Redcentric (RCN) H2 25/26 earnings summary

Executive summary

• FY 2026 marked a transformative year with the sale of the data center business for GBP 125 million, enabling a strategic shift to focus on the MSP segment and operational simplification.

• Leadership changes included a new CFO and restructuring of the executive team to drive growth and efficiency.

• The business delivered financial results in line with market expectations, maintaining high recurring revenues and low customer churn.

• Strategic initiatives included expanding sales channels, investing in customer experience, and optimizing cost structures.

Financial highlights

• Revenue declined by 2.3% year-over-year, primarily due to legacy contract attrition, an exited unprofitable contract, and the unwinding of a prior market event related to VMware.

• EBITDA margin remained stable at just above 6%, with cost savings offsetting revenue declines.

• Adjusted EBITDA is currently at 13%-14%, with a target to reach 20% over the next few years.

• Net debt reduced to GBP 2.8 million post-transaction, with a forecast of GBP 6 million by year-end, less than a third of LTM EBITDA.

Outlook and guidance

• Expectation of margin improvement in FY 2027 due to full-year impact of cost savings and further operational efficiencies.

• Revenue growth anticipated as drag factors subside and new sales initiatives mature, with a focus on ARR as a key metric.

• Dividend policy to be reinstated, with interim dividends starting against FY 2027 results and ongoing share buybacks.

• No M&A planned for FY 2027; focus remains on organic growth and scaling existing offerings.