Hello, I'm Dan Mendis, Commercial and Operations Director at Quartix, and in just a few minutes and seven slides, including this one, I'd like to take you very briefly through our commercial results for 2025, which are also available to download together with our annual report on our investor site. Our Finance Director, Sally Morton, will take you through the financial results straight after that.
As a reminder, we are a software subscription service, and our customers are typically SME companies with mobile workers. An example might be a plumbing company whose employees travel to customer sites for their work, and through tracking their vans, we would provide that plumbing business with information on a subscription basis. Our total number of subscriptions is now 334,000. You can see the full definition of subscriptions in the annual report.
By the end of 2025, we had those 334,000 vehicles under subscription, which is an increase of 11% against 2024. Our subscription base continues to grow. This slide then gives us the remaining KPIs for the business. We had good growth in new fleet subscriptions, the total fleet subscription base, as we've seen, the fleet customer base, we now have almost 33,000 customers globally, and the rate of customer acquisition. These all grew between 7%-11%. The key forward-looking measure of growth for the group is Annualized Recurring Revenue, or ARR. It's also a key indicator of shareholder value. Now, we measure ARR by looking at active subscriptions which have a contract associated with them. Unless those contracts are canceled, the default is that the customer would continue to use the service.
We don't include other service revenues which we might expect to recur, only those which are tied to a contract. In the year, our ARR grew by GBP 4.5 million on a constant currency basis, ending the year on GBP 37 million. The next couple of slides after this one will give a bit more detail behind this number. For now, we'll look at Net Revenue Retention, or NRR. This is an important measure of how well we maintain revenue streams from our existing customers over the course of the year. Again, please refer to the annual report for the full definition, but essentially, this tells us theoretically how much revenue would be left after a year if we didn't bring on any new customers.
In 2025, our NRR was 98.1%, and that's an increase of around 3% against 2024. Fleet recurring revenue was also up in the year. Returning to ARR, I just want to show you how the growth in ARR compares to previous years. The line graph here shows us how ARR has grown in each year since 2021. You can see 2021 there. We performed well in 2022 and then dipped in 2023. In 2024, performance increased, and we also benefited from the introduction of customer indexation. This was a record year, finishing on GBP 3.5 million pound increase in ARR. 2025 has now been another record year with a GBP 4.5 million pound increase on a constant currency basis.
Just to give you some color as to how that GBP 4.5 million increase splits out, you can see in the top left chart there, ARR growth, that the major increase came from the U.K., almost GBP 2 million, in fact. This benefited from a fairly modest increase in vehicle tracking subscriptions, but sales of the group's new dashboard camera option also had a significant impact. We then see some further good performance in France, in Italy, and in Spain, where we saw increases in the ARR growth, particularly in Italy, you can see there. The U.S. and Germany saw a reduction in ARR growth, but still increased their ARR overall. If you remember, this is ARR growth, and this is ARR overall. This bottom right graph splits out the group's ARR at the year-end of GBP 37 million in total.
You can see that each country has seen an increase in ARR, and whilst the U.S. saw modest growth, there it is, good increases were registered in the remaining countries. The group is an increasingly diversified business with 47% of ARR now outside of the U.K. This slide illustrates some of the product innovation that we've been working on during 2025. On the left, you can see images of our new user interface, which is due to be rolled out to both new and existing customers in the coming months. Feedback on the alpha release of the web application has been positive, and it's now been released in beta version. The code will also form the basis of the next generation of mobile application, which is intended for release this year.
The unit in the top right of the slide is the group's new Plug in an OBD unit . This is a user-installed unit, and this particular version is designed for the U.K. and European networks. It's now completed type approval, and it's entering production. A further version is designed for the U.S. market, and that's at prototype stage, and it's anticipated that this will enter type testing soon. In the bottom right of the slide is our connected dash cam solution, whose sales in the U.K. in 2025 have been good. We're looking at the use of the camera for tracking and location information as well, and also, the potential to release the product in new markets. This final slide from me then gives an idea of the quality of our revenue base.
I won't just list every number on here, but there are a couple of things to draw out from this. Firstly, ARR per employee is GBP 208,000. This is a key efficiency metric for subscription businesses. Secondly, 96% of our sales are subscriptions. If you remember, I was saying that these subscriptions have a contract associated with them, and so unless canceled, they'll continue to recur. Thirdly, because of the type of customer Quartix brings on, our ARR is made up of 334,000 vehicles and actually almost 33,000 customers. The largest of those customers makes up less than 1% of sales. Finally, it's a growing revenue base. For example, in 2025, our ARR went up by 14%.
Now, more detail on everything I've said can be found in the annual report, but for now, thank you for listening, and I'll hand over to our Finance Director, Sally Morton, to take you through the financials.
Thanks, Dan. Turning to our financial performance for the year ended 31st December 2025, with the comparatives restated for our change in accounting policy, which I'll explain on the next slide. I'm pleased to report a set of strong results across all key metrics. Revenue grew by 12% to GBP 35.7 million. Operating profit increased by 34% to GBP 8.7 million, and we delivered exceptional cash generation with free cash flow more than doubling to GBP 5.2 million. Looking at the revenue in more detail, we achieved GBP 35.7 million, representing 12% growth year-on-year. It's worth noting that 44% of our revenue originates from territories outside of the U.K., which does expose us to currency fluctuations.
However, even at a constant currency, our revenue growth in the year was 12%, which does demonstrate genuine underlying performance rather than any FX benefits. Our gross margin of 73% in 2025, improving from 71.6% or 72% in 2024, reflects two key drivers. First, we achieved further cost reductions in the manufacturing cost of our 4G compatible tracker unit, which entered into production in the second half of 2025. Secondly, our revenue grew faster than our cost of sales, which is exactly what we want to see as we grow in all of our markets.
The combination of our revenue growth and margin expansion drove a 34% increase in operating profit to GBP 8.7 million, with our operating margin improving from 20.4% to 24.3%. EBITDA increased by 23% to GBP 13.2 million, representing a 36.9% EBITDA margin. Importantly, our adjusted EBIT conversion to operating cash flow conversion remained strong at 104.6%, demonstrating high quality earnings. On the cost side, we made strategic investments while maintaining discipline. Sales and marketing investment increased by 17% to GBP 8.3 million. This is deliberate growth investment. Following the cost optimization initiatives we discussed in July 2025, we completed a reorganization program in the first half to accelerate development of our core telematics platform.
This resulted in one-off costs of GBP 0.4 million, but will deliver annualized savings of approximately GBP 0.4 million going forward. Despite these non-recurring costs, we have managed to keep administrative expenses essentially flat at GBP 9.1 million versus GBP 9.2 million in the prior year, which demonstrates effective cost control while we invest for growth. The net result, therefore, is a profit for the year increased by 25% to GBP 6.4 million, with earnings per share up from GBP 10.58 to GBP 13.18 in 2025. Our cash generated from operations has increased from GBP 10.3 million to GBP 12.6 million, which is a doubling of our free cash flow from GBP 2.6 million to GBP 5.2 million.
As you can see from this bridge, our 2024 reported operating profit was GBP 6.5 million. However, there were two accounting adjustments that I want to walk you through. First, we made a change in the accounting policy during the year, and this is fully explained in note 33 of our annual report, which is available on our website. The key issue is fundamentally how we account for our tracker units and dash cams. Following discussions with the Financial Reporting Council, we reassessed who controls these units, us or the customer. We concluded that Quartix controls the units, not the customer. This therefore meant that we needed to change our accounting policy and recognize tracker units and dash cams as property, plant and equipment. Under the old treatment, we capitalized equipment, carriage, and installation costs as contract cost assets and amortized them over 20 months.
Under the new policy, we recognize these costs as PPE and depreciate them over seven years. That change improved our P&L by GBP 1.7 million, as can be seen here. Second, we reversed the 2G upgrade program in France for the units that needed to be replaced. That provision had previously offset costs in 2024, so reversing it reduced our profit by GBP 1.7 million. As you can see, these two adjustments are equal and opposite. They net to almost zero, so our restated operating profit remains virtually unchanged at GBP 6.5 million, despite reintroducing the GBP 1.7 million of costs into the P&L from the provision reversal. To summarize, we've made excellent progress in 2025.
We achieved record growth in ARR and now have a subscription base of 334,000 units, which puts us in a strong position heading into 2026. Our French 2G upgrade program is on track and will accelerate once our new generation OBD unit is in full production. Now looking at profitability, our operating margin improved by almost 4 percentage points despite increased investment in sales and marketing. How did we achieve this? First, the revenue growth, which is aided by pricing adjusted for inflation. Second, the efficiency measures we implemented in the first half, particularly the restructuring of the R&D team. Thirdly, the lower manufacturing costs from our more cost-effective 4G OBD unit. Finally, we closed Konetik, the German subsidiary we acquired in 2023, which had been a cost drain on the business and has incurred no costs in 2025.
Looking ahead, management believes there's excellent growth potential in our core markets. Our key strategic priority is to invest in the indirect channel for 2026, building out this route to market across all of our territories. Combined with continued discipline on administrative overheads, we're confident about our prospects for 2026 and beyond.