Hello, I'm Dan Mendis, Commercial Operations Director at Quartix, in just a few slides, I'd like to take you through our results for the first half of 2026, which are also available to download on our investor site. Just as a brief reminder, Quartix is a vehicle tracking company with now 340,000 vehicles plus under subscription. We prioritize customer service, and as a result, our customers tend to stay with us for a long period of time, decades in some cases. Actually, we still provide telematics to our first customer who we acquired in 2001. We serve fleets of all sizes, we focus on site-based services, meaning our customers are typically those that will travel to site to perform a task, whatever that might be. We're strong in sectors like construction, facilities management, and grounds maintenance.
We've built up a base of those sort of customers since 2001 and done so organically. The table in this slide gives us the KPIs for the business. Our annualized recurring revenue or ARR, which now stands at GBP 38.9 million, has increased by 10.9% on a year-on-year basis. As we've seen, our subscription base is now over 340,000 vehicles. That's an increase of 7.4%. Our customer base is 33,500, an increase of 6.2%. Our ARR per vehicle and ARR per employee have both increased since 2025, the latter significantly, and these have been supported by customer indexation, the dashboard camera in the U.K., and general pricing control as well. Net revenue retention at 96.9% has slipped a little bit this year, 0.4% down against H1 2025, there's a bit more detail about this later.
Finally, invoice recurring revenue has increased by 13.6% in the period and now stands at GBP 36.6 million. These next three slides give us an idea of the growth of the subscription base, the customer base, and the ARR over time. This one shows the subscription base. It's important to note with this graph and the subsequent two graphs as well for customer base and ARR, that the bar on the right-hand side there is shown as at half year, there's another half year of growth before the bar is complete for the year. In any case, these graphs are split into various markets that Quartix sells into. The key point I want to draw out here is the group is an increasingly diversified one with over 51% of the subscription base now residing outside of the U.K. and Ireland.
In terms of the customer base, 64% of that now resides outside of the U.K. and Ireland. Again, the bar on the right-hand side there represents the figure as at the 30th of June. We certainly hope it will have increased by year-end. The same is true of ARR as well, which this slide shows, where 48% of the recurring revenue resides outside of the U.K. and Ireland. To give you a bit more detail on ARR, this line graph here shows us how ARR has grown in each year since 2021. Growth increased between 2021 and 2022 and then dipped in 2023. In 2024, performance increased, and we also benefited from the introduction of customer indexation, and this was a record year, finishing on GBP 3.5 million increase in ARR.
2025 was another record year, finishing on an increase of GBP 4.5 million on a constant currency basis. 2026 is currently at about 2024 levels, which is obviously not as good performance as 2025, but still represents growth in ARR. We look at how that splits down by country, the left-hand chart here shows the ARR base by country at the end of the period. The U.K. and Ireland represents 52% of that ARR, with the remainder of the countries representing 48%. Every country has grown, but some more than others, which you can see in the graph on the right-hand side there, which shows ARR growth. The U.K. is still the strongest contributor in terms of growth at about GBP 1.4 million, but this is a bit less than 2025, where we had an outstanding start to the year in the U.K.
France has performed better than last year in terms of growth, but the U.S. has been disappointing this year. The growth is marginal, which is disappointing in the context of the investment that has been put into it. Italy and Spain continue to perform very well, actually Italy is significantly ahead of last year. Germany's growth is then not as good as last year but still registered some reasonable growth. This graph then shows net revenue retention or NRR, which is an important measure of how well we maintain revenue streams from our existing customers over the course of the year. Please refer to the annual report for the full definition, essentially this tells us how quickly or slowly revenue would theoretically fall away if we didn't bring on any new customers.
From the graph, you can see that we retain 96.9% of revenue from existing customers over the period from June 2025 to June 2026. There's a lot going on with that number. It comes from customers reducing their subscriptions or renegotiating price, so reducing their revenue contribution. On the positive side, what sets it off against that is customers that have indexation applied to their price annually, they may also increase their subscriptions or take additional products such as dash cams. The net effect of all of this is a net revenue retention of 96.9%. Once you add business from new customers won in the year, you get to an ARR as at June 2026 of GBP 38.9 million. With that, let me hand you over to our Finance Director, Sally Morton.
Thank you, Dan. Good morning. I'm Sally Morton, Finance Director at Quartix. I'd like to take you through some of the key characteristics of the business, our financial performance in the first half, the progress we're making in development, and finally, our outlook. Together, these points highlight the resilience, quality and scalability of the Quartix business model. Our business benefits from a very high level of recurring revenue, with around 97% of revenue generated from subscriptions. That gives us a strong degree of visibility and stability in the model. That is supported by the quality of our customer relationships. Although our initial contract terms are typically only 12 - 36 months, and we do not rely on auto renewals, our average customer tenure is around seven years, which reflects both the strength of our proposition and the quality of our customer service.
As Dan has already mentioned, one of our key metrics is ARR per employee. At the end of June 2026, this increased by 11% to approximately GBP 220,000, demonstrating the operational leverage in our business. Because we are not a project-based business and do not carry the same level of costs associated with bespoke contract delivery, we are able to grow ARR without needing headcount to increase at the same pace. That allows us to scale efficiently while maintaining discipline over costs. With approximately 37,000 customers, our revenue base is also highly diversified. No single customer accounts for more than 1% of total revenue, which further strengthens the resilience of our business. Turning to financial performance, the first half has delivered a strong result, supported by higher ARR per vehicle, improved margins, and continued discipline over overheads.
Revenue increased by 12% compared with the same period last year, while gross profit rose by 14%, meaning that gross profit grew faster than revenue. That stronger gross profit performance reflects both lower manufacturing costs and a reduced SIM cost under a new five-year contract with our main network provider. Together, those factors have helped accelerate gross profit growth and strengthen margins. Operating profit increased by 21%, reflecting the benefit gross margin improvement together with strong cost control across the business. Below the operating profit line, profit after tax, basic EPS and diluted EPS were all down 15% in the period. That decline was driven by a GBP 1.1 million tax adjustment relating to the 2024 tax year, which was determined after the group's 2025 reporting had concluded, although it arises from the accounting policy change communicated in our previous financial reporting.
Free cash flow increased by 18%, broadly in line with the increase in operating profit, which demonstrates strong cash conversion. This is after the GBP 1.1 million additional tax payment made in June 2026 to HMRC, following the voluntary disclosure relating to 2023 and earlier tax periods. Turning to development, we are currently in the final approval stage for our OBD device for the U.S. market. We already have around 300 units available for immediate shipment to customers, with our first full production run expected to land later in August. Later in the year, we expect to introduce the TCSV17 Connect & Track unit, also known as our two-wire tracking unit, for the U.S. market. This is an important step because it will bring all of our tracking units across all territories onto a common core infrastructure.
On the software side, our new user interface is progressing well, and feedback from the beta program has been encouraging. The beta has been live with selected customers for the past three to four months, and we're planning to launch the new UI for InfoPoint users in Q4 2026. Our goal is to transition 5,000 InfoPoint customers onto the new interface by the end of this year. The wider rollout to other package users, including customers using the integrated dashcam and Quartix Check, is planned for 2027, with the legacy interface expected to be retired in 2028. Finally, to close, as Dan has already highlighted, we have grown ARR by GBP 3.8 million over the last 12 months. Within that, ARR per vehicle increased by 3% year-on-year, the subscription base grew by 7%, and the operating profit was up 21%.
These results reflect the strength of our recurring revenue model, the benefits of improved efficiency, and the continued progress we're making across the business. Looking ahead, our continued ARR growth, ongoing efficiency gains, and the planned launch of dashcams in Continental Europe targeted for H1 2027, which is particularly exciting because it will allow us to support customers looking for a more integrated vehicle and driver safety solution, combining tracking video footage and a vehicle safety app within a single offer. Taken altogether, that gives the board confidence not just in the near-term outlook, but in the scale of the opportunity ahead.