Let me just start perhaps with a brief refresher on Tribal. We are a trusted supplier of software solutions to the higher education, the further education sector, and have been so for years, servicing customers in the U.K. and Australia and New Zealand, over 200 universities, over 100 colleges. We have the most flexible, fully functional, sticky software available in the marketplace. We are in the process of evolving that technology to a SaaS, as a service offering, retaining all the strengths of our existing solution, protecting the significant investments our customers have made in our solutions over the years, but improving it on technologies and modernizing it into a cloud solution. Customers continue to rely on our robust, resilient, battle-tested solutions. That has informed our strategy to be a pure-play EdTech SaaS company with a global reach.
I would also note that we have two separate businesses. Our Student Information Systems, our SIS business we will refer to in the presentation. We may also refer to Student Management System, which is the product. SMS is the product. Student Information Systems is the technology side of our business. We have a second line of business, which is called Etio, which is our education services business. I am pleased to report that a good set of results for this half year, fully in line with expectations. We increased our group revenue, we increased our ARR, and we improved year-on-year significantly our cash position. It is good to note that the growth showed through in both our SIS business and our Etio business. How have we delivered on the strategy that we have laid out in previous presentations?
I have previously spoken about our focus on increasing the annual recurring revenue, the ARR number, which is our key performance indicator, about moving customers to the cloud and to a subscription pricing model that we call HEFS, our Higher Education Full-Service subscription licensing model, HEFS. That internally we focus on restructuring the business to support that subscription SaaS business and driving a standardized approach across the board, which in turn drives the ability to scale the business so we can add revenue and gross margin with little increase in overhead costs. Although the half year was impacted by foreign exchange movements, which Diane will refer to later on, the underlying trend is of improving scalability. The key focus areas within that strategy for the half year have been ARR growth, and I note that we have just under 11% growth in our core ARR.
Indeed our NRR, which includes the upsells into our existing base, is at 109%. We feel those are strong performance indications. We sign new cloud deals, and we continue to move customers into the HEFS model. That drives recurring revenues and is critical to our strategy of improving our customer support and engagement, partnering with our customers to bring them on a journey with us to SaaS. We note, particularly in our Australia SMS Student Management System product, Callista, where we have steadily delivered SaaS functionality to our customers over the last three years, and customers are starting to move into the cloud in anticipation of the release of our first cloud-only fully SaaS version of Callista, which will be delivered on track in H1 2027. Similar SaaS journeys are underway for our other products, where we reimagine our further education product, EBS.
We are releasing Maytas 6, a cloud SaaS version of our apprenticeship products, and version 9 of our Semestry timetabling product, which will be delivered to customers in Q3 in 2026. In SITS, we have launched our Tribal Admissions product, bringing together all of our expertise in development of Tribal Edge into a full SaaS admissions product. That is a product that provides a complete solution for admissions delivered from the cloud, managed, maintained, updated by Tribal, delivered seamlessly to the end user. This has been an exciting development for us and the culmination of significant development effort. It is pleasing to see the level of customer interest that we have in the product.
We have also continued our focus on operational efficiency, driving a more standardized approach to all areas of our business to support our move to a SaaS business, to enable that scalability, and continuing the centralization of our core central functions like finance and HR, simplifying contracts, embracing procurement frameworks. We see this efficiency coming through in the balance sheet, where the net cash has improved to GBP 0.6 million, despite GBP 6 million of dividend payments. We feel these six months have made significant strides in our delivery of our strategy. If we think a little bit about specifically admissions as being a big step for us on our move to delivering an as a service product to our customers. The higher education sector is facing unprecedented financial challenges.
Universities need to reduce cost, and most have undertaken extensive cost-cutting exercises, including closing unprofitable courses, carrying out redundancy programs, and so on. Tribal's opportunity is to really help our customers drive efficiency through the use of technology. Admissions is top of mind for most universities. It drives most of their revenue, and the initial student experience directly informs their perceptions, the reputation of the university, and provides a university with an edge in an increasingly competitive market for students, particularly the higher-paying international students. Student experience is multifaceted. It is about a compelling application interface, efficiency in the university responses, speed of decision-making, ease of verification of identity and documents, and so on. Many institutions are still very manual in their process, and Tribal Admissions addresses all of this by providing a modern SaaS admissions solution.
We are working with key partners to create a complete admissions ecosystem, and we have significant customer interest in that. Critically, data. Data is at the heart of an effective solution. What Tribal Admissions does is provide a complete data governance, data consistency. Why is this particularly important now? AI with poor unstructured data is unreliable, inconsistent, and often inaccurate. With properly structured data quality, data governance, we can build trustworthy AI into our application and ultimately can build an agentic workflow AI to automate many of those admissions processes, which will dramatically improve university efficiency and thereby, the student experience. We are starting pilots with customers, and we have seen significant interest in that product. More broadly, we have laid out a view of how we take our customers to our as a service offering. Admission sits at the core of that.
But more broadly, it is about our products being open and modular. Open meaning they support the emerging open standards that we see in the higher education sector. Looking at this graphic from the bottom upwards, the core of it is about building our own reference model. We call that our architectural reference model, based upon those open standards. So customers understand our model, understand how we are delivering on the SaaS product. It is about Tribal Cloud, and we have seen more customers moving into the Tribal Cloud, and we still have more customers to move into that cloud. It is about building modular solutions where customers can progressively adopt these solutions over time. That is a lower cost, lower risk way of customers to move steadily in our solution.
The delivery of the admissions management, which is by far the largest of those modules, is a very significant step on taking customers on that journey with us to a SaaS solution. Then critically above the top, Tribal Open Intelligence, which will, over time, provide that AI layer over the top of our products. If we then consider AI for a minute, and how we have embraced AI, we very much have an AI first transformation strategy, and we have particularly embraced AI within our engineering teams. We have rolled out over 250 licenses, and are seeing very significant increases in productivity. So this enables us to have a faster route to market for our products, and we have seen that in our Semestry timetabling product being brought forward a number of quarters in its delivery time to our customers.
We can create more fully functional products in a shorter period of time. That is an exciting opportunity for us to deliver that value to customers swiftly. What we have done is embraced AI within our specific teams, and we have restructured our teams to be able to get the most value out of that. Have the right skill sets in each of those teams, to create the most value for customers as we move forward. With that, I am going to pass over to Diane, and she will talk more specifically through our finance numbers. Diane.
Thank you very much, Mark. I will now take you through the group's financial performance for the first half of 2026. I will cover the headline results first, and then I will look in more detail at the system revenue performance, ARR, product investment, cash generation, and then finally, Etio. From a CFO perspective, half one, 2026 continued the trajectory we set out in the FY 2025 results. We have got improving earnings quality, deepening recurring revenues, and we have translated that into disciplined cash generation whilst continuing to invest in our product roadmap. So moving on to our kind of overall performance. The first half of the year saw continued growth across revenue, ARR, and cash, alongside resilient underlying trading performance. Group revenue increased to GBP 48.9 million, up 7.1% on a constant currency basis, with growth in both of our divisions, SIS and Etio.
Adjusted EBITDA was level with prior year at GBP 8.7 million. Margin reduced to 17.8% compared to 19% the previous year, and that reflects strong underlying trading forms in both SITS and EBS, but offset by an adverse foreign exchange swing on our intercompany balances of GBP 0.9 million. ARR grew 9.7% to GBP 66.5 million, and we ended the period with a net cash of GBP 0.6 million. That's an improvement of GBP 4.5 million year on year, despite paying GBP 6 million of dividends in the period. The next slide just talks about the performance of our SITS business, which remains the core of our group. SITS revenues increased 6.6% to GBP 38.9 million, driven by continuing momentum in subscriptions and cloud. Subscription revenues grew strongly, increasing from GBP 8.8 million- GBP 16.95 million as more customers transitioned, as Mark was talking about, onto our HEFS bundle.
Cloud revenues grew 10.1%, reflecting ongoing customer migration and new sign-ups. As expected, this growth was partially offset by a decline in support and maintenance revenues consistent with this transition into a subscription-based model and by low professional services revenues as a number of our implementations concluded early on in the year. The quality of our revenue continues to improve. Recurring revenue now represents 90% of SITS revenues, up from 86% last year. Retention metrics remain strong. As Mark was saying, our NRR, our net revenue retention, is at 109%, that's up four percentage points. Gross revenue retention was at 96%, up three percentage points, which demonstrates both our customer loyalty and our successful upsell path. SITS operating margin reduced slightly to 37.9%, and this reflects our continued investment in product development across our range, and we expect that to support our future margin resilience and growth.
Moving on to ARR, and that's our key forward-looking indicator for the business. ARR increased 9.7% year on year to GBP 66.5 million, with core product ARR up 10.7% to GBP 4.6 million. Within this, subscription ARR increased 55.7% to GBP 32.6 million, and that reflects that continued rapid adoption of our HEFS subscription model. Foundation Cloud Services ARR grew 16.6% to GBP 17.1 million, and that reinforces that momentum in cloud migrations. As expected, support and maintenance ARR declined to 34.5% as customers transitioned to that bundled subscription pricing. Other software and services ARR reduced to GBP 1.9 million as legacy long core contracts continued to run off. Customer concentration remains low, with only 18% of our ARR coming from our top 10 customers, and customer longevity is strong, with 81% of our SITS customers are retained for more than 10 years.
By segment, you can see that higher education represents 74% of ARR, with vocational learning 23%. This combination of ARR growth, high retention, and low concentration continues to underpin the durability of our revenue base. This next page illustrates our continued discipline in product development investment. Our total product development spend was GBP 6.2 million, compared to the prior year of GBP 5.4 million, of which GBP 1.7 million was capitalized. This is focused on Tribal Admissions, timetabling, and Dynamics. Our expense product development increased to GBP 4.5 million, and that reflects our continued investment across SITS, EBS, and Maytas. We continue to expect capitalized development spend to remain broadly flat throughout 2026 before unwinding towards zero from 2027 as Tribal Admissions becomes fully embedded within EBITDA. That's a very clear shift from our heavy build investment towards optimization, enhancement, and monetization.
This waterfall chart shows our cash movements since the beginning of the year. Despite paying GBP 6 million of dividends in the period, equivalent to GBP 0.028 per share, we ended the half with a net cash of GBP 0.6 million, GBP 9 million a year ago. Half one saw our working capital unwind from the end of last year. We had a GBP 3.2 million advanced customer in the prior year. In the first half of the year, we had a GBP 3 million expected advanced customer.
This means our cash generation has strengthened further or will strengthen further in the second half year, and that is in line with our strategic operating principles. Moving on to Etio, our education services business. Etio revenue increased 9.4% to GBP 10 million, with government services up 14.1% to GBP 8.9 million. That is driven by programs including the DfE Attendance Mentors contract.
That is partially offset by a 15.4% reduction in full expenditure marketing to GBP 1.1 million. That just reflects the seasonality of our Southern Hemisphere international student market. Adjusted operating profit increased 27.1% to GBP 1.3 million, with adjusted operating margin up 1.8 points to 13%. That is driven by higher margin contracts and our continued back-office efficiencies. In the U.K., we have secured new contracts supporting both our early years reforms and our school anti-bullying initiatives, alongside strong performance across our existing Department for Education programs. In the Middle East, we have maintained positive momentum across both Saudi Arabia and the UAE, securing and extending a number of school quality assurance and improvement programs with both government bodies and leading education groups, and also our pipeline to half two remains strong.
To summarize the first half of the year, we have significant ARR growth up GBP 9.75 million, with 90% high-quality recurring revenue. We have a stable group EBITDA of GBP 8.7 million at a 17.8% margin. Etio margin grew up 13% with adjusted operating profit up to GBP 1.3 million, and we have a strengthening cash position with GBP 0.6 million of net cash after returning GBP 6 million to shareholders through dividends. In summary, half one demonstrates that the group continues to strengthen our quality and our durability of our revenue base, whilst maintaining a disciplined approach to cash generation and returning to shareholders alongside continued investment in our product roadmap. I will now hand back to Mark to cover our growth strategy.
Much done. When we look at answers, we feel that we have delivered on the strategy we set out, and produced a good set of results, and we feel comfortable about our current market expectations for the full year. Our focus areas remain consistent with the strategy we have laid out, particularly around customers moving into the Tribal Cloud. We have approaching 35 customers that are in the Tribal Cloud, and some 70 or so customers who are yet to move into the Tribal Cloud, which is something around 20. That is our target to go after. We continue to work with customers and the pipeline of customers to move customers steadily into the Tribal Cloud, both on the SITS side and as I mentioned earlier, on the Callista side as well as we deliver our cloud version of Callista.
We continue to upsell our portfolio product being delivered early in Q3 rather than in 2027. The Tribal Admissions launch is really key for us and our focus will be encouraging as many customers as possible to adopt our admissions solution and admissions as a SaaS product that is delivered on the cloud. Our cloud offering to customers is not only cloud on its own, it's actually cloud as part of the transition to Tribal Admissions, which in turn brings customers onto that journey to move to an as-a-service. It's where we maintain, manage, upgrade the system and deliver SITS through as a service to the end user. In terms of being able to monetize SITS, the admissions, the core part of admissions is included in HEFS, but actually the increase, the level two, level three functional part are opportunities to build out the monetization of it.
Also working with partners, to provide that whole ecosystem admissions and also the AI possibilities that I described earlier on. It will take some time for that to come through because customers typically will implement a new admissions process over two academic years. However, the demand for admissions and improvement of the admissions systems, as I discussed earlier, is top of mind for most customers at the moment. We have a lot of interest in admissions, albeit it will take some time for the revenue opportunities for that to come through. And we continue also to focus on our ongoing operational efficiency. The improvements we see in cash through our tight internal controls, we've talked about how they've come through. There's still more work we could do. It's ongoing.
We're looking to roll out AI internally within our business operations, and that will help improve efficiency as well. We continue to focus on that area into H2. Overall, we feel a good positive set of results, and we feel comfortable with our overall market expectations for this year.