Today, I'll be presenting our First Half 2026 Results. Consistent with our advice for market in December, Atturra's results for the half year had. I'll highlight the profit impact only affects the first half. In the second half, all impact on profit. Fortunately, the Atturra business model is flexible enough to absorb and deliver against our guidance for the second half. I also understand this in the management team and myself. We take this seriously and have put in place processes to ensure. It is important that you review the presentation pack, understanding the disclosure on this page. This slide shows the agenda. I'll cover the results summary and go into a business to take us through the financial performance. I'll take you through strengths and capabilities again. Let me start with this.
We're an IT solutions provider with a focus on helping our clients transform their businesses. Revenue is up 28% to AUD 181 million. Said in the continued increase in headcount across the company, where we now have over 1,300 staff. It is, however, anticipated that with the productivity benefits from AI, that the rate of revenue growth. Unfortunately, our strong revenue growth was not our results, primarily because of a large contract dispute that Atturra announced to market in December after each guidance. As a result, our underlying EBITDA was down 46% in PCP. In terms of cash, we ended the half with in excess of. Herb will provide more details on our cash flow later in this presentation.
The slight decrease in other revenue due to the growth in our data and ERP businesses and the movement of some clients from the recurring to long-term revenue category. Before we jump into details, I want to do across our near-term priorities, which are consistent with those stated at the end of FY 2025. Firstly, a focus on Atturra's proprietary solutions. In accordance with our portfolio, over the previous six months, we have developed significant traction in PCP, in particular, Boomi ACP and also Scholarion, our school management ERP data accelerators, which not only provide Atturra a competitive advantage in projects, but also to help clients manage their environments. The second area of focus in our prior results, Atturra will continue to expand its managed services business and see it as a strong, fast, and predictable recurring revenue. In the first half, we acquired Blue Connections.
Allowing Atturra to combine our end-user compute and device businesses. Focus area is sales expansion. Atturra has executed upon our strategy of setting up a larger, longer-term sales. In the second half of FY 2026, additional sales in several focus areas. These areas that can deliver above-market growth, in particular, AI. The fourth area is AI and data. Six months ago, Atturra highlighted. This is now accelerating. As I will discuss shortly, AI has gone from core focus and we are taking an AI-first approach. This is both internally. This slide covers the Atturra business strategy. Although our vision remains unchanged, we strategically have made some changes around simplifying the business, focusing on EP first. For this half and into FY 2027, actively focus on how we can better monetize our strong position within our data capability.
As also mentioned, there is a focus on improving our earnings per continuous focus on operational performance. We're implementing a new continuous benchmarking process. As a result, I've appointed a full-time director to focus on business improvement and measurement, who is taking an AI-first approach. Although this transition really started in earnest back since early AI adoption, primarily operational stabilization and resourcing, we have extremely recruited two dedicated executives to drive our transformation. One internal process, adoption, and change, while the other is focused on our external data market activity. The 270 AI and data experts means Atturra should be able to disproportionately benefit. There is significant information in the market around the growth of AI research, which is showing that the Australian market is more than doubling.
Westpac quote, a quote from AI itself, which thinks with all the currently, humans are not looking at things correctly and they do not have in play from Moltbook, a social media platform for AI agents only. That means that if you're an agentic AI agent in and watch it chat and make things up with other AI agents. Suicide is an AI agent's response to another AI agent question. AI is now everywhere, and yes, in many parts, it is way overhyped, but in one way... For a company that has data at our heart, there's a massive opportunity because garbage in means garbage out. We need to support these changes with an increased focus on sales investment. In particular, our unique areas that we see significant growth opportunities, those being AI...
I'll now hand to Herb to take you through our financial listen.
Hello, everyone. My name is Herb To. I'm Chief Financial Officer for Atturra. I'll be 31 December 2025. The first slide here highlights the key profit and loss results, with the six-month period ended 31 December 2024. As Stephen has highlighted, growth on revenue of AUD 180.6 million. Quality of the business has remained stable with a gross 27% on PCP. EBIT has declined by 10% on PCP of FY 2026, some of which is non-recurring, including provision for debt for work performed to date, which is non-recurring, AUD 2 million in organizational restructuring, AUD 1.5 million in integration costs, which is non-recurring integration, which is ongoing. We've highlighted underlying EBITDAs. We exclude non-recurring expenses and revenue. In FY 2026, we've added back share action and retention costs, acquisition-related integration costs, and organizational 2025.
We add back share-based payments, gain on bargain purchase, and retention costs, acquisition-related integration costs, and capital raising costs to AUD 7.3 million from PCP, which is consistent with the reconciling items that EBIT variously. The next slide details underlying EBITDA or intangible amortization and acquired software amortization. Underlying EBITDA also adds after adjusting for the impact of tax. This metric provides the underlying profitability of the group. The underlying EBITDA of the business of AUD 2.1 million has decreased by AUD 6.3 million. The next slide is a summary balance sheet. It compares balances at the end of the current 2025, the end of FY 2025. The company continues to maintain AUD 8.6 million, a decrease of 36% or AUD 33 million from six months ago, in our subsidiaries and our share buyback programs.
We have net tangible assets of AUD 16 point. This cash flow slide is a summary of the sources and applications of funds. That compares cash flows from the current period to the six months ended 31 December 2024, in from AUD 91.6 million to AUD 58.6 million. Overall inflows and outflows, AUD 4 million, a movement of AUD 15.8 million to PCP. Seasonality and timing tend to be slightly volatile and may show large movements from period to period. For this period, PCP include timing of the payroll for the last cycle of the pay period of AUD 3.1 million, restructuring costs of AUD 2 million, payment in the period of AUD 1.6 million. Deposits held by comp, AUD 1.5 million.
Cash outflows also include 17 point comprises subsidiaries acquired in FY 2026 of AUD 12.1 million, plus four subsidiaries of AUD 5.3 million. This compares with the investment in subsidiary. In the current period, cash inflows include AUD 8.3 million draw down over. Now I'll hand back to Stephen, and we'll be pleased to answer any questions in the Q&A later on in the session.
Thank you, sir. In August 2025, Atturra disclosed, and I wanted to provide a brief update on each of these. Firstly, built in-house on Microsoft's D365. When complete, total will be 12 modules, which can be used as an entire integrated system or just select. We have sold 2 licenses to early adopters and had a target to have six schools try and already hit the six schools targeted. Yes, pre-release. More exciting, initial target, because the most recent signing is Haileybury College, and it's a not a school, but the deal covers multiple campuses and not just the Melbourne campus. However, together with our clients, we're doing a major change to our core pioneers to that of Dynamics. This change is now due in December 2026. Its investment in the product business in FY 2026 and 2027 to support this growth.
2027. An aggressive target, given the sales cycle for a school, is 12-18 months and is only scheduled for 30th of June 2026 year platform. I'm very excited about the possibilities of our Atturra cloud platform. This is not over arching branding for a set of hosted solutions. In FY 2026, we are well on track to achieving that with the current forecast, with ACP for the full year in our cloud business. Our ACP business is our Boomi ACP solution, which is a fully managed and monitored Boomi solution in September 2024, with two early adopters as clients. By the end of FY 2025, we have 35 clients, and at the end of the first 52 clients. Our objective is to have organic ACP growth of a client every six.
I would like to bring strategy is continuing to have both an organic and inorganic component acquisition targets. Depending on pricing, high priority targets will be those that increase by cyber, cloud, and data. The only other area which Atturra is organically growing its ServiceNow practice, we may look at accelerating our growth through an app, albeit it is a lower priority. It is important to cover acquisition in integrating all our acquisitions. Following the acquisition of a business, Atturra's focus simply bringing in Atturra culture and operating processes. It's one of the key reasons that our acquisition pro the cultures to ensure these align. This also shows we do not lose the secret sauce. Atturra, as mentioned before, however, does believe in full system integration, and this is the drive. This done ensures we have consistent systems and processes that are scalable over time.
The acquisitions that we made in the second half of FY 2025 and the one acquisition we made, that being Blue Connections, which was focused on expanding our managed services footprint. However, because some of the complexities in the combination of both Atturra and Blue Connections, where system integration is not scheduled until FY 2027. Consistent with our guidance for the full year, Atturra is forecasting revenue in the range of AUD 37 million and underlying EBITDA in the range of AUD 30 million-AUD 31 million. Of in the second half, underlying EBITDA of roughly AUD 23 million-AUD 24 million are the result of an adverse contract termination, and as a result, Atturra has changed our WIP. Despite the poor first half, Atturra, both because of its strong market position, but also because of its leadership in the data domain.
Its approach, supported by over 270 data experts, we are rapidly upskilling many. Secondly, we will continue to invest and develop our solutions on IP. We see offering and also to continue to expand our ACP offerings. On EPS. We'll also bring additional sales resource in the area that we see above AI, cyber, cloud, and data. As I mentioned previous, yep, Atturra is forecasting revenue in the range of AUD 364 million-AUD 374 million. I'm very confident of Atturra's positioning as we look in the FY 2027 million sales. I now happy to move to Q&A.
Please press star followed by one on your telephone and wait for your name to be announced. While we assemble Jules from Shaw and Partners. Stephen, there is a big focus on AI, this reporting season, or likely to be disrupted. Could you talk to how you see the impact across consulting and data mine and time of projects? Do you see that as a headwind to revenue growth, or does it allow Atturra to do more?
Yeah, I'll address that one. Look, it's a good question and disruptive or beneficial, and I think the 100% honest answer is it's a bit of both in that process, as are many other companies. It is opportunity for growth, but also going to change a lot and is starting to change. You know, coding is probably the easiest example. You know, productivity's up, you know, 30%, 40%, 50%, probably 1: 3, and that's a reduction in work going forward. What we're seeing in practice is actually what's happening is that people have just got higher expectations of what they can get and how they can get it done.
We provide some of those services, but having a deep industry knowledge, and that data practice and the ability, especially in the commercial space, companies are going to spend more and more in disruption going forward. I don't kind of run into any companies who say they're going to spend less on it. Expectation is going up, and I think, especially in the SMB market, the upper SMB and enterprise market, the thing that's more important is security, forcing internally to obviously invest a lot and make sure that we're keeping up. You know, the pace of we used to, in reality, be able to change kind of every 12, 18 months, and it's almost like it's quite an insane time, but if you don't do that, you don't keep up. In summary, I think it's a huge upside.
The short to medium term, is people fill with AI and implement AI and work.
Thank you. We'll take some phone questions now. Open.
Hi, Steve. Hi, Herb. Can you guys hear me all right?
Yes.
Two questions for me on behalf of Josh. Firstly, could you talk about some of your internal AI use on potential impacts on charge-out rates with customers, as well as upside or downside risk.
Yeah, look, it's a, it's a good question, and I'd give you our view, and it probably changes on a daily basis. Say, sales, marketing, market intelligence, and automating that, and then in a sort of ticket handling and self-healing capability. And that's just. You've got to do it to stay, it's just, it's going to get, you know, more and more expectations. Theoretically, you'd think going up at the same time, but that's internally.
The other one that we did, which was a real experiment for us, team, agentic agents, as we're starting up a new line of business, a ServiceNow to be transparent, to do the market intelligence, a lot of the market prospecting, even what would have taken a long time and a significant overhead to start up a new practice, you know, four people instead of a team of probably 10. That's a huge opportunity to enter a new market. As you might see, the biggest ones, we've got some other ones that are kind of more common, and I'd almost call it ML around, and error detection. The big changes for us are that marketing, help, self-healing, and part of Josh's question? Yep.
Yeah, that was very helpful. Second one for me is, Steve, how should we think about the opportunities for your data practice as companies prepare businesses for?
I think our key strengths. We're AI first. I think our key strength, AI, our key strength, we're seeing huge demand into the data practice now as people start and they've worked out the first thing they're going to get under control. Actually, the second thing they're going to control. The first thing they're going to control, really good consulting work that we're getting there, but the second bit is then the data structures goes in and out. Yeah, we're seeing big demand. We did see historically or the difference that we're seeing now is they're no longer conversations, they're actually projects, activities are actively doing. I think, you know, in particular, FY 2027, FY 2028, it's gonna be, not gonna be a shortage of jobs in that space as people are talking about.
There's a lot of work to be done.
Yeah. Thanks for that.
Your next question, Unified Capital Partners. Apologies. Your line is open.
No worries. Thanks for... Look, obviously a lot to digest in terms of this and obviously a lot also going on in your business through the period. You've at times called out cloud and the sovereign capability, both in terms of your consultants. There's a bit of emphasis coming through, I think, with some of the AI compute. Can you sort of give us an idea around your exposure there, and?
Yeah. Our cloud, we ended FY 2025, about AUD 30 million. We said we're going to do double digits there. I suppose we have our cloud environment is a combination of hyperscalers and non-hyperscale service. We actually see that as a strong growth opportunity. Look, I'll give you one client, started to name somebody said they're confidential. You know, Itronics is a real good example. We went and put AI in security. I mean, you've all seen TV where someone sits there and watches all those screens or any credit system. Effectively, AI across that to kind of give all the inference information to that organization project. We actually now provide that inference as a service. We're actually using our GPU and cloud to actually do stuff coming down, depending on the company and the use case and their data requirements.
It's a huge opportunity for cloud, and that's stuff that's driving into our cloud business.
Understand. Appreciate the context. Just on the cash flows, I think you've called out just the sort of an inventory build in one of the new acquisitions there, and also just, you know, is that sort of unwound or unwinding this period?
With regards to cash flow, there's the increase in inventory does make up a component. The cash flow step up from the acquisition of Blue Connections because they are rather a business compared to us, but we didn't get the benefit of their full period of one-off non-recurring event in the half. A larger part of the cash outflow, the last, believe it or not, payroll cycle in the period where we had the payroll leave the cash or our cash reserves in this period, it was, it left our cash reserves just before. It resulted in, optically, a cash outflow, the period comparable.
Understand. Thanks for the second half. You know, you've reiterated the guidance for the second half, which provides obviously a pretty also out of your business. Can you describe some of the margin profile? Are we expecting, you know, gross margins to step up alongside just-
Two things that affect that. Obviously, you're right, we always have a better second half. We obviously had an efficient to normal. You will see a bit of margin expansion delivery in that's just a second half number that our investors would have expected to have our normal first, second half split. As we roll into FY 2027, you'll go back to our normal, you know, ratio. Quite a strong first half next year and a stronger second half.
Thanks, Stephen.
As a reminder, if you wish to ask a question, please press star followed by one on your telephone and wait for. [inaudible] from Canaccord Genuity. Your line is open.
Morning, Team. Well done for hitting your updated guidance despite the unfortunate loss. Maybe you could just give us a little bit of color. Was that a customer that was relatively new to Atturra, or was it more of a, they terminated that contract early?
It's been an unusual one and very careful wording in our announcement last year. Yes, it was a new client. The, in our opinion, obviously being careful with my words, it is, they didn't really follow the right real cause from our point of view. They just decided to stop and run up too much WIP, which obviously is saying we've made sure we changed our processes on. It has a new client. It's a really unusual one. I've not seen it in 30 years.
And maybe just turning as well, it's really exciting seeing some of the IP and proprietary offerings. Just on the traditional business, what are you seeing in terms of public sector and defense, you know, budgets and demand?
Look, in the medium term, I think, yeah, defense spending is going to increase, definitely. Yeah, it's bottom of market, but it may be bottom of market for a while. You know, what we're continuing, we're putting all our focused effort on growth outside of those core areas. What we see is probably a pretty flat period over the next, you know, one, two, maybe even three years.
Great. Thanks very much, and looking forward to seeing the recovery.
Currently, there are no further questions on the phone, so I'd like to hand back.
Look forward to a very positive next update for the full year results. Thank you.