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Revenue: $57.8 million, up 17.8% year-over-year. Organic Growth: 10% for the half-year. Underlying EBITDA: $8.2 million, up 17.6% year-over-year. EBITDA Margin: Maintained at 14.1%. Gross Margin: 31.5%, down 1.2% from the prior period. Net Profit After Tax and Amortization (NPATA): $4.9 million, up 14.5% year-over-year. Underlying EPS: 2.47 cents, a 5.3% increase year-over-year. Cash Conversion: Lower than expected due to project invoicing timing. Debt Facility: Increased to $38.9 million. Employee Count: Over 420 employees for the first time. New Contracts: 6 new EM as a service contracts and 4 new managed services contracts in the first half. North American Business: Secured 11 new IBM Maximo customers. Dividend: Interim dividend of $0.01 per share.

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Release Date: February 24, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

COSOL Ltd (ASX:COS) reported a strong financial performance with a 17.8% increase in revenue to $57.8 million for the half year. The company achieved a 10% organic growth rate, driven by new customer acquisitions and managed services opportunities. COSOL Ltd's North American business secured 11 new IBM Maximo customers, indicating successful expansion into the US market. The acquisition of Two Stone has exceeded revenue synergy expectations, enhancing COSOL Ltd's digital and data capabilities. The company has grown its customer base significantly, with over 20 customers now contributing more than a million dollars annually, diversifying its revenue streams.

Negative Points

The North American revenue has been declining half on half, attributed to the completion of a large SAP data transformation project without a subsequent replacement. Gross margin decreased by 1.2% to 31.5% due to investments in onboarding new managed services clients. Cash conversion was lower than expected in the first half, driven by timing issues around major project invoicing. The company's leverage is higher than its long-term target due to recent acquisitions, impacting its debt position. There were $400,000 in transformation expenses included in the underlying results, related to integration and expansion projects.

Q & A Highlights

Q: Can you explain why the North American revenue has been declining and when it might start growing again? A: Anthony Stokes, CFO: The decline was due to the completion of a large SAP data transformation project in the first half of FY24, which hasn't been replaced yet. However, we have won a new project that will start soon, and we expect revenue to increase in the second half.

Story Continues

Q: The North American margins have been strong. Can you maintain this going forward? A: Anthony Stokes, CFO: While margins will decrease slightly as new projects come in, we expect overall margin improvement in the North American business in the second half.

Q: Are there any expected acquisition costs in the second half? A: Scott McGowan, CEO: We don't expect transaction costs in the second half, as we've recently completed several acquisitions. However, we will continue to look for new opportunities.

Q: How many customers do you have that deliver over a million dollars annually, and what is your target? A: Scott McGowan, CEO: We currently have 20 customers over a million dollars. Ideally, we aim for 30 to 40 such customers, balancing growth with the cost of managing larger accounts.

Q: Do the new customers acquired in the first half provide enough momentum for revenue growth in the second half? A: Scott McGowan, CEO: Yes, we have sufficient opportunities and pipeline from new and existing managed services customers to drive organic revenue growth in the second half.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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