Highlights

  • Etherstack plans to cancel its share premium account and transfer the amount into a new distributable reserve.
  • The UK Government project has grown from £14.2 million to more than £16.2 million after two customer-requested increases.
  • H1 2026 Revenue rose 40% to US$8.5 million, although net profit fell 67% to US$0.4 million.
  • Management reaffirmed FY2026 revenue guidance of US$17.2 million to US$18.9 million for the year to 31 December.

A share premium reorganisation is the first concrete result of the strategic and Capital management review at Etherstack (ASX:ESK), the mission critical communications software company said on 5 October 2026, opening a path for possible dividends or Buybacks once its full-year accounts are in.

The announcement capped a busy stretch that included a further UK Government project milestone and the first international contract for its NATO Narrowband Waveform technology.

Capital Reduction Sets Up Future Return Options

The board launched the review on 13 July 2026, flagging that it could include creating distributable reserves through a reduction of capital. Its initial conclusion is to cancel the share premium account and transfer the balance to a new distributable reserve. The number of shares and depositary interests will not change, no capital will be returned immediately, and net Assets are unaffected.

The reorganisation requires approval at a forthcoming general meeting and from a UK court. Resolutions and a timetable will be set out in a future notice of meeting. Once complete, the board may consider dividends or share buybacks, with any decision to follow the release of FY2026 results and to depend on cash, growth opportunities and capital requirements.

UK Government Work Underpins Second-Half Revenue

The UK Government contract, first announced in October 2025 at £14.2 million, has been increased twice at the customer's request, most recently on 31 August 2026, to more than £16.2 million, or about US$21.5 million. Etherstack expects further increases in coming months.

On 29 September, the company reported that a second major milestone was delivered on time, contributing US$1.8 million to second-half revenue. With the next milestone expected in October, H2 2026 project revenue from the contract would reach US$4 million. Most of the contract revenue is expected to be recognised across FY26 and FY27, and the London Facility is expanding to support the initial five-year term.

On 22 September, Etherstack's Australian Subsidiary signed a contract with an offshore defence equipment maker to Supply its NBWF technology for technical evaluation. The value is below the company's materiality threshold.

Revenue Up, Margins Lower in H1 2026

For the six months to 30 June 2026, revenue increased 40% to US$8.5 million, with support revenue more than doubling to US$2.7 million. Gross Margin narrowed to about 44% from about 64%, EBITDA fell 19% to US$2.1 million and net profit after tax declined to US$0.4 million. Cash stood at US$0.7 million at 30 June, alongside a US$2.5 million unsecured funding agreement maturing in June 2027.

In August, the company appointed US-based Ryan Burchnell, a former AT&T FirstNet and public safety executive, as Group Chief Operating Officer.

Guidance Points to a Stronger Second Half

Management has reaffirmed FY2026 revenue guidance of US$17.2 million to US$18.9 million, subject to continued delivery on contracts in hand, and expects support revenue above US$5 million. Communications-as-a-service revenue is expected to grow through FY2027 and step up significantly in FY2028, when the UK project is planned to go live.

Shares were priced at A$0.478 on 2 November 2026, down 0.52% on the day, with a Market Capitalisation of A$67.73 million.