Highlights

  • COSOL (ASX:COS) reported lower FY26 Revenue and a statutory net loss, although second-half Earnings improved.
  • The company is undergoing a Leadership transition while targeting cost savings and a broader sector mix.
  • New transport contracts in Australia and Canada add visibility to the forward workload.
  • Growth in OnPlan Recurring Revenue and execution through FY27 will be important indicators of the turnaround.

COSOL (ASX:COS) entered FY26 promising steady growth from its niche as an enterprise asset management specialist; it exits the year instead with a 15.6% revenue decline, a statutory net loss and a new interim chief executive. For a company whose pitch has long been mission-critical, hard-to-displace software embedded in mining, energy, Utility and transport operators, that is a meaningfully rockier year than investors had become accustomed to.

Yet the detail is more nuanced than the headline numbers suggest. A stronger second half, new multi-year transport contracts in Australia and Canada, and continued expansion of a growing recurring-revenue software product all point to a Business working through a genuine but plausibly temporary rough patch rather than a structural decline. The question for investors is whether COSOL's turnaround plan — cost cuts, new leadership and a pivot toward recurring software revenue — can restore growth in FY27.

What Has Happened?

COSOL's FY26 result, covering the year to 30 June 2026, showed revenue of $98.6 million, down 15.6% on the prior year, alongside underlying EBITDA of $9.8 million. Importantly, the year was split unevenly: the first half delivered underlying EBITDA of only $3.5 million on revenue of $49.6 million, down 14.1%, while the second half recovered to $6.3 million of underlying EBITDA — evidence, management argues, that the worst of the downturn has passed.

On a statutory basis, the company recorded a net loss of roughly $4.0 million after taking a $6.5 million Goodwill Impairment charge.

Alongside the results, COSOL confirmed a leadership transition: long-serving Managing Director and CEO Scott McGowan, who led the company for a decade, has stepped into a new role as Executive Director of Strategy and Solutions, with Chief Financial Officer and Chief Operating Officer Anthony Stokes appointed interim CEO while the board runs a search for a permanent chief executive.

The company also announced two significant new transport-sector contracts — a five-year, $12.8 million Australian rail agreement running to 2031, and a multi-year engagement supporting Canadian pension fund CDPQ Infra's REM light-rail network in Montreal.

Understanding the Business

COSOL (ASX:COS) provides enterprise asset management software and consulting services, built primarily around SAP and IBM Maximo platforms, to organisations that depend on complex physical infrastructure — Mining and resources companies, energy and utility operators, water authorities, and rail and transport networks.

Because these Assets require continuous, highly regulated maintenance, the software COSOL implements tends to be deeply embedded and costly to replace, the basis of its mission-critical positioning.

The business spans two segments: Asset Management Services, which is project-driven and exposed to contract timing, and Data and Digital Consulting, which includes OnPlan, a recurring-revenue scheduling SaaS product acquired in September 2023.

COSOL has also diversified geographically, growing its IBM relationship in the US — now around 25% of group revenue, up from zero in FY23 — and expanding beyond mining and energy into transport and rail infrastructure.

Financial and Operational Picture

The FY26 revenue decline was driven mainly by the Asset Management Services segment, where revenue fell $5.7 million, around 26%, on lower coal-sector Demand and the completion of two contracts, one planned and one terminated early.

Consulting revenue was also softer, down $2.5 million, or 6.8%, on the loss of a managed services client and project delays. Gross Margin contracted to 28.8% in the first half from 31.5% a year earlier, before recovering through the second half alongside a 340-basis-point improvement in Data and Digital Consulting margins to 37.9%.

Management has responded with a cost-reduction program targeting roughly $1 million in annualised savings, a restructured Australian sales function, and a pivot within Asset Management Services toward gold and lithium producers to offset softer coal demand.

COSOL held cash of $5.3 million and net Debt of about $20 million at year-end, with cash conversion at 108%. OnPlan reached $3.1 million in annualised recurring revenue — roughly double the level at acquisition.

Why This Matters

The FY26 numbers test the core Investment thesis for COSOL: that mission-critical asset-management software should deliver more resilient, recurring earnings than the results actually showed this year.

A near-16% revenue decline and a goodwill impairment are not what investors typically expect from a business built around embedded enterprise systems, and the CEO transition after a decade of stable leadership adds a layer of uncertainty just as the company tries to demonstrate a turnaround.

At the same time, the stronger second half, new transport contract wins and continued OnPlan growth suggest underlying demand has not disappeared — it has instead been disrupted by contract timing and softer resources-sector conditions.

How convincingly management translates cost discipline and new wins into FY27 revenue growth will be the real test of the turnaround narrative.

Industry Opportunity

Enterprise asset management remains a structurally growing category as infrastructure operators face pressure to extend asset life, meet stricter compliance regimes and digitise maintenance planning historically run on paper or ageing systems.

The shift toward critical infrastructure — rail, ports and water assets — evidenced by COSOL's new Australian rail and Montreal REM contracts, broadens its addressable market beyond mining and energy.

COSOL's growing IBM relationship in the US also opens a larger addressable market for Maximo-based work outside Australia, while the pivot toward gold and lithium producers could offer a more favourable demand backdrop than the coal exposure that weighed on FY26.

Potential Catalysts

The appointment of a permanent CEO, once the board's search concludes, could provide clarity on strategic direction and remove an element of leadership uncertainty.

Confirmation that the digital and data services contracts flagged for FY27 convert into signed work, together with continued growth in OnPlan's annualised recurring revenue, would support the case that FY26 was a trough rather than the start of a longer decline.

Delivery against the $1 million cost-savings program and further progress in expanding the US IBM relationship and newly won transport contracts both represent identifiable near-term milestones that could help rebuild confidence in the growth trajectory.

Risks Investors Should Consider

COSOL's revenue remains meaningfully dependent on the timing of relatively large individual contracts, as FY26 demonstrated. The loss or non-renewal of a significant client can materially affect group performance in any given period.

Net debt of roughly $20 million against a smaller cash balance also leaves less room for error than a fully net-cash Balance Sheet would provide, particularly if revenue recovery is slower than hoped.

The leadership transition itself carries execution risk during a period when the company is trying to demonstrate a turnaround. Continued softness in coal-related demand, further contract losses or delays in converting the FY27 sales pipeline could each extend the current downturn rather than resolve it.

What to Watch Next

Investors should watch for the outcome of the permanent CEO search and any resulting changes to strategy, as well as COSOL's first-half FY27 trading update for early evidence that the second-half FY26 recovery in EBITDA and margins is continuing.

Progress on ramping up the new rail and REM contracts, further OnPlan ARR growth, and confirmation of previously flagged digital and data services contract wins will all be useful markers of whether the turnaround is taking hold.