Skillcast Group PLC - Results for the six months ended 30 June 2025

The information contained within this announcement is deemed by the Company to constitute inside information pursuant to Article 7 of EU Regulation 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 as amended.

19 September 2025

Skillcast Group PLC

("Skillcast", the "Group" or the "Company")

Results for the six months ended 30 June 2025

Skillcast (AIM: SKL), the Governance, Risk and Compliance ("GRC") software and e-learning provider, is pleased to announce continued growth in recurring subscription revenue and profitability in its unaudited results for the six months ended 30 June 2025 ("H1 25").

 Highlights

·    Revenue growth of 18% (H1 24: 24%) driven by a 23% increase in subscription revenues

o  Subscription revenues increased to 85% of total revenues (H1 24: 81%)

o  Professional services revenues were 7% below the prior year at £1.1 million (H1 24: £1.2 million).

·    ARR* increased 23% YoY to £12.8 million as at June 2025 (June 24: £10.4 million) and +10% year to date:

o  £1.1m ARR growth from new clients in H1 25 in line with H1 24

o  Net retention of 100% with lower, 3% price rises (H1 24: 7%), which are being welcomed by clients and supporting the lower annualised churn of 7% in the period (H1 24: 12%)

o  Average ARR per client (excluding Core Compliance) +12%

o  CoreCompliance accounting for 1.2% of ARR (June 2024: 0.3%).

·    Gross margin grew 3.8 percentage points to 75.5% (H1 24: 71.7%) due to a reduced professional services cost base:

o  SaaS margins increased by 0.5% to 79.5% (H1 24: 79.0%)

o  Professional services margins increased to 51.7% (H1 24: 41.7%).

·    EBITDA rose to £0.7 million (H1 24: £0.03 million) representing 9% of revenues reflecting the continued operational gearing impact of the revenue growth with overhead costs increasing 9% on H1 24. Average headcount increased by 3% over the past 12 months to 123 (June 24: 120) in volume-based roles.

·    Interim dividend declared of £180,000, a 20% increase on last year and broadly in line with subscription revenue growth as per our stated policy. This represents 0.202 pence per share (H1 24: 0.168 pence per share).

·    Cash in bank increased to £11.5 million at 30 June 2025 (30 June 2024: £8.3 million).

·    Free cash flow* of £2.2 million (H1 24: £1.0 million) reflecting upfront cash from growing subscription sales, a return to profitability and accelerating cash flow from auto-renewal terms introduced last year.

Current Trading and Outlook

ARR continues to grow in the second half of the year and drive subscription revenues in line with expectations.

The market demand for our GRC content and software remains resilient. While revenues from non-strategic Professional Services have limited visibility, the continued growth in subscription revenues reduces their impact, and we remain confident of meeting current market expectations.

Vivek Dodd, Chief Executive Officer, said:

"Our H1 2025 performance demonstrates the resilience of the GRC market and our value proposition. In this period, we achieved 23% organic growth in ARR and improved our EBITDA margin to 9% as we progressed further towards meeting the Rule of 40*.

"Skillcast is seen as a trusted partner by over 1,400 companies, mainly in the UK, for simplifying their staff compliance, cutting costs and building resilience. We see opportunities to grow in our core and adjacent markets and continue to look for suitable acquisitions to supplement organic growth.

"Our cash position remains strong, and we have declared an interim dividend of £180,000 that is +20% higher than last year and broadly in line with our subscription revenue growth."

*Further details on the calculation of ARR, Rule of 40 and Free Cash Flow are set out in the Alternative Performance Measures section of the Financial Review below

Enquiries:

Background

Our Purpose

Skillcast enables businesses to build ethical and resilient workplaces and make compliance simple.

Who we are

Skillcast Group Plc (AIM: SKL) is headquartered in the City of London and has an operations hub on the island of Malta. It is a leading provider of governance, risk, and compliance (GRC) content and software to help companies create compliant and resilient workplaces.

What we do

The Group provides a cloud-based, software-as-a-service (SaaS) portal for managing GRC. It combines learning content, activity tracking, policy management, and a range of compliance declarations and submissions. Skillcast supports firms in simplifying their staff compliance and meeting complex regulatory obligations cost-effectively, and helps them reduce risk from compliance breaches. The Group has grown entirely organically, building and maintaining all its technology and content IP in-house, allowing it to deliver customisable solutions.

The Group offers three subscription plans for its Managed Portal Services: Standard, Enhanced and Premium, to meet the different needs of organisations. These plans include a dedicated Customer Success Manager to deliver award-winning customer service, and the Enhanced and Premium include Aida - our AI-powered compliance assistant.

For mid-size and large companies with existing compliance portals, Skillcast offers Remote Services to enhance their portals with off-the-shelf content and additional functionality.

Additionally, the Group offers CoreCompliance, a pre-configured, self-serve, ecommerce compliance solution for small UK businesses.

Over 80% of our revenues are recurring with low churn, long-term customer relationships, and a high gross margin. In the four years 2021-2024 since the IPO, these recurrent subscription revenues have grown by a CAGR of 26%, and the Group returned to profitability in 2024, as guided.

Our customers

Skillcast serves over 1,400 clients, including FTSE 100 companies, global financial institutions, and small to mid-sized businesses in the UK. The majority of our clients operate in regulated sectors such as financial services and insurance.

Investment case

Skillcast is a leading provider of GRC SaaS solutions to companies, mainly in the UK. Such companies are subject to many regulations that require them to educate, record, monitor, and analyse employee activities. Consequently, they turn to digital platforms, such as those provided by Skillcast, to comply with these obligations and demonstrate compliance with regulators, customers, and stakeholders.

The Group's management estimates the total addressable market (TAM) for GRC platforms to be over £1.6 billion based on the company demographics data from the UK Government Department of Business and Trade and its prices for relevant business segments. Just over half of this TAM exists in small companies with less than 50 employees, which the Group targets with its CoreCompliance solution. The remaining TAM exists in mid-size and large companies that the Group can serve with Managed Portal Services and Remote Services.

The Group's management expects to increase its penetration in both market segments, aided by the quality and breadth of its current offering and innovations like Aida - its AI-powered compliance assistant.

The Group benefits from a business-to-business model with low churn. The overwhelming majority of its contracts are annual and invoiced upfront. It aims to offset churn and downsells with upsells to the retained customer, giving it a typical net retention rate of over 100%. This results in high revenue visibility, strong cash flow, and accreting ARR.

In the years following the Group's IPO in December 2021, we proactively increased overheads ahead of revenue to improve marketing, product development and corporate governance. That phase ended in 2024, and we are now benefitting from operational gearing inherent in our SaaS business model. The Directors expect this operational gearing to increase EBITDA margins further with revenue growth as we strive to meet the Rule of 40. The corporate compliance market is large, resilient, and growing, but fragmented. The Directors believe Skillcast is well-positioned to thrive with multiple opportunities for organic growth in our core and adjacent markets.

Strategic and operational progress

Our focus in H2 2025 remains on growing the subscription business, as measured by our ARR book, and improving profitability.

Our business model of recurring annual subscriptions provides a stable base we can build upon with product upsells and new customer acquisitions.

After successful trials in H1 25, Aida, our AI assistant, is currently being rolled out to existing subscribers of our Enhanced and Premium Plans. Aida enables users to access relevant, concise information by asking the AI assistant specific questions rather than reviewing lengthy courses or policies. Users receive answers relying exclusively on their employer's company policies, e-learning courses, and external statutory documents curated by Skillcast. In addition, they receive hyperlinks for instant access to the relevant sources.

We increased our spending on marketing activity by 35% during this period. In March 2025, we launched our revamped and rebranded website with notable increases in engagement and domain authority, supported by increased digital PR activity and a higher share of voice. Search behaviours are changing, and the Group continues to adapt to the move in traffic from SEO to AEO.

On the product side, an improved UI/UX and content authoring tool is being developed for rollout later this year. We continue to add courses to our off-the-shelf libraries to help our clients respond to new regulatory obligations, such as Failure To Prevent Fraud (FTPF), that come into effect in September this year. In Q4 2025, we will launch an EU Compliance library to improve the product fit with our subscription clients in the EU.

Our Premium Plan, launched in FY24, now represents 7.4% of ARR (H1 24: 2.9%, FY24), and our Enhanced Plan, launched in FY25, represents 1.1% of ARR (H1 24: nil). The sale of these plans to new clients and upgrades by our existing clients supported a 12% increase in ARR per account (excluding CoreCompliance) in the period to £10,620 (H1 24: £9,520).

Our CoreCompliance offering for small businesses launched in FY24 now accounts for 1.2% of ARR (H1 24: 0.3%).

While organic subscription growth remains our core strategy, we remain interested in acquiring other digital compliance GRC/learning providers in adjacent verticals, provided they meet our strict criteria for product fit and valuation. We have recently engaged advisors to assist in finding suitable targets.

Outlook

ARR continues to grow in the second half of the year and drive subscription revenues in line with expectations.

The market demand for our GRC content and software remains resilient. While revenues from non-strategic Professional Services have limited visibility, the continued growth in subscription revenues reduces their impact, and we remain confident of meeting current market expectations.

Financial Review

Revenue

Total revenues of £7.5 million were 18% up on the comparable period last year (H1 24: £6.4 million), driven by SaaS subscription revenues. Subscription revenues typically accrue from 12-month contracts, invoiced up front, for our library of compliance e-learning courses and associated compliance products. During H1 25, subscription revenue growth helped increase the proportion of revenues from subscriptions to 85% (H1 24: 81%) of total revenues. Total revenue-generating clients excluding Core Compliance in H1 25 increased by 7% to 1,263 (H1 24: 1,178). The top 10 clients accounted for 17% of revenues in the period (H1 24: 16%).

SaaS revenues grew 23% to £6.4 million (H1 24: £5.2 million), driven by an 8% increase in new clients (excluding CoreCompliance). 44% of SaaS revenues included our bespoke GRC technology with the balance derived from e-learning courses (H1 24: 43%).

Annual recurring revenue ("ARR"), our key performance indicator to measure subscription sales progress, grew by 23% to £12.8 million over the past 12 months (June 2024: £10.3 million) and by 10% since the start of the year (December 2024: £11.6 million). All of the net ARR growth in the period was derived from new clients.

Net retention in the period was 100% (H1 24: 100%). Annualised churn on the period was 7%, a significant reduction on the prior year period (H1 24: 12%). Downsells were consistent with the prior year and upsells were lower partly due to a 2025 price rise of 3% compared to 7% in 2024.

Average ARR per account (excluding CoreCompliance) increased by 12% to £10,629 (H1 24: £9,522) from 9% net more clients.

ARR was supported by our three "new" packages.

Our premium plan, launched in 2024 which included all our GRC software and enhanced learning tools grew 217% on the same period last year to 7.4% of ARR (H1 24: 2.9%).

Our enhanced learning plan, launched in early 2025 represented 1.2% of ARR.

CoreCompliance, our self-serve e-commerce offer for small businesses launched in 2024 grew to 1.2% of ARR (H1 24: 0.3%). Client numbers grew 327% to 141 (H1 24: 33) and average ARR per client increased 21% to £1,053 (H1 24: £870).

Revenue from professional services was £1.1 million in the period, 7% below the same period last year (H1 24: £1.2m).

Gross profit

Gross profit margin increased by 3.8 percentage points to 75.5% in H1 25 (H1 24: 71.7%), due to lower costs in Professional Services. In 2024 a decision was made to reduce or redeploy headcount in response to declining Professional Services revenue. The cost benefit of this is now being seen with gross profit margins in H1 25 of 52% (H1 24: 42%), SaaS margins of 79.5% were 0.5% above the same period last year (H1 24: 79.0%).

Overhead costs

Overheads increased by 9% or £0.5 million in the period (H1 24: 9% or £0.4 million) to £5.1 million (H1 24: £4.7 million). 72% of overheads are people costs which increased 9% on the previous year, with the remaining increase in marketing activity which increased 35% to represent 7% of revenues.

No research and development costs are capitalised and expenditure remained consistent with the previous period at 9% of revenues.

In H1 25, total employment costs (including employees in operations included in the cost of sales), increased by £0.3 million or 7% to £4.9 million (H1 24: £4.6 million), and the average headcount increased by 3% to 123 (H1 24: 120). Average cost per headcount increased 5% to £40k in the period (H1 24: £38k). Total headcount at 30 June 2025 was 125 (30 June 2024: 121). The largest area of increased headcount was in the client support team offset by planned reductions in the Professional Services team.

EBITDA

The Group delivered EBITDA of £0.7 million (H1 24: LBITDA: £0.03 million), representing 9% of revenues due to continued improvements in operational gearing, and £0.2m more than in the full prior year (2024: £0.5 million).

Rule of 40

The increase in profitability saw our Rule of 40 performance (the sum of ARR growth rate and EBITDA margin) increase to 32% for the period (H1 24: 27%).

Tax

The Group reported a profit before tax of £0.7 million and a tax charge of £0.14 million with an effective tax rate of 20%.

EPS

The basic earnings per share was 0.636 pence on 89.5 million shares. (H1 24: -0.009 pence).  Diluted earnings per share adjusted for unexercised share options under the treasury stock method was 0.631 pence on 89.9 million shares.  (H1 24: not applicable).

Dividend

With a business that is backed by recurring revenues that provide strong cash generation, the Board is committed to paying dividends. It is the Board's stated policy to broadly increase dividends in line with subscription revenue growth rates. The Board, therefore, declared an interim dividend of £180,000, 20% higher than the previous year, or 0.202 pence per issued ordinary share. The interim dividend will be paid on 24 October 2025 to shareholders on the register on 3 October 2025.

Balance sheet

The Group had £11.5m cash at bank at 30 June 2025 (30 June 2024: £8.3m) and has no bank debt.

The Group does not capitalise any intellectual property on either the content or technology of its products.  It has two right-of-use assets totalling £0.2 million at 30 June 2025, representing its leased offices in London and Malta and £0.2m of property plant and equipment including office and IT equipment.

Trade and other receivables at 30 June 2025 of £3.5 million were £0.7 million lower than 30 June 2024. Trade debtors of £2.7 million were £0.2 million or 7% lower than at 30 June 2024 despite continued revenue growth. Debtor days reduced from 64 at 30 June 2024 to 52 days at 30 June 2025. The introduction of widely accepted auto-renewal standard terms and increased process automation helped to deliver the improvement. Other receivables of £0.8 million at 30 June 2025 were £0.6m below 30 June 2024 of £1.4m. £0.5 million of this reduction relates to a tax rebate paid by the Maltese government. A further £0.2m remains due and is expected to be received before the end of the financial year.

Current liabilities of £9.0 million at 30 June 2025 were £1.7 million higher than at 30 June 2024 primarily due to a £1.4m increase in contractual liabilities relating to deferred income. Deferred income of £6.5 million at 30 June 2025 was £1.4 million or 28% higher than 30 June 2024 due to SaaS contracts and work in progress relating to professional services projects.

Net assets at 30 June 2025 were £6.4 million, an increase of £0.7m since 31 December 2024 and £0.6 million since at 30 June 2024 due to the retained profits accumulated less dividends, all paid in the second half of the financial year.

Cash flow

Free Cash Flow in the period increased by £1.2 million to £2.2 million (H1 24: £1.0 million). The Group generally has a negative working capital cycle due to the upfront cash profile of subscription sales. £0.8m of Free Cash Flow was generated from an increase in deferred revenue from cash receipts paid upfront from higher subscription sales. A further £0.7m (H1 24: £nil) was generated through Profit Before Tax and a further £0.8m (H1 24: £nil) from a reduction in trade and other receivables including the £0.5m Maltese government tax rebate.

Alternative Performance Measures*

Annual Recurring Revenue (ARR)

ARR is also used to assess the performance and the trend of subscription revenue. ARR is calculated by multiplying the Monthly Recurring Revenue ("MRR") by twelve. MRR is defined as the subscription revenue that was recognised in a month, excluding any retrospective upward adjustments that arise at the end of the contract where there have been more subscribers than a client originally contracted for, less any contract losses (Churn), or downward adjustments arising on contract renewal. The Directors consider that the ARR, derived from software-as-a-service (SaaS) sales, is a key measure of the performance of the business. The ARR increased 23% to £12.8 million on the year (June 24: £10.4 million) and 10% since December 2024 (£11.6 million).

Rule of 40

The Rule of 40 is a SaaS company performance metric based on the sum of the ARR growth rate and the EBITDA margin. Achieving the target of 40% for this sum is considered as an appropriate performance measure by Directors as the Group balances growth with profitability.

Free Cash Flow (FCF)

Free cash flow is defined as net cash inflows from operations less net cash used in investing activities less principal paid on lease liabilities and less interest paid.