Subscription mix shift drives 38.9% PBT improvement on 5.6% revenue growth

Platform subscription revenue grew 35% to NZ$8.8m and now represents 68.7% of total revenue, up from 53.7% in HY25. At a derived gross margin of 92.9%, subscriptions are the dominant earnings driver, and their share of the mix has risen by 15 percentage points.

Offsetting that, platform transaction revenue fell from NZ$4.0m to NZ$2.7m — a 32% decline — and its derived gross margin compressed from 37% to 17.2%, meaning transactions are now contributing materially less in both volume and quality terms.

Total cash on balance sheet rose to NZ$33.9m from NZ$6.8m, driven by equity-raising activity rather than operating performance, as operating cash outflow widened to NZ$3.0m from NZ$2.6m.

The transaction segment contributed NZ$0.46m in gross profit this half versus NZ$1.46m in HY25, a fall of NZ$1.0m. If this reflects structural de-prioritisation of lower-margin transactional work it is value-accretive over time, but the mechanism is unconfirmed by the disclosures available and the magnitude of the margin compression — from 37% to 17.2% — requires explanation.

Operating cash outflow widened despite improved earnings quality. Operating cash flow was negative NZ$3.0m, 18.1% worse than HY25's negative NZ$2.6m, even as PBT improved by NZ$2.8m. Capex nearly tripled to NZ$1.0m (7.5% of revenue versus 3.0% in HY25), predominantly in capitalised development, which means the investment phase is intensifying. Free cash flow reached negative NZ$4.0m, wider than negative NZ$2.9m in HY25. This matters because reported loss improvement has not yet translated into reduced cash consumption.

Inventory build signals upcoming hardware or deployment activity. Inventory rose 120.6% to NZ$2.8m. For a geospatial software company that also sells hardware, this likely precedes deployments, but it ties up working capital and has not been converted into receivables or revenue this period.

The HY26 subscription revenue result of NZ$8.8m (+35% versus HY25) and an exit run rate of approximately NZ$19.4m annualised (+47%) suggest the first half is tracking in line with that guidance on revenue. The FY25 seasonality pattern shows the second half has historically been slightly stronger on revenue, with HY25 representing 48.4% of the FY25 full-year total — so current first-half run rates are consistent with meeting the full-year subscription target.

However, the EBITDA component of guidance is harder to assess. With no EBITDA figure supplied in the current financial statements, and with operating cash outflow widening despite the PBT improvement, the trajectory to EBITDA improvement depends on whether the transaction revenue decline and inventory build are transitional or persistent.

The subscription segment's 92.9% derived gross margin provides a high-quality earnings base, and the rise to 68.7% of revenue is a meaningful milestone.

However, two factors reduce the quality read. First, FCF of negative NZ$4.0m was meaningfully worse than the prior half's negative NZ$2.9m — the loss reduction is occurring entirely within the income statement while cash consumption grew. Second, capex intensity doubled from 3.0% to 7.5% of revenue, largely in capitalised development; to the extent this spending supports future subscription ARR growth it may prove well-directed, but it is not yet visible in cash generation. The NZ$33.9m cash balance provides ample runway to sustain this investment phase, but the balance sheet strength is the result of capital-raising, not operating self-sufficiency.

This briefing cannot assess the sustainability of the transaction revenue decline, the underlying EBITDA trajectory, or the conversion rate between subscription ARR and recognised revenue without additional segment disclosure and management commentary on those points.