Pentanet Secures First EBITDA Positive Quarter, Accelerates 5G Expansion

Strategic Milestone Achieved

In its FY25 Q2 update, Pentanet Limited (ASX: 5GG) announced a pivotal financial and operational milestone: its first EBITDA positive quarter and year-to-date result. This achievement reflects the successful execution of a multi-quarter strategy focused on expanding 5G network coverage and optimising its NVIDIA Cloud gaming platform, CloudGG.

Managing Director Stephen Cornish highlighted the company’s commitment to doubling its 5G coverage within the financial year, a goal that remains firmly on track. With 14 towers already upgraded to 5G and an additional five slated for completion in the second half of FY25, Pentanet is positioning itself to offer ultrafast bandwidth capabilities that will underpin sustainable competitive growth in its telecommunications division.

Financial Performance and Growth Drivers

Consolidated revenue rose 6% quarter-on-quarter to $5.7 million, marking a 10% increase compared to the prior corresponding period. This growth was supported by a 31% year-on-year surge in gaming revenue, driven by the monetisation of the CloudGG platform and a successful transition from a freemium to a paid user base. Telecommunications recurring revenue also showed steady growth, increasing 2% during the quarter alongside subscriber gains.

Gross profit expanded by 17% quarter-on-quarter to $2.8 million, with gross margins improving by 5 percentage points to 49%. Notably, the GeForce NOW segment achieved a gross margin of 66%, benefiting from higher average revenue per user (ARPU) and cost optimisation initiatives. These financial improvements contributed to a $1 million quarter-on-quarter EBITDA uplift, culminating in a positive EBITDA of $0.6 million for Q2 FY25.

Operational Efficiencies and Cash Flow Improvement

Pentanet’s operational strategy included an inventory swap that secured 25 5G base stations and 423 customer premises equipment units, effectively minimising capital expenditure cash costs associated with the 5G rollout. Additionally, supplier renegotiations and platform subscription optimisations helped reduce operating costs, further enhancing profitability.

Cash flow from operations turned positive, increasing from a negative $0.6 million in Q1 FY25 to a positive $0.9 million in Q2 FY25. This improvement boosted the company’s net cash position by $0.4 million to $2.2 million as of 31 December 2024, providing a stronger financial footing for continued investment and growth.

Looking Ahead: Growth and Market Positioning

With half of its tower footprint expected to have 5G coverage upon completion of the FY25 upgrade program, Pentanet is preparing to launch a new competitive offering at scale. The company’s focus on expanding its 5G network is designed to reduce customer acquisition costs and improve subscriber churn, which has already declined to a targeted 1.2% monthly rate.

Meanwhile, the NVIDIA Cloud division continues to scale, with over 670,000 users engaging monthly and playing more than 20 million minutes on the infrastructure. Pentanet aims to further monetise this user base by evolving its freemium model and enhancing GPU optimisation, which should drive margin uplift and revenue growth in the gaming segment.

Chief Financial Officer Mart Derman expressed confidence in the company’s strengthened financial position and growth trajectory, emphasizing disciplined execution and adaptive management as key to sustaining momentum through the remainder of FY25.