SOCO Reports 18% Revenue Growth Amid Project Delays and Government Demand Shift

Preliminary Revenue Growth Signals Momentum

SOCO Corporation Ltd (ASX:SOC), a prominent Australian IT consultancy, has revealed preliminary unaudited revenue of $11.0 million for the first half of FY2025. This represents an 18% increase compared to the $9.3 million recorded in the same period last year, underscoring the company’s ability to secure new business despite a challenging environment.

The first half of the financial year began on a strong note, with SOCO signing contracts worth $18 million by October 2024. This early momentum suggested a promising trajectory for the year ahead, reflecting the company’s continued appeal across its target markets, including federal, state, and local government sectors.

Challenges Emerge from Project Delays and Government Policy

However, the initial optimism has been tempered by delays in project commencements and a notable decline in demand from Federal Government clients during November and December 2024. This downturn aligns with government policy shifts aimed at reallocating work internally to public servants, which has directly impacted SOCO’s Axsym and existing business streams.

Management acknowledges these headwinds but remains confident in the company’s client relationships. Many projects have been deferred rather than cancelled, with expectations that they will resume post-election, suggesting a potential rebound in federal demand in the medium term.

Strategic Diversification and Outlook

In response to the shifting landscape, SOCO is actively diversifying its client base, particularly focusing on expanding its footprint in Victoria and Queensland. This strategic pivot aims to reduce reliance on federal contracts and enhance revenue stability in future years.

Based on current project pipelines and contract status, SOCO’s management now forecasts full-year FY2025 revenue to range between $22.0 million and $24.0 million. While this is a downward revision from earlier expectations, it still represents growth over the prior full-year revenue of $20.5 million, indicating resilience amid sectoral challenges.

The company plans to release its full audited results and a comprehensive business update on 28 February 2025, which will provide further clarity on financial performance and strategic initiatives.