Can Spirit Sustain Profitability After Managed Services Turnaround?
Spirit Technology Solutions reports a strong FY25 with underlying EBITDA soaring to $11 million and a return to profitability in its Managed Services segment after years of restructuring.
- FY25 underlying EBITDA jumps to $11 million from $1.7 million in FY24
- Revenue rises to $102.4 million, driven by Cyber Security and Managed Services
- Managed Services segment returns to profitability post-restructure
- Turnover up 17% but slightly below guidance range
- Company plans FY26 margin expansion and acquisition-driven growth
Strong Financial Turnaround
Spirit Technology Solutions Ltd (ASX, ST1) has delivered a notable financial turnaround in FY25, reporting an unaudited underlying EBITDA of $11 million, a substantial leap from just $1.7 million the previous year. This performance aligns with the company’s guidance and marks a significant milestone following a multi-year restructuring effort that began in FY23.
The company’s revenue also climbed to $102.4 million, reflecting a disciplined focus on its core offerings in Cyber Security and Managed Services. This growth underscores Spirit’s successful strategy to concentrate on high-margin, recurring revenue streams within the secure technology solutions sector.
Segment Highlights and Profitability
Spirit’s business segments showed varied but positive results. The Cyber Security division achieved an underlying EBITDA of $6.8 million with a healthy 23% margin, while the Communication and Collaboration segment contributed $7.7 million in EBITDA at a 17% margin, supported by strong product sales and recurring revenues.
Most notably, the Managed Services segment returned to profitability with a modest $0.3 million EBITDA, a key achievement after years of turnaround efforts. This segment’s renewed focus on security-enabled offerings such as Continuous Threat Exposure Management (CTEM) and Secure Networking is expected to drive further growth in FY26.
Operational Discipline and Future Outlook
Despite some headwinds in the first half of the year, particularly within Communication and Collaboration, Spirit maintained a disciplined cost base, delivering an 11% underlying EBITDA margin overall. The company also amended its revenue recognition policy during FY25, which affects comparability but reflects a more accurate presentation of product revenues.
Looking ahead, Spirit is poised to build on this momentum with a leaner operating model and integrated platform. The company is actively evaluating acquisition opportunities to supplement organic growth and plans to provide detailed FY26 guidance in August 2025, with a clear focus on margin expansion and recurring revenue enhancement.
Managing Director Julian Challingsworth highlighted the significance of this year’s results, describing FY25 as a turning point that positions Spirit for sustainable growth and scalability in the competitive cyber security landscape.
Bottom Line?
Spirit’s FY25 results mark a pivotal step toward sustainable profitability, setting the stage for strategic growth and margin expansion in FY26.
Questions in the middle?
- Which acquisition targets is Spirit considering to accelerate growth in FY26?
- How will the new security offerings in Managed Services impact revenue and margins going forward?
- What are the expected effects of the revenue recognition policy change on future financial reporting?
