Activeport Group Ltd reported a significant $15.7 million net loss for FY25, driven by a $10.9 million goodwill impairment, as it pivots towards recurring software revenue. The company plans a $2.5 million rights issue to support this transition amid ongoing financial challenges.
- Revenue declined 35.8% to $9.6 million in FY25
- Net loss increased 65.9% to $15.7 million including $10.9 million goodwill impairment
- Shift from one-off license deals to recurring, high-margin software revenue
- Operating expenses reduced by 16% following restructuring
- Planned $2.5 million fully underwritten rights issue to bolster cash flow
Activeport’s Financial Performance and Strategic Pivot
Activeport Group Ltd has revealed a challenging financial year ending 30 June 2025, with revenues falling sharply by 35.8% to $9.6 million. This decline reflects the company’s deliberate shift away from one-off software license sales and services towards building a more sustainable, recurring revenue base focused on high-margin software offerings.
Despite efforts to streamline operations and reduce costs, Activeport reported a net loss after tax of $15.7 million, a 65.9% increase from the previous year’s $9.45 million loss. A significant factor in this deterioration was a $10.9 million goodwill impairment related to its subsidiaries Global Edge Pty Ltd and Activeport Pty Ltd, underscoring the financial strain from prior acquisitions.
Cost Management and Restructuring
The company’s operating expenses decreased by 16% to approximately $13 million, reflecting the completion of a corporate restructure aimed at improving efficiency. Investment in software development remained steady at around $2.9 million, signaling Activeport’s commitment to its strategic transformation despite the tough financial backdrop.
Gross profit halved to $4.4 million, highlighting the pressure on margins as the company transitions its business model. Other income, including government grants and R&D tax incentives, contributed nearly $1 million, providing some relief amid the losses.
Balance Sheet and Going Concern Considerations
Activeport’s balance sheet shows net tangible assets per share improving to 0.42 cents from a negative 0.06 cents the prior year, helped by impairment charges that reduced intangible asset values. However, total liabilities remain substantial at $7.18 million, down from $10.9 million, with borrowings and lease liabilities forming a significant portion.
The company disclosed material uncertainty regarding its ability to continue as a going concern without successful execution of its planned capital raising and cost control measures. Activeport has lodged a prospectus for a fully underwritten $2.5 million rights issue expected to close in September 2025, which management believes will support ongoing operations and fund growth initiatives.
Market Outlook and Investor Implications
Activeport’s strategic pivot to recurring software revenue aligns with broader industry trends favouring subscription-based models over transactional sales. However, the significant goodwill impairments and widening losses raise questions about the pace and success of this transition.
Investors will be watching closely for the outcome of the rights issue and the forthcoming audited financial statements, which may provide further clarity on the company’s financial health and operational progress. The absence of dividends and ongoing losses suggest a focus on reinvestment and survival rather than shareholder returns in the near term.
Bottom Line?
Activeport’s FY25 results highlight a critical juncture as it restructures and raises capital to secure its future in a competitive software market.
Questions in the middle?
- Will the upcoming rights issue successfully raise the targeted $2.5 million to stabilize finances?
- How quickly can Activeport grow its recurring software revenue to offset legacy losses?
- What further impairments or restructuring might be necessary if the strategic pivot falters?