Prophecy’s FY25 Loss Widens Amid Legacy Revenue Decline and Sales Disruption
Prophecy International Holdings reported a 5% revenue decline and a 53% increase in net loss for FY25, while advancing key product developments and announcing a transformative merger with Complexica.
- FY25 revenue declined 5% to $21.75 million
- Net loss after tax widened 53% to $6.48 million
- Contracted ARR fell 14% due to legacy product roll-offs and sales churn
- EBITDA loss steady at $4.9 million amid strategic investments
- Proposed merger with Complexica aims to create AI-driven platform
Financial Performance Amid Transition
Prophecy International Holdings Ltd (ASX, PRO) released its preliminary final report for the year ended 30 June 2025, revealing a modest 5% dip in revenue to $21.75 million and a significant 53% increase in net loss after tax to $6.48 million. The company attributed these results to transitional challenges, including the attrition of legacy revenue streams and sales staff churn in North America.
Contracted Annualised Recurring Revenue (ARR) declined 14% year-on-year to $21.5 million, primarily reflecting the cessation of approximately $0.8 million in legacy product ARR and the conclusion of a major fixed-term contract with a large emite customer. When adjusted for legacy revenue, the underlying ARR decrease was around 11%, highlighting ongoing pressures in new business conversion.
Operational Highlights and Strategic Investments
Despite the revenue headwinds, Prophecy maintained a consistent EBITDA loss of $4.9 million, driven by deliberate investments in product re-architecture and partner-led growth initiatives. The emite platform saw significant development progress, including a re-architecture program aimed at enhancing scalability and integration capabilities. Notably, emite’s iPaaS solution achieved record platform usage, with 28 million actions processed daily in May 2025, and secured new enterprise customers such as Riyadh Air, Airbnb, Yuzzu, and Services Australia.
Similarly, the Snare security and compliance product line continued to gain traction, winning major enterprise clients including MLC Life (ANZ), the UK Ministry of Defence, and Florida State University. Strategic partnerships expanded Snare’s distribution through a global reseller agreement with Securonix and deeper integration with cybersecurity ecosystems like Devo.
Balance Sheet and Cash Flow Considerations
Prophecy ended FY25 with a reduced cash balance of $4.93 million, down 58% from the prior year, and reported a negative operating cash flow of $6.8 million. The company capitalised development costs related to the emite re-architecture, reflecting a long-term investment horizon. Deferred revenue remained relatively stable, indicating ongoing subscription commitments despite the revenue decline.
Looking Ahead, The Complexica Merger and Growth Outlook
In a strategic move announced in August 2025, Prophecy proposed a merger with Complexica Pty Ltd, a company specialising in AI-driven decision optimisation. The combined entity aims to offer an end-to-end platform integrating secure data ingestion with advanced AI decision support, potentially reshaping Prophecy’s market positioning.
Management expressed confidence in FY26, supported by a robust 12-month pre-merger sales pipeline valued at approximately $23 million and the anticipated benefits from recent enterprise wins and partner-led channels. The transition towards SaaS and subscription sales remains a focus, with expectations of improved revenue momentum and margin expansion as operational efficiencies take hold.
Bottom Line?
Prophecy’s FY25 results reflect a company in transition, balancing short-term challenges with strategic investments and a potentially transformative merger that could redefine its growth trajectory.
Questions in the middle?
- How will the proposed Complexica merger impact Prophecy’s product integration and revenue streams?
- What measures is Prophecy implementing to mitigate sales staff churn, especially in North America?
- Can the company sustain its R&D investments while improving cash flow and profitability in FY26?
