US Shutdown Hits HighCom Hard, But H2 Promises Turnaround
HighCom Limited reveals a challenging first half of FY26 with losses linked to the US Government shutdown but signals a confident turnaround in the second half driven by diversification and operational improvements.
- H1 FY26 revenue expected between $10.5M and $11.0M
- EBITDA loss forecasted at $5.0M to $5.8M due to US Government shutdown
- US operations account for 75% of global revenue, heavily impacted
- Positive H2 outlook with revenue growth and EBITDA recovery targeted
- Strategic diversification and margin optimisation underway
Challenging First Half Amid US Government Shutdown
HighCom Limited (ASX, HCL) has disclosed a tough start to FY26, with expected revenue between $10.5 million and $11 million and an EBITDA loss ranging from $5 million to $5.8 million. The primary culprit behind this underperformance is the temporary shutdown of the US Government during the first half, which delayed contract awards and procurement activities. Given that approximately 75% of HighCom’s revenue is generated from US customers, the shutdown’s ripple effects significantly disrupted the company’s financial momentum.
Maintaining Strategic Momentum Despite Headwinds
Despite these setbacks, HighCom has continued to advance its strategic initiatives. The company is actively developing new products within its XT Clave line and expanding its market channels. Notably, the Technology division has shown resilience, securing recent orders in Small Uncrewed Aerial Systems (SUAS) and enhancing its service offerings. These developments provide a solid foundation for anticipated deliveries and revenue in the second half of the fiscal year.
Positive Outlook and Diversification Efforts
Looking ahead, HighCom’s management expects procurement and funding cycles in the US to normalise by the third quarter of FY26. The company is proactively diversifying its revenue streams by entering new sectors, including a direct-to-consumer platform and state-based procurement panels. These moves aim to broaden the addressable market and build resilience against future disruptions, positioning HighCom for stronger and more stable growth.
Operational Improvements Target Margin Recovery
Operationally, HighCom is implementing a channel and product optimisation program in the US, focusing on margin enhancement. Key initiatives include expanding direct sales coverage and introducing a volume-based discounting framework with major resellers. These efforts are designed to support margin growth and facilitate a return to positive EBITDA in the second half of FY26.
Awaiting Final Results and Market Reaction
The financial figures shared are preliminary and unaudited, with final accounts expected by the end of February 2026. While the company has not previously provided earnings guidance, this update offers investors a clearer picture of the current challenges and the strategic path forward. The market will be watching closely to see how effectively HighCom can capitalise on its diversification and operational initiatives to deliver on its optimistic second-half targets.
Bottom Line?
HighCom’s H1 setbacks set the stage for a pivotal second half where diversification and margin strategies will be put to the test.
Questions in the middle?
- How quickly will US government procurement normalise to support HighCom’s recovery?
- What impact will the new direct-to-consumer and state procurement initiatives have on revenue stability?
- Can operational improvements in the US market translate into sustainable margin growth?
