Service Stream Reports $1.14 Billion Revenue, $75.3 Million EBITDA in 1H26
Service Stream Limited reported a 6.4% revenue decline for the half-year ending December 2025, yet delivered a 2.3% rise in underlying EBITDA and increased its interim dividend to 3 cents per share.
- 6.4% revenue decrease to $1.144 billion, driven by Telecommunications segment slowdown
- Underlying EBITDA from operations up 2.3% to $75.3 million
- Adjusted net profit after tax down 2.9% to $36.6 million, impacted by prior year tax refund
- Interim dividend increased to 3.0 cents per share from 2.5 cents
- Operating cash flow strong at $63.6 million despite higher tax and investment outflows
Half-Year Financial Overview
Service Stream Limited, a key player in Australia's essential services infrastructure sector, has released its half-year financial results for the period ending 31 December 2025. The company reported a 6.4% decline in revenue to $1.144 billion, primarily attributed to a slowdown in its Telecommunications segment as several major work programs concluded and new contracts began transitioning.
Despite the revenue dip, Service Stream managed to increase its underlying EBITDA from operations by 2.3% to $75.3 million. This improvement was largely driven by strong performances in the Utilities and Transport segments. The Utilities division benefited from strategic repositioning and margin improvements, while the Transport segment saw gains due to the absence of prior period contract mobilisation costs.
Profitability and Dividend
The adjusted net profit after tax (NPAT-A) declined by 2.9% to $36.6 million, reflecting the absence of a one-off $2.7 million tax refund that had boosted the prior corresponding period. Statutory net profit after tax stood at $26.8 million. In a positive signal to shareholders, the board declared an interim dividend of 3.0 cents per share, up from 2.5 cents in the previous half-year, underscoring confidence in the company’s cash flow and earnings quality.
Cash Flow and Investments
Operating cash flow remained robust at $63.6 million, supported by strong operational cash conversion. However, this was tempered by higher tax payments, including a $26 million final instalment for FY25, and increased investing activities. Notably, investments were made to support mobilisation of a new Defence PAS contract and ongoing IT system upgrades, reflecting the company’s commitment to long-term infrastructure and technology capabilities.
Segment Performance and Outlook
The Telecommunications segment’s revenue contraction highlights the cyclical nature of contract work and the challenges of transitioning between major projects. In contrast, Utilities showed resilience and growth through disciplined execution and strategic focus, while Transport benefited from reduced mobilisation costs compared to the prior year. The company reported no impairment indicators across its cash-generating units, suggesting stable asset valuations amid market conditions.
Service Stream remains compliant with its borrowing covenants and has fully repaid its borrowing drawdowns as of 31 December 2025, maintaining a solid balance sheet position. The absence of material subsequent events post-reporting period provides a stable platform as the company navigates the evolving infrastructure services landscape.
Bottom Line?
Service Stream’s mixed half-year results reflect operational resilience amid sector transitions, setting the stage for close market scrutiny on its Telecommunications recovery and Defence contract execution.
Questions in the middle?
- How will Service Stream manage the revenue transition in its Telecommunications segment going forward?
- What impact will ongoing SaaS and IT investments have on future profitability and margins?
- How significant is the Defence PAS contract for the company’s medium-term growth prospects?
