SOCO’s $5.9M Loss Raises Questions on AxSym Integration and Project Delays

• 12% revenue decline to $9.7 million driven by deferred Federal Government projects
• Net loss of $5.93 million includes $4.61 million non-cash goodwill impairment on AxSym
• Core consulting and managed services revenue grew 8.2% to $6.56 million
• Underlying EBITDA loss of $642,000 stable versus prior period
• Restructuring completed to align cost base; cash on hand $814,000 with debt facility available

Revenue and Operational Performance

SOCO Corporation Ltd has reported a 12% decline in revenue for the half-year ended 31 December 2025, with total income falling to $9.7 million from $11 million in the prior corresponding period. This drop was primarily due to delays in several Federal Government projects within its AxSym business unit, which deferred commencement into the second half of the financial year.

However, the company’s core consulting and managed services segments showed resilience, delivering an 8.2% increase in revenue to $6.56 million. This growth reflects SOCO’s ongoing focus on cloud solutions and Microsoft-based business applications, which remain central to its strategy.

Financial Results and Goodwill Impairment

The half-year result was marked by a statutory net loss after tax of $5.93 million, a sharp deterioration from a loss of $150,885 in the previous period. A significant factor was a non-cash goodwill impairment charge of $4.61 million related to the AxSym acquisition. This impairment followed a reassessment of forecast cash flows for the AxSym cash-generating unit, reflecting the impact of project deferrals and lower utilisation.

Management emphasised that this impairment is a balance sheet adjustment and does not affect the company’s cash position, liquidity, or ability to deliver contracted work. Underlying EBITDA, excluding significant items, was a loss of $642,184, broadly in line with the prior year’s loss of $648,301, indicating stable operational performance despite revenue pressures.

Restructuring and Liquidity Position

In response to the challenging environment, SOCO undertook a targeted restructuring to better align its cost base with current activity levels. The company also continued selective investment in sales capabilities, which contributed to contracted sales reaching the strongest first-half result in its history. Additionally, several projects transitioned from delivery phases into managed services, boosting recurring revenue streams and improving revenue visibility.

At the end of December 2025, SOCO held $814,065 in cash, down from $1.51 million at the previous half-year, but maintained financial flexibility through an amortising debt facility with $661,667 of unused funds available. This liquidity position supports the company’s ongoing operations and strategic initiatives.

Outlook and Strategic Considerations

The board remains confident in SOCO’s ability to continue as a going concern, citing a strong sales pipeline with projects valued between $3.53 million and $4.13 million set to commence in the coming months. The company is focused on realising the benefits of cost reduction and operational efficiency measures implemented recently.

SOCO also highlighted risks including competition, reliance on the Microsoft platform, and general economic conditions, but noted mitigation strategies are in place. The company’s strategic emphasis on managed services and recurring revenue aims to provide greater stability amid market uncertainties.

Bottom Line?

SOCO’s half-year results underscore the challenges of project timing and integration, but its strong sales pipeline and restructuring efforts set the stage for a critical second half.

Questions in the middle?

• Will deferred Federal Government projects commence as planned in H2 FY26?
• How will SOCO’s restructuring impact future profitability and margins?
• Can growth in managed services offset volatility in project-based revenue?