Etherstack posted a record $8.5 million in revenue for the first half of 2026, driven by strong project and support income, but statutory profit fell 67% due to front-loaded costs and higher expenses.
- 40% revenue growth to $8.5 million in H1 2026
- EBITDA down 19% to $2.1 million
- Statutory net profit falls 67% to $432,000
- Support revenues jump 120% as AT&T enters support phase
- Management expects strong H2 as project milestones complete
Record Revenue Growth Masks Profit Pressure
Etherstack (ASX:ESK) delivered a striking 40% jump in revenue for the half year ended June 30, 2026, reaching $8.5 million, a new record for the company’s first half and already more than 80% of its full-year 2025 tally. This surge was fuelled by a 23% rise in project revenues and a 120% leap in support revenues, notably as the AT&T contract transitioned into its support phase.
Yet the headline growth belies a more complex profit story. EBITDA slid 19% to $2.1 million, while statutory net profit after tax plunged 67% to just $432,000. The decline reflects front-loaded direct project costs, particularly for the UK Home Office contract, and a rise in administrative and sales expenses as the company gears up for expansion in North America and the UK.
Project Milestones and Recurring Revenue Drive Outlook
Etherstack’s CEO David Deacon highlighted the company’s three-pronged revenue model: headline project income, traditional long-term support, and the growing Communications as a Service (CaaS) segment. He noted that the latter two recurring revenue streams are maturing enough to soften the usual volatility from project timing.
During the half, the company advanced major projects, signing off the first two milestones with the UK Home Office and moving fully into support for AT&T. The Department of Home Affairs contract in Australia also commenced support revenue, while the Department of Defence Australia project remains on track. These developments underpin management’s expectation of a strong second half relative to both H2 2025 and H1 2026, as further project milestones are delivered.
Cash Flow and Investment Reflect Growth Phase
Operating cash flow remained positive at $792,000 despite a decline from the previous corresponding period, primarily due to timing differences between revenue recognition and cash receipts. The company invested $1.8 million in intangible assets, mainly intellectual property development, reflecting ongoing R&D commitments in satellite communications and defence technologies.
Borrowings stood at $2.5 million, with an unsecured loan maturing in 2027 that includes an option to convert debt into shares. Administrative costs rose 30% to $2.6 million, driven by salary, travel, and professional fees, consistent with the company’s push into new markets and sectors.
Strategic Expansion in Defence and Public Safety
Etherstack continues to pursue opportunities for its MCX-IWF product internationally, targeting top-tier communication companies and government public safety agencies. The defence sector in Australia and the UK remains a focus, with expectations of further project awards in the second half. Additionally, upgrades to digital radio networks across Australian and American public safety sectors are ongoing.
Recurring revenues, including support and CaaS, reached their highest ever level, reinforcing the company’s strategic shift towards more stable income streams alongside project work.
Bottom Line?
Etherstack’s strong revenue momentum is tempered by profit pressures from project ramp-up costs and rising expenses, making milestone deliveries in the second half critical to sustaining growth.
Questions in the middle?
- Will Etherstack’s recurring revenue streams grow enough to offset project revenue volatility?
- How will the timing of UK Home Office and other project milestones impact full-year profitability?
- What is the potential scale and timing of new defence sector contracts expected in H2?