StepChange Holdings delivered a strong start to FY27, with unaudited first-quarter revenue rising 34% to $16.8 million and underlying EBITDA climbing 44% to $1.40 million. The consulting group also expanded its AI Method Library, advanced its US operations and lifted gross margin, although cash declined as acquisition consideration was funded.
- Q1 FY27 revenue of $16.8 million, up 34% on the prior corresponding period
- Underlying EBITDA rose 44% to $1.40 million
- Gross margin increased to 15.2% from 14.3% in FY26
- AI Method Library expanded to 130 methods with 50 consultants enrolled
- Cash fell to $3.79 million and net debt stood at $1.21 million
Revenue and EBITDA accelerate in first quarter
StepChange Holdings Limited (ASX:STH) has opened FY27 with a 34% increase in unaudited revenue to $16.8 million and a 44% rise in underlying EBITDA to $1.40 million. Management attributed the gains to organic growth across the existing business and the contribution from BroadReach, acquired in January 2026.
The result extends a growth story that has increasingly combined the consulting group’s established operations with acquisition-led expansion. The quarter included the first full-year contribution from BroadReach, following the BroadReach acquisition BroadReach acquisition, which earlier coverage said added roughly 40 senior consultants and strengthened StepChange’s government and digital transformation capabilities.
Gross margin moves above 15%
Profit growth outpaced revenue growth, while gross margin rose to 15.2% from 14.3% in FY26. StepChange said the improvement reflected utilisation, contractor mix and a shift towards outcome-based delivery. That shift is strategically important because the company is trying to make its services more repeatable and scalable rather than relying only on consultant capacity.
StepChange is also building that proposition around its AI Method Library, which grew from more than 100 methods across 40 business functions at the FY26 result to 130 during the quarter. The library was rolled out internally to all staff, while 50 consultants are enrolled in the AI program and 14 have already achieved the required industry-standard certification. The initiative follows earlier AI delivery integration, when the company reported embedding AI tools to improve delivery efficiency and scalability.
US expansion advances as debt rises
The US operation remains at the business-development stage, with StepChange reporting increasing engagement and opportunities to extend its existing service offering. The announcement provides no revenue, contract-value or profitability figure for the US, so its commercial contribution cannot yet be measured from the quarterly update.
The balance sheet presents a less buoyant but important counterpoint to the operating figures. Cash at bank fell to $3.79 million from $5.2 million at 30 June, while net debt was $1.21 million at 30 September. StepChange said its $10 million Westpac acquisition facility was used partly to fund the $6.6 million final StepChange and initial BroadReach deferred consideration.
FY27 priorities remain unchanged: secure a full-year BroadReach contribution, grow organically across StepChange’s consulting operations and improve margins. In the short to medium term, the company is targeting multi-year managed-services requests for proposal in quality engineering, while it expects the usual seasonal improvement in the revenue and EBITDA split during the second half. The key test is whether the stronger first-quarter numbers can translate into cash generation while the company continues investing in AI capability and its US presence.
Bottom Line?
The first-quarter growth rate is encouraging, but the next milestones are conversion of US opportunities, managed-services wins and stronger cash generation after acquisition funding.
Questions in the middle?
- Can StepChange convert its expanding AI Method Library and certified consultant base into measurable client revenue?
- When will the US operation begin contributing meaningful revenue and EBITDA?
- Will margin improvement and second-half seasonality be enough to offset acquisition-related cash demands?