COSOL finds a sharper route to recovery with A$11m Spokane contract

Spokane contract gives COSOL turnaround a commercial test

COSOL Limited (ASX:COS) has put a tangible contract behind its promised recovery, signing a 10-year agreement worth approximately A$11 million with Spokane Transit Authority in Washington State. Secured in partnership with IBM, the deal will provide enterprise asset management software and services for the authority’s physical assets, particularly its bus fleet.

The initial capital spending and implementation component is expected to account for A$3.7 million across FY27 and FY28. The contract is therefore a long-term revenue opportunity rather than an immediate earnings windfall, but it gives COSOL a sizeable reference point in the mass transportation market as the company shifts towards higher-margin, software and intellectual-property-led work.

H1 EBITDA forecast improves while revenue remains flat

COSOL expects first-half FY27 revenue to be broadly in line with the $49.6 million recorded in H1 FY26. Statutory EBITDA is forecast at $3.3 million to $3.6 million, an improvement of about $0.7 million on the comparable period, while underlying EBITDA is expected to reach $3.6 million to $3.9 million after excluding approximately $0.3 million of restructuring costs.

That combination matters: the first visible sign of the reset is expected to come through margin rather than top-line growth. COSOL says the improvement should carry into the second half, with revenue growth expected to resume as new transportation and infrastructure contracts begin contributing. Management is targeting a 150-point improvement in operating margins as higher-margin AI and proprietary IP work increases.

Board and management overhaul continues

The announcement arrives after a difficult FY26, when COSOL reported a $4.0 million statutory loss following goodwill impairments and revenue fell to $98.6 million. Its FY26 loss and recovery plan had already put cost reductions, transport contracts and AI-led services at the centre of the recovery effort; the Spokane agreement now provides a fresh measure of whether that strategy can convert into earnings.

Chairman Geoff Lewis described the company’s recent operating performance and share-price decline as unacceptable. COSOL is pursuing two new board appointments, expects to appoint a permanent CEO by the end of February 2027, and has extended Lewis’s executive-chairman role through the end of calendar 2027. Interim CEO Anthony Stokes, who previously served as CFO and COO, said the business was being rebuilt from a services-led model into a solutions-first operation.

Dividend target depends on earnings recovery

COSOL says it is targeting the resumption of dividend payments after H1 FY28, with payment expected in H2 FY28. That is a stated objective rather than a commitment: the company has tied it to continued earnings-per-share recovery through H2 FY27 and the following financial year.

The immediate test is narrower and more measurable. COSOL must deliver the forecast H1 EBITDA range, convert the Spokane implementation into revenue and margins over FY27 and FY28, and regain momentum in its Australian consulting business. A larger pipeline in transportation, infrastructure and energy may support the case, but the turnaround still has to move from contract announcements into reported profit.