Calnex Solutions Reports H1 Revenue Growth and Defence Market Expansion

Calnex Solutions H1 FY26: revenue up, losses narrowing, and defence momentum building

Calnex Solutions (AIM: CLX) has posted a steady first half, growing revenue while continuing to invest in products and new markets. The tone from management is confident: margins held up, cash remains healthy, and there is visible traction in US defence and cloud/datacentre customers alongside a stabilising telecoms backdrop.

Headline numbers investors should know

Quick definitions: “gross margin” is profit after manufacturing and delivery costs; “EBITDA” is operating profit before interest, tax, depreciation and amortisation; here, “Underlying EBITDA” is EBITDA after charging R&D amortisation, a conservative measure Calnex uses to reflect ongoing R&D costs.

Revenue resilience and margin discipline

Revenue grew 9% to £8.0m, with growth in all regions. The Americas delivered £3.0m (+5%), North Asia £2.1m (+18%), and Rest of World £2.9m (+9%). The mix stayed broadly similar: Americas 38%, RoW 36%, North Asia 26%.

Gross margin ticked up to 76% from 74% thanks to a favourable product mix. For a test-and-measurement business, that is a high-quality margin profile and suggests pricing power and differentiated tech. With a strict grip on costs and a boost from “other income” – largely the UK’s merged R&D expenditure credit – the loss before tax narrowed to £0.9m.

Cash, dividend and balance sheet strength

Calnex ended the period with £10.3m in cash and fixed-term deposits, up 20% year-on-year. Working capital swung positively as trade receivables fell to £2.4m from £5.3m at March, reflecting Q4 FY25 collections. Net cash outflow was modest at £0.6m, absorbing continued investment.

The Board has declared an interim dividend of 0.31 pence per share, unchanged. The RNS cites a payment date of 19 December 2024 and a record date of 28 November 2025, which appears inconsistent. The ex-dividend date stated is 27 November 2025. The key takeaway: the dividend is maintained at 0.31p and signals ongoing confidence.

Strategy update: telecoms steady, defence and datacentres accelerate

Telecoms platform still matters

Although telecoms spending is described as subdued, Calnex is seeing rising demand for test equipment upgrades, particularly at ultra-high speeds. The big structural drivers remain in place: continued 5G rollout, early 6G work, AI-driven network change, and the move to 1.6Tb/s wavelengths. Standards continue to evolve – including a newly approved PTP timing profile for datacentres – which tends to expand Calnex’s addressable market over time.

Paragon neo-S gains traction and 1.6T work begins

• Paragon neo-S, launched in H2 FY25, continued to win steady orders in H1. It offers synchronisation testing to sub‑nanosecond accuracy at up to 800Gb/s, serving both advanced 5G/O-RAN and datacentre timing needs.
• Post period, Calnex landed a significant repeat Field sync order from a major hyperscaler investing in its datacentres.
• The company has entered an Early Access programme for a high-speed chip set to support 1.6T optical interfaces, with a 1.6Tb/s synchronisation solution targeted for calendar 2027.

NAA products: meaningful wins in US federal and defence

Network and Application Assurance (NAA) platforms – such as SNE/SNE‑X (up to 400GbE) and NE‑ONE application testing – were the primary contributors to order growth, notably in US government & defence. Calnex highlights large, sometimes lumpy projects with long decision cycles, making visibility tricky, but the early traction is clear. The company is now exploring more European defence activity too.

Cloud computing & datacentre opportunity

Calnex reports ongoing progress with hyperscalers and a discovery programme focused on areas like edge compute and datacentre infrastructure validation. The firm has added Product Management resource to target AI-related opportunities including modelling algorithms and inference testing, aligning its roadmap with customers’ rapid upgrades.

Channel and partnerships: Viavi and broader coverage

• Viavi partnership: a new suite of Open RAN (O-RAN) testing solutions to simplify and de-risk pre‑validation. Early customer feedback is positive and the tie‑up expands Calnex’s reach via Viavi’s installed base.
• New North American partners onboarded; a refreshed channel strategy is said to be improving market access. Senior hires in Sales, Marketing and Partner Management are already translating into wins.

Financial plumbing: where the improvements came from

• Other income rose to £0.4m, including £0.3m from the UK’s merged R&D expenditure credit. This new scheme is simpler and allows more predictable recognition.
• Admin costs (ex D&A) increased £0.4m to £4.9m, reflecting planned investment in go‑to‑market capability and wage inflation.
• Capitalised R&D was £2.8m, consistent with Calnex’s strategy to invest through the cycle in high‑speed synchronisation and NAA advances.

Why this update matters for investors

• Diversification paying off: Calnex is less dependent on telecoms alone. Defence and cloud/datacentre orders are building, and the product suite maps onto standards that travel well across sectors.
• Margins intact: a 76% gross margin in a choppy market is a strong signal of differentiation.
• Balance sheet optionality: £10.3m of cash supports continued investment while maintaining a dividend.
• Pipeline leverage: if telecoms spend re-accelerates as operators prepare for 6G and 1.6T, Calnex should be well placed to convert demand.

Risks and watch‑outs

• Order visibility in defence: projects can be large and lumpy, with unpredictable timing. That brings forecasting risk even as strategic momentum improves.
• Telecoms recovery not guaranteed: the company says it is “well positioned” for conversion when the environment improves, but timing remains uncertain.
• Tariff landscape: the Board is monitoring potential US tariff changes that could affect costs or pricing.
• Dividend date inconsistency: the RNS lists a payment date of 19 December 2024 alongside 2025 record and ex‑div dates. Clarification from the company would be prudent.

Outlook and my take

Management expects continued growth in H2 and performance in line with market expectations. The operational story is moving the right way: improved gross margin, tighter losses, strong cash, and tangible wins in new verticals. The Viavi tie‑up, early access to 1.6T chipsets, and ongoing hyperscaler engagement expand the TAM without demanding a telecoms rebound to grow.

On the flip side, defence order timing and macro caution could still create bumps quarter to quarter. But the combination of a 76% gross margin, £10.3m cash, and an unchanged interim dividend underlines resilience. For patient investors, Calnex is executing on a sensible plan: use telecoms standards know‑how to chase higher‑speed, standards‑driven opportunities across defence and datacentres, where the need for robust test and assurance only increases.

Where to read the full detail

The Interim Report will be available at the company’s investor site: investors.calnexsol.com.