EBITDA turns positive while strategy tightens: what Checkit’s FY26 results really say
I’ve been following Checkit for a while, and this RNS is one of their cleaner pivots. The group hit adjusted EBITDA profitability, tightened its cost base, and has put a For Sale sign in the window via a Formal Sale Process. Below I unpack the numbers, the strategy moves, and what to watch next.
Headline performance and cash: proof of the reset
Adjusted EBITDA – a profitability measure before depreciation, amortisation, share-based payments and one-off items – came in at a £0.3 million profit, a 113% swing from the £2.3 million loss last year. Management also delivered ten consecutive months of cashflow breakeven and finished the year with net cash of £3.0 million.
Total revenue edged down 2% to £13.7 million as Checkit continued to move away from lumpy, lower-quality work. Recurring revenue was £13.2 million and now accounts for 96% of the total, up from 94% in FY25. H1 saw a £0.5 million adjusted EBITDA loss; H2 flipped to a £0.8 million profit – clear evidence the cost actions are flowing through.
ARR and customer quality: steady, with a single customer headwind
Annual Recurring Revenue (ARR) – the annualised value of contracted subscription income at period end – was £14.3 million, down 1% on a reported basis but up 2% at constant currency. Excluding a contraction from one large US customer that removed unused services on renewal, underlying ARR growth was 5% with net revenue retention of 104% and gross revenue retention of 95%.
Translation: the base is sticky and expanding where the platform is embedded, but the single US reshaping muted the headline. The Americas delivered £3.5 million of revenue; the UK remains the engine at £9.6 million.
Costs, margins and the breakeven bar
The restructuring was decisive. Operating expenses charged to the income statement fell 18% to £9.8 million. Annualised savings of £4.0 million were delivered, mainly via headcount moving from 165 to 117. Product management and development spend reduced to £3.3 million, sales and marketing to £2.2 million, with continued capitalisation of development (£1.8 million).
Non-recurring items totalled £1.1 million, mostly restructuring (£0.8 million) and transaction costs (£0.2 million) following the abandoned Crimson Tide acquisition, plus a small intangible impairment (£0.1 million). Gross profit held at £9.9 million, reflecting the revenue mix shift to subscriptions.
Formal Sale Process: why now and what it means
On 26 March 2026, the Board launched a Formal Sale Process after receiving six unsolicited expressions of interest during the year. Their thesis is simple: under private ownership, cost normalisation (including removal of PLC costs), platform scale and strategic/revenue synergies could drive “substantial profitable growth”.
Important caveat straight from the RNS: there is no certainty any offer will be made, concluded, or on what terms. Day-to-day execution continues unchanged while the process runs.
Product roadmap: retiring legacy to double penetration potential
In FY27, Checkit plans to retire a legacy product to unify the platform and roll workflow management across the entire customer base. Notably, medical customers – around 60% of the total – will gain workflow capabilities for the first time. Management says this “more than doubles” penetration potential and should lower legacy costs, supporting further profitable growth.
There’s also a redesigned UI/UX and heavier use of AI in development to speed delivery and improve engagement. Asset Intelligence – combining connected sensors, real-time monitoring and analytics – remains central to the value proposition and upsell path.
US focus and go-to-market discipline
Expect sharper execution in the United States, described as the largest and most scalable market. The go-to-market model is “inch wide, mile deep”, concentrating on enterprise customers and land-and-expand deployments across more sites and use cases. The aim is higher ARR density per customer and durable renewals.
Key numbers investors will care about
| Metric | FY26 | FY25 |
|---|---|---|
| Revenue | £13.7m | £14.1m |
| Recurring revenue | £13.2m (96% of total) | £13.1m (94%) |
| ARR at period end | £14.3m | not disclosed in this RNS |
| Adjusted EBITDA | £0.3m | £(2.3)m |
| Operating loss | £(2.6)m | £(4.4)m |
| Net cash (31 Jan 2026) | £3.0m | £5.1m |
| Non-recurring items | £1.1m | £0.5m |
| EPS (basic/diluted) | (2.6)p | (3.3)p |
Positives, risks and what to watch next
Why these results are encouraging
- EBITDA profitability and cash-generative H2 show the reset is biting. The breakeven ARR threshold is lower, increasing operating leverage as ARR grows.
- Revenue quality improved: 96% recurring, with underlying ARR growth of 5% after stripping out one customer’s unused services.
- Clear plan to unify the platform and extend workflow management to 100% of customers – especially meaningful for medical customers (~60% of base).
- Formal Sale Process could crystallise value if bidders share management’s view of the hybrid hardware-software moat and AI-enabled roadmap.
Balanced against a few watch-outs
- Headline ARR dipped 1% and total revenue declined 2% as non-recurring activity reduced. Sustained ARR acceleration is still to be proven.
- The legacy product retirement in FY27 is strategically sound but carries execution risk during migration.
- Cash fell to £3.0 million year-end. The business is debt free and H2 was cash generative, but continued discipline is essential.
- Non-recurring costs of £1.1 million reflect a year of change. Further one-offs are not guided and not disclosed.
- Formal Sale Process has no guaranteed outcome. Shareholders shouldn’t bank on a deal or a premium until terms are on the table.
Outlook signals from the RNS
The near-term focus is disciplined, profitable growth of core ARR in FY27 through deeper enterprise penetration, expansion of Asset Intelligence modules, and “selective inorganic opportunities” where they improve revenue density. Management sees the US as the prime hunting ground. The Board believes Checkit’s hybrid model – sensors plus software plus analytics – is more defensible in an AI world than pure-play application SaaS.
My take: a cleaner, leaner platform now set up for scale
This was an execution year, and it shows. Checkit now operates from a lower cost base with better visibility of income and a platform that is increasingly standardised. The strategy to unify products and push workflow to the full customer base could be the catalyst that lifts ARR growth from “steady” to “punchy”.
The investment case from here rests on two things: 1) delivering visible ARR growth in FY27 without compromising cash discipline, and 2) the outcome – or not – of the Formal Sale Process. Either way, the operational groundwork laid in FY26 gives the company more options than it had a year ago.
