Crimson Tide reports strong turnaround in FY26 with return to profitability and improved cash generation

Crimson Tide FY26 trading update shows a real profit turnaround, but churn is still the key risk

Crimson Tide’s latest trading update is one of those RNS statements where the headline is genuinely encouraging. The group says it expects to report revenue of £5.9 million, EBITDA of around £1.2 million, profit after tax of roughly £0.3 million, and cash of about £2.1 million with no bank debt.

That matters because this is a business that has clearly spent the last year getting itself back under control. The numbers point to a much leaner, more cash generative company. But there is a catch – recurring revenue has taken a hit from customer losses, and that means FY27 starts from a lower base.

Crimson Tide FY26 key numbers retail investors should focus on

Metric	FY26	Comparator
Revenue	£5.9 million	£5.9 million on a pro forma 12-month FY25 basis
EBITDA	Approximately £1.2 million	EBITDA loss of £0.1 million in the prior period
Profit after tax	Approximately £0.3 million	Loss after tax of £2.0 million in the prior 16-month period
Cash at year end	Approximately £2.1 million	£1.3 million at 30 April 2025
Bank debt	None	Not disclosed for prior period in this announcement
MRR at start of year	£468k	–
MRR at end of year	£397k	–
Gross revenue churn	Approximately 28%	–

One important wrinkle here: the previous statutory period was 16 months long, so some comparisons are messy. Crimson Tide tries to help by giving a pro forma 12-month revenue comparison, but investors still need to be careful not to compare apples with oranges.

EBITDA, profit after tax and cash generation all improved sharply in FY26

The best part of this update is the profitability swing. EBITDA – earnings before interest, tax, depreciation and amortisation, which is a common way of measuring underlying operating performance – is expected to be around £1.2 million, versus a loss of £0.1 million in the prior period.

Profit after tax is also expected to come in at around £0.3 million, compared with a £2.0 million loss previously. That is a meaningful turnaround, and it tells you this was not just accounting smoke. The cash balance also rose to around £2.1 million from £1.3 million, which backs up the claim that the business became more cash generative.

For a smaller AIM software company, cash matters a lot. Having no bank debt and more cash on hand gives management more breathing room, reduces funding pressure, and lowers the risk of shareholders getting hit by an urgent capital raise.

Crimson Tide revenue was flat, but monthly recurring revenue fell and that is the weak spot

The less cheerful part is that revenue was basically flat at £5.9 million on a comparable basis, while monthly recurring revenue, or MRR, dropped from £468k at the start of the year to £397k by the end. For a software platform business built on recurring contracts, that is not ideal.

The biggest single reason was already known. One customer exercised a break clause, which cut MRR by approximately £61k from 31 March 2026. Management says this contract involved significant bespoke development and that its end frees up resources for more scalable, higher-margin work.

That may be true, and strategically it makes sense to move away from awkward custom projects if they soak up effort and blunt margins. But investors should not ignore the immediate commercial damage. A £61k monthly hit is material when year-end MRR is £397k.

Gross revenue churn came in at around 28%, which is high by any sensible standard. Churn simply means revenue lost from existing customers. Crimson Tide says about 70% of its recurring revenue was up for renewal during the year, which was unusually high, and it also blames disruption linked to three takeover approaches over the prior two years.

The landmark retailer contract renewal is a proper positive for the mpro5 platform

There is one standout commercial win in this update: a three-year contract extension with one of the world’s largest retailers. The deal has a total contract value, or TCV, of £3.88 million and monthly recurring revenue of £108k.

That is a serious endorsement of the mpro5 platform. It is used across more than 3,000 retail locations in the UK and Ireland and supports over 30 operational services, so this is not a side project. It sounds embedded and mission-critical, which is exactly what investors want from an operational compliance software product.

There was also progress in the US with a new customer, 3Z Brands. The announcement does not disclose the contract value, so it is impossible to judge the immediate financial significance. Even so, it is useful proof that the US effort is producing some traction rather than just soaking up investment.

Why Crimson Tide’s new operating model could matter more than the headline revenue number

The company says it has spent FY26 building a more scalable operating model. In plain English, that means trying to grow without having to add lots of extra cost every time it wins more business.

Management highlights a stronger staffing structure, better onboarding, improved customer support, a more focused go-to-market plan, and modular products that reduce the need for bespoke customisation. That is all sensible stuff. It is not flashy, but it is usually how smaller software companies move from survival mode into sustainable growth mode.

Crimson Tide also says it rolled out AI tools across the business and has already seen material productivity improvements. There are no figures attached to that claim, so investors should treat it as encouraging but unproven for now. More tangible is the statement that overhead savings have been made and will continue into the current year.

FY27 outlook: lower churn expected, but revenue will still feel the after-effects of FY26

The Board says churn in FY27 is expected to be significantly lower than in FY26 and below 10%. If that happens, it would be a major improvement and probably the single most important number to watch over the next year.

However, the company is being honest about the near-term pain. It says FY27 revenue will reflect the churn suffered in FY26, which means the year starts from a lower revenue base. That is the awkward reality here: operational progress has been good, but the sales machine still needs to replace what has been lost.

The encouraging part is that management says the cost base has already been structured with that in mind, while marketing investment has been increased to build pipeline and accelerate new customer wins. The company also says the pipeline is healthy and growing, with a number of later-stage opportunities expected to convert in the next few months.

My view on Crimson Tide shares after this FY26 trading update

My read is that this is a good update overall, with one clear warning label attached. The good news is real: improved profitability, improved cash generation, no bank debt, a major contract renewal, and signs the business is being run with more discipline.

The warning label is churn. A 28% gross revenue churn figure is ugly, and the drop in MRR shows the damage is not theoretical. Even though management gives reasonable explanations, investors need to see those promised improvements turn up in actual retention and growth numbers.

So this looks positive, but not clean-cut. Crimson Tide appears to have completed the turnaround phase and is trying to move into growth, yet it still has to prove that lower churn and new business wins can outweigh the drag from contracts already lost.

For retail investors, the September 2026 audited results will matter because this update is unaudited. Between now and then, the big questions are straightforward: does churn really drop below 10%, does MRR stabilise, and can the healthier pipeline turn into revenue growth? If the answer is yes, this FY26 update could mark the point where the story genuinely turned.