Eleco trading update: Record ARR and 20% organic recurring revenue growth

Record recurring revenue leads the update

Eleco's first-half trading update puts recurring revenue growth firmly at centre stage. The specialist software provider for the built environment reported annualised recurring revenue, or ARR, of approximately £35.5 million at 30 June 2026.

That represents a 16% increase from £30.7 million a year earlier and sets a new record for the group. ARR is the normalised annual value of recurring income from subscription licences, support and maintenance contracts, and software-as-a-service agreements.

The organic performance was stronger still. Excluding the effects of acquisitions and disposals, organic ARR rose by approximately 23% to £34.7 million, compared with £28.3 million at the end of the prior-year period.

For investors, the distinction matters. Acquisitions can lift reported growth, but organic growth provides a clearer indication of how the existing operations are performing. A 23% organic increase suggests that Eleco's recurring revenue base is expanding without relying solely on purchased growth.

Eleco's H1 2026 figures at a glance

Metric	H1 2026	H1 2025	Change
Annualised recurring revenue	c.£35.5 million	£30.7 million	16%
Organic annualised recurring revenue	c.£34.7 million	£28.3 million	c.23%
Total recurring revenue	c.£16.9 million	£14.8 million	14%
Organic total recurring revenue	c.£16.4 million	£13.8 million	c.20%
Total revenue	c.£19.9 million	£18.4 million	8%
Constant-currency revenue	c.£19.6 million	Not disclosed	Not disclosed
Organic total revenue growth	Not disclosed	Not disclosed	15%
Recurring revenue share	85%	81%	4 percentage points
Cash at period end	£15.4 million	£12.2 million	£3.2 million higher
Debt	£0	Not disclosed	Group remains debt free

Total recurring revenue, or TRR, increased by 14% to approximately £16.9 million. Unlike ARR, which annualises the recurring revenue base at a point in time, TRR represents recurring revenue actually recognised during the reporting period.

Organic TRR increased by approximately 20% to £16.4 million, according to the detailed trading highlights. The chief executive's accompanying quotation describes organic recurring revenue as £16.9 million, but this appears inconsistent with the £16.4 million figure stated in the update's main financial breakdown. Investors may want to look for clarification when the interim results are published.

Revenue quality is improving

Total revenue rose by 8% to approximately £19.9 million, up from £18.4 million. On a constant-currency basis, which removes the effect of exchange-rate movements, revenue was approximately £19.6 million.

Eleco also reported organic total revenue growth of 15%. This calculation takes account of recent portfolio changes, including the acquisition of Kivue and the disposal of Veeuze, the group's former German visualisation business.

The most encouraging feature is arguably the changing revenue mix. Recurring revenue represented 85% of group revenue during the half, compared with 81% a year earlier.

A higher proportion of recurring income can provide better revenue visibility and make results less dependent on one-off licence sales or project timing. It does not remove business risk, but it gives investors a clearer view of the revenue already embedded in the operation.

The update did not disclose statutory profit, adjusted profit, operating margins or earnings per share. Management said that effective cost and cash management had contributed to improved profitability, but the scale of that improvement was not disclosed. The full interim results, expected in September, should therefore provide important detail on whether revenue growth is translating into stronger margins and earnings.

Cash remains a clear strength

Eleco ended June with cash of £15.4 million, up from £12.2 million at the same point in 2025. The balance was lower than the £16.3 million held at 31 December 2025, although the company reported acquisition payments, dividends and other non-operational costs totalling £5.5 million during the half.

The board said the cash position reflected strong cash generation, but it did not disclose an operating cash flow or cash conversion figure. That means investors cannot yet independently assess the quality or precise scale of cash generation from this announcement alone.

Even so, Eleco remains free of debt. A net cash position gives the group financial flexibility to invest in product development, support expansion or pursue acquisitions without the immediate burden of interest costs.

Product launches and US progress

Eleco continued investing in artificial intelligence-enabled research and development during the period. It launched Asta Vision Plus, described as an application programming interface-led solution, and Asta Estimate, which combines planning, scheduling and cost estimation.

An application programming interface, or API, allows different software products and systems to communicate with one another. The update did not disclose customer adoption, revenue contributions or development costs for either launch, so their commercial impact is not yet clear.

The group also rebranded under the Eleco name and refreshed the visual identity across its portfolio. Management believes this will strengthen Eleco's market presence and positioning, although the financial effect was not disclosed.

Elsewhere, the Pemac maintenance management business secured an order in the US from a leading medical device manufacturer. Implementation has begun, and evaluations are under way for a possible expansion into additional US manufacturing sites. The customer, contract value and implementation timetable were not disclosed.

Acquisitions and disposals complicate comparisons

First-half 2026 included approximately four and a half months of contribution from Kivue, while excluding trading from the disposed Veeuze business. The comparative period included around five and a half months from the Pemac acquisition.

These changes mean the headline growth rates do not compare identical business portfolios. Eleco's organic figures are therefore particularly useful, although investors will need the interim accounts for a fuller bridge between acquired, disposed and underlying revenue.

The Veeuze disposal was intended to increase the group's focus on its core businesses and improve margins. However, the announcement did not quantify Veeuze's previous revenue, profitability, disposal proceeds or the expected margin benefit.

What investors should watch in September

The board remains confident that Eleco will deliver full-year 2026 results in line with market expectations. The announcement did not state what those expectations are, so there is no company-supplied profit or revenue forecast against which to measure progress.

The update nevertheless contains several positives: record ARR, double-digit organic recurring revenue growth, an improving recurring revenue mix, £15.4 million of cash and no debt. These features suggest improving visibility and a financially resilient position.

The main areas of uncertainty are profitability and valuation support. No margin, profit or earnings figures were provided, product-launch contributions remain undisclosed, and portfolio changes make headline comparisons less straightforward.

September's interim results should reveal whether Eleco's strong recurring revenue momentum is feeding through into profit, margins and operating cash flow. Those figures will be essential for judging the quality of the first-half performance beyond the encouraging top-line indicators.