Fadel Partners Reports Strong ARR Growth and Improved EBITDA in FY2025 Results

Fadel Partners has delivered one of those results that looks mixed at first glance, but gets more encouraging the deeper you go. Revenue slipped, yes, but the quality of that revenue improved, margins moved up, and the adjusted EBITDA loss came down sharply. For an AIM software company trying to build a sturdier recurring revenue base, that matters a lot more than a simple top-line headline.

The big takeaway is this: FADEL is becoming more software-like and less services-heavy. That usually means more predictability, better margins and, if management executes properly, a clearer path to profitability.

Fadel Partners FY2025 results at a glance – ARR up 14% and losses narrow sharply

Metric	FY2024	FY2025	Change
Revenue	$13,022,201	$12,616,439	(3%)
Licensing and support revenue	$7,993,928	$8,235,003	3%
Services revenue	$5,028,273	$4,381,436	(13%)
Gross profit margin	62%	64%	2 percentage points
Adjusted EBITDA loss	($3,907,271)	($743,281)	81% improvement
Cash and cash equivalents	$2,607,422	$1,910,755	(27%)
ARR	$7,824,602	$8,904,588	14%

ARR means Annual Recurring Revenue. In plain English, it is the annualised value of contracted recurring software and support revenue at the period end. For SaaS businesses, it is one of the most useful ways to judge momentum because it gives a better feel for future revenue than one-off project income.

Fadel Partners ARR growth shows the recurring software engine is getting stronger

The best number in this RNS is the ARR figure. It rose 14% to $8.9 million, with management saying a significant portion of that growth landed in the fourth quarter, which should help revenue visibility going into 2026.

That growth was driven by mid-market customer wins and expansion in existing accounts. IPM Suite ARR increased 13% to $5.6 million, while Brand Vision ARR climbed 22% to $2.5 million. PictureDesk went the other way, falling 4% to $815,000.

There is some solid underlying customer behaviour here too. Net retention revenue, or NRR, was 100% for IPM Suite and 110% for Brand Vision. That means Brand Vision is not just keeping customers, it is growing revenue from them.

New wins included Handcraft Manufacturing, Viz Media, Zak! Designs and Bloom Fresh International for IPM Suite, plus Comcast Communications and Ferrero for Brand Vision. That is a respectable list for a business of this size.

Why Fadel Partners revenue fell despite software growth

Total revenue fell 3% to $12.6 million, which is the obvious weak spot in the numbers. But the reason matters. Services revenue dropped 13% to $4.4 million as FADEL pushed further into the mid-market, where projects are shorter, less complex and generate less services income.

That is not necessarily bad news. Services revenue tends to be lower margin and lumpier than subscription revenue, so a reduction can actually improve business quality if software revenue keeps growing. That is exactly what happened here, with licensing and support revenue rising 3% to $8.2 million.

One thing investors should note is that FADEL changed how it classifies some revenue and ARR. Recurring services revenue is now excluded from ARR, and recurring services subscription revenue is now shown within services rather than licensing and support. The company has restated the prior year for comparability, which is the right thing to do, but it does mean you need to read the trends carefully.

Adjusted EBITDA improvement is the standout feature of the FY2025 results

If ARR growth is the most exciting number, adjusted EBITDA is the most important one. The adjusted EBITDA loss improved from $3.9 million to $743,281, which is a very substantial step forward.

That improvement came mainly from lower operating costs. Operating expenses fell 27% to $9.5 million, with selling, general and administrative costs down 31% to $5.9 million and research and development costs down 11% to $3.1 million.

Gross profit edged up to $8.1 million, and gross margin improved from 62% to 64%. Licensing and support revenue carried an 84% gross margin, while services sat at 28%, so the revenue mix shift is doing exactly what investors would want.

The statutory net loss after tax also improved sharply, from $5.8 million to $1.5 million. Basic and diluted loss per share narrowed from $0.28 to $0.05. This is still a loss-making business, but it is no longer burning through the income statement at the same rate.

Cash and liquidity at Fadel Partners still need watching closely

Here is the bit that stops this being an all-clear moment. Cash and cash equivalents fell to $1.9 million from $2.6 million, and cash used in operations increased to $1.1 million from $622,060.

FADEL does have an undrawn $1.0 million credit facility, now renewed through May 2027, which gives it some breathing room. The board and auditors also say the business remains a going concern, and the auditors did not identify any material uncertainty on that front.

Still, this is not a cash-rich company. The balance sheet is manageable, but retail investors should keep a close eye on cash conversion in 2026. Growing ARR is good, but ultimately the market wants that recurring revenue to turn into cash.

FADEL AIVA, Product Approval and mid-market expansion could drive 2026 growth

Management is leaning hard into AI, but thankfully this is not just buzzword wallpaper. During 2025, the company launched AI Business Insights, and after the year end it launched AIVA, its AI framework spanning generative, predictive and analytical capabilities.

It also released its Product Approval module in January 2026. That sounds niche, but in licensing and brand governance software, niche can be lucrative if it solves a painful workflow problem.

The broader strategy is sensible. FADEL is targeting mid-market customers with faster implementations, shorter sales cycles and modular deployments, while also trying to expand within larger existing accounts. Management says the sales pipeline more than doubled since the beginning of 2025, which is encouraging, although pipeline is not revenue and investors should remember that.

What the Fadel Partners FY2025 RNS means for retail investors

My view is that this was a good update overall, with one important caveat around cash. The company is clearly improving the shape of the business, and the move towards higher-margin recurring revenue is exactly what an AIM software stock needs if it wants to be valued properly.

• Positive: ARR rose 14% to $8.9 million.
• Positive: Adjusted EBITDA loss improved dramatically to $743,281.
• Positive: Gross margin improved to 64%.
• Positive: Brand Vision ARR growth of 22% looks especially healthy.
• Negative: Revenue still fell 3%, even if the reason was understandable.
• Negative: Cash fell to $1.9 million and operating cash outflow worsened.
• Negative: Total customer count fell to 134 from 140, driven by PictureDesk attrition.

There was also a strategic review during 2025, and the board said several expressions of interest were received but none offered enough value, structure and certainty to recommend. That tells you there was outside interest, but not at a level the board thought worthwhile.

So, what matters next? For me, it is simple. Can FADEL keep ARR growing, convert more of that into reported revenue, and get much closer to cash break-even in 2026? If it can, these FY2025 results may end up looking like the year the business finally got its act together.