H1 FY26 revenue dips 3.9% but licence sales surge 65.5%
Intercede has posted a mixed trading update for the six months to 30 September 2025. Headline revenue was approximately £8.21 million, down 3.9% year-on-year (down 4.2% on a constant currency basis, which strips out exchange rate effects).
Under the bonnet, licence revenue was the bright spot, up 65.5% to £1.44 million. That split into £1.08 million of perpetual licences (up 63.6%) and £0.36 million of subscription licences (up 71.4%). The Board is pushing hard to shift the model towards subscriptions – recurring revenue tends to be higher quality and more predictable, even if it can temper near-term reported revenue due to revenue recognition differences.
US federal delays and FX headwinds explained
Management flagged temporary delays in some contract awards, primarily in the US federal market, alongside adverse exchange rate movements and a change in revenue mix. Together, these factors particularly dragged on reported US dollar revenues in Q2.
In plain English: orders slipped to the right and the dollar didn’t play ball, which shaved reported revenue. The delays are described as temporary rather than lost – the proof will be in H2 conversion.
New contracts and renewals worth c$3.2m in Q2
Despite delays, Q2 still saw contract and renewal orders totalling approximately c$3.2m (the “c” denotes circa). Intercede highlighted a spread of wins across energy, government, defence, telecoms and education, with over 95% flowing via partners – a good sign for scalability and market reach.
- US publicly traded energy company – new order for MyID CMS: c$0.4m in subscription licences over 5 years.
- US Scientific Agency/National Laboratory – new order for MyID CMS: c$0.1m across subscription licences and professional services.
- Asia government end client via systems integrator – subscription licences for MyID SecureVault Biometrics: c$0.12m over 2 years, plus a major MyID CMS development and professional services order: c$0.2m.
- UK defence follow-on – MyID CMS: c£0.1m perpetual licences, c£0.05m professional services and 5 years support and maintenance of c£0.1m.
- Large US Defence and Aerospace manufacturer – support and maintenance renewal in excess of c$0.5m.
- Large US Defence and Aerospace manufacturer – another support and maintenance renewal in excess of c$0.3m.
- Large North American telco – support and maintenance renewal in excess of c$0.25m.
- Large US Defence and Aerospace manufacturer – professional services for MyID CMS upgrade: c$0.14m.
- US federal POC client – professional services of c$0.2m to prepare for a future device deployment of MyID CMS.
- Key Middle Eastern educational establishment – support and maintenance renewal for MyID MFA in excess of c$0.16m.
The product breadth here matters. Intercede’s MyID CMS (credential management), SecureVault Biometrics and MFA (multi-factor authentication) give multiple entry points to clients, and subscription-led wins are consistent with the strategy shift.
Cash, debt and guidance – Intercede’s H2 hurdle
Gross cash at 30 September 2025 stood at £17.8 million (30 September 2024: £16.2 million). Cash was £18.7 million at 31 March 2025 and includes the payment of £1.8 million on a share award that vested in July. The Group continues to carry no debt.
The Board reiterated confidence that full-year financial performance will be in line with current market expectations – namely FY26 revenue of £18.7 million and adjusted EBITDA of £4.6 million. With H1 revenue at £8.21 million, that implies H2 needs roughly £10.5 million of revenue to meet the top line target. It’s achievable if delayed US federal awards convert and the partner channel keeps delivering, but the execution bar is higher for H2.
Adjusted EBITDA is earnings before interest, tax, depreciation and amortisation, adjusted for certain items – a common profitability measure for software firms.
Key numbers at a glance
| Metric | H1 FY26 | H1 FY25 | Change |
|---|---|---|---|
| Revenue | £8.21 million | £8.54 million | -3.9% (or -4.2% constant currency) |
| Licence revenue | £1.44 million | £0.87 million | +65.5% |
| Perpetual licences | £1.08 million | £0.66 million | +63.6% |
| Subscription licences | £0.36 million | £0.21 million | +71.4% |
| Gross cash (30 Sep 2025) | £17.8 million | £16.2 million | +£1.6 million year-on-year |
| Gross cash (31 Mar 2025) | £18.7 million | Not disclosed | Includes £1.8 million share award payment |
| Debt | None | ||
Why this update matters for Intercede investors
Two stories are unfolding. First, the strategic one: subscription licence growth of 71.4% is exactly what you want to see from a company leaning into recurring software revenue. Partner-led wins in the US, UK, Asia and the Middle East point to a healthy, geo-diversified pipeline and lower customer acquisition costs.
Second, the cyclical one: US federal delays and FX were unhelpful in Q2 and clipped H1 revenue. The company says the pipeline is building and the revenue backlog for FY27 and beyond is growing. If those delayed deals land in H2, the full-year guide looks realistic. If conversion slips again, revenue timing risk rises.
Positives and pressures – my take
What looks positive
- Subscription momentum – 71.4% growth from a small base, but directionally right and strategically important.
- Licence growth overall – 65.5% suggests strong demand for MyID solutions.
- Partner channel strength – over 95% of orders via partners should support scale and margin over time.
- Robust balance sheet – £17.8 million gross cash and no debt provides resilience and optionality.
- Contract diversity – defence, energy, telco, education and government across multiple regions.
Where the pressure sits
- Execution in H2 – to meet £18.7 million revenue, H2 needs to step up versus H1.
- US federal timing – labelled temporary, but still a watch-out until orders are booked.
- FX and mix – currency headwinds and revenue mix affected reported H1; these are hard to control.
What to watch into H2 FY26
- Conversion of delayed US federal opportunities and the pace at which they turn into recognised revenue.
- Further growth in subscription licences and any evidence of rising maintenance and renewal rates.
- Order intake via partners – continuity of the >95% partner-led pipeline would be a strong signal.
- FX sensitivity – especially on US dollar reported revenues.
- Updates on the “growing revenue backlog for FY27 and beyond” – any quantification at interims on 25 November 2025 would be helpful.
Bottom line
Intercede’s H1 headline is soft, but the quality of revenue is improving. Licence sales – particularly subscriptions – are moving the right way, the partner engine looks strong and the balance sheet is solid. Delivery now hinges on H2 execution and converting the US federal pipeline. If they do, full-year expectations of £18.7 million revenue and £4.6 million adjusted EBITDA remain within reach.
