Kooth PLC 2025 results: US traction builds, revenue dips as mix shifts
Kooth’s 2025 full-year numbers show a business cementing its US strategy while navigating a predictable revenue transition. Headline revenue came in at £63.3 million, down 5% year-on-year from a record 2024, with adjusted EBITDA of £11.3 million. Cash remains solid at £21.6 million and there is no debt. The California youth programme, Soluna, is scaling well and producing independent real-world impact data – crucial for state-backed behavioural health spending.
The top line dip mostly reflects foreign exchange, lower California product development revenues, and a Michigan contract signed post-period. Under the bonnet, Kooth’s recurring profile stayed very strong – 99% of revenue was recurring – and net revenue retention was 96% on a constant currency basis.
California’s Soluna: scale, system integration, and impact data
Soluna continues to be the centre of gravity. By year-end, over 144,000 young people had registered – that is roughly 1 in 41 of the state’s eligible youth. Crucially, Kooth is not just acquiring users; it is integrating into the health and education fabric of California.
- 1,400+ institutional and community partnerships across the state.
- Los Angeles County directed youth-serving departments to integrate Soluna.
- A joint letter from CalHHS, DHCS and the Department of Education underscored Soluna’s role for all Local Education Agencies.
- Independent evaluation: 90% of users said Soluna helped them get the support they wanted; 88% who previously used urgent care reported fewer visits after using Soluna; almost 90% of youth-facing professionals perceived improved concentration in school.
- Northwestern University’s Lab for Scalable Mental Health found significant and sustained improvements in psychological wellbeing.
For investors, this matters because state-led behavioural health funding follows evidence and integration. The more Kooth is embedded and independently validated, the stronger its renewal and expansion case becomes.
US footprint broadens: New Jersey renewal and Michigan win
Two important commercial markers landed around the year-end. Kooth renewed its New Jersey contract – its first US renewal, a helpful proof point – and signed a new $2.6 million contract with the State of Michigan in January 2026. The New Jersey programme contributed £1.1 million of revenue in 2025.
US revenue totalled £46.1 million (2024: £48.7 million), with the decline explained by a £1.6 million FX headwind and a £2.0 million reduction in California product development activity. This is a mix issue rather than a demand problem – the Soluna user base and engagement are moving the right way.
UK position steady, with Soluna UK set for H2 2026
In the UK, Kooth maintained its market-leading position and diversified its funding base. UK revenue was £17.2 million (2024: £18.0 million), with UK net revenue retention improving to 96% from 92%. Churn of £1.4 million was mainly pilot programmes not continuing for funding reasons and some contract size reductions after consolidations.
New services funded by the Department of Work and Pensions launched across several regions to support young people with mental health needs into education, employment or training. Management plans to launch Soluna in the UK in H2 2026, aiming for closer alignment with NHS and government priorities and to capture economies of scale from the US build.
Financial performance: resilient core, FX and marketing weigh on margins
2025 was about disciplined investment to embed the US strategy. Kooth leaned into California direct user marketing in H1 to drive reach and engagement, which, together with FX, pulled down margins versus the prior year.
| Key metric | 2025 | 2024 | Comment |
|---|---|---|---|
| Revenue | £63.3 million | £66.7 million | Constant currency -2.7% |
| Annual Recurring Revenue (ARR) | £60.6 million | £66.4 million | £3.3 million FX impact, lower California product dev |
| Net Revenue Retention (NRR) | 96% cc; 91% reported | 100% cc | UK NRR 96% |
| Adjusted EBITDA | £11.3 million | £15.8 million | Ahead of expectations |
| Operating profit | £3.4 million | £9.2 million | Lower gross profit, higher CA marketing |
| Gross margin | 73.1% | 77.9% | Marketing spend increased to £8.1 million |
| Cash | £21.6 million | £21.8 million | No debt; $9.5 million undrawn facility |
| Profit after tax | £2.6 million | £8.0 million | ETR up to 40.3% due to RDEC and equity award tax effects |
Jargon buster: ARR is the annualised value of contracted recurring revenue. Net revenue retention measures how much revenue you keep and expand within existing customers. Adjusted EBITDA is earnings before interest, tax, depreciation and amortisation, excluding share-based payments and realised FX – Kooth’s proxy for operating profitability.
Why this matters: positives, pressure points, and concentration risk
What looks good
- California execution is beating targets and now backed by independent outcomes data – the lifeblood for renewals and state expansion.
- First US renewal in New Jersey and the Michigan award support the State Alliance model and bipartisan positioning.
- Recurring revenue is 99%, with constant currency NRR at 96% – that is contract stickiness.
- Balance sheet remains robust – £21.6 million cash, no debt, and an undrawn $9.5 million facility.
- URAC and BACP accreditations plus ethical AI work enhance credibility in a tighter regulatory climate.
What to watch
- Revenue concentration remains high – a single customer accounted for 71% of group revenue.
- Gross margin stepped down to 73.1% on heavier California marketing; necessary for scale, but investors will want to see operating leverage return as cohorts mature.
- Foreign exchange is a meaningful swing factor with 74% of revenue in USD; 2025 saw a £0.6 million realised FX loss.
- The effective tax rate rose to 40.3% due to the shift to RDEC accounting and equity award tax treatment – this may normalise, but it is a headwind year-on-year.
Strategy and product: widening scope without compromising safety
Kooth is sticking to its State Alliance model – win large, universal access contracts, then layer adjacent funding streams in-state. The acquisition of Kismet Health broadens capability into under-12s and family-based support. Management is explicit about AI guardrails, leaning on a proprietary dataset of over six million safeguarded interactions and 2.5 million clinical case notes to power risk detection and clinical pathways, in line with evolving FDA and MHRA scrutiny.
Outlook 2026: what I’ll be tracking
- Execution in California, New Jersey and the rollout in Michigan – usage, integrations and any visible expansion or upsell.
- Progress converting the US state pipeline – Kooth flags it as strong and diverse.
- Soluna UK launch in H2 2026 – watch for contract wins aligned to NHS priorities and early indications of economies of scale.
- Margin trajectory as 2025’s marketing investment annualises and product development revenue mix normalises.
- Revenue and adjusted EBITDA are expected to be in line with current market expectations for 2026.
My take
These results read like a business trading through a planned transition after a break-out 2024. The revenue slip is not pretty, but the reasons are clear and largely temporary: FX, lower California build revenues, and a Michigan start delayed into 2026. What matters more is whether Kooth’s platforms become indispensable to state systems. On that score, California’s integration, outcomes data, and the LA County directive are exactly what you want to see.
There are risks – notably customer concentration and FX – and the margin step-down means 2026 execution has to deliver scale benefits. But with high recurring revenue, improving UK retention, a clean balance sheet and growing US validation, Kooth looks set up for steady, system-led growth rather than flash-in-the-pan wins. If they keep converting state pipeline and prove operating leverage as Soluna cohorts mature, the trajectory should improve from here.
