Kooth half-year trading update: EBITDA set to more than triple despite lower revenue

Kooth PLC’s first-half update presents an interesting combination: slightly lower revenue, but substantially stronger profitability and a healthier cash position.

The digital mental health provider expects revenue of £30.8 million for the six months ended 30 June 2026, down from £32.1 million a year earlier. However, adjusted EBITDA is forecast to rise from £1.6 million to between £5.0 million and £5.4 million.

That makes profitability the central feature of this update, rather than top-line growth. The original company announcement says first-half performance was in line with expectations.

Kooth’s key half-year figures

Metric	H1 2026 expected	H1 2025	Change
Revenue	£30.8 million	£32.1 million	Down approximately 4.0%
Adjusted EBITDA	£5.0 million-£5.4 million	£1.6 million	More than three times higher
Net cash at period end	£23.1 million	£15.3 million	Up £7.8 million
California registrations	187,000	Not disclosed	Performance targets exceeded

Adjusted EBITDA means earnings before interest, tax, depreciation and amortisation, with certain additional adjustments. It is commonly used to assess underlying operating performance, although Kooth did not disclose the specific adjustments or a statutory profit figure in this trading update.

At the midpoint of Kooth’s expected range, adjusted EBITDA would be £5.2 million. That implies an adjusted EBITDA margin of approximately 16.9%, compared with around 5.0% in the prior-year period.

Why revenue is lower

The £1.3 million decline in expected revenue may initially look disappointing, but management provided three important pieces of context.

First, Kooth is seeing the planned tapering of product development revenue from its California contract. This suggests that part of the decline reflects the contract moving beyond an earlier development phase, rather than an unexpected deterioration in service delivery.

Second, foreign exchange movements reduced reported revenue by £0.7 million. Currency effects can affect the sterling value of Kooth’s US income even when underlying activity has not changed by the same amount.

Third, revenue from a new contract with the State of Michigan provided a partial offset. The value and expected financial contribution of that contract were not disclosed.

Investors should therefore distinguish between falling reported revenue and weakening operational delivery. Kooth says California user engagement remained strong, while the first half also included the contribution from Michigan.

That said, revenue growth will ultimately need to resume if the business is to deliver sustainable long-term earnings expansion. Improved margins are valuable, but they cannot carry the investment case indefinitely without renewed top-line progress.

Profitability is the standout improvement

The expected increase in adjusted EBITDA from £1.6 million to £5.0 million-£5.4 million is significant.

Kooth explained that the prior-year result had been reduced by accelerated investment in key areas of focus. The latest period benefited from strong California user engagement compared with that investment-heavy comparative.

This indicates that the operating model is showing greater profit potential as engagement builds. Digital services can sometimes benefit from operational leverage, where a larger user base is supported without costs increasing at the same rate. Kooth did not provide enough detail in this update to determine exactly how much of the improvement came from operating leverage, lower investment or other factors.

Investors will therefore want the September results to explain the movement in costs and the quality of adjusted EBITDA in more detail.

For context on how the current performance follows the previous financial year, see my coverage of Kooth’s 2024 full-year results and US expansion.

California remains central

Kooth has entered the fourth year of its California contract and reported 187,000 Soluna registrations by the end of June 2026, exceeding performance targets.

Soluna is Kooth’s digital behavioural health platform for young people aged 13 to 25 in California. Its offering combines self-guided tools, peer communities and professional support.

The company highlighted external validation from the California Department of Health Care Services’ 2025 Impact Report and research from Northwestern University’s Lab for Scalable Mental Health. Detailed findings from those evaluations were not included in this announcement.

Soluna was also featured in California Governor Gavin Newsom’s Children and Youth Behavioral Health Initiative Legacy Report. Kooth additionally noted California’s balanced budget across 2026-27 and 2027-28, describing this as a stable basis for planned government spending.

These points strengthen the operational story around adoption and relevance. However, they should not be treated as a guarantee of contract renewal, expansion or future funding. Kooth did not disclose any new California contract value or extension in this update.

UK activity and the State Alliance model

In the UK, Kooth said its market position remains strong. The company pointed to recent government recommendations for more flexible and preventative support for children and young people, particularly to improve participation in education and employment.

Kooth has launched an integrated employment and mental health support pathfinder programme in the West Midlands. Soluna by Kooth is also rolling out for young people in the UK as they return to school.

Financial details, user targets and the expected scale of these UK initiatives were not disclosed. They appear strategically relevant, but investors will need evidence that pilots and roll-outs can convert into meaningful contracted revenue.

Management intends to continue executing its evolved strategy and State Alliance model. This model focuses on working with public-sector partners to provide digital mental health support across broad populations. More information about the company and its previous announcements is available on the Kooth PLC share page.

A stronger cash position reduces financial pressure

Unaudited net cash reached £23.1 million at 30 June 2026, compared with £15.3 million a year earlier. That is an increase of £7.8 million, or approximately 51%.

A strong net cash position gives Kooth flexibility to invest in product capabilities, partnerships and growth without the immediate pressure associated with net debt. It may also support the company’s stated interest in selected acquisition opportunities.

However, this was only a trading update. Kooth did not disclose first-half operating cash flow, capital expenditure, acquisition spending or a full cash-flow statement. The detailed results will be needed to assess how closely the improvement in adjusted EBITDA translated into cash generation.

What investors should watch in September

The half-year results are scheduled for September 2026. The main points to examine will be:

• The bridge from revenue to adjusted EBITDA and the reasons for the margin improvement.
• Statutory operating profit or loss and the adjustments excluded from EBITDA.
• Cash conversion and the movement in net cash.
• The contribution and future potential of the Michigan contract.
• Progress towards replacing tapering California development revenue.
• Details of UK programmes and the broader State Alliance pipeline.
• Any updated outlook for the full 2026 financial year.

Profit progress is encouraging, but revenue remains the test

Kooth’s update is positive on profitability, cash and California engagement. Expected adjusted EBITDA of £5.0 million-£5.4 million represents a substantial improvement, while net cash of £23.1 million provides useful financial resilience.

The main reservation is that revenue is expected to decline by around 4%, partly because California product development income is tapering and currency movements created a £0.7 million headwind.

The September results now need to show that the earnings improvement is supported by durable operational progress. For investors, the key question is whether Kooth can turn its engagement, public-sector relationships and expanding US footprint into renewed revenue growth without sacrificing the stronger margins demonstrated in this update.