KRM22 ARR Reaches £7.9 Million as Growth Investment Weighs on EBITDA

KRM22's half-year update presents investors with a familiar small-cap software story: recurring revenue is moving in the right direction, but investment and slower sales conversions are holding back near-term financial progress.

Annual Recurring Revenue, or ARR, reached £7.9 million at 30 June 2026. That was up from £7.6 million at the end of 2025 and £7.2 million a year earlier.

However, total revenue increased only modestly, adjusted EBITDA declined and the cash balance fell. The key question is whether KRM22's current investment can translate its apparently strong sales pipeline into faster growth during 2027 and beyond.

Investors can read the original company announcement alongside this analysis.

KRM22's half-year figures at a glance

The company expects to publish its full results for the six months ended 30 June 2026 in September.

Key figure	H1 2026 estimate	Comparison	Change
Annual Recurring Revenue	£7.9 million	£7.2 million in H1 2025	9.7% higher
Total revenue	£3.8 million	£3.7 million in H1 2025	2.7% higher
Adjusted EBITDA	£0.2 million	£0.3 million in H1 2025	33.3% lower
Cash balance	£4.7 million	£5.2 million at FY 2025	£0.5 million lower

ARR is the annualised value of recurring customer contracts. It matters for a software business because it can provide a clearer view of the underlying subscription base than revenue recognised during a single accounting period.

On that measure, KRM22 is still growing. ARR increased by £0.3 million from the end of 2025 and by £0.7 million year-on-year.

The revenue increase was less substantial, while adjusted EBITDA - earnings before interest, tax, depreciation and amortisation, with certain items excluded - fell by £0.1 million. The announcement does not disclose a reconciliation of the adjusted measure.

New products and partnerships are contributing

One of the more encouraging details is the first sale of KRM22's Margin-as-a-Service application programming interface, or API.

This optional module allows firms to submit portfolios and receive a replication of exchange margin requirements. Potential uses include checking orders before trades are placed, validating statements and assessing hypothetical scenarios.

The first sale generated £0.1 million of ARR. That is not transformational by itself, but it provides initial commercial validation for the product.

KRM22's partnership with Trading Technologies International also generated £0.1 million of new ARR for the company through the combined Surveillance application.

Uplifts and extensions to existing contracts across KRM22's four core applications accounted for the remaining new ARR. This suggests growth is not coming solely from new customer wins, with existing clients also expanding or extending their relationships.

For background on the company and its previous announcements, see the KRM22 PLC share page and my coverage of its FY2025 trading update.

Customer churn remains a warning sign

The positive contract activity was partly offset by £0.1 million of customer churn. Churn refers to recurring revenue lost when customers cancel or reduce subscriptions.

In this case, the lost ARR came from one institutional customer cancelling its subscription to the Surveillance Manager application.

A single cancellation can have a visible effect when the overall recurring revenue base remains relatively small. Investors will therefore want to see whether this was an isolated event or the start of a wider pattern.

The announcement does not disclose KRM22's customer retention rate, contract renewal rate or customer concentration. Those figures would help investors judge the durability of the £7.9 million ARR base.

Sales pipeline delays are the central near-term risk

Management said there had been delays in converting the sales pipeline.

KRM22 attributed the delays to increased market volatility, extended vendor onboarding and longer internal governance processes at potential customers. The company maintained that demand remains strong and that the quality of pipeline opportunities continues to improve.

That explanation is plausible within the information provided, but pipeline quality ultimately needs to show up in signed contracts. Until that happens, the gap between ARR growth and recognised revenue growth deserves attention.

Total revenue increased by just £0.1 million year-on-year to £3.8 million, despite ARR being £0.7 million higher than in H1 2025. Timing differences can affect when contracted revenue is recognised, but the announcement does not provide further detail.

Investment is reducing near-term profitability and cash

Following its November 2025 fundraise, KRM22 has been expanding its applications to support multiple asset classes.

The company added eight employees across its Revenue, Technology, Product and Client Services teams during the period. Further hires have already been committed for the second half.

KRM22 also increased outbound marketing, sales activity and event attendance. These initiatives are intended to raise the company's profile, generate qualified leads and support future sales.

Meanwhile, a partnership with Sigma AI will integrate advanced news sentiment analytics into KRM22's risk management platform. The company described this as the first phase of a broader programme to provide deeper portfolio intelligence and risk insights.

These investments help explain why immediate earnings growth is not the only priority. Nevertheless, adjusted EBITDA declined from £0.3 million to £0.2 million, despite the increase in revenue.

Cash also fell by £0.5 million from the end of 2025 to £4.7 million. The announcement does not provide a detailed cash flow breakdown, so investors will need to wait for September's results to assess expenditure and cash conversion more closely.

What looks positive and what needs watching

The main positives are clear:

• ARR increased to £7.9 million.
• The Margin-as-a-Service API secured its first sale.
• The Trading Technologies partnership added further recurring revenue.
• Existing contract uplifts and extensions contributed to growth.
• Management says demand and pipeline quality remain strong.
• KRM22 still expects to achieve market forecasts, although the forecast figures were not disclosed.

The risks are equally important:

• Sales pipeline conversion has been delayed.
• Recognised revenue grew by only £0.1 million year-on-year.
• Adjusted EBITDA declined by one-third.
• Cash reduced from £5.2 million to £4.7 million.
• One institutional customer cancellation removed £0.1 million of ARR.
• Additional hiring could keep costs elevated before new sales arrive.

September's results must add financial detail

KRM22 says the investments being made now are laying the foundations for accelerated growth in 2027 and beyond. That gives investors a clear timeframe against which to assess progress, but it also means the business must balance current spending with the pace of contract conversion.

The September half-year results should provide a fuller picture of margins, operating costs and cash movement. Any additional information on customer retention, sales conversion and the timing of committed hiring would also be useful.

For now, the update shows steady progress in recurring revenue and some welcome product validation. The weaker EBITDA result and delayed pipeline conversion mean it is not an entirely clean growth story, however. Execution during the second half will determine whether KRM22 enters 2027 with genuine momentum rather than simply a larger cost base and an attractive pipeline.