Microlise Group Issues FY25 Profit Warning and Announces Cost-Cutting Measures

Microlise FY25 trading update: profit warning, cost cuts, and what to watch

Microlise Group has issued a downbeat FY25 trading update. Revenue and profit are now expected to land below market expectations, with the company launching cost-saving measures and signalling a softer OEM outlook into FY26. There are bright spots – recurring revenue is up, APAC is performing well, and cash remains solid – but the near-term picture is clearly tougher than hoped.

What changed vs market expectations?

The company now expects to deliver FY25 revenue of not less than £84 million, versus market consensus of £91.3 million. Adjusted EBITDA is guided to not less than £8.3 million, versus consensus of £12.7 million. That is a material reset on both the top and bottom line, albeit still modest growth against FY24 adjusted revenue.

Metric	Guidance / Outcome	Prior reference point
FY25 revenue	Not less than £84 million	Consensus £91.3 million; FY24 adjusted revenue £81.0 million (c.+4%)
FY25 adjusted EBITDA	Not less than £8.3 million	Consensus £12.7 million
ARR run rate (FY25)	£59.1 million (+4.5%, +£2.5 million YoY)	FY24 ARR run rate £56.6 million
OEM revenue mix (FY25)	~27% of total revenue	FY24: 33%
Annualised cost savings	At least £4.0 million	Exceptional charge c.£1.5 million; ~10% headcount reduction
Year-end cash (31 Dec 2025)	~£11 million	FY24: £11.4 million; undrawn £10 million RCF and £20 million accordion

Where the slowdown is biting

OEM channel: tariffs and macro hit volumes

Microlise is seeing lower order volumes from global OEM customers in the automotive and construction sectors. The company flags trading disruption tied to tariffs and broader macro weakness. As a result, OEM revenue is expected to be below FY24 and represent roughly 27% of FY25 total revenue (down from 33%). Management is also “cautiously” guiding that FY26 OEM revenue will be below FY25 levels, which is notably conservative.

UK direct sales: project delays push revenue into FY26

Direct UK sales have been softer due to delays in a small number of projects. One large project – with a British multinational retailer – was impacted by a cyber-attack earlier this year, delaying the deployment of Microlise’s software and hardware. The revenue associated with these projects is now expected to be recognised in FY26. The work is not lost, but timing has moved out.

APAC: WooliesX delivered, pipeline skewed to larger deals

Asia-Pacific is the standout, with strong direct sales and the full deployment of the £10.6 million, 5-year WooliesX contract in Australia. The APAC pipeline is “skewed to a small number of larger contracts” – that’s encouraging for scale, but it also means deal timing could be lumpy.

Recurring revenue and margins: steady ARR, EBITDA reset

Annual recurring revenue (ARR) run rate is expected at £59.1 million, up 4.5% year-on-year (£2.5 million). That’s steady progress, though not rapid. Combined with softer OEM and UK project timing, it leaves the FY25 P&L under more pressure than previously expected.

On profitability, adjusted EBITDA guidance has been reset to not less than £8.3 million. To protect margins and refocus spend, Microlise is implementing cost and efficiency measures across the group: at least £4.0 million of annualised savings, an exceptional charge of around £1.5 million mainly for severance, and an expected ~10% reduction in headcount. Management expects these actions to be materially complete before year end.

Cash, balance sheet and liquidity

Year-end cash is anticipated to be around £11 million (FY24: £11.4 million). The group also has an unutilised £10 million revolving credit facility and a £20 million accordion. Importantly, Microlise says it will remain cash generative in FY25 despite the one-off restructuring costs, and excluding the £2.2 million cash proceeds received in H2 FY25 from the sale of its investment in Trakm8 Holdings Plc.

FY26 outlook: revenue growth, EBITDA below consensus

Looking to FY26, management expects overall revenues to increase versus FY25, with improving recurring revenue growth and “materially increased” EBITDA and cash generation after the cost-saving programme. However, they also flag that FY26 adjusted EBITDA is expected to be below current market expectations of £14.9 million. In short, a recovery is anticipated, but not to the level the market had pencilled in.

Leadership update: new CTO to drive tech strategy

Microlise has appointed Dean Garvey-North as Chief Technology Officer, succeeding Duncan McCreadie, who is retiring after a decade with the group. Dean will lead technology strategy, product innovation and infrastructure – a timely hire as the group sharpens execution and aims to accelerate product development.

My take: why this matters for investors

• Near-term negative: This is a clear profit warning. FY25 revenue and EBITDA are both below consensus, and FY26 EBITDA is guided to be below consensus too.
• OEM risk persists: Tariff-related disruption and macro softness have cut OEM volumes and visibility. Management’s caution for FY26 here is prudent, but it tempers the recovery narrative.
• Execution vs timing: UK project delays – particularly the large retailer impacted by a cyber-attack – push revenue into FY26. The work sounds intact, but timelines slipped.
• Resilience levers: ARR growth, cost savings of at least £4.0 million, and a stable cash position with undrawn facilities give Microlise room to navigate the downturn.
• Watch the catalysts: APAC contract wins, signs of OEM volumes stabilising, acceleration in ARR, and proof that margin initiatives flow through to cash in H1 FY26.

Overall, the update is mixed: operationally resilient but commercially softer than expected. For investors, it likely means a period of reset while we watch for pipeline conversion and margin execution. A further trading update is due in late January 2026, which should help calibrate FY26 expectations.

Key numbers at a glance

Item	Figure
FY25 revenue	Not less than £84 million
FY25 adjusted EBITDA	Not less than £8.3 million
FY24 adjusted revenue	£81.0 million
ARR run rate (FY25)	£59.1 million (+4.5%)
OEM revenue mix (FY25)	~27% of total (FY24: 33%)
Annualised cost savings	At least £4.0 million
Exceptional charge	c.£1.5 million
Headcount reduction	~10%
Cash at 31 Dec 2025	~£11 million
Undrawn facilities	£10 million RCF; £20 million accordion
APAC highlight	WooliesX: £10.6 million, 5-year contract fully deployed

Quick jargon buster

• ARR (Annual Recurring Revenue): the contracted, repeatable revenue run rate from subscriptions and services.
• Adjusted EBITDA: earnings before interest, tax, depreciation and amortisation, adjusted to exclude exceptional items and certain non-cash charges.
• RCF (Revolving Credit Facility): a flexible bank facility the company can draw if needed; “accordion” is an option to increase that facility size.