Nanoco Posts H1 Profit on LG Settlement and Advances Sensor JDAs

Nanoco H1 FY26 results: profit lands, licence cash flows in, sensor JDAs move forward

Nanoco’s interim results show a clear step forward: a return to profit, leaner costs, and tangible progress with customers in image sensors. The headline driver was the LG Electronics licence settlement, but there is more here than a legal cheque. The Group is tightening its belt and edging closer to commercial scale-up with two Asian chemicals partners.

What drove the numbers in H1 FY26

Group revenue rose 123% to £7.7m (H1 FY25: £3.4m), largely due to licence income. Of the £7.7m, licences contributed £6.8m, services £0.8m, and material sales £0.1m. The licence line includes £3.806m from LG and £3.037m from Samsung.

Adjusted EBITDA jumped to £5.1m (H1 FY25: £0.5m), and the Group booked a £2.3m profit after tax (H1 FY25: £1.0m loss). Basic EPS was 1.15p. Period-end cash was £14.4m (31 July 2025: £14.0m).

Key numbers	H1 FY26	H1 FY25
Revenue	£7.7m	£3.4m
Licences	£6.8m	£3.0m
Services	£0.8m	£0.3m
Adjusted EBITDA	£5.1m	£0.5m
Adjusted operating profit/(loss)	£4.1m	£0.2m loss
Operating profit/(loss)	£2.5m	£1.2m loss
Profit/(loss) after tax	£2.3m	£1.0m loss
Cash (period end)	£14.4m	£15.5m
Basic EPS	1.15p	(0.53p)
Deferred revenue (balance)	£34.2m	£40.5m

Commercial traction: sensor JDAs edging to scale-up

Nanoco continues to hit milestones under its Joint Development Agreements (JDAs) in image sensors. The first Asian Chemical Customer has extended for three more years, moving from R&D towards production. Over the next few months the customer is expected to select a material to move into scale-up and then production.

The second Asian Chemical Customer has delivered positive results, with discussions underway for a further JDA extension. Beyond these two, Nanoco remains engaged with several potential partners across SWIR (short-wave infrared), MWIR (mid-wave infrared) and display applications in Europe and Asia. Management says its second-generation sensing materials are achieving market-leading device metrics with customers – an encouraging claim for future product revenue.

Cost base trimmed again to protect cash

The Company has taken another slice out of operating costs. The gross cash cost base is now £0.3m-£0.4m per month (FY25: £0.5m). Post-restructuring, gross annual cash costs are expected to be about £4.2m from 1 August 2026 (2025: £6.0m). Headcount has been reduced and the Runcorn site footprint cut, while retaining capability to research, test and manufacture PbS and InAs quantum dots at scale.

The Board is being simplified too, moving from seven directors to three by May 2026, with Liam Gray acting as Interim CEO and Dr Jalal Bagherli as Executive Chairman.

IP monetisation: LG settled, Shoei closed

Nanoco achieved a no-fault settlement and licence with LG for a gross $5m, received in January 2026. Separately, the Company settled litigation with Shoei to protect the organic business and avoid uneconomic legal spend. Cash costs relating to the Shoei case were £3.2m, to be paid by 30 April 2026.

The strategy is clear: use the patent portfolio primarily to support commercialisation, but pursue licences where the IP is used without permission. Recurring licence revenue – notably from Samsung – continues to underpin the P&L.

Outlook and cash runway

For FY26, management expects revenue of about £11.3m, in line with market expectations. Cash at 30 April 2026 is expected to be around £10.4m after the £3.2m Shoei payment. The Company reiterates its ambition to reach cash breakeven in the medium term and continues to assess strategic options.

Market-wise, third-party forecasts cited by Nanoco point to strong growth in SWIR sensors and QD-based displays over the next five years. Across all applications, the Company estimates an approximately $1.0bn quantum dot market by 2029. In image sensors, there is a visible shift toward heavy metal-free materials in automotive and consumer electronics – a favourable backdrop for cadmium-free quantum dots.

Why this matters for investors

• Proof of profitability: A £2.3m H1 profit and 1.15p EPS show the P&L can swing positive with licence support.
• Customer momentum: The first Asian Chemical Customer moving to scale-up is the closest sign yet of potential product revenues beyond services and licences.
• Lean cost base: Monthly cash burn guidance of £0.3m-£0.4m and annualised £4.2m from August 2026 extend runway and lower breakeven.
• Visibility from deferred revenue: £34.2m of deferred revenue reflects contracted licence fees recognised over time, offering earnings visibility.

Watch-outs and open questions

• Revenue mix: H1 revenue was still dominated by licences (£6.8m of £7.7m). Material sales remain small at £0.1m. Product revenue from sensors is not yet evident.
• Cash dip near term: Expected cash of c.£10.4m at end-April reflects the £3.2m Shoei outflow.
• Execution risk: Transition from R&D to scale-up can take time, and customer selection of materials is still pending.
• Board changes: Rapid restructuring and leadership transitions can be distracting, even if they cut costs.
• Balance sheet optics: Total equity shows net liabilities of £17.2m, and the Group carries large deferred revenue liabilities. The Company states it remains a going concern.

My take on Nanoco’s trajectory

This is a cleaner, leaner Nanoco with genuine commercial momentum in sensors. The LG licence has done its job in shoring up cash and delivering a profitable half, while Samsung continues to provide recurring income. More importantly, the first customer moving toward scale-up suggests a pathway to product revenue, which is the missing jigsaw piece.

The bear case is that licences carry you only so far; without material sales ramping, profitability relies on one-offs and amortised deals. Management knows this and is cutting costs hard to buy time for JDAs to convert. If even one of the sensor programmes scales into production, the P&L mix could change meaningfully. Until then, expect a lumpy revenue profile, but with a lower cash burn and clearer commercial direction.

Quick jargon buster

• JDA (Joint Development Agreement): a customer-funded R&D contract to co-develop materials or processes, often with milestones and potential scale-up to production.
• SWIR/MWIR: short- and mid-wave infrared – parts of the infrared spectrum used in advanced imaging and sensing.
• Adjusted EBITDA: earnings before interest, tax, depreciation and amortisation, adjusted to strip out items like share-based payments and one-off costs.
• Deferred revenue: cash received (often upfront licence fees) that is recognised as revenue over the life of the contract, creating a liability until earned.
• EPS: earnings per share – profit divided by the weighted average number of shares.

Guidance snapshot

• FY26 revenue expected to be c.£11.3m.
• Cash expected to be c.£10.4m at 30 April 2026, including £3.2m paid for Shoei litigation costs.
• Gross annual cash costs expected to be c.£4.2m from 1 August 2026 (2025: £6.0m).

Bottom line: a constructive half. If the first sensor programme does move from lab to line, this story changes gear. For now, Nanoco has bought itself time, tightened spend, and kept customers moving in the right direction.