Northcoders Reports Final Results: Revenue Drops But Consultancy Growth and Strategic Reset Inspire Confidence

That matters because repeat business is usually better quality revenue than one-off wins. It suggests clients like the service and are coming back for more. Northcoders also said Counter® had total sales of approximately £2.5 million, with approximately £1.0 million of contracted revenue rolling into FY26.

The current trading update goes a step further. The group says approximately £1.5 million of Counter® revenue is already contracted to be recognised in 2026, with a further £1.0 million-plus pipeline at final stage. On top of that, there is over £4.0 million of pipeline deals at multiple stages across the group.

Pipeline is not the same as revenue, of course. It means potential deals being worked on, not cash in the bank. But for a small company in transition, better visibility is important and gives investors something more solid than vague optimism.

Why G-Cloud and ISO accreditations matter for Counter® growth

Northcoders highlighted progress on public sector frameworks such as G-Cloud. A framework is basically an approved supplier route that can make it easier for public sector bodies to buy services.

Counter® has also gained ISO 9001, 14001 and 27001 in Q1. Those are recognised standards covering quality management, environmental management and information security. They may sound box-ticky, but they can make a real difference when bidding for public sector, financial services and critical infrastructure work.

My view is simple: this is exactly the kind of plumbing a scaling consultancy needs. It is not glamorous, but it improves credibility and routes to market.

Northcoders cost cutting, cash position and debt refinancing look more reassuring

Management says it delivered approximately £2.1 million of annualised cost savings. You can see the reset in the staffing numbers too. Average headcount fell to 79 from 129.

Adjusted EBITDA came in at £(0.6) million, down from £1.0 million, but cash actually improved to £1.6 million from £1.2 million. Operating cash outflow was just £59,951 for the year, which is far less alarming than the statutory loss might suggest.

That difference matters. Adjusted EBITDA strips out items management views as not reflecting the underlying trading performance, while statutory profit includes everything. Investors should look at both, not just one.

Another positive is the refinancing. Northcoders secured a new £1.5 million facility with NatWest, replacing a previous 11% APR growth loan with a facility priced at an average of 3% above the Bank of England base rate. That is a meaningful improvement in financing terms and gives the group more flexibility.

The ugly part of the results: loss before tax, impairments and lower net assets

There is no dressing this up – the statutory numbers are ugly. Northcoders reported a loss before tax of £(2.9) million, compared with a profit before tax of £0.4 million in FY24.

A big reason was £1.7 million of non-recurring items. That included £143,291 of business restructuring costs, £1.5 million of impairment losses, and a £40,000 dilapidations expense linked to the Leeds office exit. An impairment is an accounting write-down when an asset is judged to be worth less than previously thought.

Net assets also fell to £2.3 million from £5.3 million. Intangible assets dropped to £252,260 from £2.1 million, which reflects that write-down of internal assets after the shift in business model.

This is the main reason the market may stay cautious. Once a company has to reset strategy and write down assets, investors naturally want proof that the new plan is working before getting too excited.

Ofsted outstanding rating and AI bootcamps strengthen the long-term story

One operational win that should not be overlooked is the Ofsted rating. Northcoders achieved an “Outstanding” rating across all areas in its first full inspection.

That is a serious credibility marker in education and training. It supports contract wins, helps with reputation, and gives some comfort that quality has not been sacrificed during restructuring.

The launch of the Data Engineering, AI and Machine Learning bootcamp also looks sensible. The company says three cohorts have already graduated and secured employment in the Data & AI field. The revenue contribution from this programme is not disclosed, but strategically it lines up with where employer demand appears to be heading.

Northcoders outlook for 2026: better shape, but still not risk-free

The board says FY26 has started well. Demand in London is strong, Counter® has momentum, and the GLA contract was extended at the end of FY25.

That said, management is still cautious on government-funded skills programmes. Fair enough. The funding environment remains uncertain, and this business has already felt what happens when policy changes faster than expected.

My take is that Northcoders now looks leaner and more focused, with a healthier balance between training and consultancy. The group is still in prove-it mode, but there are enough positives here to suggest the reset is gaining traction.

What these Northcoders final results mean for retail investors

This was not a good year on the historic numbers, but it may turn out to be an important one. The old model was hit hard, and the company responded quickly rather than pretending it was business as usual.

For investors, the bull case is fairly clear: Counter® keeps growing, funded training becomes more selective and profitable, AI-related courses add a fresh growth lane, and the stronger cash position buys time. The bear case is just as clear: consultancy growth may not be enough to offset ongoing weakness in funded training, and the pipeline still needs converting into revenue.

On balance, this RNS reads cautiously positive to me. Not because the FY25 numbers were good – they were not – but because the business appears to have taken its medicine and come out with a more credible structure for FY26.