Rosslyn’s half-year: margins up, AI modules rolling, but cash tight and pipeline slower
Rosslyn Data Technologies has posted its interim results for the six months to 31 October 2025. Headline takeaways: revenue edged up, gross margin jumped, adjusted EBITDA loss narrowed, and the AI-led product strategy is gaining traction with both existing and new customers. Against that, ARR slipped, the pipeline thinned and some expected H2 wins have slid into next year. Cash is the pressure point, though management has cut costs to slow the burn.
Key numbers investors should know
Quick definitions for newer readers:
- ARR: annual recurring revenue – contracted subscription revenue normalised to a year.
- Gross margin: percentage of revenue left after direct costs.
- Adjusted EBITDA: a proxy for operating cash profitability before non-cash and exceptional items.
- Cash burn: average monthly net cash outflow.
| Metric | H1 2026 | Comparative |
|---|---|---|
| Revenue | £1.5m | £1.4m (H1 2025) |
| Gross margin | 46.3% | 35.7% (H1 2025) |
| Adjusted EBITDA loss | £1.0m | £1.1m loss (H1 2025) |
| Operating loss | £1.4m | £1.4m loss (H1 2025) |
| Net loss | £1.4m | £1.3m loss (H1 2025) |
| ARR | £2.3m | £2.4m (H1 2025) |
| Total pipeline | £3.5m | £4.1m (30 Apr 2025) |
| Weighted pipeline | £0.9m | £1.3m (30 Apr 2025) |
| Monthly cash burn | £175k | £125k (H1 2025) |
| Cash burn post-period | £110k (December 2025) | Not applicable |
| Cash and cash equivalents | £0.7m | £1.7m (30 Apr 2025) |
Margins are moving the right way
Gross margin improved to 46.3% from 35.7%, driven by lower hosting costs and a focus on higher quality revenue. That is a meaningful shift for a SaaS platform at this scale, lifting gross profit to £0.7m versus £0.5m. It is the clearest operational positive in the numbers and gives more leverage to future revenue growth.
Adjusted EBITDA loss improved slightly to £1.0m. Operating costs rose to £2.1m, with £80k of redundancy costs in the period. The net effect: operating loss broadly flat year-on-year, but the unit economics are better than a year ago.
AI-led product strategy: customer traction and new modules
Rosslyn’s AI classification tool, AICE, is now in production with three customers, with a further seven – including the Major Client – in trials. The Major Client has started trialling AICE in their live environment, and Rosslyn is now talking to another department there. That cross-sell is central to the near-term plan and could be a meaningful driver if it converts.
Two new AI-powered add-ons are in play:
- IniTrack – a project and savings tracker using generative AI to flag likely outcomes for procurement initiatives.
- Benchmarking – real-time spend comparisons across divisions, peers and public price books.
One new global media and technology customer has bought both modules, alongside the core platform. That three-year deal will generate $160k of ARR plus $60k of first-year professional services. A separate one-year deal with a British train operator is worth £85k over the term.
Growth message intact, but pipeline has slipped
Management still guides to a slight increase in revenue for FY 2026 and an increase in ARR of over 15%. However, some deals expected to land in H2 2026 have moved into the first half of the next financial year. The total pipeline at 31 October 2025 was £3.5m, down from £4.1m at 30 April 2025, and the weighted pipeline fell to £0.9m from £1.3m.
On the flip side, recurring licence revenue remains the core, accounting for £1.1m in the half (76% of total). North America continues to be a strong region at £0.7m, ahead of the UK and Europe.
Cash, burn and funding: the crux of the investment case
Cash fell to £0.7m at 31 October 2025 after a £1.0m outflow in the half. Average monthly cash burn was £175k, up on last year as Rosslyn invested in sales and marketing. Post-period, cost cuts reduced December burn to £110k. If that lower run-rate holds, the 31 October cash balance would imply roughly six months of headroom, all else equal. That is tight and puts the onus on near-term conversions and/or further cost actions.
The balance sheet moved to net liabilities of £0.2m from net assets of £1.1m at year-end. Convertible financing sits at £559k (host) and £414k (derivative). There were no financing inflows in the half, unlike the prior year’s equity and loan raise. The Board says it is monitoring costs closely and assessing funding options on an ongoing basis. The goal remains to become cash flow generative in FY 2027.
Backlog and revenue mix: a nuanced picture
Future performance obligations total £3.1m, down from £3.5m at 30 April 2025 and £4.6m a year earlier. That softening reflects the same pipeline dynamics and an ARR of £2.3m that dipped 6% year-on-year due to churn of a particular customer. However, the shift toward higher-margin, licence-led revenue is visible: professional services were £0.3m versus £0.4m in the prior half, while annual licence fees rose to £1.1m.
Why this update matters for shareholders
- Proof of product-market fit: AICE is live with three customers and being trialled by seven, including a household-name Major Client. Early adoption of IniTrack and Benchmarking supports upsell potential.
- Improving unit economics: a 1,060 basis point gross margin uplift is significant for a business of this size.
- Execution risk on timing: pipeline conversion has slipped, weighted pipeline is lower, and ARR fell in the half. Delivery in H2 and early next year is key to the FY 2026 and FY 2027 targets.
- Liquidity watch: cash is limited. Management has cut burn to £110k per month and is evaluating funding options. Until the pipeline converts, funding remains a live topic.
My take: cautiously constructive, with a close eye on cash
This is a better-quality P&L backed by clearer product momentum. The margin improvement, live trials at a global tech giant and first sales of two new AI modules all point in the right direction. Guidance for ARR growth of over 15% in FY 2026 is bold given the H1 dip, but if even a portion of the seven AICE trials and the Major Client expansion land, it is achievable.
The constraint is liquidity. The December burn reduction to £110k is encouraging, but the 31 October cash balance of £0.7m offers limited runway. The Board openly flags ongoing assessment of funding options. For investors, the near-term catalyst set is clear: convert the trials, expand within the Major Client, and keep gross margin in the mid-40s or better. Do that and FY 2027 cash generation looks credible. Miss on timing, and a top-up raise or further belt-tightening may be needed.
What to watch next
- Conversions of the seven AICE trials and go-live of IniTrack and Benchmarking with the new global media and technology customer.
- Evidence of cross-sell into a second department at the Major Client.
- ARR trajectory in H2 2026 versus the >15% full-year ARR growth target.
- Cash burn progression and any updates on funding plans.
For more on Rosslyn’s platform and investor materials, see the company’s website at https://www.rosslyn.ai/.
