Software Circle Reports 71% Surge in Operating EBITDA for FY2025

Right then, let’s dive into Software Circle’s preliminary results for the year ended 31 March 2025. If you’ve been following this AIM-listed serial acquirer of vertical market software (VMS) businesses, you’ll know they’ve been executing a deliberate pivot from legacy print operations towards a decentralised software group. This set of numbers? It’s the clearest signal yet that the strategy’s gaining serious traction.

A Stellar Leap in Profitability

The standout figure? A 71% surge in Operating EBITDA (oEBITDA) to £4.8 million (FY2024: £2.8m). That’s not just growth – it’s acceleration. Digging deeper:

• Revenue climbed 13% to £18.3m, though organic growth tells a more nuanced story: acquired businesses delivered 5% organic growth, while legacy unit Nettl Systems saw a deliberate retreat from low-margin work.
• Recurring revenue now dominates at 70% of total income (up from 57%), hitting £12.7m. This is the holy grail for software investors – predictable, sticky income.
• Adjusted EBITDA (aEBITDA) jumped 88% to £3.2m, pushing the margin to 17% (from 10%) – smashing their 15% target.
• Operating Return on Capital Deployed (oROCD) hit 24% (up from 21%) – proof that acquired businesses are being integrated effectively.

The one slight blemish? Operating Cash Flow Per Share (OCFPS) dipped to 0.5p (from 0.6p). But context is key: this reflects the full-year dilution from September 2023’s £23.1m equity raise – dry powder now being deployed. Expect this metric to rebound sharply as new acquisitions bed in.

Strategic Execution: M&A, Debt, and a Cultural Shift

Software Circle isn’t just buying businesses; it’s building an ecosystem. Three strategic pillars defined this year:

1. Disciplined M&A Engine

The group onboarded three new VMS businesses:

• Be The Brand Experience (marketing compliance for financial services)
• Link Maker Systems (adoption platform for children’s social care)
• Total Drive (software for driving instructors)

Total consideration? Around £16.1m. Critically, these weren’t vanity purchases. Each fits strict criteria: mission-critical software in niche verticals, recurring revenue models, and strong cash generation. The pipeline remains “robust,” signalling more to come.