Solid State PLC Reports Strong Final Results and Upgrades Market Expectations

Defence and AI demand are powering Solid State growth across all three divisions

The two big demand drivers here are defence and AI-linked infrastructure. Defence and security accounted for around 47% of Group revenue, and the company says demand from governments and prime contractors remains strong.

There is also increasing demand tied to AI-driven data centres. That runs through more than one division, from power switching products to computing and communications infrastructure. This matters because it broadens the growth story beyond defence, even though defence is still doing most of the heavy lifting today.

Systems division growth was the star performer

Systems revenue jumped 47.8% to £62.5 million. A lot of that came from the delayed communications programme, but Solid State is also investing for future growth through its Integrated Computer Systems facility and RF antenna capability.

The initial $10.8 million, or £8.0 million, Project CAIN shipment for the British Army was completed in Q1 FY26/27. That is important because it shows the order is now converting into revenue, not just sitting in the backlog.

Power division looks genuinely improved

Power revenue rose 15.6% to £31.8 million, while gross margin improved from 31.6% to 35.8%. Adjusted operating margin jumped to 5.3% from 1.0%, which is a big improvement.

That suggests management’s reorganisation work is paying off. The company also highlighted circa $20 million of new orders in the last four months of the year for defence-related battery power applications, which gives this division more substance than it had before.

Components division stayed resilient in mixed markets

Components revenue rose 8.1% to £59.8 million. That may look less exciting than Systems, but it still matters because market conditions were described as challenging for much of the year.

Margins here were broadly stable at 4.0% adjusted operating margin, against 4.1% last year. So this is not the main profit engine right now, but new design wins in the UK and US suggest it could contribute more if market conditions keep improving.

Solid State order book, cash flow and balance sheet all point to better revenue visibility

The open order book stood at £102.4 million at 31 May 2026, compared with £103.4 million a year earlier. On the face of it, that looks flat to slightly down, but there is an important twist – the 2026 figure included no NSPA orders, while the 2025 figure included £19.0 million.

That means the underlying order book mix is stronger than the year-on-year comparison first suggests. The Board also says the non-NATO order book is significantly stronger, which helps support its confidence on the year ahead.

Cash generation was solid too. Cash generated from operations increased to £13.5 million, net debt fell to £4.2 million, and return on capital employed improved to 14.0% from 8.7%.

I like this part of the update. Growth is useful, but growth with better cash flow and lower debt is much more investable.

Why the upgraded FY26/27 outlook matters for Solid State shares

This is probably the biggest market-moving line in the release: the Board expects to exceed current market expectations for FY26/27. Before this statement, consensus stood at £152.5 million of revenue and £8.1 million of adjusted profit before tax.

That matters because companies do not usually say this lightly. It strongly hints that broker forecasts may need to move up, assuming trading continues as expected.

The business says current trading is in line with Board expectations and that Q1 has started well. In other words, management is not banking on a distant recovery – it is pointing to momentum already in motion.

What could go wrong: supply chain pressure, customer concentration and defence timing risk

It is not all plain sailing. The company flagged supply chain pressure from AI-related component demand, especially in memory and semiconductors. That can create both opportunity and risk, but it does raise the chance of delays, higher input costs and working capital getting tied up in extra stock.

Inventory rose to £30.5 million from £28.2 million, partly to support Project CAIN deliveries. That is understandable, but it does show the business still needs to carry a decent amount of stock to support growth.

There is also some concentration risk. One individual customer accounted for £26.7 million, or 17%, of Group revenue in FY25/26. That is not automatically a problem, but it is worth keeping an eye on.

And while defence spending is a major opportunity, Solid State also noted that delays to the UK Defence Investment Plan could affect the timing of orders and revenues. So the long-term theme looks strong, but the quarterly phasing may still wobble.

My take on Solid State PLC final results for retail investors

This was a strong set of final results. The numbers were good, the cash flow was good, margins improved, debt came down, and the outlook statement was better than good – it was explicitly ahead of market expectations.

The main caution is that some of the growth was helped by delayed revenue finally being recognised, so investors should not assume every year will look this explosive. Even so, the broader picture is positive: defence demand is robust, AI-related infrastructure is adding another leg of growth, and the company is investing into real opportunities rather than vague hopes.

On balance, this RNS reads like a business that has regained momentum and thinks the market is still underestimating it. For existing shareholders, that is encouraging. For new investors, the question is less about whether the year was strong – it clearly was – and more about whether Solid State can turn this into a sustained multi-year upgrade story.