SysGroup PLC Reports 26% Adjusted EBITDA Growth in FY26, Highlights AI-Led Transformation and Strong Cash Generation

SysGroup FY26 results show 26% adjusted EBITDA growth and a stronger second half

SysGroup has delivered a solid FY26 result, and the big message is pretty clear: the turnaround is starting to show up in the numbers. Revenue rose 8% to £22.07 million, while adjusted EBITDA – earnings before interest, tax, depreciation and amortisation, with other one-off and non-cash items stripped out – climbed 26% to £1.19 million.

The real kicker was the second half. H2 revenue grew 17% year on year, or 7% on an organic basis, which means excluding acquisition help. That matters because it suggests this was not just bought growth.

Key FY26 numbers	FY26	FY25
Revenue	£22.07 million	£20.50 million
Adjusted EBITDA	£1.19 million	£0.95 million
Adjusted EBITDA margin	5.4%	4.6%
Gross profit	£10.27 million	£10.01 million
Gross margin	47%	49%
Statutory loss before tax	£2.24 million	£2.45 million
Gross cash	£7.74 million	£8.74 million
Net cash	£2.70 million	£3.60 million

For retail investors, this is the kind of update you want from a small-cap tech services business. Growth improved, profitability improved, and cash conversion was very strong at 105%.

Why SysGroup’s managed IT services and cybersecurity mix is improving

SysGroup is a managed IT services provider, or MSP, selling ongoing IT support, cybersecurity and related solutions. What stands out here is that the company says it has reversed a pattern of persistent churn, which is when customers leave.

Managed IT Services revenue increased by £0.7 million in FY26 after declining by £0.9 million in FY25. That is a meaningful change in direction. If this sticks, it could be more important than the headline revenue growth because recurring service revenue is usually worth more than one-off resale work.

Cybersecurity is also becoming a bigger piece of the pie, rising to 45% of total revenue from 40% last year. Strategically, that looks positive. Cybersecurity tends to be sticky, in demand, and increasingly essential for customers under regulatory and operational pressure.

• Managed IT Services made up 83% of group revenue
• Value Added Resale, or VAR, rose to 17% of revenue
• Cybersecurity grew to 45% of total revenue
• Average contract value increased, with ACV up 34%

The Saxis acquisition also looks sensible so far. SysGroup bought Saxis in December 2025 for £1.25 million in cash plus up to £0.50 million in earn-out consideration, and it contributed £1.05 million of revenue and £0.14 million of profit after tax before year end.

Even better, management says around 30% of Saxis contract wins since acquisition came from cross-selling SysGroup’s wider services. That is exactly what investors want to hear after a bolt-on deal. It suggests integration is working rather than just adding more moving parts.

SysGroup AI-led transformation looks real because the savings are showing up in cash and margins

Lots of companies talk about AI. Fewer can point to hard numbers. SysGroup has done a better job than most of making this sound practical rather than promotional.

The company says its AI-enabled restructuring programme, Project Atlas, delivered £1.20 million of run-rate savings. Service desk headcount fell from 33 to 25, front-line payroll dropped 39%, and yet customer metrics improved.

That is the interesting bit. Standard tickets were resolved roughly twice as fast, customer satisfaction averaged 98%, P1 critical incidents fell by a third, and Net Promoter Score rose from 8 to 32 over two years. Net Promoter Score is a simple measure of customer willingness to recommend the business.

In plain English, SysGroup is arguing it can grow without needing to add staff at the old rate. If true, that is a powerful model because it breaks the usual link between revenue growth and cost growth.

There is already some evidence for that in the numbers. H2 adjusted EBITDA margin was 8.3%, comfortably ahead of the 5.4% full-year level. Management also says that margin level was maintained into the first quarter of FY27.

The weaker points in SysGroup FY26 results investors should not ignore

This was a good update, but it was not perfect.

First, gross margin fell to 47% from 49%. Management says that is because cybersecurity carries a slightly lower margin than legacy hosting. That explanation is fair enough, but it still means stronger revenue mix does not automatically mean stronger gross profitability.

Second, the business is still loss-making on a statutory basis. Operating loss was £1.94 million and loss before tax was £2.24 million. The gap between statutory loss and adjusted EBITDA is mainly explained by £1.54 million of amortisation, £0.64 million of exceptional items, and £0.41 million of share-based payments.

That does not mean the adjusted numbers are wrong, but investors should keep both views in mind. SysGroup is improving, not finished.

Third, net cash fell to £2.70 million from £3.60 million. That is after the Saxis acquisition, so it is not alarming, but the group also has an £8.00 million revolving credit facility with £4.86 million utilised and maturing in April 2027. The board says it could repay that balance from cash if needed and does not see a going concern issue, which is reassuring.

Finally, there is a boardroom wobble. CFO Owen Phillips is stepping down immediately from the board, though he will help with the handover. Interim CFO Craig Ormesher takes over. That is not ideal timing, but the company has at least set out a clear transition plan.

SysGroup FY27 outlook is confident and that matters for market expectations

The strongest line in the whole RNS may be the outlook statement. The board says it expects to exceed market expectations for FY27.

That is not language companies use lightly. It tells you trading since year end has been good enough for management to lean forward.

There is substance behind that confidence. H2 was stronger than H1, cash conversion was excellent, churn appears more controlled, and Saxis is already contributing. Add in the AI-driven savings and you can see why management thinks there is more to come.

My take on SysGroup’s FY26 final results for retail investors

I think this is a positive RNS. Not because everything is perfect, but because the direction of travel looks much better.

SysGroup is growing again, margins are improving at the adjusted level, customer metrics are getting stronger, and the acquisition strategy looks disciplined rather than reckless. Most importantly, the company is producing cash while it does this.

The negatives are still there: statutory losses, a slightly lower gross margin, and a CFO departure. But taken together, this feels like a business moving from story stock to execution stock. For small-cap investors, that is usually where things get more interesting.

In short, FY26 suggests SysGroup’s AI-led transformation is not just PowerPoint fluff. It is starting to feed through into contracts, costs and cash. That is why this result matters.