Comms Group (ASX: CCG) Lifts EBITDA 52% Ahead of Divestment

Comms Group reported a 52% increase in underlying EBITDA to $8.7 million for the year ended June 2026. Revenue rose 31.6% to $74.5 million, within the company’s recent guidance range.

The telecommunications and cloud provider also returned to pre-tax profit. Net profit before tax reached $1.4 million, compared with a $600,000 loss in FY25.

Earnings Step Up

Gross profit increased 30.8% to $35.5 million. However, the gross margin eased to 47.6% from 47.9%, reflecting the revenue mix after TasmaNet’s acquisition.

Underlying EBITDA margin expanded to 11.7% from 10.1%. The earnings result also exceeded the company’s recent market guidance.

All three operating divisions increased underlying EBITDA. Business Communications and Technology contributed $5.1 million, up from $4.2 million.

Global Unified Communications more than doubled its contribution to $3.2 million. Secure Managed IT Solutions increased its result 30% to $3.6 million.

Recurring Revenue Supports the Base

Recurring, services and usage fees reached $69.3 million. They represented 93% of group revenue, compared with 92.8% one year earlier.

Comms Group signed new contracts carrying $10.9 million of annual recurring revenue. That was about 5% above FY25’s $10.4 million.

Business Communications and Technology and Global each generated $4 million of new annual recurring revenue. The managed IT division added $2.9 million.

The full-year TasmaNet contribution helped lift Business Communications and Technology revenue to $37 million. Global revenue rose to $15.2 million.

Cash Flow and Investment

Operating cash flow increased 7% to $4.7 million after $2.1 million of acquisition, restructuring and other one-off payments.

Free cash flow declined to $3 million from $4.1 million. Capital expenditure rose to $1.7 million due to cloud and network capacity upgrades.

Closing cash was $4.6 million, including $1.7 million attributed to discontinued operations. Net debt increased to $6.3 million from $5.2 million.

Divestment Reshapes the Group

Comms Group has agreed to sell onPlatinum for $30 million, with completion expected during the first quarter of FY27. It acquired the business for $12 million in 2022.

The sold operation contributed $22.3 million of FY26 revenue. Its removal will therefore change the group’s reported revenue and earnings base in FY27.

Management plans to use sale proceeds to reduce net debt and fund growth. Capital distributions may be considered after debt has been reduced.

FY27 Priorities

The company expects margin improvement as network consolidation and remaining synergy benefits annualise. It is also completing its OneNetwork and OneCloud consolidation program.

Growth plans include expanding the domestic sales footprint and continuing the international build-out of Global Unified Communications. Cross-selling network and cloud services remains another focus.

Comms Group declared a fully franked final dividend of 0.125 cents per share. Formal FY27 guidance will be provided as the year progresses.