Shearwater Group Surpasses FY26 Revenue and EBITDA Forecasts with Robust H2 Growth

Robust H2 Performance Propels Revenue Beyond Market Expectations

Shearwater Group has reported FY26 trading results that significantly outperform market consensus for the year ending 30 June 2026. Expected revenue of approximately a342 million notably exceeds the market forecast of a335.5 million. This equates to an annualised 33% increase compared to FY25 revenue of a339.5 million, measured over a 15-month period. The strong second-half growth is attributed to ongoing expansion within the Services segment and momentum from previously disclosed contract wins.

The revenue outperformance is particularly remarkable given that the market had already anticipated substantial growth. The FY25 annualised revenue growth of 29% indicates that FY26 has not only sustained but accelerated the company’s momentum. The Services segment’s contribution highlights continued demand for managed security and advisory solutions across both public and private sectors.

Adjusted EBITDA Surges by 41% Annualised

Shearwater Group’s adjusted EBITDA is forecasted at a32.5 million for FY26, exceeding the market’s a32.4 million expectation and representing a 41% annualised increase from FY25’s a32.2 million. This accelerated EBITDA growth relative to revenue suggests operational efficiencies and benefits from the group’s buy-and-build strategy, including improved margins and scalable fixed costs.

While FY25’s 91% annualised EBITDA growth was exceptionally high, the 41% growth in FY26 remains robust, reflecting effective management of operational efficiency as the business scales. This positive trend supports the long-term sustainability of profitability improvements as Shearwater enters FY27 with strong momentum.

Net Cash Position Strengthens to a35.6 Million Amid Growth Investments

Shearwater Group ended FY26 with net cash of a35.6 million, up from a35.1 million in FY25, demonstrating balance sheet strength alongside growth investments. This increase, despite organic growth initiatives and acquisition pursuits, indicates strong cash generation and working capital management. Maintaining net cash is critical for acquisition flexibility without relying on external funding or diluting shareholders.

The board is now seeking shareholder approval for capital reallocation between reserves, enabling potential share buybacks or dividend payments. This reflects management’s commitment to balancing growth investment with shareholder returns, highlighting cash conversion efficiency and trading quality.

Capital Reallocation Proposal to Enhance Shareholder Returns and Strategic Agility

Shearwater Group’s Directors plan to issue a General Meeting notice requesting shareholder approval for capital reallocation between reserves. This will provide flexibility to execute share buybacks or dividends if deemed appropriate, signaling confidence in the group’s financial health and future trading prospects.

The timing follows two consecutive years of strong performance, with FY26 results surpassing expectations and providing a solid foundation for capital allocation discussions. The proposal maintains management’s optionality to pursue acquisitions or organic growth, reflecting a maturing business model generating surplus capital while retaining strategic agility.

Services Segment Drives Continued Momentum in H2

The Services segment’s strong H2 performance underscores robust demand for managed security and advisory solutions. Operating across identity and access management, data security, cybersecurity solutions, managed security services, and governance, risk, and compliance, Shearwater’s diversified offering reduces reliance on any single service or technology trend.

Serving a global customer base across public and private sectors, the group’s broad service portfolio supports resilience against sector-specific downturns and positions it to capture multiple revenue streams per engagement, enhancing both growth and operating leverage.

Cybersecurity Threat Landscape Fuels Long-Term Demand

CEO Phil Higgins emphasizes the evolving cybersecurity threat environment as a key demand driver. Increasingly sophisticated cyber threats across public and private sectors create sustained need for updated tools, processes, and advisory services, independent of economic cycles but influenced by spending patterns.

Cybersecurity’s elevation to a board-level priority and regulatory demands bolster ongoing requirements for governance, risk, and compliance services. Shearwater’s strong market reputation and skilled team position it to capture premium demand, supporting margins and EBITDA as the business scales.

Buy-and-Build Strategy Validated by Market Position and Cash Generation

Shearwater’s buy-and-build growth strategy is delivering results, with strong organic growth and a net cash position. The ability to consider capital returns while maintaining financial flexibility reduces reliance on external funding, mitigating dilution and debt risks. Recent acquisitions contribute positively to trading performance, supporting the group’s scalable platform vision.

Headquartered in the UK with global reach, the group can pursue acquisitions across geographies and services. Its AIM listing provides acquisition currency options, and management’s confidence in FY27 prospects, coupled with a strong pipeline, indicates alignment with strategic objectives. The capital reallocation preserves capacity for acquisitions alongside potential shareholder returns, positioning Shearwater to capitalize on consolidation opportunities in the fragmented cybersecurity market.

Positive Outlook as Shearwater Enters FY27

The group enters FY27 with strong momentum, backed by ongoing cybersecurity demand and a robust opportunity pipeline. While avoiding detailed numerical guidance, management expresses confidence in near-term trading, with no material headwinds anticipated. The strong pipeline signals potential future revenue visibility, important for growth-stage technology services firms.

Given FY26’s outperformance, consensus forecasts for FY27 may be conservative or understate the group’s execution capabilities. Management’s openness regarding capital reallocation and financial position reflects confidence and invites investors to monitor forthcoming trading updates to assess sustained revenue and EBITDA growth.

Outperformance Highlights Execution Strength or Conservative Market Views

Market consensus anticipated FY26 revenues of a335.5 million and adjusted EBITDA of a32.4 million. Shearwater’s anticipated a342 million revenue and a32.5 million EBITDA represent approximately 18% and 4% outperformance respectively. This suggests either superior execution or conservative market assumptions, with revenue outperformance more pronounced than EBITDA, indicating margins align broadly with expectations.

Consistent outperformance may prompt analysts to revise models upward, potentially enhancing valuations. Alternatively, conservative market assumptions could mean upside exists if execution continues. Investors should consider this track record when evaluating the group’s business model, market positioning, and growth prospects.