AUCyber’s Revenue Triples to $12.3M Despite $19.5M Half-Year Loss

Financial Results and Impairment

AUCyber Limited, formerly Sovereign Cloud Holdings, revealed a challenging half-year financial performance for the period ending 31 December 2024. The company reported a net loss of $19.5 million, a significant increase from the $10 million loss recorded in the same period last year. This deterioration was largely attributed to a non-cash impairment expense of $14.7 million, reflecting a write-down in the carrying value of goodwill and customer-related intangible assets following the underwhelming performance of its newly merged entities.

The impairment was triggered by the underperformance of the two primary cash-generating units (CGUs), Cloud Services and Cyber Security Services, which failed to meet budget expectations. Management’s value-in-use assessments led to a $13.5 million impairment in the Cloud CGU and a $1.3 million impairment in the Cyber CGU. These write-downs underscore the challenges faced integrating the acquisitions completed in May 2024, including PCG Cyber, Venn IT, and Arado.

Revenue Growth and Operational Changes

Despite the losses, AUCyber’s revenue rose sharply to $12.3 million, nearly tripling the $4.2 million recorded in the prior corresponding period. This growth was primarily driven by contributions from the acquired businesses, which accounted for $9.1 million of the total revenue. The company expanded its product offerings to include managed services and hardware resale, diversifying beyond its traditional cloud and cybersecurity solutions.

However, the expanded cost base following acquisitions and restructuring efforts, including employee layoffs and licensing fee reductions, meant expenses increased substantially. The company’s underlying EBITDA remained negative, though it excluded impairment and one-off costs to provide a clearer view of operational earnings.

Leadership and Strategic Developments

The period saw significant leadership changes, with Managing Director Peter Maloney resigning in December 2024 and two new directors appointed in February 2025 following the takeover bid. The company’s name change to AUCyber Limited and ASX ticker CYB in October 2024 marked a strategic repositioning aligned with its broadened service portfolio.

Most notably, on 20 December 2024, 5G Networks Limited launched an unconditional on-market takeover bid for AUCyber at 11 cents per share, later increased to 13.5 cents. The AUCyber board unanimously recommended acceptance of the revised offer. By early February 2025, 5G Networks had secured majority control, appointing two directors to the board and signaling a new chapter for the company.

Financial Position and Going Concern

At 31 December 2024, AUCyber held $5 million in cash, down from $8.4 million six months prior, with net assets reduced to $23.6 million due to ongoing losses and impairment. The company’s ability to continue as a going concern was flagged as a material uncertainty, given the cash burn and restructuring costs, including $1.9 million in transaction expenses related to the takeover process.

The board’s withdrawal of FY25 guidance reflects the volatile outlook amid integration challenges and ownership transition. Investors will be watching closely how 5G Networks leverages its control to stabilize operations and unlock value from the combined entities.