Funding and Execution Risks Loom Despite Spirit’s Strong FY25 Cyber Security Gains
Spirit Technology Solutions reported a 12.7% revenue increase and a 562% surge in underlying EBITDA for FY25, driven by strategic acquisitions that have positioned cyber security as its fastest growing segment.
- Revenue up 12.7% to $102.4 million
- Underlying EBITDA rises 562% to $11.02 million
- Net loss after tax narrows 87% to $1.37 million
- Cyber security segment fastest growing and largest earnings contributor
- Acquisitions of Forensic IT Solutions and InfoSurety strengthen cyber capabilities
Strong Financial Turnaround
Spirit Technology Solutions Ltd (ASX – ST1) has delivered a notable financial turnaround for the fiscal year ended June 30, 2025. The company reported revenue growth of 12.7% to $102.4 million, alongside a remarkable 562% increase in underlying EBITDA to $11.02 million. This performance marks a significant improvement from the prior year’s loss after tax of $10.5 million, with the FY25 net loss narrowing sharply to $1.37 million.
Cyber Security Emerges as Growth Engine
Central to Spirit’s progress has been the rapid expansion of its cyber security division, now the company’s fastest growing and most important earnings contributor. This momentum was bolstered by two key acquisitions – Forensic IT Solutions Pty Ltd, a specialist in digital forensic and incident response services, and InfoSurety Holdings Pty Ltd, acquired in the prior year. These strategic moves have enhanced Spirit’s ability to offer comprehensive cyber security solutions, including 24/7 monitoring, incident response, and compliance services, meeting the rising demand amid evolving cyber threats and regulatory pressures.
Strategic Integration and Market Positioning
Spirit has aligned its cyber security and managed technology services under the unified brand Infotrust, reflecting the inseparability of security from IT management in today’s environment. The company is capitalising on market trends such as cloud adoption, AI integration, and hybrid work models, targeting mid-market organisations seeking simplified vendor relationships with broad capabilities. Despite ongoing challenges in the Secure Managed Technology segment, the company has appointed new leadership and is focused on driving profitability improvements.
Capital Management and Accounting Changes
To support its growth strategy, Spirit raised $19.8 million in capital during FY25, funding acquisitions and providing working capital. The company also implemented a change in revenue recognition policy, shifting certain product revenues to a net basis in accordance with accounting standards, which did not affect reported profits but complicates direct revenue comparisons with prior periods. Spirit maintains a $27 million bank loan facility with financial covenants, emphasizing the importance of sustaining operational cash flow to meet debt obligations and deferred acquisition payments.
Governance and Risk Outlook
Spirit’s board has seen changes with new appointments and resignations, reflecting a refreshed leadership team. The company acknowledges several risks including funding challenges, cyber threats, sales execution, labour market constraints, and regulatory compliance. It continues to invest in talent, technology, and acquisitions to mitigate these risks and pursue scalable growth. The auditor issued an unmodified opinion on the FY25 financial statements, underscoring the reliability of the reported results.
Bottom Line?
Spirit’s FY25 results signal a turning point, but sustaining growth and managing funding risks will be critical in the next phase.
Questions in the middle?
- How will Spirit balance growth investments with the need to achieve positive operational cash flow?
- What synergies and cross-selling opportunities will the Forensic IT and InfoSurety acquisitions unlock?
- How will the evolving cyber security regulatory landscape impact Spirit’s service offerings and compliance costs?
