FINEOS Reports 80% EBITDA Growth with 5.7% Subscription Revenue Rise
FINEOS Corporation Holdings PLC reports solid half-year growth with rising subscription revenue and improved margins, while navigating currency challenges. The company remains confident in achieving positive free cash flow for FY25 and advancing its AI and cloud strategies.
- Total revenue up 4.2% to €67.1 million in 1H25
- Subscription revenue growth of 5.7%, now 54.3% of total revenue
- EBITDA surges 80.1% with margin expansion to 19.6%
- Statutory net loss narrows significantly to €1.3 million
- Guidance revised lower due to FX impact but positive free cash flow expected
Robust Growth Amid Operational Efficiency
FINEOS Corporation Holdings PLC, a global provider of core software systems for life, accident, and health insurers, has delivered a strong first half for 2025. Total revenue rose 4.2% to €67.1 million, driven primarily by a 5.7% increase in subscription revenue, which now accounts for over half of total sales. This growth reflects successful client scaling, cloud upgrades, and new client acquisitions, particularly in North America.
Operational efficiencies have played a key role in margin improvement. Gross profit margin expanded to 76.6%, up from 73.6% a year earlier, while EBITDA surged 80.1% to €13.1 million, lifting the EBITDA margin to 19.6%. These gains were supported by a 4.7% reduction in operating expenses, achieved through lower consulting and sales costs, despite increased investment in research and development.
Navigating Currency Challenges and Strategic Investments
Despite these positive trends, FINEOS faces headwinds from foreign exchange fluctuations, particularly a weaker US dollar against the euro. This has led the company to revise its full-year revenue guidance to the lower end of the €138 million to €143 million range. However, the weaker dollar also benefits FINEOS’s non-euro cost base, helping to underpin confidence in achieving positive free cash flow for the full year.
CEO Michael Kelly highlighted the company’s focus on embedding artificial intelligence across its product suite and expanding its cloud migration projects. Notably, FINEOS secured a major contract for an on-premises to cloud migration and added two new North American clients in the second quarter. These initiatives are expected to enhance product differentiation and support market share gains.
Looking Ahead, Growth and Margin Expansion
FINEOS’s outlook remains cautiously optimistic. The company plans to continue driving revenue growth through new business sales and cross-selling to existing clients, particularly in the Australia-New Zealand region. Operational efficiency programs will persist, aiming for further cost reductions and margin expansion.
Longer term, FINEOS targets increasing recurring revenues to 65% by 2027 and 75% by 2029, alongside gross margin improvements to 75% and 80%, respectively. EBITDA margins are expected to rise to 25% in 2027 and 40% by 2029, supported by a gradual reduction in R&D spend as a percentage of revenue. These ambitious targets underscore the company’s commitment to sustainable profitability and innovation leadership in the insurance software sector.
Bottom Line?
FINEOS’s disciplined execution and strategic investments position it well for sustained growth, though currency volatility remains a watchpoint.
Questions in the middle?
- How will ongoing FX fluctuations affect FINEOS’s revenue and profitability beyond FY25?
- What specific AI innovations will FINEOS embed to differentiate its platform?
- Can the company accelerate new client wins to offset slower sales cycles amid global economic uncertainty?
