Next 15 Group (AIM:NFG) reported net revenue of £214.9m for the six months to 31 July, down 6.9% from £230.8m a year earlier, as the London-listed data and technology services group pointed to three consecutive months of organic revenue growth between June and August, which it called the first sustained period of growth in three years.
On a like-for-like basis at constant currency, net revenue fell 1.3% to £216.4m.
Adjusted operating profit slipped 1.8% to £32.1m, from £32.7m, but the adjusted operating margin widened to 14.9% from 14.2%, which the group attributed to disciplined cost management and its portfolio simplification strategy.
Statutory operating profit fell to £5.1m from £19.1m, and the group swung to a statutory pre-tax loss of £1.5m, against a profit of £15.8m a year earlier, driven principally by Mach49 arbitration costs and acquisition accounting charges.
Diluted earnings per share swung to a loss of 3.4p, from earnings of 10.4p in the prior-year period.
Net debt rose to £57.3m from £45.3m, reflecting earn-out payments, tax and capital expenditure, though leverage remained low at 0.7 times adjusted EBITDA.
The board maintained the interim dividend at 4.75p per share, unchanged year-on-year.
Track 1, the group's higher-growth platform comprising SMG, Transform, Savanta, Pretzl, M Booth, M Booth Health and the retained Digital Commerce division of Elvis, delivered like-for-like revenue growth of 1.8% to £143.1m and adjusted operating profit of £26.3m, up 3.5%, at an 18.4% margin.
Digital Transformation, trading as Transform, was the standout performer within Track 1, with organic net revenue up 26.8%, supported by a multi-year contract win with the Department for Environment, Food and Rural Affairs and ongoing work with the Department for Education.
Track 2, comprising Activate, Brandwidth, Marker and MHP, generated revenue of £68m, down from £71.6m, with adjusted operating profit of £14.6m against £15m.
Transform's bookings reached £159.9m in the half, against £19.6m a year earlier, taking bookings for the 12 months to 31 July to £223.7m.
The group has rationalised its portfolio from 22 businesses to 10, including the partial disposal of Elvis Communications to Wonderhood Studios, under which Next 15 retained roughly half of Elvis' revenues, including its profitable Digital Commerce capabilities.
Headcount fell 5% to 3,198 by the end of July, part of a cost programme the group says has generated annualised savings of approximately £26m, the full benefit of which flows into the current financial year.
The Mach49 earnout arbitration remains unresolved: the hearing has concluded and the group is awaiting an outcome, maintaining its position on non-payment of the remaining earnout and its counterclaim for previously paid amounts.
"The first half of FY27 demonstrates our strategy has taken hold," said chief executive Sam Knights, adding that the group's Track 1 businesses are "increasingly winning together" as the operating model beds in.
The board said trading since the period end has been encouraging and in line with full-year expectations, with the growth drivers of the first half, including continued momentum in Digital Transformation and new business at M Booth and M Booth Health, expected to persist.
Management said it expects like-for-like revenue growth for the full year, with revenue and adjusted operating profit in line with market expectations, though the segmental mix is expected to differ, with stronger-than-expected growth in Digital Transformation offset by portfolio disposals and a more gradual recovery in other segments.
The group said it has not experienced any material adverse impact on operations from the Middle East conflict but remains mindful of the challenging economic environment.