Tech earnings took centre stage, with Focusrite's interim results headlining a session in which margin improvement and balance sheet strength emerged as the common thread. Dotdigital closed out its financial year with revenue and recurring-revenue growth in line with expectations, while MTI Wireless Edge disclosed another sharp upgrade to a defence contract in Israel that has now nearly quadrupled in value since April.
Focusrite lifts margins and cuts debt in strong first half
Focusrite (AIM:TUNE) reported revenue of £90.3 million for the six months to 31 August, up 2.7% on a restated £88.0 million a year earlier, as adjusted operating profit climbed 14.7% to £11.1 million. The shares rose 6.91% to 234.125p as the London-listed maker of Focusrite, Novation and Martin Audio branded hardware and software reported basic earnings per share more than doubling to 12.8p from a restated 6.2p, with adjusted diluted earnings per share up 25.5% to the same figure. Gross margin expanded by 1.7 percentage points to 46.6%, which the company credited to targeted price increases, cost reductions negotiated with contract manufacturers and refined routes to market.
Content Creation, covering Focusrite audio interfaces and Novation controllers, grew revenue 5.2% to £66.9 million on the back of new launches including the Focusrite CX8 interface and the second-generation FL Key controllers. Audio Reproduction revenue fell 3.9% to £23.5 million as double-digit US growth was offset by weakness in China, though the division's order book strengthened, with order intake up 12% year-on-year and a book-to-bill ratio of 1.09. Net debt fell to £1.5 million at 31 August, down from £10.8 million a year earlier and £8.6 million at the last financial year-end, helped by working capital improvements and £2.8 million of US tariff refunds relating to prior periods, of which £2.4 million was recognised as an adjusting item. The interim dividend was raised 3.0% to 2.16p per share.
"We have delivered a strong first-half performance, with revenue growth, improved margins and double-digit growth in adjusted operating profit, alongside a significant strengthening of our balance sheet, moving out of a period of adjustment to one of delivery," said Tim Carroll, chief executive of Focusrite.
The scale of the margin recovery and the collapse in net debt change the narrative for Focusrite from one of post-pandemic digestion to one of renewed operating momentum. A balance sheet carrying just £1.5 million of net debt, against £10.8 million a year ago, gives management far more room to invest in new product cycles or pursue bolt-on acquisitions without straining the dividend, while the tariff refund windfall removes a lingering uncertainty that had weighed on sentiment through the US trade disputes. With Content Creation reaccelerating and the Audio Reproduction order book turning up, the results support the case that the worst of the demand reset is behind the group.
Dotdigital closes year with ARR acceleration
Dotdigital Group (AIM:DOTD) reported revenue growth of 8% to £90.9 million for the year ended 30 June, with adjusted pre-tax profit rising 2% to £19.4 million, as the marketing technology provider confirmed results landed in line with market expectations. Shares ticked up 0.34% to 53.08p. Adjusted EBITDA grew 10% to £29.4 million, holding a 32% margin, while adjusted diluted earnings per share rose 3% to 4.94p. Forward-looking contracted annual recurring revenue for the core customer experience and data platform business increased 18% to £85.4 million, with organic growth accelerating to 8% from 6% at the half-year stage.
Stripping out acquisitions, group revenue was flat, reflecting the previously flagged exit of a low-margin messaging contract and the unwinding of a strong prior-year comparator. Cash fell sharply to £17.1 million from £36.2 million after Dotdigital funded the $30 million acquisition of Alia, paid a £3.7 million dividend and completed a £3 million share buyback. "FY26 was a year of substantial progress for Dotdigital," said chief executive Milan Patel.
The cash drawdown marks a deliberate shift from accumulation to deployment, with Alia now folded into a business that is leaning more heavily on acquired growth to offset a flat organic core. The 18% jump in contracted ARR is the figure likely to matter most to investors, since it signals improving revenue visibility even as headline growth is diluted by the messaging contract exit. "Market conditions remain mixed, but with more ways to grow and a larger recurring revenue base that gives us greater visibility, we are confident of delivering FY27 results in line with market expectations," Patel said.
MTI Wireless Edge sees Israeli contract nearly quadruple
MTI Wireless Edge (AIM:MWE), trading at 62.5p, told investors that the Israeli Ministry of Defence has again increased the value of its contract with subsidiary P.S.K. Wind Technologies for communications infrastructure, taking the deal to $8.5 million. The London-listed designer of RF and antenna solutions said the latest increase takes the contract to almost four times its original value, having started at $2.2 million when first announced on 7 April before being expanded to $4.5 million in June.
The expanded contract is now expected to complete in 2027. "It is encouraging that, within a relatively short period, the Israeli MoD has shown the confidence in our capabilities to increase this contract almost fourfold," said chief executive Moni Borovitz, who noted the work runs on a cost-plus basis carrying lower margin than some of the group's other contracts but representing lower risk for PSK.
Three upward revisions inside seven months points to a customer relationship that is deepening faster than the original scope envisaged, giving MTI Wireless Edge a multi-year revenue base in defence communications even if the cost-plus structure caps near-term margin upside. The steady escalation also suggests the Israeli MoD sees PSK as a scarce supplier of this infrastructure, a dynamic that could support further scope additions before the 2027 completion date.