Atturra (ASX:ATA) reported first-half FY26 results that management said were impacted by a large contract dispute disclosed to the market in December, but the company reiterated its full-year guidance and said it expects the profit impact to be confined to the first half.
Presenting the results, Managing Director and CEO Steven stated that while revenue rose strongly, “our strong revenue growth was not our results,” pointing to the contract issue as the primary reason underlying earnings fell versus the prior corresponding period (PCP). He added that the company’s business model is “flexible enough to absorb” the impact and still “deliver against our guidance for the second half,” and said management has put processes in place to prevent a repeat.
First-half revenue growth, but earnings hit by contract dispute
Despite the revenue increase, Steven said the contract dispute drove a sharp decline in profitability, with underlying EBITDA down 46% versus PCP. CFO Herb To provided additional color, saying the “quality of the business has remained stable,” citing gross margin of 27% (in line with PCP), but EBIT fell 10% and included several items he characterized as non-recurring.
Those items included a provision for debt relating to work performed to date, AUD 2 million of organizational restructuring, and AUD 1.5 million in integration costs. Herb said Atturra’s underlying EBITDA adjustments add back items such as share-based payments, retention costs, acquisition-related integration costs and certain other expenses, consistent with reconciliation disclosures provided in the company’s materials.
Herb said underlying EBITDA for the half was AUD 2.1 million, down AUD 6.3 million from PCP.
Cash flow and balance sheet comments
On cash, Steven said the company ended the half with cash “in excess of” an amount not fully captured in the transcript, and deferred details to the CFO’s section of the call.
Herb said the balance sheet reflected cash of AUD 8.6 million, down 36% (or AUD 33 million) from six months earlier, which he attributed to investing in subsidiaries and share buyback programs. He also cited net tangible assets of AUD 16 (figure not fully captured in the transcript).
Operating cash flow declined, with Herb describing net cash from operations moving from AUD 91.6 million to AUD 58.6 million versus the comparative period (as presented). He said seasonality and timing can create “slightly volatile” period-to-period cash movements, and highlighted timing impacts including payroll timing, restructuring payments, integration payments, deposits held by counterparties, and the cash flow effect of acquisitions. In response to an analyst question, management also pointed to an “increase in inventory” associated with the Blue Connections acquisition and the timing of a payroll cycle near the period end as factors that affected the half’s cash presentation.
Strategy: proprietary solutions, managed services, sales expansion, and an “AI-first” approach
Management reiterated near-term priorities that it said were consistent with those outlined at the end of FY25. Steven emphasized four focus areas:
- Proprietary solutions: The company cited traction in offerings including Boomi ACP and “Scholarand,” as well as “ERP data accelerators,” which it said can provide competitive advantage and help clients manage their environments.
- Managed services expansion: Atturra highlighted managed services as a “strong, fast, and predictable recurring revenue” stream and pointed to its acquisition of Blue Connections in the first half, which it said allows it to combine end-user compute and device businesses.
- Sales expansion: Management said it is building a larger, longer-term sales capability and plans additional sales hires in several focus areas in the second half of FY26, particularly AI.
- AI and data: Steven said the company is taking an “AI-first approach,” both internally and externally, and noted Atturra has more than 270 AI and data experts.
Steven also said Atturra is simplifying parts of the business and increasing its focus on operational performance, including implementing a new continuous benchmarking process. He said the company appointed a full-time director dedicated to business improvement and measurement, taking an AI-first approach, and recruited two executives to drive transformation—one focused on internal process adoption and change and another focused on external data-market activity.
Product and platform updates: schools ERP and Boomi ACP growth
Steven provided updates on initiatives previously disclosed in August 2025, including an in-house platform built on Microsoft Dynamics 365 for schools. He said the product, when complete, will have 12 modules that can be deployed as an integrated system or selectively. Atturra has sold two licenses to early adopters, and has already reached a pre-release target of six schools trialing the solution. He highlighted a signing with Haileybury College spanning multiple campuses, and said a major change to core “pioneers” toward Dynamics is due in December 2026, with investment planned across FY26 and FY27.
On Atturra’s cloud platform, Steven said the company remained on track in FY26, and highlighted growth in its Boomi ACP offering. He said Boomi ACP launched in September 2024 with two early adopters, grew to 35 clients by the end of FY25, and reached 52 clients by the end of the first half of FY26. He said the objective is organic growth of one ACP client every six (time period not fully captured in the transcript).
Management also discussed M&A strategy, saying Atturra intends to continue pursuing both organic and inorganic growth, with priority acquisition targets depending on pricing and with an emphasis on increasing capability in cyber, cloud, and data. Steven said the company may consider accelerating its ServiceNow practice through acquisition, but described it as a lower priority. He added that integration focuses first on cultural and operating-process alignment, while Atturra’s broader aim is “full system integration” to support scalability. For Blue Connections specifically, he said systems integration is not scheduled until FY27 due to complexity.
Guidance reiterated; AI viewed as both disruptive and an opportunity
Atturra reiterated full-year guidance of revenue in the range of AUD 364 million to AUD 374 million and underlying EBITDA in the range of AUD 30 million to AUD 31 million. Management said achieving that implies a materially stronger second half, with underlying EBITDA of roughly AUD 23 million to AUD 24 million, and attributed the first-half weakness to the adverse contract termination and a resulting change in work-in-progress (WIP) processes.
During Q&A, Steven said AI will be “a bit of both” disruptive and beneficial. He pointed to coding productivity improvements but said client expectations are rising, and he expects companies to continue spending on AI-related disruption, particularly with security becoming more important. On internal AI use, he highlighted applications in sales and marketing intelligence, ticket handling and “self-healing,” and described experimenting with “agentic agents” to help stand up a ServiceNow go-to-market effort with fewer people than historically required.
Asked about the contract dispute, Steven said it involved a new client and described it as unusual, saying the customer “just decided to stop” and ran up too much WIP. He said the company has changed processes in response. On public sector and defense demand, he said he expects defense spending to increase in the medium term, but indicated conditions remain soft and could stay “pretty flat” for one to three years, with Atturra focusing growth efforts outside those core areas.
About Atturra (ASX:ATA)
Atturra Limited, together with its subsidiaries, provides advisory and information technology solutions in Australia, New Zealand, Singapore, and Hong Kong. It offers consulting, business application, data and integration, cloud, change management, management control, and industry engagement and managed services. The company serves defense, federal and state government, financial services, education, manufacturing, local government, and utilities industries. Atturra Limited was founded in 2015 and is headquartered in Sydney, Australia.
