Cogstate (ASX:CGS) executives told investors the company is seeing meaningful changes in its business mix and growth drivers, highlighting record sales activity, an expanding trial portfolio, and increasing contribution from channel partners during its full-year results call for fiscal 2025.
Trial portfolio expands as new indications gain traction
CEO and Managing Director Brad O’Connor said Cogstate is seeing “expansion and diversification” across both its clinical trial portfolio and its customer base. As of December 31, the company was managing 133 clinical trials, up 34% year-over-year. The company also reported a record 42 new trial starts during the December half-year period, which management described as the most active half-year in its history.
While Alzheimer’s disease remains a core market, Colite said the company anticipates continued growth supported by disease-modifying breakthroughs, advances in blood-based biomarkers, and a broader range of therapeutic targets. O’Connor also said Cogstate expects pre-symptomatic Alzheimer’s disease to receive “a lot of attention throughout calendar 2026,” even though it was not a major factor in the most recent December half.
Record sales contracts and growing role of channel partners
Management reiterated that first-half sales contracts totaled AUD 41.7 million, up 105% from the prior corresponding period. Colite characterized the half as the company’s second-best sales result ever for a half year.
Cogstate also emphasized momentum from its channel partnership program. O’Connor said channel partners drove 70% of sales opportunities identified and 62% of sales contracts executed in the December quarter, and noted that margins are not impacted when Cogstate co-sells with partners. Colite said the channel strategy aligns with sponsor preferences for consolidated outsourcing across multiple service lines, such as eCOA from partners and Cogstate’s quality assurance services.
Executives said they continue to see record levels in the sales pipeline, with a record number of opportunities identified in each of the last six quarters. O’Connor said the company believes it is “only getting started” with channel partners, citing potential upside from deeper relationships and partner customer bases.
Financial performance: revenue growth, margin pressure, and outlook
CFO Darren Watson reported first-half revenue of $26.9 million, up 12% from the prior corresponding half and slightly above management’s guidance range of approximately $25–$26 million. Clinical trials revenue rose 13% year-over-year, supported by the strong contract sales result, though Watson said results were partially offset by a lower in-period revenue yield.
Watson attributed the lower yield to contract timing, with roughly a third of contract value signed in December, and to a mix shift that included phase IV real-world evidence deals, which he said have a slower revenue yield than typical phase II and phase III trials.
Profitability metrics cited by management included:
- EBITDA: AUD 6.5 million (24.3% margin)
- Profit before tax: AUD 5.3 million (just under 20% margin)
- Profit after tax: AUD 4.5 million (16.7% margin)
Gross margin was pressured in the half. Watson said gross profit declined 3% year-over-year and margins fell 8.6%, driven primarily by delivery investment to support more trials across more indications. Cogstate increased clinical trials delivery staff by 17% to nearly 90 FTEs.
Additional margin impacts included the reallocation of key science resources from operating expenses into clinical trials costs (which Watson said has no bottom-line impact), higher sales commissions tied to stronger sales performance, and a AUD 500,000 provision for doubtful debt relating to a U.S.-based biotech whose trial did not meet endpoints. Watson said the company is continuing to pursue the debt and has implemented additional controls around credit checks, contract language, and payment structures—particularly for smaller biotech customers.
Excluding the reallocation and other specific impacts, Watson said gross margin would have been 58.4%, which management described as broadly aligned with its target model. Watson said Cogstate expects margins to improve to 56%–59% in the second half of fiscal 2026 and continues to target 60%+ longer-term model margins. O’Connor said management’s confidence in second-half improvement is “really just revenue growth,” with operating costs expected to remain relatively constant in the June half even as the company adds direct delivery resources.
Cash position, backlog, and contracted revenue visibility
Watson said Cogstate ended the half with AUD 34.1 million of cash on hand, no debt, and AUD 2.4 million in positive operating cash flow.
The company’s total future contract revenue increased 6% year-over-year, including clinical trials backlog revenue of $92.3 million, up 9%. Watson said Cogstate entered the second half with $21.7 million of revenue contracted for the June half, up 24% from the comparable starting point the prior year. Management also said Cogstate had AUD 27 million of revenue already contracted for fiscal 2027, up 13% compared to the amount contracted for fiscal 2026 at the same time last year.
Product development and capital allocation updates
Watson said Cogstate invested AUD 2.2 million in technology during the half, including modernization of its technology platform and development of new products. He said AI-powered monitoring and AI-powered rater training are progressing, with work now focused on scaling across languages and preparing for commercial release. Watson estimated roughly $500,000–$600,000 in U.S. spend across the two AI products during the half.
During Q&A, O’Connor described Cogstate’s AI approach as based on bespoke datasets rather than large language models, emphasizing the company’s access to thousands of assessment recordings and its ability to train models on what “good looks like” in administration. He said Cogstate’s intent is for AI to act as a first screener for error detection, complementing existing centralized review workflows.
On capital allocation, O’Connor said the board resolved not to declare an interim dividend for the half year, while maintaining an annual dividend policy targeting a 20%–50% payout ratio of NPAT subject to capital plans and franking balance. The company’s share buyback remains open, with management indicating it will be used opportunistically.
About Cogstate (ASX:CGS)
Cogstate Limited, a neuroscience technology company, engages in the creation, validation, and commercialization of digital brain health assessments used in both academic and industry sponsored research. Its cognitive services include project management, data management, scientific consulting, statistical analysis, scales procurement, rater training, and monitoring solutions. The company is also involved in the design and provision of quality assurance services in clinical trials, focused on the administration, scoring, and recording of conventional brain health assessments.
