Atturra cuts FY26 revenue guidance but keeps profit

Atturra expects FY26 underlying EBITDA of AUD $30 million to AUD $30.5 million, while revenue is now likely to be below earlier guidance.

The Australian technology services group expects FY26 revenue of AUD $348 million to AUD $352 million, down from previous guidance of AUD $364 million to AUD $374 million. The revision mainly reflects the way revenue was recognised for several deals closed in June, with some product sales treated as agent rather than principal. That does not affect profitability.

Operating cash flow is expected to be about AUD $9 million for the year, including second-half cash flow of AUD $22 million to AUD $23 million. This marks a return to normal positive cash flow after a weaker first half.

Atturra also flagged a one-off non-cash goodwill impairment of AUD $20 million to AUD $25 million, subject to audit. The adjustment reflects difficult market conditions in business lines linked to government and defence customers, particularly in Canberra.

The impairment mainly relates to historic acquisitions serving those markets. Reduced government spending on discretionary projects and external consulting services has lowered expected long-term earnings in those operations.

The writedown will not affect cash flow or underlying operating performance. Growth in Atturra's data, ERP and managed services businesses has helped offset softer trading in parts of its government consulting activities.

FY27 focus

Management is shifting its focus to organic growth after integrating several businesses over the past two years. Atturra expects revenue, EBIT and underlying EBITDA to grow in FY27, although earnings are expected to be weighted to the second half.

That profile reflects planned investment in selected parts of the business, the expected benefit of restructuring carried out in FY26, and the timing of opportunities already progressing across the group. Atturra will continue on-market share buy-backs when the Board considers them appropriate.

Atturra has outlined increased spending in artificial intelligence, ERP and Scholarion, its education technology business. It plans to invest an additional AUD $3 million in AI in FY27, with a negative first-half earnings effect of about AUD $2 million expected to be offset by growth in the second half.

In ERP and related business services, Atturra has increased sales and management investment by more than AUD $1.5 million as it entered FY27. The extra spending is focused mainly on the SAP business, which is expected to grow by more than 50% between FY26 and FY27.

Scholarion is also set for heavier investment as demand rises. Investment in that business is expected to exceed AUD $4 million in FY27 and, after capitalisation, Scholarion is expected to record a loss of about AUD $2.4 million for the year, with most of that falling in the first half.

Scholarion is expected to break even in FY28 and move into profit in FY29. These projections form part of a broader plan to direct more investment into areas management sees as offering stronger long-term returns.

Market pressures

The update points to a mixed backdrop for technology services providers. Over the past two years, the market has seen rapid change in AI and data, macroeconomic uncertainty, and shifting client priorities across IT services and technology products.

Those pressures have been especially visible in government-related work. Spending restraint on discretionary projects and consulting assignments has affected demand in some public sector and defence-linked operations, even as other parts of the market continue to expand.

A restructuring charge of about AUD $1.7 million was included in second-half FY26 underlying EBITDA. That helped keep earnings within guidance despite lower-than-expected revenue.

Stephen Kowal, Chief Executive Officer, outlined the company's investment priorities and the expected effect on next year's earnings profile.

"The technology services market is changing quickly, and Atturra is investing in the areas where we see the strongest long-term opportunities. AI, Data, ERP and Scholarion are strategically important growth platforms for the business, and we believe the investments we are making now will strengthen our competitive position and support sustainable earnings growth over the medium term. While these investments will create a second half earnings skew in FY27, we are confident in the underlying momentum of the business and our ability to deliver further growth in both EBIT and underlying EBITDA," said Stephen Kowal, Chief Executive Officer, Atturra.