NCC sees macro conditions as both challenge and opportunity in FY25 results

The firm is looking to sale its Escode business and become a cyber-focused company

NCC Group has seen its revenue decline in FY25 and is now looking to sell its Escode business.

Earnings fell 6.2 per cent year-on-year in constant currency, from £329.2m to £305.4m.

Results were dragged down by the VAR’s cybersecurity business, which decreased four per cent to £227.4m (FY24: £239.2m).

In the UK, the division’s top line went down 0.6 per cent, from £135.2m to £134.4m.

Earnings in Europe decreased 0.5 per cent and by 12.9 per cent in North America.

These were partially offset by the performance of Escode, the company’s software escrow service, whose turnover rose slightly by 2.2 per cent, reaching £66.5m compared with £66m the year prior.

While the unit’s figures in the UK and Europe both grew five per cent, to £29.4m and £4.2m respectively, performance in North America decreased 0.6 per cent.

NCC’s two other branches, Fox Crypto and Fox DetACT, plummeted 51.5 per cent, landing at £11.5m from £24m in FY24.

The organisation completed the sale of DetACT in late 2023 and Crypto in March this year.

Adjusted EBITDA dropped 12.1 per cent, from £49.7m to £43.7m.

Operating profit leapt 322.6 per cent, reaching £25.6m, compared with an operating loss of £11.5m last year.

Performance this year has reportedly been impacted by a challenging geopolitical environment, which has made NCC’s customers more cautious and lengthened sales cycles, the company said.

But the firm also sees opportunity in this complexity and is aiming to consolidate its cyber resilience and regulatory assurance operations, particularly in sectors such as financial services, healthcare and critical infrastructure.

The company says it has invested in capabilities such as operational technology and digital identity, allowing it to win strategic projects this year.

"FY25 has been a year of disciplined execution and strategic progress,” said CEO Mike Maddison.

“We have significantly simplified the group, eliminated net debt and strengthened our balance sheet through the successful sale of Fox-IT Crypto.

“These actions give us the flexibility to invest in growth, focused on our core capabilities.

“Our cybersecurity business continues to evolve towards higher-value, recurring revenue streams, supported by global delivery and strategic partnerships.”

FY26 predictions

Looking ahead, while the organisation expects current economic conditions to endure in the near term, it is building its pipeline and expects a return to cybersecurity revenue growth in FY26.

Maddison added that while headwinds are also driving demand for cybersecurity, resilience and regulatory assurance.

While Escode’s performance this year has been positive, the organisation is investigating different options for the business, including a potential sale.

“Escode continues to deliver consistent growth and profitability, and as announced, we are reviewing strategic options for the business, including a potential sale,” explained the CEO.

“If a sale is concluded, this would allow NCC Group to become solely a pure-play cybersecurity service company and consider a significant return of capital to shareholders.”