Sparks - Corero Network Security

Corero’s H126 results provide  evidence that the growth and operational leverage we highlighted in our recent research are now coming through. Revenue increased 42%, adjusted EBITDA swung to a $2.7m profit and, following a strong start to H2, management now expects FY26 revenue to exceed and EBITDA to significantly exceed market expectations. Our estimates are under review.

The headline revenue figure was pre-announced in August, with H1 revenue increasing 42% to $15.5m. The detailed results provide greater evidence of the strength of the underlying performance: order intake increased 14% to $14.3m, ARR rose 12% year-on-year to $24.1m and customer retention remained very high at 96%. Adjusted EBITDA improved to $2.7m from a $1.3m loss in H125, while gross margin increased to 93%, although management expects this to normalise towards 90–91% in H2 as the revenue mix changes.

Importantly, the growth drivers identified in our recent research are increasingly visible in the numbers and customer wins. Our August outlook highlighted how the product expansion undertaken during 2025, the shift towards subscription-based delivery and a strengthened channel strategy were creating the platform for faster growth. More recently, we highlighted new customer wins as evidence that the alliance partner strategy and broader product portfolio were beginning to deliver. Post-period-end wins now include a $1.4m three-year contract with a Tier-1 US telecommunications provider and a $3.4m five-year contract with a Tier-1 UK telecom provider, alongside a $0.5m NeoCloud contract.

There are some moving parts within the revenue mix, with a greater proportion of customers opting for upfront licences during H1, boosting the top line but moderating ARR growth, which was only modestly higher than the $23.9m reported at FY25. Cash reduced from $4.0m at December to $2.1m at June as growth absorbed working capital and Corero continued to invest in development. The balance sheet nevertheless remains debt-free and the $2.0m overdraft facility is unused.

Management now expects FY26 revenue to exceed current market expectations of $29.2m and EBITDA to significantly exceed the $3.3m market expectation. With H2 traditionally the stronger half and recent customer wins adding further visibility, the results reinforce our view that Corero is moving from the investment and business-model transition of 2025 into a period of faster growth and increasingly visible operational leverage. Our estimates are under review.