Gamma Communications (GAMA)

LONDON (ShareCast) - (Sharecast News) - Gamma Communications reported double-digit revenue and profit growth for 2025 on Tuesday, driven by strong performance in Germany and continued expansion of its communications platform, although statutory profit declined following acquisition-related activity.
Revenue rose 11% to £645.8m in the year ended 31 December, while gross profit increased 16% to £348.2m, with margin improving to 54% from 52%.

Adjusted EBITDA grew 13% to £141.7m and adjusted profit before tax rose 7% to £119.4m.

However, reported profit before tax fell 8% to £87.7m, while diluted earnings per share declined 4% to 69.3p.

Adjusted earnings per share increased 11% to 94.5p.

The group said the results were underpinned by its German operations, where gross profit rose 197% to £78.4m following the acquisitions of Placetel and Starface, which delivered double-digit revenue growth in their first year of ownership and supported overall margin expansion.

In the UK, performance was more mixed.

Gamma Business gross profit fell 2% to £190.8m, while the SME segment remained resilient despite macroeconomic headwinds, with cloud volumes increasing.

The company said the planned PSTN switch-off reduced gross profit by around £4m in 2025.

Enterprise gross profit was broadly flat at £60.3m, with pricing pressure offset by contributions from the BrightCloud acquisition, although the group entered 2026 with momentum following contract wins including RAC, Bosch, Zigup and Safestore, as well as an extension with Morrisons.

The service provider division continued to expand internationally, with services now available in around 27 countries following a rollout across Asia-Pacific, positioning Gamma among the leading global providers in the segment.

Cash generation remained strong, with adjusted operating cash flow rising 9% to £131.8m and cash conversion at 93%.

The group said it ended the year with net debt of £9.3m, compared with net cash of £153.7m a year earlier, reflecting £216.2m of outflows including the £152.2m acquisition of Starface, £45.1m of share buybacks and £18.9m in dividends.

Gamma returned £64.0m to shareholders during the year, up 43%, and said it intended to continue significant returns, with up to £125m of cash expected to be returned across 2026 and 2027 through dividends and buybacks.

"2025 was another successful year for Gamma," said chief executive Andrew Belshaw.

"We delivered significant growth driven by our German business, with a resilient performance in the UK, where we are pleased to have won a number of blue-chip customers, despite the challenging macroeconomic backdrop.

"These results reflect the disciplined execution of our strategy and the strength of our highly cash-generative business model."

He added that the nature of Gamma's "cash generative business model" meant that in 2025 it was able to both invest in the business and return £64m to shareholders.

"We intend to continue to return substantial amounts of cash to shareholders through 2026 and 2027, balancing investment in organic growth with enhanced cash returns."

Looking ahead, the board said it expected 2026 performance to be in line with market expectations, with adjusted EBITDA and adjusted earnings per share forecasts within current consensus ranges.

At 0909 GMT, shares in Gamma Communications were down 6.97% at 774p.

Reporting by Josh White for Sharecast.com.

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