pressmaster - stock.adobe.com
SysGroup financial year numbers show impact of transition
MSP sees revenues decrease but cuts losses as it looks to base the business around higher-margin activities
SysGroup is a channel company going through a transition, and as a result, its full year numbers show the impact of moving away from its previous hosting and resale offerings.
The managed service player is moving towards a consultative operation that can provide users with services and guidance around security and artificial intelligence (AI), but in the meantime, its financial year revenue has taken a hit from churning through and down-selling some contracts.
For the 12 months ended 31 March, revenues declined by 10%, coming in at £20.5m, down from £22.71m in the previous year. Adjusted EBITDA of £0.95m was down from £2.01m, but the firm did reduce its pre-tax losses, down to £2.45m from £6.57m.
The firm has been moving upstream, and pointed to its managed IT services revenues of £17.7m and decrease of 32% in its resale revenues as evidence of that shift in action.
Over the course of the year, the business introduced a structure to cover the range of needs its targeted small and medium-sized enterprise (SME) customer base would require, as well as acquiring the trade and assets of Crossword Consulting to add more security advisory services. The firm also completed a £10.6m equity fundraise in June 2024 to strengthen the business and help fund activities including the move for Crossword, which was acquired last November.
Heejae Chae, executive chairman of SysGroup, said that despite the revenue drop, there were reasons to be optimistic. “We have laid strong foundations for sustainable, scalable growth through strategic, operational and financial transformation,” he said. “Our shift to a consultative, outcome-led model is gaining traction, reflected in the return to growth in managed services and improved pipeline activity.
“Whilst near-term conditions remain uncertain – with cautious SME spending and elongated decision cycles – we are stabilising our core and rebuilding customer trust. Given current visibility, we expect FY26 performance to be broadly in line with FY25, though we remain cautiously optimistic.”
Looking ahead
Chae said the moves that were being made now to position the firm as a security and AI expert would pay off in the future.
“Looking ahead, we are confident in our direction. Cyber security and AI are structural growth markets where SysGroup is well-positioned to lead,” he said. “Heightened awareness of cyber risk and accelerating AI adoption present clear opportunities to support customers. With disciplined execution-organically and through targeted acquisitions-we are building a resilient, future-ready organisation that delivers sustained value.”
In Chae’s comments accompanying the results, he outlined the belief – which had sparked the company transformation – that there continued to be a gap in the market for a managed service provider that could help customers with a wide range of needs.
“The challenge for UK SMEs is that most IT MSPs are highly fragmented and generally operate a business model that is transactional, with limited differentiation or value beyond service execution,” said Chae.
“At the other end of the market, the large consulting firms who offer broader capabilities typically target large enterprises and the public sector, with pricing and engagement models out of reach for most SMEs. As a result, many UK businesses are left navigating a confusing landscape of disconnected suppliers, creating inefficiencies, overlaps and gaps in their technology.
“Our vision at SysGroup is to be the trusted consultative advisor to SME boards in developing and shaping their strategy, and working hand in hand with the business to deliver and support integrated, future-ready solutions,” he said.
