Redcentric looks to MSP future

Redcentric has stressed in its full-year numbers that its ongoing focus is to develop the managed service business as the discussions to sell its datacentre operation continue.

The firm split its datacentre and MSP operations earlier this year and has since looked to divest the business to leave the managed service operation as the primary focus. Negations on a sale of the datacentre business, as of last month, were at an advanced stage with a preferred third party. 

The board has shared its belief that the prospects for an MSP business remain strong, with an opportunity for future growth.

The business has also shuffled its senior management pack after the close of the fiscal year, welcoming Michelle Senecal de Fonseca as CEO back in May and Tony Ratcliffe as CFO in August.

In his comments accompanying the results, Richard McGuire, non-executive chairman of Redcentric, said that the arrival of a fresh CEO had already been felt across the business: “Michelle has already made a significant positive impact, driving strategic initiatives and reinforcing the group’s forward momentum. Her leadership positions the group well for continued growth and success.”

The results for the combined datacentre and MSP business in the year ended 31 March saw the firm deliver an increase in revenues to £169.9m from £163.2m in the previous year. Recurring revenue stood firm at 81% accounting for £155.0m, compared to £149.1m in FY24. Adjusted EBITDA jumped from £28.3m to £35.4m.

During the year, the channel player consolidated and rationalised the number of cloud platforms it had been working with to reduce costs and to improve efficiencies.

The FY results were the first that Senecal de Fonseca had commented on since her arrival at the helm of Redcentric, focusing on the efforts that had been made to reshape the business.

“These are positive results in what has been a busy and transformational year for the group. Significant groundwork has been completed, paving the way for the possible disposal of the datacentre business, which I look forward to updating shareholders on in due course,” she said.

“Our ongoing focus is on MSP, which has a strong business model, brand and market position in both public and private markets. I look forward to driving the MSP business ahead in the coming years and am presently refining the go-forward strategy,” she added.

In FY25, the MSP business grew by 8.3%, with a decent performance across its three core service areas of cloud, connectivity and communications. Recurring revenues accounted for 89.3% of the total.

The MSP operation also benefitted from opportunities that emerged from the Broadcom acquisition of VMware, due to its position as a Pinnacle Partner, making it able to stand out as a source of stability amid some market turmoil. The firm stressed that this performance from the MSP operation was delivered despite ongoing macro-economic challenges.

The focus for 2026 will be to maintain and improve recurring revenues in the MSP business and to deliver stable revenues. The sale of the datacentre operation is expected to deliver a significant capital return that will help to cut debts and fund the expansion of the business.

Senecal de Fonseca indicated that she would use the next set of interim results to provide a more detailed strategy update for the business, but there was confidence in the medium to long-term outlook.