SysGroup H1 shows tangible signs of improvement

Like many of SysGroup’s financial results since its transformation, the latest update is a source of scrutiny as to whether the firm’s strategy shift is working in its favour, with the firm describing its half-year numbers as showing “tangible” progress.

The managed service player (MSP) is moving towards a consultative operation that can provide users with services and guidance around security and artificial intelligence (AI). 

For the six months ended 30 September the channel player delivered £9.9m in revenues, down from the £10.2m enjoyed last year. The firm pointed out that its second quarter was strong, with 10% growth over Q1. Managed IT services increased to 92.3% of total revenue, up from 86.3% in the same period last year. Adjusted EBITDA of £0.2m was down on last year’s £0.4m and pre-tax losses widened from £1.1m  to £1.6m.

During H1, the MSP saw its security sales improve, comprising 47% of revenue in the period ,and it secured a three-year managed services and technology refresh contract with a UK non-profit customer.

SysGroup expects its managed IT services business to return to growth after stabilising after two years of declines. There were also signs that AI, which the firm has deployed across its operations, was having a positive impact accelerating customer experiences, with SysGroup indicating that the technology was aiding its engineers more effectively. The firm has reduced headcount over the past three years from 111 to 80 people, but added that it had been able to strengthen its technical capabilities.

Heejae Chae, executive chair of SysGroup, said the numbers showed the business was continuing to head in the right direction, adding: “SysGroup has continued to make strong progress in transitioning to an advisory-led, end-to-end managed IT service provider delivering tangible results.

“Our cyber security consulting capability, acquired last year, is enabling earlier engagement and unlocking deeper cross-sell opportunities reflected in increasing revenue pipeline. Service quality, customer satisfaction and retention have improved significantly, and managed IT services revenue has now stabilised and is positioned for a return to growth in FY27.”

Chae indicated that the firm’s full-hearted embrace of AI was paying dividends and had already positively affected the organisation: “AI has become central to how we operate. It is embedded across our workflows, our data and our culture, and is already delivering tangible results: higher service quality, faster resolution, lower operating cost and a more productive workforce. The efficiency gains and service improvements achieved in the past year validate the value creation potential of an AI-enabled MSP.”

Chae made a wider comment on the need for the channel to adopt AI to ensure they remained competitive. “The MSP sector itself is at a crossroads. Customer expectations are rising, technology complexity is increasing, and traditional service models are under margin pressure. This creates a once-in-a-generation opportunity to redefine what an MSP can be,” he said.

He added that as the firm moved into its second half, there were expectations that the numbers would continue to head back into the black: “We expect a stronger H2 than H1, with improved EBITDA driven by AI-enabled efficiency and productivity gains. Full-year performance is expected to be in line with expectations.

“With a streamlined operating model, stronger customer engagement and increasing demand for cyber security and AI-readiness, SysGroup is well-positioned for margin expansion and a return to growth in FY27.”