SOCO continues client diversification amid decline in demand from fed gov

ASX-listed IT management consultancy and Fast50 firm SOCO has posted consolidated revenue of $11 million for H1 FY25, up 17.8% on 1H24

This includes a $5.1 million contribution from Axsym, the Canberra IT consultancy that SOCO acquired in October 2023 which now has its operations and management systems “into the Group and delivering synergies.”

H1 FY25 revenue was marginally down on H2 FY24 by 1.4%, but NPATA was up at $0.09 million compared to an NPATA loss of $0.79 million in the previous year’s first half.

There was a net loss after tax of $0.15 million compared with a loss of $0.87 million in the same period, but a positive cash conversion of $0.2 million despite a soft profit result.

SOCO reported strong client retention with 81 existing clients delivering 86 percent of H1 FY25 revenue, along with 27 new clients delivering 14 percent of H1 FY25 revenue. 

These span state and Australian government organisations, NFP and corporates including in growth markets of NSW, VIC and WA.

75% of SOCO’s top 20 clients from FY24 continued to engage the business in this financial year’s first half, and the company’s federal government presence was strengthened with additional panel access and Defence Industry Security Program membership.

Based on current in-flight project and contract pipelines, SOCO is forecasting full year FY2025 revenue to be in the range of $22m and $24m.

Demand from federal government clients declined in November and December 2024, which SOCO attributed to cost cutting, the election cycle, and government  policy to shift  more work to public servants and reduce government reliance on external consultants.

SOCO continued diversifying its client base by increasing sales to the corporate, state and local government sectors. Share of revenue from these sectors increased from 40% in FY24 to 44% in H1 FY25. 

The company stated that while the upcoming election is expected to create more challenging demand conditions during H2 FY25 than originally anticipated, it is making "good progress: to diversify its client base, with 21 of the 27 new clients signed in H1 FY25 being non-government corporations