Eleco - Hits record £35.5m ARR as shares jump 11%
Shares in Eleco (AIM: ELCO), the specialist software provider for the built environment, have risen strongly today on the back of a positive trading update for H1 2026. As we write they trade 11.3% higher at 128p.
Eleco’s software solutions are used by clients to manage the building lifecycle, from early planning and design stages through to construction, interior fit out, asset management, and facilities management, to support project management, estimation, building information modelling (BIM), and property management.
Revenues up in H1
We’ve mostly been given revenue figures in the update, with headline total revenue for the half up by 8% to c.£19.9 million; and in constant currency terms c.£19.6 million. Encouragingly, organic total revenue for the period increased by 15% - this takes into account the effect of several acquisitions and the divestment of one poorly performing subsidiary (see below).
Total Recurring Revenue (TRR) increased by 14% to c.£16.9 million representing 85% of total revenue, up from 81% in H1 2025 and giving increased visibility on earnings, with organic TRR up by 20% to c.£16.4 million. Following the strong performance, Annualised Recurring Revenue as at 30th June 2026 grew by 16% to a record c.£35.5 million, with organic ARR up by 23% to c.£34.7 million.
Balance sheet remains strong
While no profit figures were given in the update, Eleco highlighted that it remained debt free, with cash at the period end standing at £15.4 million. This was up from £12.2 million a year previously but down slightly from £16.3 million as at 31st December 2025. This was said to reflect strong cash generation, offset by acquisition payments, dividends and other non-operational costs totalling £5.5 million. Currently valued at c.£107 million, net cash covers 14% of Eleco’s market cap.
Strategic focus on the core business
Operational highlights of the half included a focused effort on the core businesses, with the non-core Veeuze operation disposed of to improve margins, while continuing to invest in AI-enabled R&D. During the half, Eleco launched Asta Vision Plus, an API-led solution, and Asta Estimate, which integrates planning, scheduling and cost estimation. The Pemac maintenance management solution is said to have made further progress in the USA by securing a strategically important order from a leading medical device manufacturer. Implementation has commenced and evaluations are taking place to expand into additional USA manufacturing sites.
An acquisition & a disposal
In February, Eleco acquired Kivue, a leading UK-based provider of Project Portfolio Management (PPM) SaaS software and associated services, for an enterprise value of £2.3 million. Kivue made £1.5 million in revenue and adjusted EBITDA of £0.2 million in the year to 31st October 2025 and the deal is expected to expand Eleco’s reach into a senior manager and C-Suite audience for larger enterprise projects.
One company comes in and one goes out, with German subsidiary Veeuze disposed of in April for a nominal €1, along with a share of annual post-tax profits over a 5-year period to 2030, capped at €250,000 payable in cash. This decision reinforced Eleco’s strategic focus on its core and higher growth Building Lifecycle businesses and primary customer verticals. The disposal seems like a sensible decision, with Veeuze having experienced challenging market conditions, a decline in performance and a requirement for cash to sustain its operations.
Looking into H2…
We’ll get the full interim results from Eleco in September when investors will be interested to see how the firm has performed against last year’s H1 figures of £4.3 million of adjusted EBITDA and £2.7 million of adjusted pre-tax profits. CEO Jonathan Hunter hinted at a good performance saying that, “…the Group continues to see improved profitability.”
He added, “With the ongoing digitalisation of construction and asset-intensive industries and the increasing regulatory and sustainability demands placed on our customers, the Board remains confident in delivering full year 2026 results in line with market expectations.”
Income seekers might be hoping that last year’s interim dividend of 0.35p per share will be increased in line with growth. Eleco shares yield 0.94% on last year’s total dividend of 1.2p per share, with the policy being for a progressive and sustainable payment.
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Disclosures
Eleco is not a research client of Optimo Research.
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