Skillcast Group - ARR up 14% with a third of the market cap in cash
Shares in Skillcast Group (AIM: SKL) have edged up 1% today on the back of an overall positive trading update for the six months ended 30th June 2026.
Skillcast, which listed on AIM in December 2021, raising £4.5 million at 37p per share, is a provider of governance, risk and compliance (GRC) software and e-learning. The firm claims over 1,400 companies as clients in industries including financial services, hospitality, insurance, retail and the public sector. Its product range includes a learning management system with comprehensive off-the-shelf compliance course libraries, a policy hub, staff declarations, anonymous surveys, CPD tracking, and compliance registers for gifts, expenses, PA dealing, whistleblowing – ever more important in a world of ongoing and increasing compliance obligations.
The headline from today’s update is that the firm expects to trade in line with market expectations for the full year to December 2026. Revenues for the first half are expected at £8.2 million, that’s a 10% increase on the £7.5 million posted for H1 last year. Looking back slightly, total revenues increased by 16% to £15.3 million in FY2025 so today’s update shows a bit of a slowdown overall but still decent double-digit growth on a higher base.
The numbers continue to be driven by recurring subscription revenues, which increased by 15% to £7.4 million over H1 last year, with subscriptions now representing 90% of total revenues, up from 85% in H1 2025. The overall revenue growth slowdown largely reflects revenue from non-strategic professional services, which is typically lumpy and has lower visibility, being down by £0.2 million to £0.9 million.
Annualised recurring revenue (ARR) is an important measure for the firm and calculated by annualising revenue recognised from all client subscriptions on annual contracts in a given month. On that note, ARR increased by 14% over the 12 months to June 2026 to £14.5 million, up from £12.8 million, and by 5% since the start of the year, from £13.8 million.
Recurring revenues are important for a software business as they provide a predictable and forecastable base on which to grow and plan, so it looks like Skillcast is performing well here. Also, encouragingly for the firm, profit margins have continued to increase due to operational gearing and productivity increases from AI adoption.
The company also pointed out its strong balance sheet in the update, with no debt and cash in bank of £13.6 million as at 30th June 2026, up from £11.5 million six months earlier. The end-June figure represents c.15p per share against a current share price of 45.5p. So around a third of the current market cap is being covered by cash.
We’ll get the full interim results on 30th September to gain more information on the profit for the period and other figures. Investors might be particularly interested in the dividend, which in H1 last year was increased by 20% to 0.202p per share. The full dividend for 2025 was 0.62p per share, also up 20%, and equates to a yield of 1.36% at the current share price. Skillcast’s stated dividend policy for the foreseeable future is to increase payments broadly in line with increases in subscription revenues.
Into H2 and Skillcast will release additional AI services, including conversational learning, which leverages AI to save staff time and improve compliance awareness. CEO Vivek Dodd said that, “We believe that the cost efficiencies, superior user experience, and better compliance outcomes will encourage more companies to adopt our products.” The firm is also continuing to explore opportunities to grow organically in new segments as well as through acquisitions.
So all in all a positive update from Skillcast but investors will be keen to see if growth rates continue to be pressured by the political and economic uncertainty (flagged by the CEO) causing slow decision making amongst potential new clients.
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Skillcast is not a research client of Optimo Research.
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