Tribal Group Shares Fall as Margins and Cash Flow Disappoint

Tribal Group (LON: TRB), the education software provider, saw its shares fall despite reporting revenue growth in interim results published earlier today. Markets focused on weaker margins and cash generation rather than the headline growth.

Shares fell to 60.4p, down 4.1% from yesterday’s close of 63.0p, having opened at 62.8p and traded as low as 58.772p. The stock sits well below its 52-week high of 72.6257p and closer to its 52-week low of 46.0p.

Revenue for the six months to 30 June rose 7.1% to £48.9m from £45.7m a year earlier, while annual recurring revenue, the value of subscription income locked in for the year ahead, grew 9.7% to £66.5m. Net revenue retention, a measure of how much existing customers spend year on year, improved to 109% from 105%.

Beneath that growth, adjusted EBITDA, earnings before interest, tax, depreciation and amortisation, held flat at £8.7m but its margin slipped 1.2 percentage points to 17.8%, largely due to a £0.9m foreign exchange swing on intercompany balances. Statutory profit after tax fell 9.3% to £3.9m, hit by higher amortisation including a one-off £0.7m charge from a review of asset useful life.

Cash generation weakened further. Operating cash conversion, the share of profit turned into cash, nearly halved to 25.7% from 47.7% a year earlier, and free cash flow swung to an outflow of £4.9m from £0.8m, partly reflecting a one-off £3m advance payment made to secure a supplier contract. Net cash still improved to £0.6m from net debt of £3.9m a year earlier, even after £6.0m of dividend payments.

Chief executive Mark Pickett said: “We have delivered another half of solid strategic and operational progress, with continued growth in recurring revenues, improving operational efficiency and important milestones in our transition to a fully cloud-enabled SaaS business.” Management reiterated that it expects FY26 results to be comfortably in line with market expectations, with consensus pointing to full-year revenue of £93.6m and adjusted EBITDA of £17.0m.