A setback flagged for FY28

When ActiveOps (LSE:AOM) issued its first-half trading update on 12 October 2026, the headline growth figures were accompanied by a warning about the following financial year. The company said a major customer was likely not to renew a contract worth £3.8m of annual Recurring Revenue when it ends in March 2027, and that revenue and adjusted EBITDA for the year to 31 March 2028 were now expected to be significantly below market expectations.

The board said the notice had only recently been received and that details had not been formally agreed. It stated there would be no impact on the current year to 31 March 2027, for which expectations were unchanged.

About the company

ActiveOps provides software for planning, measuring and managing operational work in back-office and service environments. Its customers include banks, insurers and other organisations that process large volumes of work such as claims, applications and customer requests. The software is sold mainly on subscription, so a high proportion of revenue recurs from year to year, and the group reports annual recurring revenue, or ARR, as a headline measure of its customer base.

The group has grown through both Organic Sales and acquisition, including the Enlighten business, whose figures are reported separately in some of the metrics discussed here. The difference between group and organic measures is useful because it shows which part of the Business is driving growth.

Scale of the hole

LSE:AOM sells software that helps banks, insurers and other service organisations plan, measure and manage back-office and operational workloads. Most of its income is subscription revenue, which makes contract renewals central to its outlook.

Group revenue for the half rose 21% to £25.3m from £20.8m, or about 14% excluding a one-off termination receipt, so the warning came amid continued double-digit growth. At 30 September, group ARR stood at £42.2m, up 4% on a year earlier, while ARR excluding the acquired Enlighten business was £37.2m, up 14%. The contract at risk is therefore equivalent to roughly 9% of group ARR. The board said it had removed about £3.8m of revenue from its FY28 expectations, and cited market ranges before the warning of £50.0m to £56.4m for revenue and £6.7m to £9.0m for adjusted EBITDA in that year.

A second pressure: slower new business

The company linked the FY28 downgrade not only to the expected non-renewal but also to lower new business activity during the first half. Training and implementation revenue was flat at £3.5m, but that figure included a one-off £1.5m termination receipt tied to the earlier loss of an Enlighten customer, so underlying services revenue fell. The company attributed the decline to fewer implementations and new customer wins than a year before.

Retention metrics show the contrast between the core business and the acquired one. Organic net revenue retention was 110%, while the group figure, including Enlighten, was 101%. Executive chair Richard Jeffery described the possible non-renewal as a setback to near-term revenue growth, while maintaining that the longer-term outlook offered significant opportunity.

How management plans to respond

LSE:AOM said some cost action would follow the expected loss, while growth Investment would continue. The Balance Sheet gives it room to do both: cash was £19.6m at 30 September, up from £13.3m a year earlier, and the company reported no debt.

For FY27, the group expected double-digit growth in adjusted EBITDA for the first half, an improved Margin and higher profit before tax. Market expectation ranges for FY27, which the company said it expected to meet, were £47.4m to £49.7m for revenue and £5.0m to £6.4m for adjusted EBITDA.

Putting the £3.8m contract in proportion

A single contract worth £3.8m of annual recurring revenue is about 9% of group ARR of £42.2m, which explains the board's decision to flag the issue promptly. Revenue guidance for FY28 was already set within ranges of £50.0m to £56.4m for revenue and £6.7m to £9.0m for adjusted EBITDA, so removing £3.8m of revenue represents roughly 7% of the revenue range. Because the revenue is subscription-based, most of it would fall straight through to profit, which is why the EBITDA impact was described as significant even though the revenue loss is moderate.

The company has stressed that the current year to 31 March 2027 is unaffected, which gives it time to adjust costs and to replace the lost revenue. The period between now and March 2027 is the window in which new customer wins and expansions with existing clients can partly offset the loss.

The two retention measures

Organic net revenue retention of 110% and group retention of 101% tell different stories. The first suggests that existing customers in the core business spend more over time, which is the behaviour expected from a successful subscription model. The second, which includes Enlighten, shows that the acquired business has been a drag on the overall figure. That gap helps explain why group ARR grew 4% while ARR excluding Enlighten rose 14%.

Retention matters especially in a company where a small number of customers represent a large share of income. If the likely non-renewal proves isolated, the overall retention picture remains healthy. If further large customers reduce spending, group retention could drift lower.

Financial resilience

The balance sheet is a cushion for the transition: cash of £19.6m at 30 September, up from £13.3m a year earlier, and no debt. That allows management to cut some costs in response to the lost contract while continuing to invest in sales and product development. Expectations for the current year, with revenue of £47.4m to £49.7m and adjusted EBITDA of £5.0m to £6.4m, were left unchanged. The interim results will show whether profit growth for the first half matches the double-digit growth in adjusted EBITDA that the company anticipated.

Risks and what comes next

The key uncertainty is whether the terms of the departure are finalised as expected, and whether further customers follow. Customer concentration matters in a business of this size: a single contract can move annual forecasts materially. Lower new business in the first half also means the pipeline needs to recover if the FY28 gap is to be narrowed rather than merely absorbed.

The interim results on 24 November, with an analyst presentation that morning and an Investor Meet Company session on 25 November, should provide reported profit figures and any update on the customer discussions, cost measures and new business momentum. Those disclosures will indicate how much of the FY28 shortfall management believes it can offset, and over what timetable.