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In conversation with TPXimpact's leadership team following their full-year results for the 12 months to 31st March 2025, the overriding sentiment was one of measured confidence tempered by market realities. The digital transformation specialist delivered on its revised expectations with revenue down 8.2% to £77.3m, but crucially improved adjusted EBITDA margins to 7.3% – demonstrating that disciplined cost management has yielded results despite pressure on the topline.
CEO Björn Conway and CFO Noel Douglas painted a picture of a market still finding its feet following the comprehensive spending review's conclusion on 11th June. While £19m of new business wins in the first two months of FY26 suggests momentum is building, Conway was refreshingly honest about ongoing uncertainty in the procurement environment.
The challenge ahead is significant. TPXimpact's £70m of new business wins in FY25 fell short of management's target of north of £100m, meaning the current year requires considerable effort both to feed immediate revenue needs and rebuild the longer-term backlog.
TPXimpact has witnessed some smaller specialist organisations, e.g., housing associations, showing renewed confidence as funding priorities become clearer, but cross-cutting digital activities – TPXimpact's bread and butter – remain harder to pin down. Multi-year budgets should favour longer-term digital transformation projects, yet procurement decisions continue to face delays as departments adjust to new spending frameworks.
Perhaps most intriguingly, our discussion revealed how TPXimpact is grappling with AI's disruptive potential. Unlike tech giants pursuing massive LLM investments, the company is taking a more targeted approach – developing small-scale, customised AI tools for specific client needs. Conway acknowledged it has "just finished the second year of our three-year plan" and, between July and September, will be "shaping the new three-year strategy" with AI considerations woven throughout.
The differentiation challenge looms large. Conway noted larger competitors with "people on the bench" are bidding aggressively for work they wouldn't normally pursue, whilst procurement processes often use generic language that obscures TPXimpact's deep domain expertise and client understanding. Where TPXimpact finds greatest success is when bids require it to demonstrate a deep understanding of specific policy agendas and combine that with agile delivery capabilities.
What's particularly striking is management's disciplined approach to investment decisions. Despite opportunities in responsible AI and automation, they're maintaining caution given market uncertainties – hard-won wisdom about managing through volatile periods.
The financial metrics tell a story of operational improvement: gross margins up 350 basis points to 28.6%, utilisation rates improved through targeted restructuring, and net debt held at manageable levels. The FY26 guidance of £6-7m adjusted EBITDA suggests continued margin progression, though revenue recovery remains the key variable.
TPXimpact's 90% public sector exposure remains both a strength and a vulnerability. Whilst positioning it perfectly for government digital transformation needs, it also means navigating where departments will prioritise IT spending. Moreover, the company's focus on relatively large digital transformation contracts creates inherent lumpiness – the binary nature of winning or losing significant deals makes performance harder to manage.
With budgets remaining tight across many government departments, TPXimpact's ability to demonstrate clear value and efficiency gains will be crucial to sustaining its recovery trajectory.
Posted by: Georgina O'Toole at 09:53
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