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Manchester HQ'd tech training provider Northcoders Group has issued a trading update which states that the company can no longer support market expectations regarding its revenue and profitability in FY25 (the twelve months ending 31st December). The change to Government funding of Skills Bootcamp programmes to a fully regional model announced in April has not progressed as rapidly as anticipated leading to dearth in contract awards through the new mechanisms. In response, Northcoders has taken steps to cut c.£2.2m from its annualised fixed expenditure representing a swingeing 40% decrease on last year’s reported cost base.
The tech training specialist, which counts AO, Barclays and the BBC among its clients, came into 2025 with considerable forward momentum. FY24 had seen a 24% yoy jump in revenue to a record £8.8m (see here). Adjusted EBITDA had also showed a significant improvement, rising to £1.0m (FY23: £0.1m). Double-digit increases in both metrics were expected by the market for the current year.
Northcoders believes that the switch in the Government funding model will mean delays to rather, than cancellations of, contract awards. Multiple bids are reported as remaining pending, albeit several regional authorities have yet to issue tenders or confirm exact future funding allocations. Until greater clarity emerges, however, the company cannot accurately predict the timing of income from Government-backed contracts.
In more positive new, Northcoder’s B2B consultancy division is reported to be making positive progress. The company’s existing £10 million contract with the Department for Education, which concludes later this year, will also help to offset some of the near-term headwinds. As we have noted before, moreover, with an increasingly diversified product portfolio and more efficient operational model, the Group appears better positioned to capitalise on the increasing demand for technology skills training.
Unsurprisingly, investors have not reacted well to the latest trading update. At the time of writing, Northcoders’ share price was down by over 20% on last night’s close. Since the publication of its FY24 results eleven weeks ago, the company’s value has fallen by almost two thirds.
Posted by: Duncan Aitchison at 09:04
Tags:
training
public sector
trading update