5G Networks Delivers 29% Revenue Surge to $36.2M, Cyber Security Now 28% of Mix

5G Networks delivers 29% revenue surge in H1 FY26

5G Networks (ASX: 5GN) has reported $36.2 million in revenue for the six months ended 31 December 2025, representing 29% growth from the prior comparative period (PCP) of $28.1 million. The 5G Networks Half Year Results demonstrate operational leverage taking hold, with underlying EBITDA growing 31% to $1.29 million while gross margin expanded 5 percentage points to 52%. The company maintained a strong cash position of $14.4 million at period end.

The result reflects the dual impact of organic growth and the consolidation of AUCyber Limited, in which 5G Networks increased its ownership to 90.03% during the period. Management attributed the margin expansion to a combination of revenue scale benefits, operational synergies from the AUCyber integration, and a strategic shift toward higher-margin cyber security services.

Strategic Positioning

The H1 FY26 result positions 5GN as a focused enterprise and government solutions provider, with cyber security now contributing over 28% of total revenue and the Enterprise segment representing more than 80% of revenue mix.

The company delivered underlying EBITDA of $1.29 million (excluding non-recurring costs and share-based payment expenses), compared to $0.98 million in the PCP. After accounting for non-recurring costs of $0.91 million (down from $4.91 million in the PCP), reported EBITDA stood at $0.40 million.

Enterprise segment powers growth with AUCyber integration

Enterprise segment revenue surged 44.9% to $28.3 million, driven primarily by the consolidation of AUCyber Limited’s financial results. 5G Networks increased its ownership stake in the cyber security business to 90.03%, contributing $10.4 million in cyber security revenue during the half. This marks the first full half-year period in which AUCyber’s financials have been consolidated into 5G Networks’ results.

The Enterprise segment now accounts for over 80% of total revenue, reflecting a strategic shift toward enterprise and government customers and away from wholesale telecommunications services. In contrast, the Wholesale segment declined 11% to $6.22 million, affected by ongoing competitive pressures in commodity connectivity markets.

Management has initiated a board-led strategic review regarding the full integration of AUCyber and a potential acquisition of the remaining 9.97% minority interest. The review aims to streamline operations, capture further cost synergies, and consolidate 5G Networks’ position as a sovereign cyber security provider to Australian enterprise and government clients.

For investors, the Enterprise segment’s dominance signals a strategic repositioning away from low-margin wholesale services toward higher-value managed IT, cyber security, and data centre solutions targeted at government and enterprise clients with longer contract durations and higher switching costs.

What is EBITDA and why does margin expansion matter?

EBITDA stands for Earnings Before Interest, Tax, Depreciation and Amortisation. It is a widely used profitability metric that isolates a company’s operational performance by excluding non-cash expenses (depreciation and amortisation) and financing costs (interest and tax). For growth-stage technology companies like 5G Networks (ASX: 5GN), EBITDA helps investors assess whether revenue growth is translating into improved operational efficiency.

In 5G Networks’ case, underlying EBITDA grew 31% to $1.29 million while revenue expanded 29%, indicating the business is achieving operational leverage. This means fixed costs (such as infrastructure, software licences, and administrative overheads) are being spread across a larger revenue base, allowing profitability to grow faster than top-line sales.

Gross margin expansion to 52% (up from 47% in the PCP) further demonstrates this effect. As the company scales its cyber security and data centre services, the incremental cost of serving additional customers decreases, improving profitability per dollar of revenue.

Why this matters for investors:

1. EBITDA measures core operational profitability without the distortion of capital structure or accounting policies
2. Margin trends indicate pricing power and efficiency gains as the business scales
3. Operational leverage is critical for small-cap technology companies transitioning from growth-focused to profitability-focused models

For ASX technology investors evaluating 5G Networks, the combination of revenue growth and margin expansion suggests the business is moving beyond the pure revenue acquisition phase and beginning to demonstrate sustainable profitability characteristics.

Product performance: Cyber leads, legacy services contract

Cyber Security emerged as the standout product segment, contributing $10.4 million in revenue following the AUCyber consolidation. This represents a material shift in product mix, with cyber security now accounting for approximately 29% of total revenue. Data Centres remained stable at $6.5 million (up 1%), while Hardware & Software grew 5% to $3.77 million through project-based work.

Legacy product lines experienced declines:

• Cloud services fell 25% to $3.13 million
• Network & Voice dropped 27% to $2.77 million
• Managed Services declined 7% to $7.93 million

Management attributed these declines to customer churn in commoditised connectivity and cloud hosting markets, where pricing pressure and competitive intensity have accelerated. The shift away from these lower-margin legacy products toward cyber security and data centre services reflects a deliberate strategic repositioning toward higher-value, higher-margin offerings.

The product mix evolution supports the thesis that 5G Networks is transitioning from a traditional telecommunications provider to a cyber security and sovereign cloud infrastructure business. For investors, this repositioning could underpin sustained margin improvement if the company continues to shift revenue mix toward cyber security and enterprise managed services.

Capital management and balance sheet discipline

5G Networks returned $4.2 million to shareholders via on-market buyback during the half, while maintaining a cash position of $14.4 million at 31 December 2025 (down from $25.9 million at 30 June 2025). The $11.5 million decline in cash reflects working capital usage aligned with growth initiatives and integration activities related to the AUCyber consolidation.

Despite increased operating costs, the company improved balance sheet efficiency:

• Current liabilities reduced by $4.8 million
• Lease liabilities decreased through data centre consolidation
• Trade payables fell despite higher operating costs, reflecting disciplined payment terms and vendor relationship management

The cash position remains healthy for a business of 5G Networks’ scale, providing capacity for further AUCyber integration costs, organic growth investment, and potential strategic acquisitions. Management’s dual approach of returning capital to shareholders while maintaining balance sheet flexibility signals confidence in cash flow generation and operational leverage.

For investors assessing capital allocation discipline, the combination of buyback activity and reduced current liabilities suggests management is actively managing working capital efficiency while retaining capacity for growth investment.

Infrastructure footprint and strategic outlook

5G Networks operates 150 kilometres of fibre network across Sydney, Melbourne, Brisbane, Perth, and Adelaide, supported by 13 data centres with over 1,200 racks of capacity. The company maintains 100+ on-net locations and services more than 1,200 government and enterprise customers across Australia and New Zealand with a team of 170 employees.

The owned infrastructure creates recurring revenue opportunities and meaningful switching costs for enterprise customers, particularly in data centre co-location and managed network services. The fibre network provides low-latency connectivity between major metro markets, while the data centre footprint enables sovereign cloud hosting solutions for government and enterprise clients with data residency requirements.

Management has flagged the ongoing board-led strategic review regarding AUCyber integration and a potential full acquisition of the remaining minority interest. The review aims to streamline operations, capture further cost synergies, and position 5G Networks as a leading Australian-owned cyber security and sovereign infrastructure provider.

Key infrastructure assets:

• 150km of metro fibre (Sydney, Melbourne, Brisbane, Perth, Adelaide)
• 13 data centres with 1,200+ rack capacity
• 100+ on-net locations across Australia, Singapore, Tokyo, and the US
• Over 1TB of international DDoS mitigation capacity
• 860+ bare metal server locations globally

For investors evaluating the business, the owned infrastructure provides a defensible moat in an increasingly competitive market, while the AUCyber integration positions 5G Networks to capture growing enterprise cyber security spend driven by escalating threat environments and regulatory compliance requirements.

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