Qoria delivers 68% EBITDA growth as digital safety platform hits $149 million ARR
Qoria Limited reported its Half Year Financial Results (ASX: QOR) for H1 FY26, posting underlying EBITDA of $10.3 million, up 68% on the prior corresponding period. The child digital safety technology provider achieved exit annual recurring revenue (ARR) of $149 million, representing 13% growth despite a $5.5 million negative foreign exchange impact from a strengthening Australian dollar.
Revenue climbed 25% to $69 million with gross margins maintained above 90%. Free cash flow surged 51% to $9.2 million, demonstrating operational leverage as the company’s dual business model delivers profitable growth across both K12 school subscriptions and consumer parental controls.
The results come alongside the announcement of a transformational merger with Aura, positioning the combined entity to provide lifetime digital protection from childhood through adulthood. Qoria currently protects over 30 million children globally across 32,000+ schools.
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What is a child safety technology platform?
Qoria operates software platforms that monitor and protect children’s digital activity in educational and home environments. The business operates through two distinct segments: K12 school-based solutions sold to educational institutions, and Qustodio parental controls sold directly to families.
The technology provides content filtering, wellbeing monitoring, screen time management, and real-time threat detection across devices, cloud platforms, and social media. Qoria’s Digital Monitoring solution made a “critical call” every 2 hours throughout FY25, meaning interventions for at-risk students identified through the platform’s AI-powered analysis.
In K12 environments, the platform reaches 20% of US students and 40% of UK students. At home, over 9 million parents use Qustodio services to manage family digital safety. The dual B2B and B2C model provides distinct unit economics, with school contracts delivering steady recurring revenue and consumer subscriptions generating rapid payback on marketing spend.
Qustodio emerges as the growth engine with 34% annualised ARR expansion
Consumer business Qustodio delivered standout performance in H1 FY26, with ARR reaching US$21.1 million, up 26% on the prior corresponding period. On an annualised basis, the segment is growing at 34%, driven by superior customer acquisition economics that enable aggressive scaling.
The platform added approximately 400,000 net new subscribers during the half, generating approximately US$3 million in net ARR growth. Qustodio’s annual upfront billing model creates an effective customer acquisition cost (CAC) payback period of less than 1 month, meaning marketing investments return cash almost immediately.
This economic profile allows Qoria to increase marketing spend with confidence, as each dollar deployed generates rapid returns that fund further growth without dilution. The B2C model contrasts with K12 school sales, which follow longer procurement cycles but deliver higher lifetime values through multi-year contracts.
| Metric | H1 FY2024 | H2 FY2024 | H1 FY2025 | H2 FY2025 | H1 FY2026 |
|---|---|---|---|---|---|
| Qustodio ARR (US$M) | $16 | $19 | $22 | N/A | $21.1 |
| Net ARR Growth (US$M) | N/A | N/A | N/A | N/A | ~$3.0 |
| Net Subscriber Growth (000’s) | 300 | 360 | N/A | N/A | ~400 |
| CAC Payback (Months) | 0.8 | 1.0 | N/A | N/A | <1.0 |
Management noted that modest increases in marketing investment are delivering significant uplifts in both subscriber acquisition and profitability, with the 34% annualised growth rate in FY26 substantially outpacing the group’s overall ARR expansion.
K12 school business maintains steady expansion
The K12 education segment reported regional ARR performance showing strongest momentum in the United States market. US K12 ARR reached US$41.9 million, up 27% on the prior corresponding period, representing market penetration of 20% of US students. UK K12 ARR stood at £23.6 million (up 5.5%), covering 40% of UK students, whilst ANZ K12 ARR reached A$7.0 million, up 7.3%.
The weighted sales pipeline hit a record $48.5 million, up 29% on the prior corresponding period, supporting the company’s growth outlook for the second half. Key US selling seasons occur in April through June, whilst UK procurement concentrates in March.
Qoria launched several AI-powered features during H1 FY26 that strengthen competitive positioning:
- Content Aware: Real-time AI analysis and filtering of text, video, and images
- Android Filter: World-first fully integrated filter for Chrome and Android apps on Chromebooks
- YouTube Manager: Granular video and channel level control for school administrators
- Qoria Academy: Configurable compliance and training courses for platform users
These releases address schools’ most pressing digital safety challenges whilst creating natural cross-sell opportunities into existing customer accounts. Management emphasised that in FY25, approximately 25% of growth came from cross-sold products within the existing K12 base.
Disciplined cost management delivers operating leverage
Fixed costs grew at a compound annual growth rate of just 4% over the past two years, compared to revenue and ARR growth exceeding 20% in the same period. This cost discipline creates the operating leverage driving EBITDA expansion.
Employee benefits increased 5% to $30.1 million, whilst administration expenses rose 16% to $8.0 million. Total operating costs climbed 7% to $38.1 million, substantially below revenue growth. Management announced cost efficiencies of approximately $4 million per annum being actioned in the current quarter, with H2 FY26 costs expected to remain in line with H1 (subject to foreign exchange movements).
The company capitalised $13.2 million in employee-related research and development costs during the half. This treatment creates a gap between underlying EBITDA and cash EBITDA, though management noted the company is approaching cash EBITDA breakeven excluding foreign exchange volatility.
On a constant currency basis (USD $0.64 | GBP $0.48), adjusted EBITDA margin reached 16.5% for the half. Management maintained full-year guidance of approximately 20% EBITDA margin on a constant currency basis, indicating expected margin expansion in H2 FY26.
Balance sheet and cash position
- Cash: $21.2 million
- Available funding: $21.2 million
- Net debt: $32.6 million
- Free cash flow H1: $9.2 million (up 51% pcp)
- Cash receipts: $79.1 million (up 20% pcp)
All debt remains long-term with the AshGrove facility maturing 30 June 2028. The positive free cash flow trajectory supports self-funded growth, with receipts from customers substantially exceeding operating expenses and capital expenditure requirements.
Transformational Aura merger creates lifetime digital protection platform
Concurrent with its H1 FY26 results, Qoria announced a proposed merger with Aura via scheme of arrangement. Under the transaction, Qoria shareholders are expected to receive 1 Aura CDI (CHESS Depository Interest) for every approximately 17.2 ordinary shares of Qoria, with Qoria security holders owning approximately 35% of the combined entity pre-equity placement (reducing to 33.8% post-placement).
Aura has received binding commitments for a US$75 million (~A$109 million) equity placement on completion, priced at approximately A$12.38 per AXQ CDI. This equates to an implied price per Qoria share of A$0.72 and a pre-money valuation of approximately A$3.0 billion for the combined business.
The transaction remains subject to shareholder approval (expected June 2026), regulatory approvals, Court approval, and customary conditions including no material adverse change (defined as greater than 15% reduction in annualised revenue). A reimbursement fee of A$10 million applies each way in circumstances outlined in the Merger Implementation Deed.
Strategic Rationale
“This merger solves the TAM age-out problem in online safety. Children eventually grow up and leave our platforms. By combining with Aura, we create a customer lifecycle from childhood through adulthood, expanding from child safety into adult identity protection and family security.”
Major Aura holders Hari Ravichandran and WindrCo have agreed voluntary escrow until Aura publishes financial results for the year ending 31 December 2026, representing 25% of the pro forma combined group’s equity.
Synergy and growth potential
The strategic combination positions the merged entity to cross-sell adult protection services to existing parent users and school communities. Aura’s adult-focused digital protection services command approximately 4X the average revenue per user compared to child safety products, representing substantial revenue expansion potential without proportional customer acquisition costs.
Aura brings AI capabilities branded as “Connected Intelligence” that enhance Qoria’s existing monitoring and filtering platforms. Distribution synergies emerge from leveraging Qoria’s K12 channel presence to introduce family safety products, whilst Aura’s consumer marketing expertise can accelerate Qustodio growth.
Revenue synergies appear significant given the natural customer overlap between parents using home parental controls and those seeking adult identity protection, password management, and transaction monitoring services. Management highlighted that schools also represent potential distribution channels for family-focused security products.
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Outlook and key dates for Qoria investors
Management maintained FY26 guidance across all metrics. Revenue and ARR growth is expected above 20% (subject to foreign exchange movements), supported by Qustodio momentum and a record K12 weighted pipeline. Underlying EBITDA margin guidance remains approximately 20% on a constant currency basis, with the company expected to be free cash flow positive for the full year (constant currency basis, excluding interest and abnormals).
H2 FY26 costs are projected in line with H1 (subject to foreign exchange), with ~$4 million per annum in cost efficiencies being implemented this quarter. Fixed cost discipline continues as a core strategic pillar supporting margin expansion.
Upcoming milestones for investors:
- March 2026: Investor update on Aura merger progression
- March quarter 2026: Key UK selling period (primary procurement season)
- April 2026: March quarter 4C cash flow report
- April-June 2026: Key US selling period (peak school buying season)
- June 2026: Expected completion of Aura merger (subject to approvals)
- July 2026: June quarter 4C report (expected as AXQ if merger completes)
The successful completion of the Aura merger would transform Qoria from a specialised child safety technology provider into a diversified digital protection platform addressing lifetime customer needs. This addresses the fundamental limitation of the current business model, where customers eventually age out of child-focused products. The combined entity would operate across three distinct verticals: adult protection, family safety, and school-based solutions, each with differentiated unit economics and growth characteristics.
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