REG - Spirent Comms. PLC Keysight Technologs. - Spirent Communications H1 2025 Results
05/08/2025 07:02
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RNS Number : 9253T Spirent Communications PLC 05 August 2025
SPIRENT COMMUNICATIONS PLC
Results for the six months ended 30 June 2025
Resilient performance in challenging conditions
Good progress in H1
$ million First half First half Change
2025 2024 (%)
Orderbook(1) 310.1 284.2 9
Order intake(2) 206.5 188.8 9
Revenue 208.1 197.3 5
Gross margin (%) 71.3 70.0 2
Adjusted operating profit(3) 7.5 5.0 50
Adjusted profit before tax(3) 8.9 6.8 31
Adjusted basic earnings per share(4) (cents) 1.45 1.05 38
Reported operating loss (14.2) (9.3) (53)
Reported loss before tax (12.8) (7.5) (71)
Reported basic earnings per share (cents) (2.15) (1.17) (84)
Closing cash 157.3 131.0 20
Commenting on today's announcement, Eric Updyke, Chief Executive Officer,
said:
"We delivered a resilient first half performance, continuing to advance our
strategic priorities, despite macroeconomic headwinds. I am particularly proud
of the team's focus and agility as we support our customers with
next-generation solutions while also deepening relationships in emerging
segments.
"Our AI Data Centre testing solution, now commercially deployed with multiple
customers, is gaining traction as enterprises race to modernise their Ethernet
network fabrics for high-performance AI workloads. Meanwhile, our Positioning
portfolio saw strong interest from aerospace, defence and automotive
customers, and Wi-Fi 7 momentum has been fuelled by our expanded test
capabilities, helping customers accelerate time to market. Interest in our 5G
solutions continues from service providers and enterprises as they progress
cloud-native core deployments and prepare for the next phase of 5G Standalone
rollouts.
"We have continued to maintain strong customer engagement and project
delivery, thanks to our committed and highly capable team. We are executing
with discipline, investing in innovation, and positioning Spirent to capture
growth as market conditions recover."
Details of the recommended cash offer for Spirent by Keysight
On 28 March 2024, the Boards of Keysight Technologies, Inc. ("Keysight") and
Spirent announced that they had reached agreement on the terms of a
recommended cash offer for the entire issued ordinary share capital of Spirent
(the "Transaction").
As announced by Keysight on 3 June 2025, Keysight obtained regulatory
clearance from the US Department of Justice. This follows the UK Competitions
and Markets Authority unconditionally clearing the Transaction on 13 March
2025. Accordingly, Conditions 3.1, 3.2, 3.3, 3.4, 3.5 and 3.6 set out in Part
A of Part III of the Scheme Document have been satisfied.
Completion of the Transaction remains subject to the satisfaction or (if
capable of waiver) waiver of the remaining conditions to the Transaction set
out in Part III of the Scheme Document (the "Conditions"), including the
Condition relating to sanction of the Scheme by the Court.
With support and assistance from Spirent, as Keysight announced on 24 July
2025 it remains committed to working constructively with the State
Administration for Market Regulation of the People's Republic of China
("SAMR") to obtain clearance for the Transaction and, as it stated in the same
announcement, expects that the Scheme will become effective on or before 29
September 2025, being the Long Stop Date (as defined in the Scheme Document).
Outlook
Whilst market conditions are likely to remain challenging in the near term,
particularly in the telecom segment we retain a positive medium-term outlook.
We are benefitting from a strong orderbook, increasing traction in AI data
centres and Financial Services, growing demand for 5G assurance solutions, and
strong customer interest in Positioning and Wi-Fi 7 test offerings.
Spirent remains focused on execution, innovation and diversification, and is
well-positioned to benefit as market conditions recover.
Notes
1. Orderbook is an alternative performance measure as defined in the
appendix on page 23.
2. Order intake represents commitments from customers in the period to
purchase goods and/or services that will ultimately result in recognised
revenue.
3. Adjusted operating profit is before acquired intangible asset
amortisation, share-based payment and other adjusting items totalling $21.7
million (first half 2024: $14.3 million).
4. Adjusted basic earnings per share is based on adjusted earnings as
set out in note 5.
- ends -
Enquiries
Eric Updyke, Chief Executive Officer Spirent Communications plc +44 (0)1293 767676
E: investor.relations@spirent.com (mailto:investor.relations@spirent.com)
Paula Bell, Chief Financial & Operations Officer
James Melville-Ross/ DGA Group +44 (0)20 7664 5095
Humza Vanderman
E: spirent@dgagroup.com
About Spirent Communications plc
Spirent Communications plc (LSE: SPT) a leading global provider of automated
test and assurance solutions for networks, cybersecurity, and positioning. The
Company provides innovative products, services and managed solutions that
address the test, assurance, and automation challenges of a new generation of
technologies, including 5G, AI, cloud, autonomous vehicles and beyond. From
the lab to the real world, Spirent helps companies deliver on their promise to
their customers of a new generation of connected devices and technologies.
Further information about Spirent Communications plc can be found at
https://corporate.spirent.com/ (https://corporate.spirent.com/) .
Spirent Communications plc Ordinary Shares are traded on the London Stock
Exchange (ticker: SPT;
LEI: 213800HKCUNWP1916L38). The Company operates a Level 1 American Depositary
Receipt (ADR) programme with each ADR representing four Spirent Communications
plc Ordinary Shares. The ADRs trade in the US over-the-counter (OTC) market
under the symbol SPMYY and the CUSIP number is 84856M209. Spirent ADRs are
quoted on the Pink OTC Markets electronic quotation service which can be found
at https://www.otcmarkets.com/corporate-services/pink-market
(https://www.otcmarkets.com/corporate-services/pink-market) .
Spirent and the Spirent logo are trademarks or registered trademarks of
Spirent Communications plc. All other trademarks or registered trademarks
mentioned herein are held by their respective companies. All rights reserved.
Cautionary statement regarding forward-looking statements
This document may contain forward-looking statements which are made in good
faith and are based on current expectations or beliefs, as well as assumptions
about future events. You can sometimes, but not always, identify these
statements by the use of a date in the future or such words as "will",
"anticipate", "estimate", "expect", "project", "intend", "plan", "should",
"may", "assume" and other similar words. By their nature, forward-looking
statements are inherently predictive and speculative and involve risk and
uncertainty because they relate to events and depend on circumstances that
will occur in the future. You should not place undue reliance on these
forward-looking statements, which are not a guarantee of future performance
and are subject to factors that could cause our actual results to differ
materially from those expressed or implied by these statements. The Company
undertakes no obligation to update any forward-looking statements contained in
this document, whether as a result of new information, future events or
otherwise.
Operating and financial review
Group financial performance
Spirent navigated global market challenges while staying focused on delivering
our product roadmaps to meet customer needs, resulting in resilient first half
performance and particularly good performance in the second quarter of the
year. Growth in both order intake and revenue was delivered.
We saw some recovery in North America at the end of 2024 and this continued
into 2025. APAC and EMEA activities remained robust compared to the prior
period which resulted in revenue increasing from $197.3 million to $208.1
million.
Orderbook and order intake both increased 9 per cent in the first half of 2025
against the first half of 2024 positioning us well for the second half of the
year.
Gross margin increased to 71.3 per cent (first half 2024: 70.0 per cent)
positively contributing to adjusted operating profit of $7.5 million in the
first half of 2025 (first half 2024: $5.0 million).
Operating costs were carefully managed whilst investing in product development
roadmaps driving important new revenue streams as part of our diversification
strategy. In addition, we continue to navigate the challenging trading
environment, including tariff changes.
Other adjusting items were $10.4 million (first half 2024: $8.4 million)
comprising costs associated with the acquisition of Spirent by Keysight (first
half 2024: $7.1 million). There were no further restructuring and strategic
evaluation projects costs in 2025 (first half 2024: $0.9 million). Adjusting
items are further detailed on page 7.
The effective tax rate decreased from 11.2 per cent to 7.0 per cent mainly
driven by the mix of profit generation by region.
Our approach to strong financial management and focus on our balance sheet
remains in place. Cash closed at $157.3 million (first half 2024: $131.0
million).
Under the dividend payment mechanics set out in the Keysight acquisition
announcement released on 28 March 2024, the Spirent Board was allowed to pay
both a Permitted Dividend of 2.5 pence per share and an Additional Dividend of
1 pence per share, before the acquisition completion date. Accordingly on 26
June 2025, the Company announced that the Board had approved to pay a dividend
of 3.5 pence per share at the end of July 2025. The total cost is estimated at
circa $27 million, and no liability is recorded in the half year financial
statements in respect of these dividends.
Revenue
$ million First half % First half %
2025 2024
Revenue by segment
Lifecycle Service Assurance 83.7 40.2 85.7 43.4
Networks & Security 124.4 59.8 111.6 56.6
208.1 100.0 197.3 100.0
Revenue by geography
Americas 123.7 59.5 113.4 57.5
Asia Pacific 57.7 27.7 57.0 28.9
Europe, Middle East and Africa 26.7 12.8 26.9 13.6
208.1 100.0 197.3 100.0
Overall Group revenue increased by 5 per cent, with Lifecycle Service
Assurance down 2 per cent and Networks & Security up 11 per cent,
respectively, compared to the same period last year.
Lifecycle Service Assurance revenue reduced by $2 million over the first half
of 2025 due to continuing slowness and regional disparity in operators
upgrading to 5G Standalone, and growing commoditisation in the device service
experience testing sector. While 5G Standalone progress from operators is no
longer stalled, it is not yet rapid nor ubiquitous.
We also saw stable demand for our Landslide(TM) core-network lab test
offering, our lab and test automation solutions and our network assurance
offerings, despite the subdued spending by telecom operators. The team
launched a suite of advanced test solutions, including the Landslide E20
over-the-air system, a cloud-native benchmarking solution, and robotic optical
switches, designed to streamline the complex challenges of testing and
monetising 5G Standalone networks and accelerating digital transformation
initiatives.
Networks & Security revenue increased by $12.8 million over the first half
of 2025 due to strong growth in our Positioning, Navigation and Timing (PNT)
solutions and growing demand for our high-speed Ethernet solutions, driven by
growing AI infrastructure investments.
Our next generation test solution for Positioning, Navigation and Timing (PNT
X) continues to lead the market as customers look for higher fidelity on more
complex scenarios across autonomous vehicles, defence systems, space,
hyperscaler infrastructure and avionics.
We saw strong demand for our 400G and 800G high-speed Ethernet test solutions
with many wins for our new AI Data Centre test solution from cloud
hyperscalers.
Revenue was up in North America, driven by increasing market confidence,
especially around AI, cloud infrastructure and defence spending, while Europe
and Asia Pacific remained on par with the first half of 2024.
Gross margin
First half % First half %
$ million 2025 2024
Lifecycle Service Assurance 60.8 72.6 61.7 72.0
Networks & Security 87.6 70.4 76.5 68.5
148.4 71.3 138.2 70.0
Gross profit increased to $148.4 million despite material and labour
inflation, driven by higher revenues and a stronger mix of products. Gross
margin increased to 71.3 per cent.
Operating costs
$ million First half First half First half First half
adjusted(1) reported adjusted(1) reported
2025 2025 2024 2024
Product development 50.1 50.1 47.4 47.4
Selling and marketing 64.0 64.0 60.2 60.2
Administration 26.8 48.5 25.6 39.9
Operating costs 140.9 162.6 133.2 147.5
Lifecycle Service Assurance 58.3 58.3 55.4 55.8
Networks & Security 79.1 79.1 72.4 72.9
Corporate 3.5 25.2 5.4 18.8
Operating costs 140.9 162.6 133.2 147.5
Note
1. Before acquired intangible asset amortisation, share-based payment
and other adjusting items totalling $21.7 million (first half 2024: $14.3
million).
Operating costs in the period include cost inflation and continue to be
carefully managed.
The overall investment in product development increased period-on-period from
$47.4 million to $50.1 million, driven by new product initiatives.
Selling and marketing costs increased by $3.8 million, in part due to a global
training sales conference to support many new product launches.
Operating profit/(loss)
$ million First half Adjusted operating First half Adjusted operating
2025 Margin(1,2) (%) 2024 Margin(1,2) (%)
Lifecycle Service Assurance 2.5 3.0 6.3 7.4
Networks & Security 8.5 6.8 4.1 3.7
Corporate (3.5) (5.4)
Adjusted operating profit(1) 7.5 3.6 5.0 2.5
Adjusting items:
Acquired intangible asset amortisation (2.6) (2.7)
Share-based payment (8.7) (3.2)
Other adjusting items (10.4) (8.4)
Reported operating loss (14.2) (9.3)
Notes
1. Before acquired intangible asset amortisation, share-based payment
and other adjusting items totalling $21.7 million (first half 2024: $14.3
million).
2. Adjusted operating profit as a percentage of revenue in the period.
Adjusted operating profit was $7.5 million (first half 2024: $5.0 million).
The reported loss was $14.2 million (first half 2024: $9.3 million loss)
mainly impacted by the increase in share-based incentive payments and
acquisition related transaction costs.
Share-based payment
Share-based payment increased from $3.2 million to $8.7 million due to the
increase in number of grants and vestings during the first half of 2025.
Other adjusting items
First half First half
$ million 2025 2024
Restructuring - 0.9
Acquisition related costs 10.4 7.5
10.4 8.4
The costs of $10.4 million recognised for the first half of 2025 relate to the
Keysight acquisition of Spirent which mainly includes legal fees and some
consultancy costs. We expect further deal related charges, the majority of
which are expected to be incurred when the deal is closed.
The total cash outflow in respect of other adjusting items is reported within
cash flows from operating activities in the consolidated cash flow statement.
Finance income and costs
Finance income in the first half of 2025 was earned from bank interest of $1.9
million (first half 2024: $2.0 million) and $nil (first half 2024: $0.2
million) of interest income in relation to the UK defined benefit pension
plans.
Finance costs in the first half were $0.5 million (first half 2024: $0.4
million), being interest on lease liabilities.
Tax
The reported tax credit for the Group for the first half of 2025 was $0.4
million (first half 2024: tax credit $0.8 million). The adjusted tax charge,
excluding the tax credit on the adjusting items of $1.0 million, was $0.6
million (first half 2024: $0.8 million), resulting in an effective tax rate of
7.0 per cent of adjusted pre-tax profit. This compared with an effective tax
rate of 11.2 per cent for the first half of 2024. The full year 2025 effective
tax rate is expected to be in the range of 10-12 per cent. The difference from
the half year rate is largely due to the impact of the US One Big Beautiful
Bill Act that wasn't considered at half year because it was not substantially
enacted at the 30 June 2025 Balance Sheet Date.
Earnings per share
Adjusted basic earnings per share grew 38 per cent to 1.45 cents, reflecting
the trading performance in the first half of 2025. There were 577.4 million
weighted average shares in issue (first half 2024: 573.7 million). Reported
basic loss per share was 2.15 cents compared with 1.17 cents for the first
half of 2024.
Financing and cash flow
Free cash flow from operations decreased by $12 million to $19.1 million in
the first half of 2025 compared to the first half of 2024, driven by the
decrease in trade payables and increase in tax paid. Cash flow from operations
is detailed in note 8 on page 21. An explanation on free cash flow as an
alternative performance measure can be found on page 24.
Free cash flow is set out below:
First half First half
$ million 2025 2024
Cash flow from operations 23.1 32.8
Tax paid (7.8) (2.7)
Net cash inflow from operating activities 15.3 30.1
Interest received 1.9 2.2
Net capital expenditure (4.1) (3.6)
Capitalised development costs (1.0) (1.9)
Payment of lease liabilities, principal and interest (3.4) (3.4)
Lease payments received from finance leases - 0.2
Acquisition related other adjusting items (note 4) 10.4 7.5
Free cash flow 19.1 31.1
Net capital expenditure of $4.1 million was broadly similar to the same period
last year and predominantly related to demonstration and test equipment.
Balance sheet and dividend
The consolidated balance sheet is set out on page 12.
Net assets as at 30 June 2025 increased by $22.0 million to $396.9 million
compared to first half of 2024.
Cash at 30 June 2025 was $157.3 million (first half of 2024: $131.0 million)
and the Company has no bank debt.
No dividends were paid to shareholders as of 30 June 2025. However, as noted
above, on 26 June 2025, the Company announced that the Board had approved a
total dividend of 3.5 pence per share to be paid at the end of July 2025 under
the dividend payment mechanics set out in the Keysight announcement released
on 28 March 2024. The total cost is estimated at circa $27 million, and no
liability is recorded in the half year financial statements in respect of
these dividends.
Principal risks and uncertainties
The principal risks and uncertainties facing the Group for the remainder of
the year are unchanged from those reported in the Annual Report 2024.
The Group's principal risks and uncertainties at 31 December 2024 were
detailed on pages 55 to 60 of the Annual Report 2024 and related to the
following areas: macroeconomic change; technology change; business continuity;
customer dependence/customer investment plans; competition; and employee skill
base. A copy of the Annual Report 2024 is available on the Company's website
at https://corporate.spirent.com/ (https://corporate.spirent.com/) .
Condensed consolidated income statement
First half 2025 First half 2024
$ million Notes Adjusted Adjusting Reported Adjusted Adjusting Reported
items(1) items(1)
Revenue 3 208.1 - 208.1 197.3 - 197.3
Cost of sales (59.7) - (59.7) (59.1) - (59.1)
Gross profit 148.4 - 148.4 138.2 - 138.2
Product development 3 (50.1) - (50.1) (47.4) - (47.4)
Selling and marketing (64.0) - (64.0) (60.2) - (60.2)
Administration (26.8) (21.7) (48.5) (25.6) (14.3) (39.9)
Operating profit/(loss) 7.5 (21.7) (14.2) 5.0 (14.3) (9.3)
Adjusting items:
Acquired intangible asset amortisation - (2.6) (2.6) - (2.7) (2.7)
Share-based payment - (8.7) (8.7) - (3.2) (3.2)
Other adjusting items 4 - (10.4) (10.4) - (8.4) (8.4)
- (21.7) (21.7) - (14.3) (14.3)
Finance income 1.9 - 1.9 2.2 - 2.2
Finance costs (0.5) - (0.5) (0.4) - (0.4)
Profit/(loss) before tax 8.9 (21.7) (12.8) 6.8 (14.3) (7.5)
Tax (0.6) 1.0 0.4 (0.8) 1.6 0.8
Profit/(loss) for the period attributable to owners of the parent Company 8.3 (20.7) (12.4) 6.0 (12.7) (6.7)
Earnings per share (cents) 5
Basic 1.45 (2.15) 1.05 (1.17)
Diluted 1.43 (2.15) 1.04 (1.17)
Note
1. Adjusting items comprise amortisation of acquired intangible
assets, share-based payment, other adjusting items, tax on adjusting items and
any over/under provision in respect of prior year tax.
The performance of the Group is assessed using a variety of non-GAAP
alternative performance measures which are presented to provide additional
financial information that is regularly reviewed by management. Adjusting
items are identified and excluded by virtue of their size, nature or incidence
as they do not reflect management's evaluation of the underlying trading
performance of the Group. The alternative performance measures are presented
in the appendix. The reported GAAP measures give the complete measure of
financial performance.
Condensed consolidated statement of comprehensive income
$ million Note First half First half
2025 2024
Loss for the period attributable to owners of the parent Company (12.4) (6.7)
Other comprehensive income
Items that may subsequently be reclassified to profit or loss:
- Exchange differences on retranslation of foreign operations 7.2 (1.1)
- Re-measurement of the net defined benefit pension asset 7 0.7 3.0
Other comprehensive income 7.9 1.9
Total comprehensive loss for the period attributable to owners of the parent (4.5) (4.8)
Company
Condensed consolidated balance sheet
$ million Note 30 June 30 June Audited
2025 2024 31 December
2024
Assets
Non-current assets
Intangible assets 202.7 204.1 203.5
Property, plant and equipment 15.2 15.0 14.7
Right-of-use assets 15.3 16.7 17.5
Trade and other receivables 4.5 1.1 6.7
Assets recognised from costs to obtain a contract 0.4 1.3 0.7
Defined benefit pension plan surplus 7 0.7 10.2 0.5
Deferred tax asset 55.6 46.5 54.7
294.4 294.9 298.3
Current assets
Inventories 33.4 40.3 35.5
Trade and other receivables 103.9 99.1 134.9
Assets recognised from costs to obtain a contract 2.8 0.3 1.9
Current tax asset 4.7 2.8 1.8
Cash and cash equivalents 157.3 131.0 141.8
302.1 273.5 315.9
Total assets 596.5 568.4 614.2
Liabilities
Current liabilities
Trade and other payables (54.1) (49.8) (78.7)
Contract liabilities (88.4) (86.8) (68.7)
Lease liabilities (6.1) (8.2) (7.6)
Other financial liabilities - - (0.1)
Current tax liability (0.3) (1.0) (6.5)
Provisions (5.1) (4.6) (3.7)
(154.0) (150.4) (165.3)
Non-current liabilities
Trade and other payables (0.2) (0.2) (0.2)
Contract liabilities (18.9) (18.4) (29.2)
Lease liabilities (11.7) (11.5) (12.7)
Defined benefit pension plan deficit 7 (12.9) (10.6) (11.0)
Provisions (1.9) (2.4) (3.3)
(45.6) (43.1) (56.4)
Total liabilities (199.6) (193.5) (221.7)
Net assets 396.9 374.9 392.5
Capital and reserves
Share capital 26.6 24.4 24.2
Share premium account 27.7 25.5 25.3
Capital redemption reserve 19.6 18.1 17.9
Other reserves 12.1 18.0 18.6
Translation reserve 10.0 4.4 2.8
Retained earnings 300.9 284.5 303.7
Total equity attributable to owners of the parent Company 396.9 374.9 392.5
Condensed consolidated statement of changes in equity
Attributable to the equity holders of the parent Company
$ million Notes Share Share Capital Other Translation Retained Total equity
capital premium redemption reserves reserve earnings
account reserve
At 1 January 2024 (audited) 24.6 25.7 18.2 17.5 5.5 284.3 375.8
Loss for the period - - - - - (6.7) (6.7)
Other comprehensive (loss)/income - - - - (1.1) 3.0 1.9
Total comprehensive loss - - - - (1.1) (3.7) (4.8)
Share-based payment(1) - - - - - 2.6 2.6
Tax charge on share incentives - - - - - 1.3 1.3
Equity dividends 6 - - - - - - -
Exchange adjustment (0.2) (0.2) (0.1) 0.5 - - -
At 30 June 2024 24.4 25.5 18.1 18.0 4.4 284.5 374.9
At 1 January 2025 (audited) 24.2 25.3 17.9 18.6 2.8 303.7 392.5
Loss for the period - - - - - (12.4) (12.4)
Other comprehensive income - - - - 7.2 0.7 7.9
Total comprehensive income/(loss) - - - - 7.2 (11.7) (4.5)
Share-based payment(1) - - - - - 8.0 8.0
Tax charge on share incentives - - - - - 0.9 0.9
New shares issued 10 0.1 - - (0.1) - - -
Exchange adjustment 2.3 2.4 1.7 (6.4) - - -
At 30 June 2025 26.6 27.7 19.6 12.1 10.0 300.9 396.9
Note
1. There were no costs in administration expenses in the income
statement in respect of deferred shares for Executive Directors' Annual
Incentive (first half 2024: nil).
Condensed consolidated cash flow statement
$ million Note First half First half
2025 2024
Cash flows from operating activities
Cash flow from operations 8 23.1 32.8
Tax paid (7.8) (2.7)
Net cash inflow from operating activities 15.3 30.1
Cash flows from investing activities
Interest received 1.9 2.2
Capital development costs (1.0) (1.9)
Purchase of property, plant and equipment (4.1) (3.6)
Proceeds from sale of property, plant and equipment - -
Lease payments received from finance leases - 0.2
Net cash used in investing activities (3.2) (3.1)
Cash flows from financing activities
Lease liability principal repayments (2.9) (3.0)
Lease liability interest paid (0.5) (0.4)
Net cash used in financing activities (3.4) (3.4)
Net increase in cash and cash equivalents 8.7 23.6
Cash and cash equivalents at the beginning of the period 141.8 108.1
Effect of foreign exchange rate changes 6.8 (0.7)
Cash and cash equivalents at the end of the period 157.3 131.0
Notes to the half year condensed consolidated financial statements
1 General information
The half year condensed consolidated financial statements do not constitute
statutory accounts within the meaning of the Companies Act 2006. The statutory
accounts for the year ended 31 December 2024 were approved by the Board of
Directors on 4 March 2025 and have been delivered to the Registrar of
Companies. The auditor's report on those accounts was unqualified, did not
draw attention to any matters by way of emphasis and did not contain a
statement made under Section 498(2) or (3) of the Companies Act 2006.
In compliance with DTR 4.2.9(2), the half year condensed consolidated
financial statements have not been reviewed by the Group's auditor.
The half year condensed consolidated financial statements for the period ended
30 June 2025 were approved by the Directors on 5 August 2025.
2 Accounting policies
The accounting policies adopted and methods of computation used are consistent
with those applied in the consolidated financial statements for the year ended
31 December 2024. The annual financial statements of the Group are prepared in
accordance with United Kingdom adopted International Financial Reporting
Standards (IFRS).
Basis of preparation
The half year condensed consolidated financial statements have been prepared
in accordance with IAS 34 'Interim Financial Reporting' as issued by the
International Accounting Standards Board and endorsed by and adopted for use
in the United Kingdom. This condensed set of half year financial statements
has also been prepared in accordance with the Disclosure and Transparency
Rules of the Financial Conduct Authority.
Critical accounting estimates and judgements
The preparation of the half year condensed consolidated financial statements
requires management to make judgements, estimates and assumptions that affect
the application of accounting policies and the reported amounts of assets and
liabilities, income and expense. Actual results may differ from these
estimates.
In preparing these half year condensed consolidated financial statements, the
significant judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the same as those
that applied to the consolidated financial statements for the year ended 31
December 2024.
The Group is required to perform an impairment review on goodwill annually and
where there are indicators of impairment. The Group has an annual impairment
testing date of 30 November. At 30 June 2025, management have reviewed
goodwill for indicators of impairment and have considered the trading
performance, the Group's principal risks and uncertainties and the other
assumptions used in the value in use calculations. Management have also
considered sensitivities in respect of potential downside scenarios. There are
no indicators of impairment at any of the cash generating units.
2 Accounting policies continued
Going concern
In adopting the going concern basis for preparing the condensed consolidated
financial statements, the Directors have considered the Group's principal
risks and uncertainties as set out on page 9.
The Directors have also considered sensitivities in respect of potential
downside scenarios, including stress testing the latest cash flow projections
that cover a period of at least 12 months from the date of approval of these
condensed consolidated financial statements. In these scenarios, the Group has
more than sufficient headroom in its available resources.
At 30 June 2025, the Group had cash balances of $157.3 million and external
debt only in relation to its lease liabilities.
The Directors have reviewed the detailed financial projections for the period
ending 31 December 2025, as well as the business plan and cash flows for the
six months ending 30 June 2026. The Directors have also considered the period
to the end of 2027 which forms part of the Group's longer term viability
assessment. In addition, they have considered the principal risks faced by the
Group including the Keysight acquisition, the sensitivity analysis and the
Group's significant financial headroom, and are satisfied that the Group has
adequate financial resources to continue in operational existence for a period
of at least 12 months from the date of approval of this report. Accordingly,
the going concern basis of accounting continues to be used in the preparation
of the condensed consolidated financial statements.
New standards and interpretations
There have been no new standards or amendments to existing standards effective
from 1 January 2025 that are applicable to the Group or that has had any
material impact on the financial statements and related notes as at 30 June
2025.
The Directors do not anticipate that the adoption of any of the new standards
and interpretations issued by the IASB and IFRIC with an effective date for
the Group after the date of these interim financial statements will have a
material impact on the Group's interim financial statements in the period of
initial application.
3 Operating segments
The Group's organisational structure is based on differences in the products
and services offered by each segment and information regularly reviewed by the
Group's Chief Executive Officer, its chief operating decision maker, is
presented on this basis. The Group's operating segments follow this structure.
The Group's reportable operating segments are Lifecycle Service Assurance and
Networks & Security. The Group evaluates adjusted operating profit before
acquired intangible asset amortisation, share-based payment and other
adjusting items. Finance income and finance costs are not allocated to the
reportable segments. Corporate is not an operating segment and costs are
separately reported and not allocated to the reportable segments. Information
on segment assets and segment liabilities is not regularly provided to the
Group's Chief Executive Officer and is therefore not disclosed below. There is
no aggregation of operating segments.
The Group disaggregates revenue from contracts with customers by nature of
products and services and primary geographical markets, as management believe
this best depicts how the nature, amount, timing and uncertainty of the
Group's revenue and cash flows are affected by economic factors.
3 Operating segments continued
$ million Lifecycle Service Assurance Networks & Security Corporate Total
First half 2025
Revenue
Nature of products and services
Sale of hardware and software 31.5 90.1 - 121.6
Maintenance and support services 52.2 34.3 - 86.5
83.7 124.4 - 208.1
Primary geographical markets
Americas 59.6 64.1 - 123.7
Asia Pacific 14.6 43.1 - 57.7
Europe, Middle East and Africa 9.5 17.2 - 26.7
83.7 124.4 - 208.1
Profit before tax
Adjusted operating profit 2.5 8.5 (3.5) 7.5
Other adjusting items note 4 - - (10.4) (10.4)
Total reportable segment profit/(loss) 2.5 8.5 (13.9) (2.9)
Unallocated amounts:
- Acquired intangible asset amortisation (2.6)
- Share-based payment (8.7)
Operating loss (14.2)
Finance income 1.9
Finance costs (0.5)
Loss before tax (12.8)
Other information
Product development 23.2 26.9 - 50.1
Depreciation of property, plant and equipment 2.3 1.5 - 3.8
Depreciation of right-of-use assets 1.5 1.6 0.2 3.3
3 Operating segments continued
$ million Lifecycle Service Assurance Networks & Security Corporate Total
First half 2024
Revenue
Nature of products and services
Sale of hardware and software 31.7 76.5 - 108.2
Maintenance and support services 54.0 35.1 - 89.1
85.7 111.6 - 197.3
Primary geographical markets
Americas 59.5 53.9 - 113.4
Asia Pacific 16.4 40.6 - 57.0
Europe, Middle East and Africa 9.8 17.1 - 26.9
85.7 111.6 - 197.3
Profit before tax
Adjusted operating (loss)/profit 6.3 4.1 (5.4) 5.0
Other adjusting items note 4 (0.4) (0.5) (7.5) (8.4)
Total reportable segment profit/(loss) 5.9 3.6 (12.9) (3.4)
Unallocated amounts:
- Acquired intangible asset amortisation (2.7)
- Share-based payment (3.2)
Operating loss (9.3)
Finance income 2.2
Finance costs (0.4)
Loss before tax (7.5)
Other information
Product development 22.0 25.4 - 47.4
Depreciation of property, plant and equipment 1.9 2.5 - 4.4
Depreciation of right-of-use assets 1.4 1.6 0.2 3.2
Inter-segment revenue is eliminated in the above periods. All of the Group's
revenue arose from contracts with customers.
Generally, revenue from the sale of hardware and software is recognised at a
point in time and revenue from maintenance and support services is recognised
over time.
Europe, Middle East and Africa includes United Kingdom revenue of $5.5 million
(first half 2024: $5.7 million).
Americas includes United States revenue of $116.0 million (first half 2024:
$106.0 million).
Asia Pacific includes China revenue of $24.4 million (first half 2024: $27.4
million).
Revenues are attributed to regions and countries based on customer location.
No one customer accounted for 10 per cent or more of total Group revenue in
either the first half of 2025 or 2024.
The Group's activities are seasonal and are typically weighted towards the
second half of the year.
4 Other adjusting items
$ million First half First half
2025 2024
Strategic restructuring initiatives - 0.9
Acquisition related costs 10.4 7.5
Total charge in the income statement 10.4 8.4
The costs of $10.4 million recognised for the first half of 2025 relates to
the Keysight acquisition of Spirent which mainly includes legal fees and some
consultancy costs. We expect further deal-related charges, the majority of
which are expected to be incurred when the deal is closed.
5 Earnings per share
Basic and diluted earnings per share are calculated by dividing profit or loss
attributable to ordinary equity holders by the weighted average number of
ordinary shares in issue during the six months to 30 June. Where dilution
would improve the loss on earnings per share reported, the table only includes
the figure for basic earnings per share, being the lowest result. Potential
dilutive instruments were not included in the calculation for the six months
ended 30 June 2025 because they were anti-dilutive.
Adjusted
The Group is disclosing adjusted earnings per share for continuing operations
attributable to owners of the parent Company in order to provide a measure to
enable period-on-period comparisons to be made of its performance. The
following items are excluded from adjusted earnings:
- acquired intangible asset amortisation;
- share-based payment;
- other adjusting items; and
- tax effect on the above items
A reconciliation is provided below:
Number million First half First half
2025 2024
Weighted average number of Ordinary Shares in issue - basic 577.4 573.7
Dilutive potential of employee share incentives 4.7 4.2
Weighted average number of Ordinary Shares in issue - diluted 582.1 577.9
First half First half
2025 2024
$ million EPS $ million EPS
cents cents
Loss for the period attributable to owners of the parent Company (12.4) (2.15) (6.7) (1.17)
Acquired intangible asset amortisation 2.6 2.7
Share-based payment 8.7 3.2
Other adjusting items note 4 10.4 8.4
Tax effect on the above items (1.0) (1.6)
Adjusted basic 8.3 1.45 6.0 1.05
Adjusted diluted 1.43 1.04
6 Dividends paid and proposed
No dividend was proposed at 31 December 2024. Under the dividend payment
mechanics set out in the Keysight acquisition announcement released on 28
March 2024, the Spirent Board is allowed to pay both a Permitted Dividend of
2.5 pence per share and an Additional Dividend of 1 pence per share, before
the acquisition completion date. Accordingly on 26 June 2025, the Company
announced that the Board had approved to pay the dividend of 3.5 pence per
share at the end of July 2025. The total cost is estimated at circa $27
million, and no liability is recorded in the half year financial statements in
respect of these dividends.
7 Defined benefit pension plans
Following the triggering of the wind-up of the Staff Plan in November 2024,
and in line with the requirements of IAS19, an asset ceiling was applied at
December 2024 year-end which restricted the Staff Plan surplus to nil. This
approach has been consistently applied at 30 June 2025 and as a consequence of
this the balance sheet position has been stable over the six-month period to
30 June 2025.
The Trustees have continued to carry out work to complete the buyout of the
Staff Plan with the Pension Insurance Corporation plc. This has included
issuing Section 251 notices to members, and engagement with the Pension
Regulators regarding the return of the surplus to the Company.
At 30 June 2025, the deferred compensation plan deficit amounted to $12.4
million (31 December 2024: $10.5 million). During the year $nil remeasurement
loss was charged to the income statement (31 December 2024: $0.7 million).
The assets and liabilities on the balance sheet are as follows:
$ million First half First half Year
2025 2024 2024
Schemes in net asset position
UK defined benefit pension plan - Staff Plan - 13.6 -
UK defined benefit pension plan - Cash Plan 0.7 - 0.5
0.7 13.6 0.5
Withholding tax payable - (3.4) -
Surplus in the plan 0.7 10.2 0.5
Schemes in net liability position
UK defined benefit pension plan - Cash Plan - (0.3) -
UK unfunded plan (0.5) (0.5) (0.5)
US deferred compensation plan (12.4) (9.8) (10.5)
Deficit in the plan (12.9) (10.6) (11.0)
Net pension plan deficit on the balance sheet (12.2) (0.4) (10.5)
7 Defined benefit pension plans continued
The assets and liabilities in the funded defined benefit pension plans were as
follows:
$ million First half First half Year
2025 2024 2024
Fair value of defined benefit pension plans' assets 184.5 188.9 177.7
Present value of defined benefit pension plans' obligations (178.6) (175.6) (167.8)
Impact of asset ceiling (5.2) - (9.4)
Surplus in the plans 0.7 13.3 0.5
Withholding tax payable - (3.4) -
Net UK funded defined benefit pension plan surplus on the balance sheet 0.7 9.9 0.5
8 Reconciliation of loss before tax to cash generated from operations
$ million First half First half
2025 2024
Loss before tax (12.8) (7.5)
Adjustments for:
Finance income (1.9) (2.2)
Finance costs 0.5 0.4
Intangible asset amortisation 2.6 2.7
Depreciation of property, plant and equipment 3.8 4.4
Depreciation of right-of-use assets 3.3 3.2
Share-based payment 8.7 3.2
Changes in working capital:
Decrease in inventories 2.9 3.2
Decrease in receivables 34.7 37.5
Decrease in payables (27.9) (16.8)
Increase in contract liabilities 7.6 5.3
Decrease in provisions (0.3) (1.0)
Defined benefit pension plan employer contributions net of plan admin expenses 0.8 0.2
Deferred compensation plan 1.8 0.6
Non-cash movements (0.7) (0.4)
Cash flow from operations 23.1 32.8
9 Fair value
The Directors consider that the carrying amounts of the financial instruments
included within trade and other receivables, trade and other payables and
contractual provisions approximates their fair value.
10 Employee Share Ownership Trust
During the first half of 2025, 2.5 million shares ($0.1 million) were newly
issued and placed into the Employee Share Ownership Trust (ESOT) to satisfy
awards vesting under the Spirent Long-Term Incentive Plan (first half of 2024;
no shares were placed into the ESOT). At 30 June 2025, the ESOT held 0.1
million Ordinary Shares.
Statement of Directors' responsibilities
The Directors confirm that to the best of their knowledge:
The condensed set of financial statements has been prepared in accordance with
IAS 34 'Interim Financial Reporting' as issued by the IASB and endorsed and
adopted by the United Kingdom.
The half year management report includes a fair review of the information
required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first six months
of the financial year and their impact on the condensed set of financial
statements; and a description of the principal risks and uncertainties for the
remaining six months of the financial year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related
party transactions that have taken place in the first six months of the
current financial year and that have materially affected the financial
position or performance of the entity during that period; and any changes in
the related party transactions described in the 2024 Annual Report.
The Directors of Spirent Communications plc are listed below and are unchanged
from the Spirent Communications plc Annual Report at 31 December 2024.
Sir William Thomas
Eric Updyke
Paula Bell
Jonathan Silver
Gary Bullard
Margaret Buggie
Wendy Koh
Edgar Masri
By order of the Board of Spirent Communications plc.
E A Updyke
Chief Executive Officer
5 August 2025
Appendix
Alternative Performance Measures
The performance of the Group is assessed using a variety of alternative
performance measures (APMs) which are presented to provide users with
additional financial information that is regularly reviewed by management. The
APMs presented are not defined under IFRS and therefore may not be directly
comparable with similarly identified measures used by other companies.
In management's view, the APMs reflect the underlying performance of the Group
and provide an alternative basis for evaluating how the Group is managed and
measured on a day-to-day basis. Such APMs are non-GAAP measures and should not
be viewed in isolation or as an alternative to the equivalent GAAP measure.
The APMs and key performance indicators are aligned to the Group's strategy
and collectively are used to measure the performance of the Group and form the
basis of the metrics for Director and management remuneration. The Group's key
performance indicators are presented within the Strategic Report of its 2024
Annual Report.
Order intake
Order intake represents commitments from customers to purchase goods and/or
services from Spirent that will ultimately result in recognised revenue. Where
there can reasonably be changes to the scope or duration of an order, the
Group exercises judgement on the amount of the order that is booked.
Order intake is a measure of operating performance used by management to
assess whether future activity levels are increasing or slowing and therefore
how effective we have been in the execution of our strategy. Order intake is a
key performance indicator used to measure Group, operating segment and
regional performance for internal reporting purposes.
Orderbook
Orderbook comprises the value of all unsatisfied orders from customers and
provides an indication of the amount of revenue that has been secured and will
be recognised in future periods. Orderbook represents the transaction price
allocated to wholly and partially unsatisfied performance obligations,
including amounts held in contract liabilities at the period end. There is no
comparable IFRS measure.
Book to bill
Book to bill is the ratio of orders booked to revenue recognised in the year
and is a measure of the visibility of future revenues at current levels of
activity. Book to bill is a key performance indicator used to measure Group
and operating segment performance for internal reporting purposes.
Adjusted operating profit
Adjusted operating profit is reported operating profit excluding amortisation
of acquired intangible assets, share-based payment and other adjusting items
including restructuring. Management uses adjusted operating profit, in
conjunction with other GAAP and non-GAAP financial measures, to evaluate the
overall operating performance of the Group as well as each of the operating
segments and believes that this measure is relevant to understanding the
Group's financial performance, as specific items (adjusting items) are
identified and excluded by virtue of their size, nature or incidence, as they
are not considered part of the Group's normal ongoing operations and therefore
can lead to period-on-period fluctuations that can make it difficult to assess
financial performance.
Specifically, items are excluded from adjusted operating profit if they are
acquisition related in nature, including acquired intangible asset
amortisation which is dependent on being able to identify intangible assets
and assessing their useful economic lives, or if their exclusion allows for
more meaningful comparisons with peer companies such as share-based payment
which can fluctuate from period to period. The exclusion of adjusting items
from adjusted operating profit is consistent from period to period.
Adjusted operating profit is also used in setting Director and management
remuneration targets and in discussions with the investment analyst community.
Adjusted operating margin
Adjusted operating margin is adjusted operating profit as a percentage of
revenue. It is a measure of the Group's overall profitability and how
successful we are in executing on our overall strategy, and demonstrates our
ability to improve margin through efficient operations and cost management,
whilst being mindful of the need to invest for the future.
Effective tax rate
Effective tax rate is the adjusted tax charge, before tax on adjusting items,
expressed as a percentage of adjusted profit before tax. The adjusted tax
charge is the reported tax charge excluding the tax effect on adjusting items
and adjustments made to provisions in respect of prior year tax.
Adjusted basic earnings per share
Adjusted basic earnings per share (EPS) is adjusted earnings attributable to
owners of the parent Company divided by the weighted average number of
Ordinary Shares outstanding during the year. Adjusted earnings is reported
profit before tax excluding amortisation of acquired intangible assets,
share-based payment, other adjusting items, tax on adjusting items and
over/under provisions in respect of prior year tax.
Adjusted basic EPS is a measure of how successful we are in executing on our
strategy and ultimately delivering increased value for shareholders. Adjusted
basic EPS is also used in setting Director and management remuneration targets
and in discussions with the investment analyst community. The Group sets out
the calculation of adjusted basic EPS in note 5 of Notes to the consolidated
financial statements.
Product development costs as a percentage of revenue
Product development as a percentage of revenue in the year. It is a measure of
how much the Group is investing to support further organic growth initiatives
in line with the strategic objectives, whilst driving improved productivity
and effectiveness.
Free cash flow
Free cash flow is cash flow generated from operations, less tax and net
capital expenditure, lease liability principal repayments and lease liability
interest paid, add interest received and lease payments received from finance
leases, excluding acquisition related other adjusting items and one-off
employer contributions to the UK pension scheme.
Free cash flow is a measure of the quality of the Group's earnings and
reflects the ability to convert profits into cash and ultimately to generate
funds for future investment. It gives us financial strength and flexibility
and the ability to pay sustainable dividends to our shareholders. Free cash
flow is an important indicator of overall operating performance as it reflects
the cash generated from operations after capital expenditure, financing and
tax which are significant ongoing cash flows associated with investing in the
business and financing operations.
Free cash flow excludes corporate level cash flows that are independent of
ongoing trading operations such as dividends, acquisitions and disposals and
share repurchases and therefore is not a measure of the funds that are
available for distribution to shareholders.
A reconciliation of cash generated from operations, the closest equivalent
GAAP measure, to free cash flow is provided within the operating and financial
review on page 8.
Free cash flow conversion
Free cash flow conversion is the ratio of free cash flow to adjusted earnings,
presented as a percentage.
Free cash flow conversion is a measure used in conjunction with free cash flow
to assess the Group's ability to convert profit into cash and ultimately to
generate funds for future investment.
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