Extra Material from August 2026 Newsletter

We had one company update (on Nexteq) that we were unable to squeeze into this month's newsletter, due out this coming weekend, so we are reproducing it below.

Nexteq    

48p (NXQ; AIM)

Nexteq has reported first half trading in line with the revised expectations set out in May, with full-year guidance unchanged. Revenue for the six months ended June 30 is expected to be approximately US$26.7m (H1 2025: US$40.7m), reflecting a sharply contrasting performance between the group’s two divisions. The Densitron displays business delivered a solid outcome, with revenue of around US$13.9m compared to US$13.8m last time. In contrast, Quixant, the land-based gaming division, continued to face difficult market conditions, with revenue anticipated at US$12.7m, down from US$26.9m in the corresponding period. Group gross margin was broadly in line with expectations, with Densitron margins improving under its new strategy. Cash at the period-end was US$10.7m (equivalent to 13.1p per share), reflecting strategic investment in critical components, shareholder returns, and lower trading levels. The board expects cash to improve in the second half, supported by normal seasonal weighting and inventory unwind.

Within Quixant, customer demand remained subdued due to uncertainty in the North American gaming market, tariff-related pressures, elevated memory and component costs, and the immediate impact of a major customer consolidation. Lower volume requirements from other customers also contributed to the decline, though the board emphasised that these were not customer losses and expects volumes to recover through 2027 as market conditions normalise. Nexteq continues to prioritise diversification, supported by new wins through its LaunchPad software and its differentiated HMI solutions under the group’s “more than the display” strategy.

After a major downturn in company fortunes in fiscal 2024 and 2025, investors could breathe a sigh of relief that there was no further bad news to digest with this update. Second-half revenue is expected to significantly exceed the first half, consistent with historical seasonality, and fiscal 2026 guidance remains unchanged. Management anticipate new-name client wins in the second half and expect diversification efforts to support a return to growth in 2027. Full-year consensus market expectations currently are US$73.0m revenue, US$2.8m adjusted EBITDA and US$0.0m adjusted pre-tax profit. Hold.