ITM Power reports solid FY25 results with growing order backlog

ITM Power reported preliminary FY25 results largely meeting expectations, with revenue up 58% to £26 million and an adjusted EBITDA loss of £33 million, slightly better than consensus. The company's order backlog significantly increased to £145.1 million, with 60% now from profitable contracts. While FY26 sales guidance of £35-40 million fell below consensus, ITM Power projected a better EBITDA loss of £27-29 million and a stronger year-end cash position of £170-175 million, indicating a strategic focus on cost discipline and operational efficiency despite a more conservative top-line outlook.

Analysis

ITM Power's preliminary FY25 results indicate a company in a strategic transition, prioritizing profitability and operational efficiency over pure revenue growth. The firm reported a 58% year-over-year revenue increase to £26 million, aligning with consensus, and posted an adjusted EBITDA loss of £33 million, which, while larger than the prior year, was slightly better than market expectations. A key positive indicator is the substantial growth in the order backlog to £145.1 million, a significant increase from £79.7 million in FY24. Critically, 60% of this backlog consists of profitable contracts, suggesting a future margin uplift as the company works through the remaining 40% of legacy orders, half of which are slated for recognition in FY26. This focus on financial health is further evidenced by the FY26 guidance. While projected sales of £35-40 million fall short of the £42 million consensus, the forecasted EBITDA loss of £27-29 million and year-end cash position of £170-175 million are both stronger than anticipated, reflecting disciplined cost and capital management.

Key Decisions for Investors

• Investors should assess the trade-off between the weaker FY26 revenue guidance and the company's improved outlook on profitability and cash preservation, signaling a strategic pivot towards a more sustainable business model.
• Monitor the conversion rate and margin quality of the £145.1 million order backlog, as the transition from legacy to profitable contracts is a primary catalyst for achieving positive EBITDA.
• Consider that while valuation models may need adjustment due to the softer top-line forecast, the stronger-than-expected year-end cash guidance of £170-175 million provides a significant liquidity cushion and may limit downside risk.