Maintel’s record pipeline masks a shrinking recurring base

Maintel Holdings, which is listed on London’s Alternative Investment Market and sells cloud, networking and security managed communications services to UK organizations, published its interim results on 30 September. For the six months to 30 June 2026, revenue fell 2.8% to £45.2m and adjusted EBITDA (earnings before interest, tax, depreciation and amortization) slipped to £3.2m from £3.4m. On a statutory basis, the loss before tax widened to £1.7m from £0.8m. The company led on sales: bookings up 6.6% to £26.0m of total contract value and a pipeline at a record £79.0m.

Beneath the sales figures, the regulatory news service (RNS) announcement shows the base that pays the bills getting smaller. Recurring revenue fell 7.8% to £31.8m, from £34.5m, and dropped to 70.4% of the total from 74.3%. Project revenue rose 11.8% to £13.4m. The company puts the recurring decline down to churn of “a small number of contracts” and a sales mix weighted toward projects.

Dan Davies, chief executive officer since February 2025, described the half as “a solid performance” in the RNS, then added a caveat: “However, the wider market we operate in remains challenged both in terms of growth and margin.” Gross margin fell to 29.6% from 30.1%, which the company attributes to competition, inflationary pressure and revenue mix.

For comms providers, resellers and MSPs with legacy voice customers of their own, the lesson is in the gap between those two sets of numbers. A record pipeline measures what a business hopes to sell. The recurring line measures whether the contracts that fund it are growing. At Maintel, legacy phone revenue is running off and the cloud and managed services meant to replace it shrank as well. The PSTN switch-off is part of that run-off, and it has a date.

Where the recurring revenue went

Two legacy lines did most of the damage. On-premise managed services, which covers support for phone systems, contact centers and networking equipment on customer sites, fell 12.3% to £8.2m. The RNS attributes that to expected churn of some heritage on-premise telephone and contact center contracts. Line rental fell 18.8% to £2.6m as customers leave BT’s public switched telephone network (PSTN), which the RNS says is scheduled to be switched off at the end of January 2027. Together the two lines lost £1.76m, almost two-thirds of the £2.7m drop in recurring revenue.

The replacements have not filled the hole. The RNS says growth in session initiation protocol (SIP) trunking “partly compensates” for the move away from PSTN, and call traffic rose 6.9% to £1.6m. But call traffic and line rental together still fell by £0.5m, or 10.6%. Cloud communication services, the destination for customers leaving on-premise systems, fell 3.1% to £7.9m, which the company attributes to “substitutional revenue” and a higher share of public cloud seats in new wins. Security and connectivity services fell 8.6% to £9.7m after contract churn, with revenue from newly signed contracts “expected to ramp up”. Mobile, primarily commission from Maintel’s O2 dealer agreement, rose 6.3% to £1.8m.

Why the pipeline flatters the business

Maintel reports both its bookings and its pipeline in first year value, which the RNS defines as project revenue plus the first 12 months of recurring revenue expected under a contract. On that measure, a one-off hardware project counts in full, while a multi-year managed service counts for one year only. First year value of bookings rose 26.3% to £21.1m, which the RNS says reflects more than double the value of non-recurring technology revenue, principally hardware and software. Total contract value rose only 6.6%. On the RNS figures, 81% of the contract value booked in the half counts as first year value, against 68% a year earlier.

The company says project revenue “typically precedes associated recurring revenues”, and it expects £52.0m of the pipeline to close in the second half. That may prove right. But the pipeline grew only modestly, to £79.0m from £75.0m a year earlier, and it is counted on the same first-year basis. Until project wins turn into recurring contracts, the order book and the annuity base are telling different stories.

What the board is prioritizing

The board says it is focused on “Adjusted EBITDA and cash generation ahead of revenue”. The RNS puts headcount at 403, 33 fewer than a year earlier. A restructure of the operations function, about half of all employees, is planned for the second half and is expected to save about £1.0m a year from the 2027 financial year. Net debt rose to £22.5m from £18.0m a year earlier, after a £1.2m cash outflow from operations and £2.4m of capital expenditure. That figure includes £2.0m of convertible loan notes, whose cash arrived on 1 July, raised alongside a £3.5m share placing, both subscribed by existing shareholders in June, when Maintel also amended the covenants on its HSBC facility.

What channel boards should measure

Any comms provider still billing PSTN line rental faces the same arithmetic before the end of January 2027, and a record pipeline will not answer the question that matters. Three measures would:

• Net recurring revenue. Recurring revenue added from new contracts against recurring revenue lost to churn and migration, reported every quarter.
• Migration yield. For every £1 of line rental or on-premise maintenance that moves, how much comes back as SIP, cloud or managed service revenue.
• Pipeline by type. One-off project value and contracted recurring value reported separately, not blended into a first-year figure.

Maintel’s board has chosen to be judged on EBITDA and cash. Channel boards facing the same migration should add a third number and put it first: recurring revenue in against recurring revenue out.