DUG Technology (ASX:DUG) reported a record first-half performance for FY2026, pointing to an earlier-than-expected contribution from its Malaysia Software as a Service and HPC as a Service contract and continued growth in its core services business.
Record half-year revenue and EBITDA uplift
Chief executive Matt Lamont said the company delivered “record half-year financial performance,” with revenue exceeding $40 million and a “very significant uplift” in EBITDA. Management highlighted that the Malaysia contract signed last year began ramping sooner than anticipated, which supported growth in the software and high-performance computing (HPC) segments.
Segment performance: services, software, and HPC
Chief financial officer Dan (surname not provided in the call) said services revenue rose 30% versus the same half last year, attributing the result to utilization, productivity, and project execution. He also noted the services figure did not include contributions from EPIC.
Software revenue rose 16% year over year, while HPC revenue growth was expected to be “very significant” given the Malaysian deal. The CFO explained that the earlier ramp in Q2 was enabled by receiving storage equipment ahead of schedule and mobilizing equipment from the U.S., which allowed DUG to combine that capacity with existing equipment in Kuala Lumpur and start the project earlier than planned.
On costs, employee benefits increased as the company added headcount in Brazil and other regions, though management said headcount growth remained slower than revenue growth. Other expenses rose 48% including an MP2 provision; excluding that provision, the increase was about 25%. The CFO said a meaningful portion of the step-up related to Cegal, DUG’s partner on the EPIC deal, with delivery costs flowing through other expenses as the project began earlier than expected.
Normalized EBITDA (excluding a one-off provision tied to an ongoing court case) increased 161%, and management highlighted a 34% EBITDA margin. The CFO said the result reflected operating leverage, with revenue increasing faster than the cost base.
Cash, balance sheet movements, and CapEx timing
The CFO said cash at December 31 was $14.3 million, with strong customer receipts in January lifting the January 31 cash balance to $20.7 million. With the December 31 position, he said net debt was $0.3 million.
Several balance sheet items were affected by EPIC timing:
- Receivables: Trade and other receivables increased as the company issued its first EPIC invoices, which were paid in January.
- Contract assets: Contract assets rose due to more milestone projects and e-invoicing timing, which management said can temporarily inflate balances at month-end before reversing early the next month.
- Contract liabilities: Contract liabilities increased because the EPIC contract allows annual invoicing in advance; management said the balance should decline monthly as revenue is recognized.
- Payables: Trade and other payables increased after new equipment deliveries near the end of December, which management said should normalize as financing is settled in the second half.
On cash flow, the company generated $7.4 million in cash from operating activities, driven by higher customer receipts. The CFO said investing cash flow and general CapEx were lower than some might expect due to timing, reiterating that EPIC-related CapEx would be weighted to the second half.
In Q&A, management framed maintenance CapEx at roughly $1 million to $3 million, often around $2 million, and said it does not expect a step-change higher. For FY2026 total CapEx tied to EPIC and other projects, the CFO confirmed a broad range of $14 million to $16 million.
Commercial momentum: Middle East trials, 4D seismic, and multi-client
Responding to questions about the Middle East, Lamont said trials with Aramco and ADNOC had gone “super well.” He described the Aramco relationship as “very strong,” adding that there was ongoing legal and contractual work to take it “to another level.” He said the ADNOC project had “hit its straps,” with strong results and a paper expected at a European conference in June. While calling the region a “slow burn,” he said momentum was solid toward “very significant business,” and management said the pipeline in the region was “very significant.”
On services awards and pipeline visibility, Lamont said the company’s pipeline was “the biggest it’s ever been,” describing award timing as inherently lumpy.
On production-oriented work, Lamont said DUG had won another large 4D seismic project and was in discussions with super majors. He estimated production work might represent around 20% of revenue and said it was growing. He also described 4D as typically repeated every 12 months and positioned it as an area where only top providers can compete due to technology and reliability requirements.
On multi-client, Lamont said FY2026 was shaping up as a “breakthrough time,” pointing to an Equatorial Guinea project that he said was “fully underwritten,” emphasizing that DUG was “not risking anything” on that project. He also noted the company continued to sell multi-client assets in Australia.
Product and strategy updates: Nomad, immersion cooling, and WA data center
Management reiterated that DUG’s offerings are built around three connected areas—imaging, software, and an HPC backbone—and said it views itself as a leader in elastic MP-FWI imaging. Lamont said DUG was ahead of competitors in MP-FWI, and highlighted the value of elastic rock properties derived from field data.
Management also discussed AI as a long-standing part of DUG’s toolkit, including use in imaging, software tools, and internal teams, and noted it runs on large-scale computing capacity and NVIDIA chips the company has purchased.
On DUG Nomad, management said it was progressing and that the company was working through strategy and proposals, including bundled solutions combining containerized HPC, computing hardware, and software. On DUG Cool and immersion cooling, management said sales cycles were long and the market was currently oriented toward direct-to-chip cooling. They said there were headwinds, including limited enthusiasm from NVIDIA regarding immersion, though Lamont noted DUG has immersed NVIDIA chips successfully and said discussions were ongoing.
Finally, in response to a question about a previously discussed carbon-neutral data center in Western Australia, Lamont said the company had moved on from the plan after enterprise HPC did not accelerate as expected and the land lease option had lapsed. He added that the company continued discussions with the Western Australian government and argued HPC funding settings in Australia would need to change for the industry to develop.
About DUG Technology (ASX:DUG)
Dug Technology Ltd, a technology company, provides hardware and software solutions for the technology and resource sectors in Australia, Malaysia, the United States, and the United Kingdom. The company offers high-performance computing as a service solution; data centre cooling solutions; scientific data analysis services; and DUG Insight, a full-service, interactive software platform for advanced seismic data processing and imaging, interpretation, visualization, and QI across land, marine, and ocean-bottom surveys.
