CWG Plc Delivers Strong FY 2025 Earnings Growth Driven by Software, Infrastructure Services and Margin Expansion

Analyst: Qudus Adebara

Executive Summary

CWG Plc delivered a strong and resilient performance for the financial year ended December 31, 2025, supported by robust revenue growth across core technology segments, improved operating leverage, and disciplined cost management. Despite working capital pressures and increased inventory build-up associated with project execution, the Group recorded a significant uplift in profitability, reflecting strong demand for IT infrastructure, managed services, and software solutions across its operating markets.

Group revenue grew by 41.7% YoY to ₦65.7 billion, driven by strong performance in IT infrastructure services and software revenue. Profit Before Tax (PBT) rose sharply by 81.3% YoY to ₦8.0 billion, while Profit After Tax (PAT) increased by 84.2% YoY to ₦5.6 billion, reflecting improved margins and controlled finance costs. EBITDA expanded by 78.3% YoY to ₦8.6 billion, highlighting significant operating leverage.

CWG’s balance sheet expanded meaningfully, with total assets increasing by 35.7% YoY to ₦40.6 billion, driven largely by higher inventories and receivables in line with revenue growth. While operating cash flow turned slightly negative due to working capital absorption, the Group maintained a healthy liquidity position and strengthened retained earnings, reinforcing its capacity to fund future growth.

Financial Highlights – Statement of Profit or Loss (₦’million)

₦’million        FY 2025          FY 2024          % YoY

Revenue          65,659 46,353 +41.7%

Gross Profit     16,106 9,894   +62.8%

EBITDA         8,571   4,806   +78.3%

EBIT   8,126   4,513   +80.0%

Finance Cost   (115)    (96)      +19.7%

Profit Before Tax        8,011   4,417   +81.3%

Income Tax     (2,403) (1,373) +75.0%

Profit After Tax          5,608   3,044   +84.2%

Revenue Performance

CWG recorded strong top-line growth in FY 2025, with revenue increasing by ₦19.3 billion YoY, supported by broad-based performance across its technology offerings.

Key Growth Drivers

• IT Infrastructure Services revenue surged by 88.5% YoY to ₦24.0 billion, driven by:
  • Increased enterprise infrastructure deployment
  • Cloud and data center-related projects
  • Public and private sector digital transformation initiatives
• Software Revenue rose by 27.3% YoY to ₦20.9 billion, reflecting:
  • Higher enterprise software adoption
  • Improved delivery on long-term contracts
• Managed & Support Services grew by 29.4% YoY to ₦18.8 billion, providing recurring revenue stability.
• Platform Business remained stable at ₦1.9 billion, providing annuity-style income.

Overall, revenue growth reflects CWG’s strengthened positioning as an end-to-end enterprise technology solutions provider.

Profitability and Margins

Gross Margin

Gross profit increased by 62.8% YoY, with gross margin expanding to 24.5% (FY 2024: 21.4%), reflecting:

• Improved project mix
• Better pricing discipline
• Higher contribution from software and services

Operating Expenses

Operating expenses rose by 54.0% YoY to ₦8.3 billion, but grew slower than revenue, resulting in margin expansion:

• Investment in talent and delivery capacity
• Inflation-driven cost increases partially offset by scale efficiencies

EBITDA & EBIT

• EBITDA margin improved to 13.1% (FY 2024: 10.4%)
• EBIT margin expanded to 12.4% (FY 2024: 9.7%)

Profit After Tax

PAT growth of 84.2% YoY reflects strong operating leverage, stable finance costs, and improved tax efficiency.

Quarterly Performance Snapshot (Q4 2025)

₦’million        Q4 2025          Q4 2024          % YoY

Revenue          16,722 11,121 +50.4%

Gross Profit     3,953   2,408   +64.2%

EBITDA         1,911   1,061   +80.1%

Profit After Tax          1,234   737      +67.3%

Q4 performance confirms sustained earnings momentum into year-end.

Balance Sheet Overview (₦’million)

₦’million        Dec 2025         Dec 2024         % Δ

Total Assets    40,620 29,947 +35.7%

Inventories      8,165   3,533   +131.1%

Trade Receivables       23,940 16,797 +42.5%

Cash & Cash Equivalents       5,210   6,045   -13.8%

Total Liabilities           30,576 23,319 +31.1%

Total Equity    10,044 6,628   +51.6%

Retained Earnings       8,062   3,439   +134.5%

Balance Sheet Overview (₦’million)

₦’million

Dec 2025

Dec 2024

% Δ

Total Assets

40,620

29,947

+35.7%

Inventories

8,165

3,533

+131.1%

Trade Receivables

23,940

16,797

+42.5%

Cash & Cash Equivalents

5,210

6,045

-13.8%

Total Liabilities

30,576

23,319

+31.1%

Total Equity

10,044

6,628

+51.6%

Retained Earnings

8,062

3,439

+134.5%

Interpretation

• Asset growth driven by revenue-linked increases in inventories and receivables.
• Equity expansion reflects strong profit retention.
• Leverage increased moderately to support working capital needs.
• Cash balances declined due to operating working capital absorption.

Cash Flow Highlights (₦’million)

₦’million        FY 2025          FY 2024

Cash from Operating Activities          (279)    4,515

Cash from Investing Activities           (810)    (627)

Cash from Financing Activities          1,662   (785)

Net Change in Cash    574      3,103

Closing Cash Balance 5,208   5,841

Key Observations

• Operating cash flow turned negative due to:
  • Inventory build-up
  • Increased receivables from large enterprise contracts
• Financing inflows supported liquidity.
• Capital expenditure remained moderate and controlled.

Key Ratios & Indicators (FY 2025)

Metric Performance

Revenue Growth         +41.7%

Gross Margin  24.5%

EBITDA Margin         13.1%

PBT Growth   +81.3%

PAT Growth   +84.2%

Asset Growth  +35.7%

Equity Growth +51.6%

Strategic Insights

• Strong demand for enterprise IT and digital transformation solutions.
• Software and managed services improving earnings quality.
• Working capital intensity remains a key execution challenge.
• Balance sheet strength improving, providing capacity for growth investments.

Strengths

• Strong revenue growth across core segments.
• Expanding margins and operating leverage.
• Improved retained earnings base.
• Strong positioning in enterprise IT solutions.

Weaknesses

• High working capital absorption.
• Cash flow volatility.
• Dependence on large project execution cycles.

Opportunities

• Growing enterprise cloud adoption.
• Increased government and private sector digitalization.
• Expansion of platform-based and recurring revenue services.
• Regional expansion opportunities.

Threats

• FX volatility impacting cost of imported technology hardware.
• Competitive pressure from global IT service providers.
• Delays in project execution and customer payments.
• Inflationary pressure on operating costs.

Outlook

Near-Term Outlook (12–18 Months)

• Revenue growth expected to moderate to 25–30%, reflecting:
  • Base effects from strong FY 2025
  • Project execution timing
• Margins expected to remain stable to slightly positive.
• Cash flow expected to improve as receivables normalize.

Medium-Term Outlook (3–5 Years)

CWG is positioned to evolve into a higher-margin, solutions-led technology group with:

• Greater recurring software and managed services revenue
• Improved capital efficiency
• Stronger regional footprint

Analyst View

“CWG delivered an impressive FY 2025 performance driven by strong revenue growth, margin expansion, and operating leverage. While working capital pressures impacted cash flow, the Group’s improving profitability and balance sheet strength position it well for sustainable long-term growth.”

Conclusion

CWG Plc recorded a strong FY 2025 performance marked by rapid revenue growth, expanding margins, and significantly improved profitability. Although working capital pressures weighed on operating cash flow, the underlying earnings quality remains strong. With sustained demand for digital transformation and enterprise technology solutions, CWG is well positioned to enhance shareholder value over the medium term.

CWG Plc Delivers Strong FY 2025 Earnings Growth Driven by Revenue Expansion and Operational Efficiency

Analyst: Qudus Adebara (Research Analyst, DLM Securities)

Executive Summary

CWG Plc recorded a robust financial performance for the year ended 31 December 2025, underpinned by strong revenue growth across its IT infrastructure, software, and managed services segments, alongside improved operational efficiency.

Revenue increased by 41% YoY to ₦65.56 billion, driven largely by expansion in IT infrastructure services and software solutions. Gross profit rose by 61% YoY to ₦15.94 billion, reflecting improved cost optimization and scale benefits.

Profit Before Tax (PBT) grew by 78% YoY to ₦7.88 billion, while Profit After Tax (PAT) increased by 63% YoY to ₦4.98 billion. Earnings per share strengthened to 1.97 kobo, compared to 1.21 kobo in 2024.

The balance sheet remained solid, with total assets expanding to ₦39.95 billion, supported by growth in receivables and inventories, while equity rose to ₦8.92 billion on the back of retained earnings growth.

Financial Highlights – Statement of Profit or Loss (₦’billion, Consolidated)

₦’billion            Dec 2025         Dec 2024         YoY %

Revenue            65.56  46.35  +41%

Cost of Sales  (49.62)               (36.46)               +36%

Gross Profit     15.94  9.89     +61%

Other Income 0.60     0.24     +152%

Administrative Expenses        (8.41)  (5.70)  +48%

Operating Profit            7.52     4.45     +69%

Net Finance Income  0.36     (0.03)  NM

Profit Before Tax            7.88     4.42     +78%

Profit After Tax                4.98     3.04     +63%

EPS (kobo)       1.97     1.21     +63%

Revenue Performance

Revenue grew strongly by 41% YoY to ₦65.56 billion, supported by broad-based expansion across key business segments.

Segment Performance (₦’000)

Segment          Dec 2025         Dec 2024         YoY %

IT Infrastructure Services       23,594,031     12,753,351     +85%

Managed & Support Services              18,782,052     14,550,077     +29%

Software Revenue       21,335,800     16,426,734     +30%

Communications & Integrated Services       6,904  447,449            -98%

Platform Business      1,839,411        2,175,841        -15%

Key Drivers

•             Strong expansion in IT infrastructure services, which nearly doubled YoY.

•             Continued growth in software and managed services segments.

•             Decline in communications and platform businesses reflects restructuring and shifting demand dynamics.

Profitability and Margins

Gross Margin

Gross margin improved to 24.3% (2024: 21.3%), driven by:

•             Improved pricing and cost efficiency

•             Higher contribution from higher-margin service segments

Operating Expenses

Administrative expenses increased by 48% YoY due to:

•             Inflationary pressures

•             Expansion in business operations and workforce

Finance Income & Costs

CWG reported a net finance income position, supported by:

•             Significant increase in interest income (₦421 million vs ₦63 million)

•             Lower finance costs relative to operating scale

Balance Sheet Overview (₦’billion, Consolidated)

₦’billion            Dec 2025         Dec 2024         % Δ

Total Assets    39.95  29.95  +33%

Total Equity      8.92     6.63     +35%

Total Liabilities              31.03  23.32  +33%

Property, Plant & Equipment                1.35     0.96     +41%

Inventories       7.33     3.53     +107%

Trade Receivables       23.87  16.80  +42%

Cash & Cash Equivalents      5.20     6.04     -14%

Interpretation

•             Asset growth driven largely by receivables and inventory build-up to support expansion.

•             Equity strengthened through retained earnings growth.

•             Rising liabilities reflect increased working capital financing and borrowings.

•             Slight decline in cash position due to working capital absorption and investments.

Cash Flow Highlights (₦’billion)

₦’billion            Dec 2025         Dec 2024

Net Cash from Operating Activities (2.17)  5.81

Net Cash from Investing Activities   (0.21)  (0.63)

Net Cash from Financing Activities  1.74     (0.78)

Net Increase/(Decrease) in Cash     (0.64)  4.39

Closing Cash Balance             5.20     5.84

Key Observations

•             Operating cash flow turned negative due to significant working capital expansion.

•             Continued investment in assets and technology platforms.

•             Financing inflows supported liquidity amid expansion.

Key Ratios & Indicators (FY 2025)

Metric  Performance

Revenue Growth          +41%

Gross Profit Growth   +61%

PBT Growth     +78%

Asset Growth +33%

Equity Growth                +35%

Gross Margin 24.3%

EPS Growth     +63%

Strategic Insights

•             IT infrastructure services are the primary growth engine.

•             Software and managed services provide recurring revenue stability.

•             Strong revenue growth translating into operating leverage.

•             Increased working capital requirement reflects scaling operations.

Strengths

•             Strong revenue and profit growth momentum

•             Diversified revenue streams across IT services

•             Improved margins and operating leverage

•             Growing retained earnings base

Weaknesses

•             Negative operating cash flow

•             High working capital intensity

•             Exposure to FX volatility (exchange losses recorded)

Opportunities

•             Digital transformation demand across Africa

•             Expansion of cloud and managed services

•             Growth in enterprise IT infrastructure investments

•             Regional expansion through subsidiaries

Threats

•             Currency volatility impacting margins

•             Rising operating costs and inflation

•             Competitive pressure in IT services space

Outlook

Near-Term Outlook (12–18 Months)

CWG is expected to sustain strong revenue growth driven by IT infrastructure and enterprise solutions demand. However, working capital pressures and FX volatility may weigh on cash flows.

Medium-Term Outlook (3–5 Years)

The company is well-positioned to benefit from Africa’s digital transformation wave, with scalable service offerings and regional expansion likely to drive sustained growth.

Analyst (Qudus Adebara) View

“CWG Plc delivered a strong FY 2025 performance, with impressive revenue expansion and margin improvement. However, elevated working capital requirements and negative operating cash flow warrant close monitoring despite the company’s solid growth trajectory.”

Conclusion

CWG Plc delivered a strong FY 2025 performance characterized by significant revenue growth, improved profitability, and expanding market presence in IT services. While working capital pressures impacted cash flows, the company’s strategic positioning in high-growth digital segments provides a solid foundation for sustained long-term growth.