This article first appeared on GuruFocus .
-
Total Revenue:Up 38% to a record full-year result.
-
Normalized EBITDA:Up 78%, with margin improving to 32% (up 7 percentage points year-over-year).
-
NPAT:Improved by $7 million, returning the company to profitability.
-
Services Revenue:Up 23%.
-
HPC Revenue:Strong growth, now representing 13% of total revenue.
-
Software Revenue:Up 33%, now representing 13% of total revenue.
-
Seismic Imaging Revenue:Grew 23%, but decreased as a percentage of total revenue to 74%.
-
Brazil Office Revenue:Delivered just shy of USD 6 million in revenue for the year, up from zero in July.
-
MP2 Settlement:Excluded $1.5 million paid out in the fourth quarter from normalized EBITDA.
-
Net Debt:Finished the year at $13 million.
-
Net Cash from Operating Activities:Significant improvement driven by strong receipts from customers.
-
Net Cash Investing:$11.6 million outflow for HPC and data storage infrastructure.
-
New Contract:Announced a $9.3 million software and HPC contract with a 2-year term.
Release Date: August 27, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
-
Record full-year revenue growth of 38%, with normalized EBITDA up 78% and NPAT improving by $7 million to return to profitability.
-
Strong growth in high-margin segments: software revenue up 33%, HPC revenue up significantly, and Multi-Client business gaining momentum with successful assets in Venezuela and Australia.
-
Successful expansion into new regions, with the Brazil office generating nearly $6 million in revenue in its first year and the Abu Dhabi office performing well.
-
Technological leadership in MP-FWI seismic imaging, with competitors now adopting the term, and a focus on efficiency, productivity, and quality driving margin improvements.
-
A robust pipeline of opportunities, including a $9.3 million software and HPC contract announced recently, and expectations of further contract wins in the near term.
-
Improved cash flow from operations and a plan to reduce financing repayments in FY27, positioning the company for stronger free cash flow.
Negative Points
-
EBITDA was slightly lower than expected due to a $1.5 million settlement for the MP2 dispute and reliance on third-party compute, which is expected to continue for a couple more months.
-
Order book declined, primarily due to softer services demand in Houston and delays in large projects, though management attributes this to industry-wide uncertainty.
-
The Nomads immersion cooling business is not selling as expected, with the pipeline growing but sales lagging, and management acknowledges it may need to be shut down if it doesn't improve.
-
Employee costs rose significantly due to office build-outs and hiring, impacting margins in the short term.
-
Net debt increased to $13 million, partly due to timing of asset financing and contract assets, though this is expected to improve as financing facilities wrap up.
-
The company is not focused on maximizing profits, which may concern investors seeking near-term earnings growth.
Q & A Highlights
Q: Can you provide more detail on the Multi-Client business, specifically the differences between late-stage sales and pre-funding, and how we should think about the scaling of this business moving forward? A: Matthew Lamont (Managing Director and Founder) explained that pre-funding involves companies committing to purchase data before it is produced, typically covering at least two-thirds of the underlying project cost, and they receive a discount for this early commitment. Late sales occur after the data is produced and sits on the shelf, requiring minimal work to deliver and generating very high margins. Daniel Lamont (Acting CFO) added that pre-funding revenue is recognized as the project is processed and flows through the order book, while late sales are recognized at the time of invoicing and do not flow through the order book. The company is seeing strong momentum in this business, with a very good start to FY27.
Q: You mentioned the order book is down. Do you see the strong pipeline converting into order book over the next six months, or is it too hard to tell? A: Matthew Lamont (Managing Director and Founder) stated that he does expect the pipeline to convert, noting that the order book should not drop further from here. He described the current situation as waiting for the "dam wall to break," with some very large projects in the pipeline at advanced stages of clarification. He drew parallels to late 2024/early 2025 when the company won $18-20 million worth of work in a single month, and feels a similar dynamic is building now.
Q: The US second-half revenue went backwards, and Houston contributed to the order book falling. Is this just weakness in the Gulf of America, or are you becoming less competitive? A: Matthew Lamont (Managing Director and Founder) firmly stated that competitiveness is not an issue, saying "We are extremely competitive. That isn't an issue. We're not losing projects." He explained that the win/loss ratio has not changed, but projects are simply sitting in the pipeline longer due to industry-wide uncertainty, likely related to Middle East tensions. He noted that Houston is where competitors are strongest and fighting hardest, but the company is not seeing any fundamental deterioration in its competitive position.
Q: How do you view the HPC and software pipeline going forward, following the recent contract win? A: Matthew Lamont (Managing Director and Founder) expressed strong confidence in the pipeline, stating there are significant opportunities being worked on that the company expects to convert. He noted the company is well-positioned to win additional work in this space, though he acknowledged there are no guarantees. The recent $9.3 million software and HPC contract announced just before the call demonstrates the momentum in this high-margin segment.
Q: Do you see the Multi-Client Q4 run rate of USD2.6 million sustaining over FY27? A: Matthew Lamont (Managing Director and Founder) confirmed that the company does expect this run rate to sustain, highlighting the strong performance of assets in Venezuela, where the company got in early and is now seeing data sell "many, many times over." He also noted strong sales of Australian assets, including a significant sale to Chevron on the Northwest Shelf. Daniel Lamont (Acting CFO) added that the company is building a "library" of projects that provides more opportunity for upside and helps smooth out revenue.
Q: How do you think services revenue shapes for the year ahead, given the order book decline and the company's stated priority on higher-margin areas? A: Matthew Lamont (Managing Director and Founder) explained that services, software, and HPC have independent sales teams, so prioritizing software and HPC does not come at the expense of services growth. He noted that the services business can be cyclical, tied to acquisition cycles, and the industry is currently in an acquisition phase. He expressed optimism, stating "I expect to grow services again this year," and noted that just one or two large pipeline projects dropping could lead to growth by multiples.
Q: Can you share the financial impact of the third-party compute costs on the accounts? A: Daniel Lamont (Acting CFO) stated that approximately $700,000 came through in June, with another couple of million expected to come through over the next few months before the company transitions fully back to its own compute. He characterized the impact as "relatively immaterial overall" but acknowledged it is not completely insignificant. Matthew Lamont (Managing Director and Founder) added that the company is now on top of its compute capacity and will be off third-party compute within a couple of months.
Q: You mentioned immersion cooling is not conducive for training with Nvidia's top-end hardware. How does it sit for inference and specialist infrastructure? A: Matthew Lamont (Managing Director and Founder) clarified that the issue is specific to Nvidia's top-end DGX systems, which have extensive low-latency networking and fiber optics that are not sealed for immersion. He noted the company has successfully immersed H200 GPUs without problems. He mentioned that BAC has licensed DUG's patent and partnered with Nvidia to work on getting their blessing for immersion, and discussions are ongoing. He concluded "It's not over yet. We'll see how it plays out."
Q: How should we think about the margin profile going forward, given the efficiency drive and the changing revenue mix? A: Matthew Lamont (Managing Director and Founder) stated that the margin profile will "maintain or improve," driven by the growing mix of software, HPC, and Multi-Client revenue, which all carry superior margins. He also highlighted that the company's MP-FWI code now has approximately 500 different combinations of options, compared to competitors' six to eight maximum, which enables the company to focus on efficiency, productivity, and quality improvements that flow directly to the bottom line.
Q: How do you plan to develop the Multi-Client segment over time, given that competitors like TGS and Viridien do large CapEx programs? A: Daniel Lamont (Acting CFO) stated the company is open to all avenues for growing the Multi-Client business, including potentially acquiring a cash-generative Multi-Client business in the short term. He emphasized that any growth must be cash-generative in the near term rather than purely strategic. Matthew Lamont (Managing Director and Founder) added that the total addressable market for Multi-Client is "way bigger" than the underlying services business, and clients are unhappy with the current market dominance of TGS, creating significant opportunity for DUG.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
