Scalare Partners (ASX:SPX) Up 43% on a Huge H1, But It’s an M&A Story Now

Revenue Up 370%, The Market Loves the Tank Stream Labs Deal

Scalare Partners Holdings surged 43% today after reporting a strong H1 FY26 result, and the market clearly liked what it saw.

A big part of that growth story came from acquisitions. The additions of Tank Stream Labs and Planet Startup meaningfully expanded the company’s operating footprint and helped drive revenue to $5.49 million, up 370%.

Gross profit was even stronger, rising to $5.56 million, up 615%. On the surface, those are impressive scaling numbers and they show the business is gaining momentum fast.

That said, we think it is important to look a level deeper. A large part of this jump was driven by acquisitions, which can create revenue concentration risk, and some of the profit uplift may reflect early synergies and integration benefits flowing through the numbers.

The key question from here is whether this growth can keep compounding, or whether this was more of a one-off step change from the deals.

Scalare paid $5 million to acquire a business generating $3.9 million in revenue, and also paid $400,000 for Planet Startup, which was generating around $200,000 in revenue. In both cases, the company paid above current revenue, so the pressure is now on execution.

What are the Best ASX Stocks to invest in right now?

Check our buy/sell tips

Strong Print, Heavy Acquisition Costs, Here’s the Clean Read

It accounted for 73% of service revenue, contributing $3.98 million, while the legacy segments including consultancy fees, Tech Ready Women programs, director fees, and sponsorship revenue made up just 27%, or $1.49 million combined. That really shows the scale and significance of the Tank Stream Labs acquisition.

We can also see the impact in margins. Gross margin has expanded from around 50% in H1 FY25 to 77% in H1 FY26, which suggests the acquisition has brought in a much more profitable business mix, helped by recurring and subscription-based revenue.

That margin improvement has also pushed the business much closer to breakeven at the net level, which is an important step forward.

On the operating line, EBITDA came in positive at $987,000, marking a major turnaround from the $1.29 million loss recorded in H1 FY25. That is a strong shift and it shows the underlying operating profile has improved materially.

But when we go below that line, the statutory result still shows pressure. The company reported a net loss before tax of $1.38 million, largely because depreciation and amortisation came in at a very high $2.37 million.

That heavy non-cash charge is mostly tied to the Tank Stream Labsacquisition. The deal brought across $23.2 million in right-of-use assets, $6.1 million in fit-out and leasehold improvements, and $11.8 million in intangible assets.

A big part of that expense came from the seven managed office spaces, with depreciation on right-of-use assets alone contributing $1.94 million in just the half.

So while the operating performance looks much stronger, the acquisition has also brought a much heavier asset base and that is now flowing through the financials. The core business is improving, but we still need to keep a close eye on whether revenue growth and profitability continue to scale enough to justify the weight of those acquisition-related costs.

Paid Up for Growth, Execution Is the Next Catalyst

What we think investors need to focus on is that this business strategy is now heavily reliant on aggressive M&A as a core part of its FY26 growth plan.

The Tank Stream Labs acquisition is the clearest example of that. TSL operates premium coworking facilities across Sydney, Melbourne, and Adelaide, serves more than 600 active members, and generated $3.98 million in revenue in just four months under Scalare’s ownership.

That is a meaningful contribution, but it also came with roughly $4 million in goodwill, which is material for a company of this size.

From here, the key issue is execution. We need to see revenue and profitability keep scaling and expanding over the next few quarters, rather than this simply being a short-term boost driven by acquisition synergies.

For Scalare, the real test is whether it can turn these acquired assets into sustainably profitable growth, not just a one-off uplift in the numbers.