Imdex (ASX:IMD) Hits Record Revenue but Profit Misses: Buy or Wait?

Imdex (ASX: IMD) rose 8.2% on Monday after delivering its strongest-ever first half. Revenue jumped 16% to A$246.6 million, and EBITDA climbed 22% to A$77.9 million, both beating what analysts expected. But dig a little deeper, and the picture gets more interesting. Net profit missed estimates by about 2%, and the dividend came in roughly 5.5% below expectations. With the stock sitting near all-time highs and trading at around 33 times earnings, the key question for investors is simple: Is the good news already in the price?

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Imdex Is Becoming a Different Kind of Business

The revenue beat matters, but we believe the real story is the shift happening inside the business. Normalised EBITDA margins expanded to 31.6%, up 140 basis points from 30.2% a year ago, showing that Imdex is not just growing but growing more profitably.

The reason comes down to product mix. Technology, SaaS, and sensor products now make up about 68% of what the company sells. These are higher-margin, stickier revenue streams compared to the traditional drilling fluids business. In other words, Imdex is quietly evolving from a mining equipment supplier into something closer to a mining data company. For investors, this shift means higher-quality earnings that should prove more resilient through the cycle.

Management is also moving fast on acquisitions, completing deals for ESA and Datarock, while the full buyout of Krux is expected to close in April 2026. These bolt-on deals deepen the technology offering and open up cross-selling opportunities across a customer base already spending more on gold and copper exploration. These two commodities drive roughly 75% of global exploration activity.

The Profit Miss Is Not What It Seems

So if revenue and EBITDA both beat, why did profit fall short? The short answer is acquisition costs and higher amortisation charges. When a company buys other businesses, the accounting treatment creates extra costs that drag on reported profit, even when the underlying operations are running well.

The cash flow numbers confirm this. Operating cash flow came in at roughly A$67 million with an 86% conversion rate, which is a healthy result. It tells us the core business is generating real cash, not just accounting profits. We see this as short-term noise rather than anything to worry about, though it is worth watching as the recent acquisitions are fully bedded down.

The Investor’s Takeaway for IMD

At 33 times earnings, Imdex is priced for strong execution. The bull case rests on rising exploration spending, expanding margins, and acquisition synergies building over the next year or two. These are all reasonable expectations given the current backdrop.

The bear case is that mining exploration spending can turn quickly if commodity prices soften, and a premium valuation leaves no room for disappointment. If margin expansion stalls or deals take longer to pay off, the stock could pull back.

In our view, Imdex is a high-quality business, but it looks fairly priced at current levels rather than cheap. Holders should stay put, given the strong momentum. New buyers may find a better entry point on a pullback towards the A$3.20 to A$3.40 range.