AO World PLC (LSE:AO.) shares rose 4.5% to 103.8p after the electrical retailer posted interim results showing stronger-than-expected profit growth and raised its full-year guidance.
Profit before tax for the six months to 30 September 2025 increased 10% to £18 million, ahead of previous expectations for flat earnings, as revenue rose 14% to £586 million.
The group has also reduced losses at musicMagpie, which is now forecast to break even on an exit run-rate basis.
Free cash flow jumped to £57 million, up from £14 million a year earlier.
Management now expects full-year profit before tax to come in at the top end of the £45-50 million range, having already narrowed the range upwards at its last update in September.
AO said it continued to gain market share across key categories and launched its new iPhone upgrade plan during the period, called Switch24 and exclusive to its 'Five Star' membership scheme.
Analysts said the new pricing model for iPhones saw customers fund just the handset depreciation, equivalent to around a 44% discount on the iPhone 17.
CEO John Roberts said: “Our strategy is working and we're as confident as ever about AO's upwards trajectory.”
He said he is "incredibly excited" to have launched the new iPhone proposition, allowing members to buy the latest Apple handsets from as little as £17.
"This is a first in the UK market, and also allows our members to have the latest iPhone every two years. It's a great example of AO continuing to disrupt and innovate on behalf of our members to bring them the latest products at the lowest prices."