GB Group PLC (LSE:GBG) shares fell 14.5% to 210p after the identity verification software company swung to a paper loss and unveiled plans to increase investment in its flagship platform, which will slightly squeeze profit margins in the coming year.
The FTSE 250-listed group reported revenue up 3.2% on a constant currency basis to £285 million in the year to 31 March, while adjusted operating profit increased 0.7% to £67.5 million.
The company reported a statutory pre-tax loss of £74.5 million, compared with a profit of £15.7 million a year earlier, largely due to a non-cash impairment charge of £73.1 million.
Momentum was said to have accelerated during the second half, with growth in its Identity and Location divisions helping support revenue retention rates of 100%.
Chief executive Dev Dhiman said: "FY26 has been a year of considerable progress. We have delivered on the strategic initiatives that have the largest impact on our topline momentum, including returning Americas Identity to growth and generating strong demand for GBG Go."
The company said more than 100 customers had signed contracts for GBG Go, its global digital identity and fraud prevention platform, since launch, with a pipeline of more than 225 qualified opportunities.
Management expects mid-single-digit revenue growth in the 2027 financial year, supported by improving performance in the Americas and growing demand for identity fraud prevention tools as artificial intelligence-driven fraud becomes more prevalent.
GB announced a one-off £6 million investment in GBG Go to accelerate product development. As a result, adjusted operating margins are expected to fall to 21-22% in the 2027 financial year from 23.7% in 2026 before recovering in subsequent years.
Dhiman said the additional spending would help bring enhanced capabilities to market sooner, drive future growth and accelerate the retirement of legacy technology.