The printhead manufacturer, Xaar, has released an unaudited interim report for its first half of the 2026 financial year up to the end of June, which shows revenues up across the board.
However, as always, the devil is in the details. The revenues did improve in comparison with last year’s H1 figures, right across the group’s different activities. The group recorded total revenues of £29.70 million, up from £27.21 million in H1 2025. But this translated to an operating loss of £1.13 million and an overall loss of £1.82 million. Nonetheless, that’s an improvement on the H1 2025 operating loss of £2.57 million and overall loss of £3.11 million. And these latest figures do also include an unexpected £1.8 million one-off tax liability that Xaar had previously disclosed, which is being settled over the next two years. (One British pound (GBP) is worth about US$ 1.35 according to present exchange rates)
So perhaps not surprisingly, Xaar prefers to quote its Earnings Before Interest, Taxes, Depreciation and Amortisation of £1.7 million, and profits before tax of £0.2 million, both of which have been adjusted, and which perhaps give a fairer picture of the group’s overall position. The adjustments add up to around £1.7m and include a range of items such as currency fluctuations between the US and UK operations, restructuring expenses and amortisation of intangibles relating to the acquisition of Megnajet, amongst others. At the same time, the free cash flow, similarly adjusted, has fallen from a negative £1.9 million to £4.3 million.
The Xaar group is split across three divisions. The core business remains the design, manufacture and sales of inkjet printheads, which saw revenues rise 5.5% to £21m. Gross profit margin was a very healthy 37.5% and the operating profit, adjusted as above, was £2.2m.
Xaar attributes this partly to new business with several OEMs adopting Xaar technology for the first time. Xaar has returned to the ceramic tile market through a new ceramics glaze application. Thus the ceramics and glass business increased by £0.4m, with ceramics up £0.2m, and continued growth in automotive glass applications leading to total revenues of £4m. However, the coding and marking and direct-to-shape revenues dropped by 8.5% to £6.5m, which Xaar says is down to some customers deferring orders to the second half of the year.
Xaar is seeing continuing success in 3D Printing & Advanced Manufacturing with 28.4% growth to £8.6m, driven by an ongoing shift toward digital processes as a replacement for analogue methods, such as replacing spin coating in semiconductors and screen printing in PCBs. However, there has been less demand for jewellery wax 3D printing due to higher global gold prices and the ongoing conflict in the Middle East.
The Wide Format Graphics and Labels side of the business grew by 8.3% to £1.3m. But against this, the Packaging & Textiles segment fell drastically by 53.8% to £0.6m, though Xaar claims that it has several key textile projects that are still in development.
Then there is the Megnajet division, which covers fluid management systems, where revenues rose 27.3% to £1.4m, mainly because of new modular systems that have drawn better sales. Gross profit margin improved 12 points to 52.9 percent, with adjusted operating profit of £0.6m.
The third division is the American venture Engineered Print Systems, which offers system integration, and reported revenues of £7.3m, up 15.9 percent. Here the gross profit margin was 39.4 percent with adjusted operating profit of £0.6m. This is largely due to Xaar’s reorganisation of the management team, which has led to better project execution, refined the commercial pipeline and improved overall business discipline.
The three divisions together give Xaar a fairly well-rounded offering, from printheads and printbars, to fluids and fluid management systems and integration. Overall, Xaar’s management believes that the company is in a reasonably stable position. There is some risk from the conflict in the Middle East, which affects production and assembly capacity, energy costs and the wider operating environment. And there are some concerns around supply chains and laws and regulations, particularly around the ongoing uncertainty in US markets and expansion of Xaar’s Asian operations. These things are largely outside of Xaar’s control and affect other manufacturers as well. In addition, Xaar claims to have reduced its risk related to customer credit exposure and inventory obsolescence.
For now, Xaar is continuing to pursue a basic strategy of developing new applications based around digital manufacturing and process waste reduction. Cynics might suggest that this is because Xaar is struggling to compete in the traditional graphic arts space for printheads, including the packaging and textiles markets that have offered so much potential to other printhead vendors.
But another view is that the company is simply playing to its strengths, namely the ability to handle specialist fluids, including those with higher viscosity. Since general manufacturing, including additive manufacturing, is undoubtedly a bigger market opportunity than the graphic arts alone, this may yet prove to be a very smart approach. The problem is the time that it takes to develop each new application and the amount of work that Xaar has to put into this, coupled with many manufacturers being reluctant to share news of these applications. The fact that the revenues are growing suggests that Xaar is starting to see some traction.
Recent projects have included PCB conformal coatings, ceramics glazing, semiconductors and solar panels. Xaar is waiting for one customer, the Chinese manufacturer Flashforge, to bring its desktop CJ2703D printer to market. According to Xaar, “This provides validation of the market opportunity for high-viscosity jetting in desktop 3D applications and demonstrates the technical advantages of Xaar’s architecture.”
At the close of the first half at the end of June, Xaar’s shareholder equity was £54.3 million, down from the 2025 H1 figure of £58.6 million. The retained earnings were £10.4 million, down from the 2025 H1 amount of £14.0 million, while foreign exchange translation reserves totalled £1.3 million, up from the £1m in H1 2025. During this first half, the Group purchased £0.6 million of its own shares into the Employee Benefit Trust, up from the £0.3m in H1 2025. However, the company chose not to offer a share dividend for this period, opting to focus more revenue on R&D.
