Half Year Trading Update

FADEL Partners Inc.

("FADEL" or "the Company")

Half Year Trading Update

30 July 2025

FADEL (AIM: FADL), the cloud-based brand compliance, rights and royalty management SaaS provider, provides a trading update for the six months ended 30 June 2025 ("H1 2025").

H1-25 Financial Highlights

● Revenue of $4.7 million (H1 2024: $5.3 million), down 11% year-on-year; gross margin of $2.3 million (H1 2024: $2.7 million), with margin of 49% compared to 51% in H1 2024, reflecting effective cost control despite lower revenue. Within the revenue mix:

● License and subscription revenue increased 1% to $3.45 million (H1 2024: $3.4 million).

● Services revenue of $1.2 million (H1 2024: $1.9 million), reflecting fewer implementation projects being initiated by enterprise level clients.

● Operating expenses reduced by 22% to $4.8 million (H1 2024: $6.2 million).

● Adjusted EBITDA loss of $2.4 million, a 33% improvement from H1 2024 ($3.6 million).

● Annual Recurring Revenue (ARR) of $9.9 million as of 30 June 2025, flat versus 31 December 2024 and up 8% from $9.2 million as of 30 June 2024.

● Cash and cash equivalents balance of $1.6 million at 30 June 2025 (H1 2024: $1.9 million). The Company also has access to a $1.0 million line of credit, renewed through May 2026, which remains undrawn.

Operating expenses decreased by 22% to $4.8 million in H1 2025 (H1 2024: $6.2 million), with savings realised across all areas of the business. A significant portion of these efficiencies were driven by the integration of AI into the Company's development framework, enabling greater automation and the streamlining of workflows across all divisions and product lines. Notably, the Company achieved a 30% productivity improvement in R&D, allowing it to maintain delivery velocity while reducing operating intensity. These initiatives have supported our investment discipline while enabling a continued path for long-term growth.

Annual Recurring Revenue (ARR) at 30 June 2025 was $9.9 million, flat versus 31 December 2024 and up from $9.2 million at 30 June 2024, reflecting 8% year-over-year growth in the Company's recurring revenue base. The increase was driven by continued expansion in license-based ARR, which grew by 23% year-over-year, offset by a decline in Enhanced Support Services (ESS) ARR, where a small number of clients chose to reduce their support tiers as part of broader internal cost-saving measures. Both license-based revenue and ESS form part of the Company's ARR profile. Importantly, there was no logo churn in the IPM or Brand Vision product lines, which together represent over 90% of total ARR-underscoring the durability and stickiness of FADEL's core platform offerings.

Looking ahead to the remainder of FY 2025, the Board anticipates that full-year revenue will be approximately 10% to 15% below market forecasts, with an expected range of $12.0 million to $12.9 million. The majority of this shortfall is attributable to lower-than-expected services revenue, particularly in the first half of the year, due to fewer implementation projects being initiated by enterprise level clients, given the current macro-economic environment and uncertainty surrounding the US tariffs. Despite this anticipated variance, the Company remains on track to achieve its full-year adjusted EBITDA loss target, which is expected to fall between $1.0 million and $0.8 million, consistent with market forecast. Cash at year-end is expected to be in the range of $0.5 million to $0.9 million, reflecting the normal seasonal pattern of lower cash at the year end. The Company also has access to a $1.0 million line of credit, renewed through May 2026, which remains undrawn.

Operational Highlights

· Improving momentum in the mid-market IPM segment, with a significantly expanded and more diverse pipeline compared to prior periods; the Company has also recently entered the process on a number of longer-cycle enterprise deals, with potential to close in late 2025 or early 2026.

· Launched AI Business Insights for IPM Suite in H1 2025 (released 10 April), offering predictive analytics, natural-language dashboards, dynamic reporting, and "what-if" forecasting. Early client feedback indicates a 50%+ reduction in royalty processing analysis and improved decision-making for licensing and finance teams. This capability is expected to enhance customer value and drive long-term ARR growth through platform upsell and stickiness.

· Product Approvals module is on track for beta release in September 2025 and a general availability release by the end of 2025. Early client demonstrations are already underway and strong initial interest. This release expands FADEL's addressable market by targeting customers that require an integrated solution combining rights & royalties management with product approvals workflow capabilities.

· The strategic review process referenced in the 2024 Annual Report remains ongoing, with no further update at this time. We will update shareholders at the appropriate time.

Board and Management Changes

Ian Flaherty has notified the Board of his intention to step down as Chief Financial Officer and Director of the Company, with his final day of service to be 5 September 2025. He is currently working closely with the Board and executive team to ensure a smooth transition of his responsibilities to Mark Plotkin, who joined FADEL full time on 28 July 2025 and will assume the role of CFO and Secretary to the Board upon Ian's departure. It is not intended that Mark will join the Board at this time.

Mark Plotkin, CPA, is a seasoned financial executive with over 25 years of leadership experience across licensing, publishing, and corporate finance. Most recently serving as VP of Controllership, Marvel Entertainment, at The Walt Disney Company. Mark has a proven track record of driving operational efficiency, implementing financial systems, and aligning strategy with business goals. A former Chief Accounting Officer at Marvel Entertainment and Senior Manager at Ernst & Young, he brings deep expertise in GAAP, internal controls, and financial reporting. Mark is based in New York City.

Notice of Interims

The Company expects to report its interim results for the six months ended 30 June 2025 in September 2025.

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About FADEL Partners Inc.

FADEL is a developer of cloud-based brand compliance and rights and royalty management software, working with some of the world's leading licensors and licensees across media, entertainment, publishing, consumer brands and hi-tech/gaming companies. The Group combines the power of rights management and content compliance with sophisticated content services, AI-powered visual search and image and video recognition.

FADEL has two main solutions, being IPM Suite (for rights and royalty management for publishing and licensing) and Brand Vision (an integrated platform for Brand Compliance & Monitoring that includes Digital Asset Management, Digital Rights Management, AI-Powered Content Tracking, and a Content Aggregation platform with over 100 million Ready-to-License Images).

The Group's main country of operation is the United States, where it is headquartered in New York, with further operations in the UK, France, Lebanon, Jordan and India.

For more information, please visit the Group's website at: www.fadel.com.