Alfa Financial Software (ALFA) H2 2024 earnings summary

Executive summary

• Achieved record Total Contract Value (TCV) of £221.3m, up 34% year-over-year, with eight new customer wins and strong growth across all business segments.

• Subscription revenue grew 18% year-over-year, now representing 34% of total revenue, reflecting a successful SaaS transition.

• Customer base diversified, with 21 customers generating over £2m each and top customer concentration reduced to 7%.

• Launched Alfa Systems 6, introducing 10 new modules and extending market leadership.

• Continued investment in product (£37.1m), people (5% headcount growth, 96% retention), and sustainability initiatives.

Financial highlights

• Revenue increased to £109.9m, up 9% at constant currency from the prior year.

• Operating profit rose 14% to £34.3m, with margin improving to 31.2%.

• Diluted EPS up 8% to 8.56p; basic EPS up 9% to 8.68p.

• Cash balance at year-end was £20.5m, with free cash flow conversion at 89%.

• Total dividends for the year reached 8.0p per share, up 10% year-over-year, with £22.1m paid including special dividends.

Outlook and guidance

• Expect mid-teens growth in subscription revenues and double-digit overall revenue growth for 2025.

• Continued investment in product development and client-led enhancements, with capitalised development and amortisation to remain elevated.

• Cash conversion for 2025 projected between 80%-90%, with an effective tax rate around 25%.