Alfa Financial Software (ALFA) H2 2025 earnings summary

Executive summary

• Full-year revenue reached GBP 126.7 million, up 17% at constant currency, with operating profit up 17% to GBP 40.1 million and strong growth across all revenue streams.

• Subscription revenue rose 16%, now representing 34% of the revenue mix, with ARR up 15% to GBP 43.9 million and NRR at 109%, reflecting robust customer retention and expansion.

• Delivery revenues increased 15%, while software engineering revenues grew 13% but are expected to decline in 2026.

• Cash conversion was robust at 97%, and the year-end cash balance stood at GBP 26.4 million.

• Strong sales pipeline with ten late-stage prospects and continued investment in people, product, AI, and sustainability.

Financial highlights

• Diluted EPS increased 18% to 10.14 pence; basic EPS up 17% to 10.19 pence.

• Total contract value (TCV) rose 3% to GBP 227.5 million, with subscription TCV up 18% and next 12 months TCV at GBP 98 million, up 2%.

• Delivery revenues increased 15% year-over-year, while software engineering revenues grew 13%.

• Perpetual license revenues declined to GBP 3.7 million, continuing a multi-year downward trend.

• Dividends paid or declared totaled 4.6p per share, including a 3.1p special and 1.5p ordinary dividend.

Outlook and guidance

• Expectation of continued revenue growth in 2026, though at a more moderate pace, with subscription revenue share projected to rise toward 40%.

• Delivery revenues expected to remain stable, while software engineering revenues are projected to decline.

• FX headwinds anticipated to reduce reported profit by GBP 2.4 million in 2026, with less favorable hedge rates.

• Cash conversion guidance for 2026 is 80%-90%, returning to 90%-100% thereafter; effective tax rate to rise to ~26%.

• Continued investment in AI, product development, and market expansion, especially in Commercial Finance and Fleet.