Alfa reports strong revenue growth in Q3

Alfa Financial Software Holdings PLC (Alfa) has reported robust trading results for the third quarter ended 30 September 2024, underpinned by substantial revenue growth and an upward revision in full-year profit expectations.

Alfa’s Q3 revenues reached £28 million, marking a 14% increase compared to the same period last year and a 16% rise at constant currency rates. This solid growth was driven by several key factors, including:

• Subscription revenues: Continued momentum saw subscription revenues rise 19% compared to Q3 2023, reflecting the company’s ongoing shift toward recurring income models.
• Software revenues: Alfa noted a marked increase in software revenues after a period of internal investment, highlighting a return to customer-driven development activities.
• Services revenues: While flat compared to the same quarter last year, service revenues are forecasted to experience growth in Q4.

Looking ahead, Alfa’s Board anticipates continued strong performance in the fourth quarter, with expectations of mid to high single-digit revenue growth for the full year. Despite minor currency headwinds projected to affect revenues by 1-2 percentage points, cost management improvements have positioned the company for enhanced profitability. Operating costs for FY24 are expected to be £1 million lower than previous estimates, resulting in a £1 million upward revision of anticipated operating profit for the year.

Operational advancements and product innovation

During Q3, Alfa maintained its strategic focus on product innovation, culminating in the market launch of all six pillars of Alfa Systems 6. The final two pillars, “Intelligent Automation” and “Collaborative Ecosystem,” enable AI-powered automated decision-making and seamless integration with other systems, enhancing customer efficiency and competitiveness.

The company also highlighted a strong delivery performance, completing six customer implementations in Q3, building on the 13 from the first half of the year, with additional key deliveries slated for Q4.

Continued success in pipeline conversion

Alfa has shown exceptional strength in converting its sales pipeline, as evidenced by significant new contracts secured during Q3. This includes a high-profile agreement with a major US automotive customer announced earlier in the year. Total contract value (TCV) as of 30 September 2024 reached a record £205 million, reflecting a 56% year-over-year increase.

The company has maintained its momentum into Q4, signing deals with a leading European auto manufacturer and the UK and US equipment finance arms of a major Japanese bank. Additionally, Alfa has initiated work with a new North American auto finance client under a letter of engagement. The late-stage pipeline remains strong, with nine prospects, seven of which are already engaged under letters of engagement.

“The launch of Alfa Systems 6 is a major milestone for the Company and I am delighted with the reaction that we have already received from customers and prospective customers in day to day conversations and at industry conferences. This has set the foundations for strong future growth in the business as evidenced by the conversion of a number of key prospects along with the continuing strength of the pipeline.

“We are well placed to achieve our increased expectations for the year and we remain confident in 2025’s performance and in the longer-term outlook for the business,” he noted.