Q3 Trading update
14 November 2023
Alfa Financial Software Holdings PLC
Q3 Trading update
Performance in line with expectations
Alfa Financial Software Holdings PLC ("Alfa" or the "Company"), a leading developer of mission-critical software for the asset finance industry provides this scheduled update on trading for the quarter ended 30 September 2023.
Trading
Trading since the half year remains strong and in line with expectations, with revenue of £25m consistent with the same period last year.
The financial highlights were:
· Double digit growth in Subscription revenues continued the strong sequential growth we have seen since we started to migrate away from perpetual licences.
· Software revenue is down versus strong chargeability in the third quarter last year. As expected, we have seen a lower run-rate than the first half with reduced chargeable development days as a result of our H2 focus on product investment and the reduction in the customised licence revenue recognition as we transition to a subscription licence model.
· Services revenue was slightly up on the same period last year.
Operational highlights
As planned, following a strong first half for chargeable development, we are now focusing our engineering efforts towards future product roadmap development as we release Alfa Systems 6 over the next twelve months. This new version is a step-change in functionality on the existing technical platform and is therefore available to existing customers through their standard upgrade process. Feedback from our customers at our US and European user groups was overwhelmingly positive and we are confident that the new version will drive incremental module sales.
With the increasing focus on Artificial Intelligence ("AI") across our client base we have decided to integrate our development of AI more closely with our product roadmap. We will therefore transfer the activities of Alfa iQ into core Alfa to be marketed alongside our existing products under the same brand name.
In the third quarter we have continued the strong delivery pace from the first half with nine further go-live events, including a v4 to v5 go-live for a long-standing UK banking customer and a go-live for the commercial asset finance book of a bank. Since the end of the quarter we have had a successful new UK Alfa Start go-live.
Pipeline and Outlook
At the end of August we had eleven prospects in the late stage pipeline, of which ten were at preferred bidder status. Since then this has further improved with the addition of another opportunity from the mid-stage pipeline.
We have just signed full contract packs for the European arm of a major US automotive manufacturer and they will shortly go-live, illustrating how the contracting process now often runs alongside paid delivery work under individual letters of engagement. We are close to signing complete contracts with two more from the late-stage pipeline.
Looking forwards the pattern of Q3 is expected to continue through into Q4. We expect strong growth in subscription revenues and more modest growth in services revenues as new projects start to ramp up. Software revenues will be down due to a continued focus on non-chargeable product development work by our internal team along with reduced customised licence revenue recognition as a result of our ongoing migration to a subscription revenue model. Overall our expectations for the full year to 31 December 2023 remain unchanged.
Andrew Denton, Chief Executive Officer of Alfa, said:
"I am delighted that we have continued to drive the business forwards maintaining a high delivery cadence while evolving our product in line with our roadmap. The marketing of Alfa Systems 6 has received strong positive reactions from customers. Our pipeline remains as strong as I have ever seen it, and I am excited to have welcomed yet another prestigious global automotive brand into the Alfa family. The Board remains confident in its expectations for the full year and in our prospects beyond that."
Enquiries
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Alfa Financial Software Holdings PLC |
+44 (0)20 7588 1800 |
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Andrew Denton, Chief Executive Officer Duncan Magrath, Chief Financial Officer Andrew Page, Executive Chairman
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Teneo |
+44 (0)20 7353 4200 |
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James Macey White Victoria Boxall
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Barclays |
+44 (0)20 7623 2323 |
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Robert Mayhew Tom MacDonald
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Investec |
+44 (0)20 7597 4000 |
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Patrick Robb Virginia Bull
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Notes to Editors
Alfa has been delivering software systems and services to the global asset and automotive finance industry since 1990. Our agile methodologies and specialised knowledge of asset and automotive finance enables the delivery of large software implementations and highly complex business change projects. With an excellent delivery track record now into its fourth decade, Alfa's experience and performance is unrivalled in the industry.
Alfa Systems, our class-leading technology platform, is at the heart of some of the world's largest asset and automotive finance companies. Alfa Systems supports both retail and corporate business for auto, equipment, wholesale and dealer finance on a multijurisdictional basis, including leases/loans, originations and servicing. A cloud-native, end-to-end solution with integrated workflow and automated processing using business rules, Alfa Systems provides compelling solutions to asset finance companies.
Alfa Systems is currently live in 38 countries. Alfa has offices in Europe, Australasia and North America. For more information, visit www.alfasystems.com.
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