Alfa Financial Software Holdings PLC · LSE:ALFA
Alfa Financial Software — FY2024 Earnings Presentation
45 slides from Alfa Financial Software's earnings presentation, Mar 13, 2025
Slide 1: 2024 Full Year Results
2024 Full Year Results 13 March 2025 Leading software | Smart people Unrivalled delivery | Exceptional IP
Slide 2: Disclaimer
Disclaimer The following presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated (“relevant persons”). Any person who is not a relevant person should not act or rely on this presentation or any of its contents. Information in the fo
Slide 3: Agenda
Setting a new standard with Alfa Systems 6 Agenda Introduction and Key Highlights 4 1 Andrew Denton, CEO Financial Review 2 8 Duncan Magrath, CFO 3 Operational Delivery 21 Matthew White, COO 4 Business and Sales Update 30 Andrew Denton, CEO Summary 5 34 Andrew Denton, CEO 2024 has been a 6 Q&A 36 br
Slide 4: Introduction and Key Highlights
Introduction and Key Highlights Andrew Denton, CEO 4
Slide 5: Overview
Overview Strategic highlights Accelerating transition to SaaS subscription model Diversified customer base • Subscription fastest growing revenue stream, up 18% • Customer concentration reduced to 32% • 14% growth in subscription TCV • 21 customers with more than £2m revenue each • Subscription reve
Slide 6: Highlights
Highlights £109.9m +9%1 +18% £221.3m +34% £20.5m Subscription Total Contract Revenue Cash revenue growth Value2 2023: £102.0m 2023: £21.8m 2023: +16% 2023: £165.3m +14% 31% 502 £34.3m Operating profit 34% Closing headcount Operating profit EBITDA margin margin +5% average 2023: £30.2m 2023: 32% 2023
Slide 7: Breakthrough year
Breakthrough year • 8 new customer wins, including landmark wins in major target markets • Pipeline conversion driving record TCV £221m • Subscription up 18%, now over a third of revenues • Over 50% of customers on Alfa Cloud • Alfa Systems 6 fully launched, including 10 new modules • Over 500 emplo
Slide 8: Financial Review
Financial Review Duncan Magrath, CFO 8
Slide 9: Income Statement
Income Statement Strong overall financial performance Key Financial Metrics (£m) 2024 2023 Change % • Revenues up 8% at actual and 9% on constant currency basis Revenue 109.9 102.0 8% Cost of sales (39.0) (38.3) 2% Gross profit margin (%) 64.5% 62.5% 200bps • EBITDA margin 34% up from 32% in 2023 Sa
Slide 10: Revenue streams
Revenue streams Our strategy is to grow subscriptions by continuing to enhance our product, Better reflecting underlying nature of revenues unlocking more markets and ultimately delivering more Alfas to new customers Software Product investment Engineering • Software Engineering1 revenues largely ar
Slide 11: Customer revenues
Customer life cycle Illustrative customer journey • Definition work may commence before Typical customer revenue profile final contracts are signed Final go-live • Once contracts are signed, subscription Software development fees build up with volume of contracts and environments utilized • Delivery
Slide 12: Strong customer retention & accelerating wins
Strong customer retention & accelerating wins Acceleration of customer wins underpinning growth 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 • Strong customer retention: • Of our v5/AS6 customers that have gone live, only two have left Alfa, where the customers exited t
Slide 13: Total Contract Value (TCV)
Total Contract Value (TCV) Strong growth in Overall and next 12 months TCV • 34% growth in Total TCV vs Dec-23; Subscription up 14%, Delivery up £m Total TCV £m Next 12 months TCV 114%, Software engineering up 240 100 96 38% 221 220 90 +34% +43% • Next 12 months TCV up 43% vs 200 60 Dec-23 with grow
Slide 14: Subscription revenues
Subscription revenues Continuing sequential growth in subscription revenues £m Subscription Revenue £m Subscription TCV 137 140 40 +14% +18% 37.5 119 • Subscription revenue up 18% on 120 35 2023, now making up 34% of our revenues 30 31.8 100 25 95 • 66% of subscription revenues 80 82 coming from cus
Slide 15: Software Engineering revenues
Software Engineering revenues Executing strategy to transition to SaaS model • Software Engineering revenues up 12% from 2023 £m Software Engineering Revenue £m Software Engineering TCV 25 28 • Customised licence £(1.1)m as 24 23 25 we complete implementations +38% 21 +12% 10 for perpetual licence c
Slide 16: Delivery revenues
Delivery revenues Delivery revenue is stable, but TCV up with new projects contracting and ramping up £m Delivery Revenue £m Delivery TCV 60 60 60 +1% • Delivery revenues up 1% year on year, with 2023 being a record year 54.5 55.0 for delivery events (36 vs 26 in 50 50 20 2024) +114% After 12 Months
Slide 17: Net Operating Expenses
Net Operating Expenses Continuing to invest in our people and product to drive growth £m 2024 2023 Change % Salaries, pensions and on-costs 53.1 49.6 7% • Overall operating expenses up 5% Capitalised development (5.3) (2.8) 89% Profit Share* 4.2 3.8 11% • Salary costs up £3.5m (+7%) over Share-based
Slide 18: Cash Flow
Cash Flow Cash conversion in line with expectations • Cash conversion of 89% for the full year, as expected lower than 2023 £m 2024 2023 which benefited from unusually high level of receipts at end of year Cash generated from operations 37.3 39.2 Adjusted for: (1.3) (1.3) • Cash conversion expected
Slide 19: Capital allocation
Capital allocation Strongly cash generative business with strong track record of returns • We continue to generate excess cash, even after allowing for investment in the business Cumulative dividends paid Dividend paid per share & yield 10.0 160 • Balance between ordinary and £141m 9.0 special divid
Slide 20: Modelling guidance
Modelling guidance Outlook Currency • Success in conversion of pipeline and the record level of • Currency sensitivity (updated) TCV at year end will drive continued growth in our business, in particular new customer Deliveries and • Revenue Software Engineering work • 1 US cent = c.£500k • 1 EUR ce
Slide 21: Operational Delivery
Operational Delivery Matthew White, COO 21
Slide 22: Our strategy
Our strategy Sell Simplify Enable profitable growth by focussing on: Enable more concurrent Alfa Systems • Alfa Systems on Alfa Cloud; implementations, more efficiently, by: • Subscription revenue; • Simplifying our product; • Incremental sales; • Simplifying our implementations; • Commitment to our
Slide 23: Strengthen – Product
Strengthen – Product Alfa Systems 6 – evolving asset finance software 01 02 03 • £37m investment in Alfa Systems (2023: £35m) • Investment is both functional and technical Total Capability Efficiency Sustainability • Alfa Systems 6 launched Introducing Compose: Meeting the complex end-to- Satisfying
Slide 24: Strengthen – People
Strengthen – People Investing in our culture of excellence Employee Engagement and Retention • 500+ employees globally, +5% 100% average headcount 97% 96% 90% • 82% employee engagement 90% score 80% 84% 82% 82% • 96% employee retention rate 70% • Investing in our induction, 60% learning and developm
Slide 25: Strengthen – Delivery
Strengthen – Delivery Maintaining excellence in delivery v5/AS6 Customers 45 40 • Ongoing growth in customers 35 for Alfa v5/AS6 30 • After record new customer go- 25 lives in 2023, we started six new 20 major customer projects in 2024 15 • Maintaining our excellent 10 delivery track record 5 0 2011
Slide 26: Sell – Subscription
Sell – Subscription Exceptional pipeline conversion and growth in subscription revenues • Strengthening our differentiators – people, product and delivery – underpins Subscription revenue acceleration of pipeline 40 38 conversion +20% CAGR 35 • Success in moving to subscription model – 34% of our 30
Slide 27: Scale
Scale Scaling our product reach and our delivery capacity • Scaling delivery capacity: Headcount and Product Investment • Over 500 people globally (up 5%) 600 20.0 • Over 100 people in the US (up 18.0 15%) supporting our growth in 500 US Automotive 16.0 Investment in product (£m) 14.0 • Reviewing ou
Slide 28: Simplify
Simplify Delivering more Alfas more efficiently • Simplifying implementation will enable us to deliver more Alfa v5/AS6 Customers Systems implementations more 30 efficiently 25 • Enhanced migration suite – easing transition to Alfa Systems 20 • Investment in automated testing 15 – simplifying upgrad
Slide 29: Fundamental Strategic Change, Achieved Incrementally
Fundamental Strategic Change, Achieved Incrementally Watch our CEO and CTO discuss the evolution of our best-in-class technology here 2010 2024 Alfa Systems v5 launched Alfa Systems 6 launched Deployed on-premise Single-tenant SaaS deployment Significant hardware deployment effort Alfa Systems avail
Slide 30: Business and Sales Update
Business and Sales Update Andrew Denton, CEO 30
Slide 31: Late stage pipeline update
Late stage pipeline update Six wins and three more prospects added since September 2024 • Record eight new customer wins in 2024, six of these in H2 • Including some significant wins, accessing more of our addressable market • Success in pipeline conversion has led to a record TCV of £221m • Eight p
Slide 32: SaaS only sales strategy
SaaS only sales strategy Strong growth in SaaS customers, now only selling SaaS Alfa Cloud Portfolio Volumes • We have seen strong growth in 1.6 16 our SaaS customer base, with more than half of all customers 1.4 14 on Alfa Cloud1 1.2 12 • Subscription revenues for new 1.0 10 customers ramp up over
Slide 33: Outlook
Outlook • Demand for asset and automotive finance software remains robust, as our pipeline demonstrates • New customer wins driving growth in Delivery and Software Engineering, and continued ramp-up in Subscriptions • Continuing to invest in our product, increasing our technical and functional lead
Slide 34: Summary
Summary Andrew Denton, CEO 34
Slide 35: Overview
Overview Strategic highlights Accelerating transition to SaaS subscription model Diversified customer base • Subscription fastest growing revenue stream, up 18% • Customer concentration reduced to 32% • 14% growth in subscription TCV • 21 customers with more than £2m revenue • Subscription revenues
Slide 36: Q&A
Q&A
Slide 37: Appendices
Appendices
Slide 38: Late stage pipeline update
Late stage pipeline update Key: Won Lost Six wins and three more prospects added since September 2024 New in late stage Project Annual Status Status Potential Client descriptor Territory Comment Revenues Subscription Sep-24 Mar-25 Retail Bank F UK/NA Working Working Full contracts signed – v5 up
Slide 39: Subscription growth
Subscription growth Subscription is our fastest growing Subscription revenues and TCV ramp up over time revenue stream, with growth coming from: • Growth in existing customers portfolio volumes, migration of Illustrative Customer Subscription Profile* business onto Alfa and purchase of new software
Slide 40: Balance sheet
Balance sheet Robust balance sheet with £20.5m of cash £m 2024 2023 Total non-current assets 42.9 37.1 • Trade receivables increased to £8.6m from very low level of £5.6m at Dec Current assets 2023 Trade receivables 8.6 5.6 Prepayments, accrued income and other receivables 9.9 8.7 • Prepayments, acc
Slide 41: Revenue profiles
Revenue profiles Strong base of revenue of a recurring nature • Subscription customers all recurring revenues; now 35% of overall revenues Revenue from existing and new customers • 58% of Software Engineering revenues from existing customers: 15% of overall 2024 By Stream revenues Sub Soft Del Total
Slide 42: Market & customer diversification
Market & customer diversification Improved revenue quality Revenue 2024 – by market Customers > £2m annual revenue 25 • Continued strong diversification of customer base across regions and market segments 21 20 19 • Growing strength of customer base - 21 17 customers with annual revenue over £2m 15
Slide 43: Alfa Systems new modules
Alfa Systems 6 new modules Optional functional modules • 24/7 • Compose • Basic Quoting • Inventory Management • Case Supervision • Decisioning Financial Product Modules • Usage Based • Revolving Credit facilities • Asset Level Financials Life Cycle Modules • Originations 43
Slide 44: Single-Tenant SaaS
Single-Tenant SaaS The best of both – gaining traction Multi-Tenant Alfa Single-Tenant Standard code-set Standard code-set Standard database Standard database Single “instance” for multiple customers Single “instance” per customer, managed by “infrastructure as code” Release timing set by vendor wit
Slide 45: Definitions
Definitions Measures not specifically defined by IFRS Constant currency Total contract value (TCV) When the Company believes it would be helpful for understanding TCV is calculated by analysing future contract revenue based on the trends in its business, the Company provides percentage increases fol
Alfa Financial Software Holdings — FY2024 Earnings Presentation on 6ix