Alfa reports robust Q4 performance and strong TCV growth

Alfa Financial Software Holdings PLC (Alfa) has reported a robust Q4 performance, with full-year 2024 revenues increasing by 8% year-over-year to £110 million, aligning with market expectations.

For the full year 2024, Alfa’s total contract value (TCV) reached a record £221 million, marking a 34% rise from the previous year, driven by eight significant contract wins. Operating profit saw a significant rise of 13% to £34 million, surpassing market expectations by 5%, attributed in part to costs being approximately £1 million lower than anticipated.

Alfa, a developer of mission-critical software for the asset finance industry, has announced its trading update for the quarter ended 31 December 2024, ahead of its full-year audited results scheduled for release on 13 March 2025.

In the fourth quarter, Alfa’s revenue grew to £29 million, a 21% increase from the same period last year, or 23% at constant currency. Subscription revenues saw a 17% rise compared to Q4 of the previous year, while software revenues experienced an 84% surge. Services revenues also grew by 7% year-over-year in the quarter.

Alfa Systems 6 has been fully launched across all regions and has received positive feedback from customers and prospects. The company continues to invest in product development, with a focus on client-led functional enhancements planned for 2025. During the quarter, Alfa successfully completed seven customer deliveries, including two go-lives for new customers, bringing the total number of customer deliveries for the year to 26. Notably, a swift go-live for a US OEM client in December, using Alfa Start as an accelerator, showcased the company’s strong delivery capabilities.

The fourth quarter was particularly strong in terms of pipeline conversion, with five new contracts secured. These included an internationally recognised OEM in the US, an Alfa Systems 6 upgrade for a leading UK bank, and a specialist UK banking group implementing Alfa Start. These additional wins bring the total to eight for the year, significantly increasing TCV to a record £221 million, up 34% from the previous year, or 37% at constant currency. The late-stage pipeline has also strengthened, with two new US auto finance prospects added, bringing the total to eight. Alfa is the preferred supplier for five of these and is working under letters of engagement.

Reflecting its transition to a SaaS license model, Alfa has redefined the terminology of its revenue streams. The software revenue stream has been renamed to Software Engineering, while the services revenue stream is now called Delivery. The subscription revenue stream remains unchanged. This reclassification aligns the company’s terminology with its underlying revenues without altering revenue recognition methodologies.

“We are very pleased to see the momentum from Q3 continuing through Q4, resulting in H2 revenues up 17% on last year and with operating profit ending the year ahead of expectations. As well as being a good year financially, 2024 was also a hugely successful year for sales and the development of our product.

“The record eight wins drove TCV up 34% to £221m and we have laid the foundations for our future with the launch of Alfa Systems 6. We remain well positioned to drive growth in 2025 and well beyond,” Denton added.