Alfa lifts profit guidance after strong third quarter

Alfa Financial Software has raised its full-year profit expectations after delivering what it called a strong trading performance in the three months to 30th September, with revenues rising and contract wins boosting its pipeline.

The London-listed developer of software for the asset finance industry reported third-quarter revenue of £31.7m, up 12% on the same period last year, or 14% at constant currency. The company said the result was in line with expectations and reflected solid contributions across its regional operations.

Subscription income grew 16% year-on-year, while delivery revenues jumped 26% as teams remained “busy across all three regions”. Software engineering income fell 30% compared with what Alfa described as an unusually strong quarter a year earlier, with the company now shifting focus toward investment rather than customer-specific development work.

Total contract value (TCV) ended the period at a record £222m, up from £211m at the end of June and £205m a year earlier.

The company said tight cost control helped support performance in the quarter, with lower-than-expected spending on travel, conferences and IT, as well as a carefully managed increase in headcount. That discipline, Alfa said, is expected to continue through the final quarter of the year.

Alfa’s pipeline strengthened further, with the number of late-stage prospects rising from seven to eight. The company is the preferred supplier for seven of these and has already begun paid work under letters of engagement with five. Since its half-year results, Alfa has secured a win with an equipment manufacturer in Australia and New Zealand, while adding two new prospects – a South American multi-country automotive project and a UK high street bank.

Delivery TCV was boosted by expanded work with existing customers and by converting the Australian-New Zealand OEM opportunity, while subscription TCV rose on the back of a two-year contract extension. Software TCV declined in the quarter, reflecting the pivot toward longer-term product investment.

Operationally, Alfa completed 10 deliveries in Q3, including an upgrade to Alfa Systems 6 for an existing Nordic OEM customer, and achieved another go-live in New Zealand shortly after the quarter end. Fourteen customers are now running on Alfa Systems 6, with conversions continuing “effectively and at pace”.

The company said it had also made progress in expanding its offering across originations, fleet, and commercial finance, areas it sees as broadening its addressable market, supported by favourable feedback from recent industry events.

Alfa now expects full-year operating profit to be around £2m higher than previously forecast, driven by lower costs. Revenue expectations for 2025 remain unchanged.

“Alongside delivering this strong financial performance we have also continued to invest in our product and our people to enhance our leading position in the market,” he said. “We remain confident in the strength of our pipeline and the future prospects for the business.”