Alfa Financial Software Holdings PLC released its first‑half 2026 results on September 3, showing total revenue of £65.1 million, a 5% increase on a constant‑currency basis and 4% at actual rates. The company’s share price rose 6.28% to $172.6 after the announcement.
Operating profit slipped 15% to £18.4 million, pulling the operating margin down to 28.3% from 34.6% a year earlier. Adjusted for £1.6 million of severance costs and unfavourable foreign‑exchange hedge impacts, operating profit would have risen 2% to a margin of 31.1%, still 70 basis points below the prior period.
Basic earnings per share fell 15% to 4.55 pence from 5.38 pence, while the effective tax rate held steady at 26%. Cost of sales rose 16% to £25.9 million, driven largely by the severance and FX items; excluding those, the increase would have been 10%. SG&A expenses grew 12% to £21.1 million, versus a 2% rise on an adjusted basis.
Subscription revenue accelerated 14% to £24.1 million, accounting for 73% of customers live on the v5/AS6 platforms, 20% from new AS6 implementations, 4% from v4 upgrades and 3% from v4 customers yet to upgrade. Annual recurring revenue (ARR) climbed 17% to £48.5 million and total contract value (TCV) for subscriptions rose 22% to £176 million, with overall TCV up 17% to £247 million. Net revenue retention stood at 110%, marginally below the previous 112%.
The subscription customer base expanded to 44, up from 41, including 24 v5/AS6 Alfa Cloud customers and 15 private‑cloud users. Fifteen customers are currently in implementation, and nine prospects are in the late‑stage pipeline.
Delivery revenues increased 5% to roughly £32 million, serving 44 customers, while software‑engineering revenues fell 17% to £8.6 million, though they were 43% higher than in H1 2024. Customized license revenue rose to £2.8 million, with £3.9 million remaining on the balance sheet for recognition through 2031.
Cash conversion for the period was 76%, below the full‑year target range of 80‑90% after a timing shift from a December 2025 accelerated receipt reversal; the normalized rate was about 91%. Operating cash generated £17.6 million, down from £22.0 million, and operating free cash flow was £14.0 million after £3.0 million of capital expenditure and £0.6 million of lease payments. Dividends paid totalled £13.7 million (£4.5 million ordinary and £9.2 million special), with no new special dividend declared. The cash balance closed at £22.2 million, reflecting a net cash outflow of £4.2 million.
The company highlighted currency sensitivities, noting that a 1‑cent move in the US dollar translates to roughly £500,000 of revenue and £300,000 of operating profit, while a 1‑cent shift in the euro impacts revenue by £140,000 and profit by £120,000. Remaining 2026 USD flows are fully hedged at an average rate of $1.36.
CEO Andrew Denton said the firm has “a lot of that revenue in the oven, it’s just not fully cooked,” referring to the pipeline of implementation customers. COO Matthew White added that Alfa is “the leading player in a massive market, and we currently have only a small market share.”
