Alfa Financial Software Holdings reported a 14% increase in subscription revenue for the first half of 2026, reaching £24.1 million, as the asset finance software provider highlighted accelerating growth in its core business. The London-listed company posted total revenue of £65.1 million, up 5% at constant currency, though operating profit fell 15% to £18.4 million amid higher costs.
Shares rose 6.28% to $172.6 following the presentation of H1 2026 results on September 3, 2026. The company outlined its strategic pillars of Strengthen, Sell, Scale, and Simplify, while emphasizing progress in its AI technology suite, Thea, which includes Core, Notes, Lens, and Connect components.
Subscription revenue now accounts for 37% of total revenue, up from prior periods, with annual recurring revenue climbing 17% to £48.5 million. Total contract value for subscriptions surged 22% to £176 million, while overall contract value grew 17% to £247 million. Net revenue retention remained robust at 110%, supported by a 100% base retention rate and contributions from new customer implementations.
Operating profit was impacted by £1.6 million in severance costs and a £2 million swing in foreign exchange hedging effects, which shifted from a £1.7 million gain in 2025 to a £0.3 million loss in 2026. Adjusted operating profit, excluding these items, would have risen 2% with margins declining by 70 basis points to 31.1%. Basic earnings per share fell 15% to 4.55 pence.
CEO Andrew Denton noted that a pipeline of 15 customers currently in implementation is expected to drive future recurring revenue growth. COO Matthew White emphasized the company's position as a leading player in a large market with modest current market share.
The company invested £19.6 million in software development during the period, primarily focused on AI functionality and platform enhancements. Cash generated from operations totaled £17.6 million, while operating free cash flow reached £14.0 million. Dividends paid amounted to £13.7 million, including a £9.2 million special dividend, though no special dividend was declared with the H1 results.
Alfa provided 2026 guidance, projecting continued strong subscription revenue growth, though delivery revenues are expected to expand at a slower pace than previously anticipated. Capitalized development costs are forecast to remain similar to 2025 levels, with amortization expected to align with capitalization. The company maintained its full-year cash conversion target of 80-90%, though H1 performance fell short at 76% due to timing factors.
Currency sensitivity remains a key consideration, with each 1 US cent movement affecting revenue by approximately £500,000 and operating profit by £300,000. The company has fully hedged remaining 2026 USD flows at an average rate of $1.36.
