**Summary of Alfa Financial Software Holdings PLC 2025 Half Year Report**
**Financial Highlights**
**Revenue Growth** Alfa reported a 20% increase in revenue to £62.5 million (H1 2024: £52.3 million), or 22% at constant currency.
**ARR and NRR** Annual Recurring Revenue (ARR) grew by 16% to £41.6 million, with Net Revenue Retention (NRR) at 112% (H1 2024: 106%).
**Profitability** Operating profit rose by 33% to £21.6 million, driven by a 72% surge in Software Engineering revenues, resulting in a high operating profit margin of 35%.
**TCV Growth** Total Contract Value (TCV) increased by 9% to £211 million, with the next 12 months TCV up 25% to £90 million.
**Balance Sheet** Robust financial position with £23.9 million in cash (up 17% from December 2024) and no bank debt.
**Special Dividend** A special dividend of 5.0 pence per share (£14.8 million) was declared, reflecting strong cash generation and disciplined capital allocation.
**Strategic Highlights**
**Subscription Growth** Subscription revenues grew by 17%, with ARR up 16% and NRR boosted by new customer subscriptions.
**Product Development** Continued investment in software, particularly in US Auto Originations, Fleet, and Commercial Finance, expanding the Serviceable and Target Addressable Markets.
**Alfa Systems 6** Nine customers are now live on Alfa Systems 6, demonstrating its frictionless upgrade nature.
**Sales Momentum** Strong late-stage pipeline with seven prospects, six of which are working under letters of engagement.
**Headcount and Retention** Average headcount increased by 7% to 508, with a high retention rate of 97%.
**Outlook**
Despite currency headwinds and macro uncertainty, Alfa remains confident in its full-year expectations, supported by ongoing work with customers and a strong pipeline.
The company expects lower software engineering revenues in H2 2025, offset by planned increases in headcount and salary costs.
Continued focus on delivering value and expanding market opportunities in 2025 and beyond.
**CEO Commentary (Andrew Denton)**
Highlighted strong H1 2025 performance, strategic progress, and the successful rollout of Alfa Systems 6.
Emphasized continued investment in software and people to maintain competitive advantage and market expansion.
**Financial Review**
**Revenue Breakdown** Subscription revenues grew by 17%, Software Engineering by 72%, and Delivery by 10%.
**TCV** Subscription TCV grew by 12%, with overall TCV up 9% to £211 million.
**Profitability** Gross profit margin improved to 64.2%, and operating profit increased by 33% to £21.6 million.
**Cash Flow** Operating free cash flow conversion was 88%, in line with guidance.
**ESG and Corporate Responsibility**
Recognized for ESG efforts, including winning the Corporate Social Award and inclusion in the FTSE4Good Index.
Continued focus on social initiatives and employee engagement.
**Conclusion**
Alfa Financial Software Holdings PLC delivered a strong H1 2025, with robust financial performance, strategic advancements, and a positive outlook for continued growth despite external challenges. The company remains well-positioned to capitalize on market opportunities and deliver long-term value.