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Alfa Financial Software plc
(LSE:ALFA)
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Rating:78Outperform
Price Target:
197.00 p
▲(17.54% Upside)
Action:Reiterated
Date:09/15/26
The score is driven primarily by strong financial performance (profitability, low leverage, and robust cash generation). Valuation adds support via a moderate P/E and high dividend yield, while the earnings call was net positive on recurring-revenue momentum and backlog despite near-term margin/profit pressure. The main drag is technical weakness, with the stock trading below key moving averages and negative MACD.
Positive Factors
Recurring Revenue Expansion
Rapid subscription growth, strong ARR expansion, and 110% net revenue retention show increasing recurring revenue quality and customer expansion. A larger subscription base should improve predictability, deepen customer relationships, and support more durable earnings over the next several quarters.
Negative Factors
Margin and Profit Pressure
The reported profit decline and gross-margin compression indicate that recent revenue growth has not translated cleanly into earnings. Even where exceptional costs contributed, sustained margin pressure could reduce operating leverage and limit the pace of future profit improvement.
Read all positive and negative factors
Positive Factors
Negative Factors
Recurring Revenue Expansion
Rapid subscription growth, strong ARR expansion, and 110% net revenue retention show increasing recurring revenue quality and customer expansion. A larger subscription base should improve predictability, deepen customer relationships, and support more durable earnings over the next several quarters.
Read all positive factors
Alfa Financial Software plc (ALFA) vs. iShares MSCI United Kingdom ETF (EWC)
Market Cap
£502.86M
Dividend Yield5.68%
Average Volume (3M)1.04M
Price to Earnings (P/E)18.1
Beta (1Y)0.63
Revenue Growth7.66%
EPS Growth-6.78%
CountryUK
Employees502
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)0.09
Shares Outstanding298,602,020
10 Day Avg. Volume1,964,599
30 Day Avg. Volume1,043,850
Financial Highlights & Ratios
PEG Ratio1.39
Price to Book (P/B)12.13
Price to Sales (P/S)4.95
P/FCF Ratio16.72
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
£255.00Price Target Upside52.15% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
EPS Forecast (FY)0.1
Revenue Forecast (FY)£134.40M
Alfa Financial Software plc Business Overview & Revenue Model
Company Description
Alfa Financial Software Holdings PLC, through its various subsidiaries, is a global provider of specialized software platforms and professional advisory services tailored for the asset finance industry. Operating across the United Kingdom, United ...
How the Company Makes Money
ALFA generates revenue primarily by licensing its software to financial institutions (such as auto finance companies, banks, captives, and independent lessors) and by providing services required to deploy and operate that software.
Key revenue st...
Alfa Financial Software plc Earnings Call Summary
Earnings Call Date:Sep 03, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Mar 18, 2027
Earnings Call Sentiment Positive
The call was predominantly positive. Management highlighted strong subscription momentum, ARR and TCV growth, zero competitive churn, successful go-lives, a substantial implementation backlog, expanding market opportunities, AI-driven product and delivery progress, and unchanged full-year expectations. These positives were partly offset by the reported 15% decline in operating profit, a 400-basis-point gross-margin reduction, lower software engineering revenue and TCV, 76% first-half cash conversion, severance costs, FX headwinds, and implementation timing risk. Overall, the number and significance of the stated growth and strategic positives outweighed the challenges.Positive Updates
Subscription Growth and Recurring Revenue Expansion
Subscription revenue grew 14% to GBP 24.1 million, ARR increased 17% to GBP 48.5 million, and net revenue retention remained strong at 110%. Subscription revenue now represents 37% of total revenue, reflecting Alfa's continued transition toward a larger recurring-revenue business.
Negative Updates
Reported Operating Profit Decline
Operating profit decreased 15% year-on-year to GBP 18.4 million, and operating margin was 28.3%, although management said the reported figures were materially affected by severance costs and FX hedges.
Read all updates
Q2-2026 Updates
Positive
Negative
Subscription Growth and Recurring Revenue Expansion
Subscription revenue grew 14% to GBP 24.1 million, ARR increased 17% to GBP 48.5 million, and net revenue retention remained strong at 110%. Subscription revenue now represents 37% of total revenue, reflecting Alfa's continued transition toward a larger recurring-revenue business.
Read all positive updates
Company Guidance
For 2026, Alfa expects continued growth in subscription revenues, delivery revenues will grow more slowly than we originally expected but be offset by improved software engineering revenues, and overall growth is broadly as anticipated; subscription revenue is expected to be slightly stronger growth in the second half, with delivery and software engineering similar, analysts have us on about 6% growth for the second half and nearly 5% growth for the year as a whole, delivery is expected to be somewhere between mid-single digit to high-single digit growth, or 5%-8% type growth per annum, subscription is expected to deliver mid to high teens growth, software engineering modeled as a sort of flat part of the business would not be a bad place to start, cash conversion is expected to be 80%-90% for 2026 as a whole, capitalized development costs are expected to continue at similar levels to 2025, amortization will increase to a similar level as capitalization, and the effective tax rate is expected to be around 26%; over the medium term, Alfa expects margins to improve, although it will not necessarily see dramatic increases in margins over the short term, but over the long term, gradually, incrementally, that will improve.Alfa Financial Software plc Financial Statement Overview
Summary
Income Statement
86
Very Positive
Balance Sheet
84
Very Positive
Cash Flow
88
Very Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 129.30M | 126.70M | 109.90M | 102.00M | 93.30M | 83.20M |
| Gross Profit | 76.00M | 77.40M | 70.90M | 63.70M | 56.90M | 51.10M |
| EBITDA | 41.00M | 42.20M | 37.50M | 32.90M | 32.50M | 27.70M |
| Net Income | 27.70M | 30.10M | 25.60M | 23.50M | 24.50M | 19.20M |
Balance Sheet | ||||||
| Total Assets | 90.20M | 90.70M | 84.70M | 75.10M | 76.50M | 84.00M |
| Cash, Cash Equivalents and Short-Term Investments | 22.20M | 26.40M | 20.50M | 21.80M | 18.70M | 23.10M |
| Total Debt | 9.00M | 9.30M | 9.30M | 8.20M | 9.30M | 17.10M |
| Total Liabilities | 38.40M | 39.00M | 38.50M | 33.10M | 34.50M | 40.60M |
| Stockholders Equity | 51.80M | 51.70M | 46.20M | 42.00M | 42.00M | 43.40M |
Cash Flow | ||||||
| Free Cash Flow | 32.30M | 37.50M | 22.80M | 28.80M | 24.90M | 25.40M |
| Operating Cash Flow | 32.70M | 37.90M | 28.40M | 32.20M | 27.20M | 26.70M |
| Investing Cash Flow | -5.60M | -5.40M | -5.40M | -3.10M | -2.30M | -1.30M |
| Financing Cash Flow | -28.80M | -26.40M | -24.10M | -25.80M | -29.70M | -39.20M |
Alfa Financial Software plc Technical Analysis
Positive
167.60
Price Trends
162.06
Positive
161.01
Positive
164.36
Positive
Market Momentum
3.57
Negative
57.87
Neutral
64.22
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:ALFA, the sentiment is Positive. The current price of 167.6 is above the 20-day moving average (MA) of 164.93, above the 50-day MA of 162.06, and above the 200-day MA of 164.36, indicating a bullish trend. The MACD of 3.57 indicates Negative momentum. The RSI at 57.87 is Neutral, neither overbought nor oversold. The STOCH value of 64.22 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GB:ALFA.
Alfa Financial Software plc Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | £502.86M | 18.07 | 53.53% | 5.68% | 7.66% | -6.78% | |
77 Outperform | £10.38B | 28.11 | 81.91% | 1.95% | 8.75% | 15.70% | |
68 Neutral | £219.22M | 138.17 | 3.23% | 0.86% | 20.24% | -62.04% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
61 Neutral | £110.13M | 33.44 | 6.17% | 2.67% | -9.87% | -22.86% | |
61 Neutral | £72.36M | -29.90 | -3.58% | 3.04% | -5.90% | -207.35% | |
54 Neutral | £369.55M | -5.02 | -14.39% | 2.72% | 0.82% | -997.08% |
* Technology Sector Average
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Alfa Financial Software plc Corporate Events
Business Operations and StrategyRegulatory Filings and Compliance
Alfa Financial Software Updates Market on Total Voting Rights
Neutral
Sep 30, 2026
Alfa Financial Software Holdings PLC, a leading developer of mission-critical software for asset finance and leasing, operates its Alfa Systems SaaS platform at scale across 37 countries. The platform underpins complex automotive, equipment, whole...
Regulatory Filings and Compliance
Alfa Financial CFO-Designate Increases Stake with Share Purchase
Positive
Sep 3, 2026
Alfa Financial Software Holdings plc, a specialist in asset finance and leasing software, provides its Alfa Systems SaaS platform to major automotive, equipment, wholesale and commercial finance players worldwide. The system supports core lifecycl...
Business Operations and StrategyFinancial Disclosures
Alfa Financial Software lifts recurring revenue and contract value despite profit hit
Positive
Sep 3, 2026
Alfa Financial Software reported first-half 2026 results showing continued momentum in its subscription-based model, with annual recurring revenue rising 17% to £48.5m and total contract value up 17% to £247.0m. Overall revenue grew 4% t...
Business Operations and StrategyFinancial Disclosures
Alfa Financial Software sets date for H1 2026 results and investor webcasts
Neutral
Aug 21, 2026
Alfa Financial Software Holdings PLC, a specialist provider of mission-critical asset finance software, is best known for its Alfa Systems SaaS platform, which underpins major automotive, equipment, wholesale and commercial finance operations in 3...
Business Operations and StrategyExecutive/Board ChangesRegulatory Filings and Compliance
Alfa Financial Software announces departure of non-executive director Adrian Chamberlain
Neutral
Aug 10, 2026
Alfa Financial Software Holdings plc has announced that non-executive director Adrian Chamberlain has stepped down from the board with immediate effect. Chair Andrew Page thanked Chamberlain for his commitment and contributions since joining in 20...
Regulatory Filings and Compliance
Alfa Financial Non-Executive Director Sells 200,000 Shares
Neutral
Aug 4, 2026
Alfa Financial Software Holdings PLC has disclosed a share transaction involving non-executive director Christopher Sullivan, in line with EU Market Abuse Regulation requirements. Sullivan sold a total of 200,000 ordinary shares of £0.001 eac...
Business Operations and StrategyExecutive/Board ChangesRegulatory Filings and Compliance
Alfa Financial Software grants long-term share award to incoming CFO
Positive
Aug 3, 2026
Alfa Financial Software Holdings plc has granted a new conditional share award under its 2017 Long Term Incentive Plan to Chief Financial Officer designate Andrew Dickson. The 2026 Award covers 122,007 ordinary shares, granted on 31 July 2026, wit...
Business Operations and StrategyRegulatory Filings and Compliance
Alfa Financial Software Updates Share Voting Rights and Capital Structure
Positive
Jul 31, 2026
Alfa Financial Software Holdings PLC has confirmed its total voting rights as at 31 July 2026, reporting issued ordinary share capital of 300,000,000 shares, of which 1,410,177 are held in treasury and carry no voting rights. This leaves 298,589,8...
Business Operations and StrategyFinancial Disclosures
Alfa Financial Software lifts H1 revenue and contract value on new asset finance wins
Positive
Jul 30, 2026
Alfa Financial Software Holdings reported first-half revenue of £65.1m, up 4% year-on-year, with Q2 revenue rising 6% as stronger software engineering work for new implementations offset delays in delivery projects. Subscription revenue grew ...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.