Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- GFT Technologies SE (WBO:GFT, Financial) reported an 11% revenue growth to EUR 430 million in the first half of 2024, with an adjusted EBIT margin increase of 15% to EUR 36 million.
- The company experienced strong organic growth in Brazil, with a 12% increase, highlighting the benefits of geographic diversification.
- The integration of Sophos is on track, contributing to an increased order backlog and supporting the revised guidance.
- GFT's AI.DA marketplace and AI Impact product have gained significant market interest, contributing to 8% of total revenues.
- The company received prestigious awards for its Engenion product and was recognized by ISG for its data and analytics services, enhancing its market credibility.
Negative Points
- The Anglo-Saxon markets, particularly the UK and North America, showed weakness, impacting overall growth.
- The insurance sector experienced a 7% decline due to the completion of large projects and difficulty in rebuilding the pipeline.
- Capacity adjustments were necessary in high-cost regions like the UK, leading to increased restructuring costs.
- The Sophos acquisition did not meet initial revenue expectations, contributing less to the EBITDA than anticipated.
- Underutilization in high-priced countries affected profitability, with a noticeable impact on the operating margin.
Q & A Highlights
Q: How does the Sophos integration align with the reduction in full-year EBITDA contribution?
A: The reduction in EBITDA contribution from Sophos is due to a decrease in expected revenue, influenced by the Anglo-Saxon markets, particularly North America. The initial goal was EUR 60 million in revenues, now adjusted to EUR 55 million.
Q: What impact does the Brazilian accounting effect have on the EBT guidance?
A: EUR 3 million from the Brazilian provision was included in the EBT and EBIT adjusted guidance.
Q: Is the AI.DA product portfolio gaining traction reflected in the order book or sales?
A: Yes, AI.DA is generating real revenues, with AI Impact and other AI solutions contributing to 8% of total revenues.
Q: How is customer behavior affecting project decisions, and what is the wage trend?
A: Customers, especially in Anglo-Saxon markets, are postponing project decisions, impacting growth. Wages are currently stable with no significant inflationary pressure.
Q: What is the outlook for the second half of the year regarding utilization and capacity adjustments?
A: Utilization is expected to improve to 91% or higher. Capacity adjustments could result in EUR 1.5 million to EUR 3 million in costs, which is included in the guidance.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
