Release Date: November 14, 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 a 10% increase in revenues, reaching EUR646 million, with an adjusted EBIT margin improvement of 10% to EUR57 million in the first nine months of 2024.
- The company experienced strong growth in its three largest markets: Brazil (13%), Germany (17%), and Spain (16%).
- GFT Technologies SE successfully completed its largest acquisition in history, expanding its market presence in Colombia and Latin America, and enhancing its core banking, AI, data, and cloud capabilities.
- The company launched GFT AI Impact, a product that accelerates and improves productivity in software development, achieving productivity boosts of 50% to 90% for clients.
- GFT Technologies SE was recognized as a global leader in digital banking services in the 2024 Spark Matrix report and improved its EcoVadis rating, reflecting its commitment to sustainability and ESG practices.
Negative Points
- Despite revenue growth, the company faced challenges with a 3% decline in the insurance sector, although there was a positive recovery in Q3.
- The company experienced a negative impact from foreign exchange rates, particularly in Latin American currencies, affecting profitability.
- GFT Technologies SE had to expand its restructuring programs, incurring nearly EUR7 million in capacity adjustments in 2024.
- The company reported a reduction in revenue expectations for Q4 due to weaker demand and unfavorable currency evolution in South American markets.
- The adjusted EBIT growth of 5% was slower than revenue growth, indicating pressure on prices and operational challenges.
Q & A Highlights
Q: Can you provide more details on the order backlog and its impact on future quarters?
A: The order backlog, including the recent deal in Colombia, provides a solid basis for the next quarters. The deal in Colombia is just starting and doesn't significantly impact the numbers yet. The backlog mainly covers the next two quarters, with a significant portion in the upcoming quarter and a high extent in the following one.
Q: What is the value proposition of GFT AI Impact, and how does it compare to existing solutions like GitHub Copilot?
A: GFT AI Impact leverages large language models from OpenAI, AWS, and Google to enhance various aspects of the software development lifecycle beyond coding, such as documentation and issue fixing. It offers significant productivity improvements and can extend functionalities beyond what GitHub Copilot offers. It is adaptable to different client environments, providing a tailored solution.
Q: With attrition rates rising, does this indicate improving market conditions?
A: Rising attrition rates could be an early indicator of improving market conditions. However, the financial services industry, particularly in the UK, US, and Canada, remains cautious, with tier-one banks reducing budgets. While attrition suggests potential market recovery, it is not yet fully reflected in the financial services sector.
Q: How will the US market be managed following your transition to CEO, and what is its strategic importance?
A: The US market remains a key focus and strategic pillar for GFT's growth. Despite my transition to CEO, the US market will continue to receive appropriate priority and attention, ensuring it aligns with our strategic vision and growth objectives.
Q: Can you provide guidance on capacity adjustments and personnel expenses for the full year?
A: Capacity adjustments are expected to total between EUR7.5 million and EUR8 million for the full year. We are actively working on optimizing personnel expenses to improve efficiency and align with our revenue expectations.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
