GFT maintains growth momentum

Stuttgart, 14 November 2024 – GFT Technologies SE (GFT) maintained its growth momentum on revenues and earnings in the first nine months of 2024 in a market environment that remained challenging. Group revenue and adjusted EBIT both increased by 10 percent year-on-year. This was driven by the strong performance in the banking sector, which recorded 14 percent growth. Growth was especially dynamic in Brazil, GFT’s largest market, as well as most European key markets.

GFT AI Impact is also gaining traction: This generative AI product that accelerates the software development life cycle can boost productivity by 50  to 90 percent. It includes advanced generative AI automated prompts for story creation, code refactoring, code analysis, review and fixes, as well as vulnerability checks and comprehensive program documentation. In the last quarter, GFT has won ten new clients for the product, sold over 170 licenses and is realising more than 20 proofs of concept.

“Our strategic acquisition of Sophos Solutions is continuing to excel: We have just won a major new deal in core banking modernisation at Colombia’s largest bank.” said GFT Co-CEO Marco Santos. “We have also achieved some major milestones with our AI solutions. Especially the successful market adoption of our product GFT AI Impact, which leverages generative AI into the heart of GFT software development process stands out.”

The GFT group generated revenue of EUR 645.50 million in the first nine months of 2024. The company thus exceeded the prior-year figure of EUR 585.10 million by 10 percent. GFT achieved growth of 14 percent in the Banking sector and 7 percent in the Industry & Others sector. Revenue in the insurance business decreased by 3 percent year-on-year, but improved compared to the previous quarter (H1 2024: -7 percent). This improvement was driven by strategic project wins with leading insurance players in the Americas and Europe.

 

Dynamic growth in Continental Europe and Brazil, clients in UK and US remain cautious

GFT showed solid growth in Continental Europe. Revenue in the segment grew by 16 percent. A major driver was the strategic acquisition of targens GmbH (now GFT Deutschland), which was completed in April 2023. Revenues in Spain grew by 16 percent, and in Germany by 17 percent over the same period last year. Italy, France, and Poland also saw dynamic growth.

Revenue in the Americas, UK & APAC segment increased by 6 percent compared to the previous year’s period. This includes the acquisition of Sophos Solutions, which is reflected in the group figures with effect from 1 February 2024, as well as strong growth in Brazil while business in the USA and Canada is stable quarter on quarter.

"We are expanding our reach with new growth clients and are winning ambitious projects with trusted partners even in markets where many hesitate to make bold moves," stated Jochen Ruetz, CFO of GFT. He continued: “By broadening our client base and securing major projects in key markets, we’ve continued to position GFT for sustained growth.”

 

Stable operating earnings margin

Adjusted EBIT increased by 10 percent year-on-year to EUR 57.10 million (9M/2023: EUR 52.14million). This was supported by an extraordinary income related to a provision release in Brazil. The adjusted EBIT margin was 8.8 percent in the first nine months of 2024 (9M/2023: 8.9 percent). At EUR 48.07 million, EBT remained at the same level as in the same period of the previous year (9M/2023: EUR 49.38 million).

 

Financial stability and flexibility remain high

Operating cash flow was above the previous year’s level with EUR 22.43 million (9M/2023: EUR 13.17 million). Net liquidity fell to EUR -84.18 million (31 December 2023: EUR 4.39 million), mainly due to the acquisition of Sophos Solutions. As a result of the acquisition and the associated increase in total assets, the equity ratio also fell by 2 percentage points to 41 percent (31 December 2023: 43 percent). 

As at 30 September 2024, the group employed a total of 11.304 full-time equivalents (FTEs), thereof 1,445 from Sophos Solutions. This corresponds to an increase of 24 percent compared to 9,134 FTEs at the end of 2023.

Further leveraging the AI megatrend, GFT has entered into a collaboration with NVIDIA to deliver advanced AI solutions for the financial services and manufacturing sectors. The collaboration will combine GFT’s deep expertise in digitalising global banks, financial institutions and manufacturers with NVIDIA’s AI software tools and accelerated computing platform for generative AI to drive a new level of innovation and efficiency in both industries.

GFT has also been recognised once again for its leading position in Digital Banking Services. For the third consecutive year, GFT has been listed as a Technology Leader in the Quadrant SPARK Matrix report for Digital Banking Services. This year, GFT has further strengthened its leadership position, earning the highest rating for Service Excellence and ranking among the top three providers for Customer Impact.

 

Outlook 2024 amended: Further growth in revenue and adjusted EBIT

Although some markets remain challenging, GFT expects further growth in group revenue and adjusted EBIT in the financial year 2024. This includes the acquisition of Sophos Solutions, which is recognised pro rata temporis from the closing of the transaction on 1 February 2024. The integration of the company is proceeding according to plan and should be completed in the first quarter of 2025. In addition, increasing digitalisation and the resulting demand for core banking modernisation, data platforms and cloud services continue to drive GFT's business growth.

 

Although GFT sees business improvement in some markets and stabilisation in others, the overall market environment remains challenging. This is expected to result in a less dynamic business development in the remaining months of the year than previously assumed. As a result, GFT has made slight adjustments to its outlook: The company now anticipates revenue growth of 10 percent to a total of around EUR 865 million (previously +12 percent to EUR 885 million). The adjusted EBIT is forecast to increase by 5 percent to around EUR 77 million (previously +12 percent to EUR 82 million). The group expects earnings before taxes (EBT) to reach around EUR 65 million (incl. €-EUR -9.5m negative effects from the Sophos acquisition due to M&A effects and interest expenses; previously +3 percent to EUR 70 million), representing a decrease of 4 percent.

* Adapted due to the reclassification of sales-related Brazilian taxes in the amount of €-3.66m and order backlog in the amount of €+12.58m of the acquired targens GmbH (now GFT Deutschland GmbH).

** Adjusted for effects from M&A activities and share price-based effects in connection with the valuation of variable management remuneration.