Alfa Financial Software Holdings PLC ($ALFA)

Hello, everybody, and welcome to the Alfa Financial Software 2025 Full Year Results. As always, I'm joined by Matthew White, Alfa's COO; and Duncan Magrath, Alfa's CFO. I'll kick us off with the introduction and key highlights before handing over to Duncan for the financial review. Matt will then pick up the operational delivery side of things before I talk about the business and give you a sales update before we summarize. So in overview, 2025 has been an excellent year for the company. Subscription revenue was up 16%, and we saw an 18% growth in subscription total contract value. ARR of GBP 43.9 million was up 15% and net revenue retention of 109% was up on 2024's 103%. In total, subscription revenues were 34% of our revenue mix. We had a strong sales performance and very strong delivery momentum during the year. The late-stage pipeline was filled with 10 prospects, and we are doing paid work with 5 of the 10 customers in that late-stage pipeline. We're also seeing encouraging activity in the early-stage pipeline, showing the buoyancy of demand within our target market. 20 customers are now live on Alfa Systems 6, which underscores the ease of implementation of that upgrade for our existing customers. And we continue to invest in people, product and planet. We've grown the team with average headcount up 6% and high staff retention at 97% during the year. Overall, we invested GBP 37.7 million in our software with the major focus of investment being market expansion. Originations and Fleet are increasing our accessible addressable market and Commercial Finance is increasing our overall addressable market. And for the planet, the carbon offsets we purchased were greater than the total of our emissions. Looking forward, we're confident in our expectations and our prospects. Matt will touch upon the major talking point of the moment, artificial intelligence. But I'll preempt his messages by saying we see AI as an exciting area. It's an opportunity for us to become more efficient in our internal operations, delivery and in our software engineering, and it brings opportunities to build new functionality and capabilities into our software to create business benefit for our customers. In light of that confidence, the Board has declared a special dividend of GBP 0.031 and an ordinary dividend has been declared of GBP 0.015. So going into more detail then with the key highlights. Full year revenue was GBP 126.7 million, up 17% on a constant currency basis from last year's GBP 109.9 million. Subscription revenue grew 16%. And as I've mentioned, net revenue retention was 109%. Total contract value stood at GBP 227.5 million, up 3% on last year's GBP 221.3 million, and operating profit was GBP 40.1 million. That's a 17% increase on last year's number, and it represents a 32% operating profit margin with EBITDA margin at 34%. Cash conversion was stronger than last year at 97%. That's up from 2024's 89%. I will now hand over to Duncan for the financial review.

Thanks, Andy. I said at the half year that the figures really speak for themselves, and I find myself repeating that for the year as a whole. 2025 really was a very strong financial performance. Revenue was up 15% at actual rates or 17% at constant currency with growth across all revenue streams. We had very strong chargeability in the first half, and as expected, this reduced in the second half with less software engineering revenues. Overall, though, it was a good gross margin performance of nearly 64%. Operating profit grew even more strongly than revenue, up 17% at actual rates to deliver an operating margin of 31.6%. This benefited from 120 basis points from the FX hedges that we put in place to protect ourselves from movements in sterling versus the U.S. dollar. The effective tax rate of 24.9% was in line with last year. And so basic EPS also grew by 17% with diluted EPS up 18%. Overall, a really strong performance. And given our confidence in the future prospects for the business, the Board has proposed an ordinary dividend of GBP 0.015 per share and declared a special dividend of GBP 0.031 per share. This is a total dividend of GBP 0.046, which is up 21% on the dividends declared and proposed this time last year. Along with a special dividend of GBP 0.05 paid earlier in the year, total dividends are GBP 0.096 for the year, up 20% on last year. Turning now to TCV. 2024 really was a standout year for our revenue and commercial teams, which was demonstrated by the 34% increase in TCV in that year. We said a year ago that we expected to work through the TCV during 2025. But in fact, we have seen a small increase in the year, ending up 3% higher than this time last year. This increase was driven by the strong growth in subscription TCV that more than offset the reductions in software engineering and delivery TCV. Next 12 months TCV is up 2%, again, with strong growth in subscription TCV with delivery TCV being in line with last year, but with software engineering TCV down 35% versus this time last year. Despite next 12 months delivery TCV being flat year-on-year, we expect delivery revenues to grow in 2026 and would expect TCV to increase as we convert the customers in the late-stage pipeline into wins. Given the customer profile in the late-stage pipeline, we do expect software engineering revenues to drop in 2026 from the high of 2025. With the growing importance of subscription revenues to our business, we started publishing some typical SaaS metrics at the last half year's results. On the left, you can see our annual recurring revenue or ARR figures. We calculate this using the average subscription revenues over the last 6 months and then annualize them. This picture shows what you would expect, very strong growth in ARR, up 15% versus last year and very much in line with our overall growth in subscription revenues. The graph on the right shows our net revenue retention percentage or NRR, and this is a financial metric, which represents the net impact of churn and growth in the subscription revenues. This is calculated by taking the customers with recurring revenues from 12 months ago and calculating what their revenues are now and expressing this as a percentage. This calculation includes the benefit of upsells and expansions and is net of customer losses. We're often asked by those new to the Alfa story about churn. In reality, closer watchers of our story know that it is in effect 0, and this is demonstrated by an NRR figure that is consistently in excess of 100%. At 31 December 2025, NRR was an impressive 109%. This was principally due to the ramp-up of subscription revenues from customers in the early stages of their time on Alfa, along with contractual inflation increases. So looking now at overall subscription revenues. It is perhaps worth reiterating that our subscription revenue is dependent on contract counts or in effect, the number of assets on Alfa, i.e., it is volume-based measure and not a per user measure. Alfa has always priced on this basis as we make companies more efficient and pricing on a per user basis would not be appropriate. We continue to see strong growth in subscription revenues in 2025, up 16% as more customers added more contracts on to Alfa, along with some indexation. Total subscription TCV and next 12 months TCV grew 18% and underpins our confidence that this revenue stream will continue to show strong growth going forward. Total subscription customers increased from 39 to 42, and we only have 2 customers on v4 who are not yet committed to upgrading onto modern Alfa, and they accounted for circa 7% of revenues in 2025. There are 15 contracted customers not on Alfa Cloud and converting these on to Alfa Cloud is a potential source of future growth in subscription revenues. Turning to software engineering revenues. Last year, we had a relatively low first half for software engineering revenues and a much stronger second half. This year, we saw the opposite trend with the first half showing a 72% increase in software engineering revenues versus last year, with revenues in the second half down 18% on last year. Overall, this results in revenues up 13% on last year, and this growth was very much driven by enhancement work for new customers. Enhancement work for existing customers was broadly stable. Perpetual license revenues being the combination of both one-off and customized license revenues totaled GBP 3.7 million in 2025, slightly down on the GBP 4.0 million in 2024 and the GBP 5.1 million in 2023. This will continue to decline over the next few years as the historic perpetual license accounting unwinds. For 2026, at the moment, we see less demand for chargeable enhancements from new customers, and this is what is driving the reduction in TCV. As noted at the half year, our margins are quite sensitive to the amount of chargeable enhancement work we have as the cost base stays relatively fixed. Turning to our final revenue stream, delivery. The ramp-up of the new projects was the major reason for the 15% increase in our delivery revenues in 2025. We have 11 projects underway where the customer is not yet live and only when these contracts are live, will they drive up our subscription revenues. Overall delivery TCV is showing us down year-on-year as a result of working through some of the large multiyear projects that we won in 2024. As these multiyear projects continue throughout 2026, the next 12 months TCV is actually flat year-on-year. Given that we are doing paid work for a number of customers in the late-stage pipeline, and we expect these projects to continue, we expect overall delivery revenues in 2026 to be higher than 2025. Turning now to expenses. Cost of sales grew by 18% over last year, largely on the back of increases in costs from headcount and salary increases, along with a small drop in the amount of capitalization of internally generated software. Hosting costs increased with the growth in Alfa Cloud. Sales, general and admin expenses were up 12%. In addition to salary cost growth, there were increases in profit share due to the higher profits generated this year, share-based payments and increased amortization. FX has been significant in the period. We had net transaction gains of GBP 0.8 million. Within this, the gain from U.S. dollar FX hedges was GBP 1.5 million, offset by other FX losses of GBP 0.7 million. Other income from R&D expenditure credit was up at GBP 0.4 million. Turning to cash flow. In March last year, I estimated the cash conversion for the year would be 80% to 90% due to accelerated receipts in 2024 from 2 projects. Cash conversion, in fact, has beaten this at 97%. The reason for this improved performance was again better-than-expected receipts at year-end. So again, I'm guiding to around 80% to 90% cash conversion for 2026 with 90% to 100% thereafter. Dividends paid increased GBP 3.9 million on last year to GBP 26.0 million. Overall, there was a net cash inflow of GBP 5.9 million for a cash balance of GBP 26.4 million at the year-end. Now some words on capital allocation. Alfa is a highly cash-generative business, and we have a strong track record of returning excess cash to shareholders through dividends. Cumulative dividends paid in the last 5 years are now up to GBP 167 million, and our overall dividend yield from ordinary and special dividends has been running between circa 3.5% to 5% per annum. As you know, we are very disciplined about allocating capital and keep this under review. There are no immediate investment requirements for our current excess cash. And so we are proposing an ordinary dividend of GBP 0.015 and have declared a special dividend of GBP 0.031 per share, in total, up 21% on this time last year. Next, a brief update on modeling guidance. This slide is largely reiterating guidance I have given as I've gone through my presentation. However, FX is worth highlighting. It is perhaps easier to follow what is going on with FX if you split out the gain or loss on FX hedges from other FX gains and losses. As far as transaction and translation gains go, our sensitivity remains the same as before with each $0.01 movement in the U.S. dollar impacting revenue by GBP 500,000 and operating profit by GBP 300,000. We had an average rate of $1.32 for 2025. And if we had a rate say of $1.35 for 2026, that would reduce reported revenue by GBP 1.5 million and reported profit by GBP 0.9 million. In addition to this, we had GBP 1.5 million of hedge gains in 2025. So total profit in 2026 will be lower than 2025 by GBP 2.4 million purely because of FX. Predicting what is likely to happen on the exchange rate is extremely difficult and seems to vary weekly. Earlier in 2026, we hedged 40% of 2026 U.S. dollar cash flows at $1.37. And so if the rate for the year was $1.35, which I used in the illustration I just talked about, we would also have a loss of GBP 0.2 million. So this will be a year-on-year swing in our hedges alone of GBP 1.7 million, and so quite a headwind to profit growth. However, despite this and assuming the exchange rate does not move far from $1.35, we expect to see good revenue growth in 2026. So a quick recap on what was an extremely strong set of financial results. Revenue of GBP 126.7 million was up 17% at constant currency. This was at an operating margin of 32%, delivering an operating profit of GBP 40.1 million, up 17% on last year. Diluted EPS was GBP 0.1014, up 18%. Cash conversion was excellent at 97%, resulting in a year-end cash balance of GBP 26.4 million. This cash balance, along with TCV of GBP 227.5 million gives us great strength going forward, allowing us to declare a combined ordinary and special dividend of GBP 0.046, up 21% on last year. I will now hand over to Matt.

Thanks, Duncan, and hello, everyone. Firstly, from me, as always, a reminder of our strategy. The market that we serve is extremely complex, highly regulated, infinitely demanding and ever changing. Our opportunity is huge. We're the leading player in a massive market, and we currently have only a small market share. So our strategy for creating long-term sustainable business value is designed to maximize and enable us to grasp that opportunity to strengthen, to grow our differentiation by investing in our 3 key differentiators, our smart diverse team, our product and our delivery methodology and tooling to sell, to enable profitable growth by focusing on building our community of single-tenant SaaS customers, increasing our subscription revenue and enabling incremental sales; to scale, to increase our capacity for developing and delivering Alfa Systems and extend our reach; and finally, to simplify to enable more concurrent Alfa Systems implementations more efficiently. Now as usual, I'll structure this update around our 3 key differentiators: our product, our delivery and our people. And Andrew will talk about exciting sales progress when I finished. But I'll start with a few words on Alfa's product and technology. And firstly, artificial intelligence. Alfa's market positioning, our product architecture and our business model provide strong foundations for long-term growth as the capability of AI technology evolves. So we view AI as an enabler of greater efficiency and greater customer value. We're excited about the possibilities, and our approach is deliberately pragmatic and grounded in real use cases that enhance productivity, delivery efficiency and product capability. We focus our AI strategy on 4 areas: AI literacy across the organization, ensuring that all of our people can effectively and responsibly leverage new tools; internal efficiencies using AI to streamline processes, to reduce manual effort and to improve operational scalability, including in software development. Delivery acceleration, applying AI to reduce implementation costs and time lines for customers, for example, through AskThea, our AI chatbot, which is in use by our delivery teams, by our customers and by our partners; and product enhancements, embedding AI within Alfa Systems where it solves customer challenges and improves automation, insight and decision support. Expanding a little on the product enhancement's theme. In 2026, we'll invest in architecture to simplify the process for expanding the use of AI by Alfa Systems customers in a secure and resilient way. Our vision is for our customers to be able to solve problems using AI, both in Alfa Systems itself and with Alfa Systems as part of a wider landscape. We'll continue to invest in demonstrable and productionized functionality, for example, multifunction self-service agents and intelligent document processing to automate credit workflow. The capability of technology in this area is moving forward fast, and we are leveraging that progress. Now some of you may be relatively new to our story and may not be familiar with some of the intricacies of the market that we serve. So it's worthwhile repeating. And I'll do so while adding context around our view of the future of AI in our market. We are, of course, aware that many views have been expressed in the wider area recently. This is our take on the implications for Alfa. Firstly, deep functional domain capability makes simple replication of Alfa Systems by AI impossible. Put simply, you can't vibe code an Alfa. To the extent that development of software will become easier in the future, we have a huge head start and the resources to capitalize on our position. And we see ourselves accelerating away from competition and potential future competition as development costs reduce. Secondly, whilst we do see generic AI automation tooling enhancing our ability to serve our customers, this will only be possible because those automation tools will be predicated on and governed by our enterprise software. Alfa provides a vast, well-structured data framework that is based on a deep understanding of the complex enterprise context in which we operate. Our deeply embedded enterprise-wide software provides encoded institutional knowledge and system of record. Alfa Systems serves customers' line of business in an extremely complex market. And our regulated customer base requires embedded deterministic workflow and ledger transactions with clear audit trails and predictable interactions within a complex landscape. Probabilistic outcomes have no place, and this absolutely does not favor ungoverned AI outputs acting alone. In this context, standardization, compliance, reliability, reversibility, integration, speed, authority models, security and specific industry practice matter much more than generic automation. And finally, software needs to be implemented. Enterprise software implementation projects within highly complex and regulated environments are necessarily huge business change exercises. We see AI increasing implementation efficiency, but we don't see it eliminating the implementation process. At Alfa, we have an unrivaled track record of delivery of these projects in intricate and interconnected contexts and where competitors consistently struggle. And this is a key aspect of our differentiation. We should also be clear that Alfa Systems is priced based on the number of asset finance contracts managed on Alfa rather than per user, and this will ensure that AI-driven headcount reductions at customers will not impact Alfa's revenues. So while we do see opportunities for Alfa Systems as an enabler for Agentic technology that reduces system user numbers, this also represents an opportunity rather than a threat to our revenue. In summary, Alfa's market-leading technology stack and architecture, the scale and complexity of our software, our expansive and culturally embedded innovation and investment agenda and our robust revenue model ensure that Alfa is positioned to maximize the potential of AI technology as it evolves. Turning to other areas in which our product, Alfa Systems has progressed. 2025 was a landmark year. In all of our key product development areas, we have worked in partnership with customers. This is our preferred way to develop software because it ensures market fit and because our customers co-invest sharing the cost. Our product investment keeps us ahead, wins new customers and also plays a part in ensuring that we don't lose customers. 2025 was a landmark year because we have developed MSPs or minimum sellable products in our 3 key expansion markets, 2 of which expand the scope of our existing serviceable addressable market or SAM, U.S. auto Originations and Fleet, and the third of which takes us into a new target addressable market, Commercial Finance. U.S. auto Originations is exciting because of the scale of the opportunity. To date, our U.S. auto implementations have provided lease and loan servicing functionality. But all U.S. auto finance providers require an origination system in addition, and we believe that this market is underserved. We see the value of a U.S. auto Originations implementation as between one-third and two-thirds of the value of our core servicing market, so a huge opportunity. We have already sold our origination solution to one large customer and the development that we've carried out to date has benefited hugely from partnering with that customer. Implementation of Alfa for Originations will follow from our servicing implementation. Fleet is exciting because it opens up the European auto finance market where auto Fleet management often sits alongside retail finance. We've already secured an initial sale in this market too, and the implementation is progressing well. And Commercial Finance is an adjacent market, which will, in time, increase our TAM. We've secured 2 sales within customers that are primarily focused on asset finance. And in 2026, we'll be stepping up our marketing efforts within the Commercial Finance world itself. I've outlined some highlights here, but it's by no means an exhaustive list. Our product improves constantly, and we release a new version every 4 weeks. Every version includes many new features and functionality. 2025 saw us increase our investment in our product again, and 2026 will see the exciting product progress continue at pace. I've spent a lot of time talking about technology today, but our delivery track record and our people remain just as important in differentiating Alfa from competitors. If I had to cite a single differentiator, it would have to be culture. We have a culture of delivery. And it's really hard to deliver in this market. We succeed where competitors frequently fail. We achieved 35 successful deliveries in 2026, and 20 customers are now live on the latest version of our software, Alfa Systems 6. In 2025, we started work with some smaller opportunities in the U.S., which is important because it has enabled us better to understand the requirements of lower-tier customers and to develop our Alfa Start solutions with the aim of creating a product for this market, including for partner-led delivery. We have a culture of growth individually and collectively. We put a lot into ensuring that we can attract the best people in our industries into developing our team and to engaging and retaining our team as we grow together. We've continued to grow our team with average headcount over the year of 516. We have strong retention at 97%, and we have strong engagement at 83%. Following the success of our Lisbon Smart Hub, we've set up a new Smart hub in Gdansk, and we've welcomed new software developers and new members of our cloud hosting team. 2026 will see us set up a 24/7 hosting operations team in Gdansk. We've refreshed our talent management and pay and promotions process, moving away from heavyweight annual review towards a clear framework for ongoing conversations about skills development, goals, delivery and well-being. And really importantly, we have a culture of inclusion and of social and environmental responsibility. And you can read more about this fundamental part of who we are in our 2025 sustainability report, which we released last week. We're in a fantastic position now, and we're excited about the future. Our culture remains key to that. So we're extremely grateful to our team for making possible the success that we're reporting today as we grow this special company together. And we're also continuing to welcome new customers into our community, as Andrew will outline next.

Thanks, Matt, and I'll continue with the business and the sales update. The sales pipeline has been really strong during the year. The late-stage pipeline increased to 10 prospects. And to add a little detail to that, touching on the early-stage pipeline, we've been focusing particularly on gathering industry knowledge and contacts in Commercial Finance. We've also seen strong interest in Originations and Fleet with multiple demos and overall, the activity in the early-stage pipeline has remained robust. We've been delighted by the interest in the results of the investment work that we've been doing, which really underscores our decision to build out the software in those areas. Touching then on the late-stage pipeline. During FY '25, we added 5 new prospects, converted one into a win, one moved back to the mid-stage, and one was lost. Overall, we ended the year with 10 prospects in the late-stage pipeline, which was up from 8 at the last year-end. And as I mentioned at the start of the presentation, we're doing paid work with 5 of them. We are a preferred supplier with 8, which gives us a huge amount of optimism that we will convert those too sold in due course. It's also worth noting that we've seen good spread across our regions with recent additions in Europe as well as our first South American prospect for in-country operations. Turning then to the outlook. Demand for asset and automotive finance software remain robust as our pipeline demonstrates. Our people and delivery record, as always, are key differentiators. That's the case now, and we expect it to continue to be the case in the future. We've been working hard as before to simplify our implementations, but we're increasing the use of AI and growing our capability to do more implementations as a result of this work. We expect further growth in delivery revenues, which will feed through into more subscription revenues in 2026 and beyond. We continue to invest in our product. Chargeable development work will vary depending on the mix of new customers in our pipeline. For 2026, we expect this to be below the high watermark achieved in 2025. And our success in growing our U.S. business means that we're impacted by foreign currency exchange, which right now is a headwind. But in summary, we expect that 2026 will be a year of continued growth and momentum. So to summarize what you've been hearing today so far. 2025 has been a fabulous growth story for our single-tenant volume-based SaaS solution. Subscription revenue has grown 16%. We've seen 18% growth in subscription TCV. ARR was up 15% to GBP 43.9 million and NRR was at 109%, up significantly from 2024's 103%. Overall, subscription revenues have contributed 34% of the total. I've talked about the strong sales and delivery momentum, a strong late-stage pipeline with 10 prospects in total, up from 8 last term. And we're working under LOE or equivalent with 5 of the 10 customers in the late-stage pipeline. We're seeing encouraging activity in the early-stage pipeline, and that activity is very much validating the software investment that we've been making in growing our addressable market. 20 customers in total are live on Alfa Systems 6, a really pleasing level of uptake that, as I said before, really underlines everything that we've said about this latest game-changing version of our software being frictionless for existing customers. We continue to invest in people, product and planet. Headcount is up 6% with high staff retention at 97%. And the investment that we've made in our key software asset was GBP 37.7 million. That investment focused on Originations, Fleet, Commercial Finance to drive us forward and to expand our opportunity. And carbon offsets purchased were greater than 100% of our emissions. So we're confident in our expectations and in our prospects. The Board has decided to declare a special dividend of 3.1p and an ordinary dividend of 1.5p, and we continue forward with that confident outlook. Thank you for listening.

Thank you for the presentation. We have had a number of questions pre-submitted and submitted live. [Operator Instructions] Our first question is, results look solid this year, but is this the sort of growth we should realistically expect going forward? Or was this a particularly good year?

Thanks, Ivy, and welcome, everybody. That sounds like well for you, Duncan.

Thanks, Andy. Yes, they were really, really pleased, very good set of results for 2025. Revenue growth of 15% at actual rate, 17% constant currency was very strong. We very much see ourselves as there's a phrase in the technology sector, Rule of 40. So we very much see ourselves as a sort of 30% margin type business with a sort of 10% to 12% on average revenue growth business. And we've -- over the last 5 years, we've averaged 11% growth per annum, and that we think is a sort of sensible long-term growth trajectory. So we don't expect to repeat the 15% growth next year, but we certainly still see growth next year, and we still see us over the medium term, delivering that sort of compound growth rate that we've been talking about.

Thank you, Duncan. Next, we have, do you expect recurring revenues to become a larger proportion of total revenue in the future? And I'm also going to ask the next question as well as it's relating. So we also have congrats on the excellent set of results. Subscription and delivery revenues have accounted for 34% and 50% of revenues, respectively, in both FY '24 and FY '25 with delivery. With expectations of a reduction in software engineering revs in FY '26, what may -- sorry, what may we anticipate the percentage split for each of the segment in FY '26?

That sounds like Duncan again.

Okay. Yes. Yes, great question. Subscription revenue is the fastest-growing revenue stream we have, and the strategy is to drive forward the growth in our subscription revenues. And we will see that progress further in 2026. So we -- as you say, we basically have roughly 50% delivery revenues, 34% subscription revenues and software revenues with the balance. We see subscription revenue percentage growing in 2026, so getting up towards 40% probably. Delivery revenues probably staying around about the 50% level and with software coming down to more like the 10% level. So yes, we expect to see a step forward in subscription as a proportion of the business in line with our strategy.

Thank you, Duncan. Our next question is, are you seeing more demand from banks, leasing companies or auto finance groups at the moment?

I'll pick that one up. It's another great question. And perhaps I take the liberty of slightly repurposing the question and substituting OEMs or manufacturers for auto because that is the mainstay of our market, large financial institutions like banks and people who make assets. And actually, a quick skim of our late-stage pipeline, which we talked about during the presentation shows that we're not 1 million miles away from half and half between banks and manufacturers. I think perhaps it's helpful to give more of a voiceover of the question, though, and guessing a little bit why it's been asked. Diversity within our world is good. That's diversity of countries, asset classes and different end markets because having a broad market base builds resilience into our business and gives us, frankly, the opportunity to make more sales in more places. It's not a dissimilar idea to reducing customer concentration, which is another thing that we've worked on in the service of resiliency. So diversity of the sources of our business is super important, but the direct answer is roughly half and half. So all of our markets are active.

Thanks, Andy. And are you seeing more -- sorry, the question was just removed then. The balance sheet is very strong with no debt. What's the long-term plan for all of that cash?

Maybe I'll have another go at that one, even though it involves numbers, but it gives Duncan something of a break. It might be useful to tell the listeners what investment means to us so that you can get a better feel for our aspirations and why we treat cash the way that we do. Most of the things that we can do meaningfully to invest our business; the vast majority of those things take the form of opportunity cost. So when we are building software, for instance, in 3 areas that we have made investments on in 2025, we're choosing not to sell those days, and it will be the same where we're making investment in delivery efficiency. So in terms of our aspirations and what we want to achieve in the future, that's not really about cash. That's about making decisions with the resources that we've got. We do like the optionality because something might come along that requires us to spend some cash. But in general, we don't. And therefore, we take the view that the money belongs to investors, we make sure that we've got enough money, but anything that we don't need, we will return it to you, and that's what you've seen in the last few years.

Thank you. Our next question is, where do you see Alfa in 5 years' time? Bigger geographically, more products or mainly deeper with existing clients?

Matt, could I put you on the spot for that one? That is a product that has a bit of a sense of our purpose in terms of scaling the business and having greater impact.

The Alfa in 5 years' time point? Yes. So do we see Alfa bigger geographically? Quite possibly, yes, although I'll return to that. Do we see Alfa having more products? Absolutely. Do we see Alfa being deeper within existing customers? Yes, absolutely as well. So I'll return to all 3. So bigger geographically, it's really important to emphasize that the existing target markets in which we're working are huge for us and have a huge amount of potential. And we absolutely see our existing target markets sustaining our growth for the medium to long term. But we do see ourselves expanding geographically. Where that tends to happen is with existing customers. So existing customers really like the product, really like the way that we work with them. We work in really close partnership with our customers, and they'll often take us into new geographies and where those are interesting geographies for us as potential target markets, then we can expand our interest, and that's one important way in which we've grown in the past, and we'll continue to do that in the future. Will we have more products? Yes, we've talked a lot about our Commercial Finance entry, and we've talked a lot about Fleet and Originations. Fleet and Originations are -- expand the asset finance market for us. Commercial Finance is -- it's an adjacent but it's additional target addressable market. And that is something that could power our growth for the even longer than long term. we're thinking early about that expansion into the wider lending market, and we're making good progress already. So it was -- sorry, the question has gone. So it's geography, product, and deeper within existing customers or similar reasons, yes, absolutely. So partly -- and we're seeing that already on the Commercial Finance market, we're able to expand the products that we're helping our customers to support. We're also able to help our customers to grow, of course. And our ongoing product investment, either internal investment or with our customers, expands our module set as well. And one area in which we've been getting better over the last few years is incremental sales, so selling those additional modules into existing customers. So yes, in all 3 in various ways.

Thank you, Matt. Next, we have, you often talk about a strong pipeline. How much of that pipeline is realistically signable in the next 12 months rather than just nice conversations?

Well, we certainly enjoy nice conversations with prospects, but the question is absolutely right that this is all about getting some tangibility on it. We often talk about different types of selling and what it means actually to close a deal. So important, I think, for everybody on the call to know that when we mark something as being sold, that's because we've got a complete set of contracts for it. And -- the contractual process, the process of negotiating those legal contracts can go on a little bit. That's because it's really important for us. We are very, very careful with the types of contractual terms we'll sign up to. It's also, of course, really important for the customers because these are very long-lived systems, and therefore, the contractual terms is something that the customer has to live with, too. So that's our strict definition of when it's sold. But if we think of the 10 that we have in the late-stage pipeline, which is right on the edge of being sold, 8 of them have said that we're a preferred supplier. That means that they would rather work with us. So it's not sold in the form of having a complete contract set, but it's definitely a good sign and we'd be pretty confident of bringing those 8 over the line. I won't say whether it's 12 months or not, but I would say fairly shortly. The other thing that is worth noting is that within those 10, 5 of them have done paid work with us. So whilst we don't have that full contract set, customers very often want to get on with it and actually start the processes of associated with implementing their very own Alfa. So those 5, if the definition is chosen you and starting to give you money, then they feel quite sold as well. But the succinct answer is 8 of them preferred supplier, we'd be pretty confident of bringing those 8 across, but there is little way to go.

Thank you, Andy. Our next question is, do customers ever try to build systems internally instead of buying Alfa? And how often does that actually work out for them?

That's a fab question, and Matthew and I have both seen some fallout from that kind of thing in the past. With customers building their own systems, I will deliberately talk about it as core systems because there's a bit of a sting in the tail coming. There was a book that doesn't seem to be that long ago because I'm pretty old, actually was probably quite a long time ago called In Search of Excellence, where some American business academics talked about sticking to the knitting and the importance of sticking to the knitting. And largely, mature companies have got a very focused strategy. So an OEM -- an auto OEM knows that its job really is building cars, and everything directly associated with that. There's software in their house, of course, but they're not authors of large pieces of software like us. It feels quite compelling, can feel quite compelling to start with. It would -- the idea of a bespoke system would definitely fit their current situation like a glove. But of course, they'd have to execute it right. We've been building our piece of software for 35 years now. So we've had plenty of time to get it right. And you do go down wrong path sometimes, and we've had the experience and the opportunity to correct that. The other thing about fitting like a glove today is it only fits like a glove today. And I think everybody on the call is probably watching the news and has been watching the news. There's a lot going on. And really who knows what the future will bring in our world, what requirements the future brings. So you're definitely not going to be all that future-proof, whereas across all of those areas of expansion that Matt mentioned and diversity that I talked about, our single product strategy gives the best opportunity to be future-proof. So the 2 problems with doing that is that you've got to execute well, you've got to have the capability to execute well and you've got to be able to guess what the future holds, which is really difficult, which is why you don't often see it and where Matt and I have seen it, it's not worked out all that brilliantly. I do think that it's worth a note on moving away from core systems on this idea of ecosystems. It's important that we allow our customers the latitude to configure Alfa in order to make it do the things that they want to do, but also through our take on ecosystem through our APIs and our integration layer, give them the opportunity to integrate point solutions in things that they might need, things that they might want to avail themselves of and actually some things that they might develop themselves. A good example there would be a highly branded point-of-sale system so that they can have a better view over the customer experience and customer journey. So our view on Alfa these days is that it is giving the customer the best of both worlds. But the direct answer to that question is not that often these days, and it doesn't usually work out.

Next, we have a couple of questions on AI. The first one being, how is Alfa thinking about incorporating AI into the Alfa platform and are clients starting to ask for AI-driven capabilities? And the second one is, are customers asking for AI features yet? Or is the demand still mostly focused on core platform functionality?

Well, all of our AI initiatives are in Matthew's part of the business. So would you like to answer that one, Matt?

No problem. I was expecting this one, so I won't need remind me of the question halfway through. We've had -- and we've had for a long time, actually various features in our workflow, which you might consider AI. So the simplest decisioning in Alfa's workflow capability doesn't need an LLM but might be considered AI. We've got machine learning capability within our credit decisioning functionality that, again, is AI related, not necessarily LLM related, but it is AI. AskThea is our chatbot for assisting us in our implementations of Alfa and our customers and their use of Alfa Systems and our partners as well in implementation of Alfa Systems that is LLM-based. And we have, in addition, various demos and proof of concepts for LLM or agentic or intelligent documentation production and processing integration. The models that we're working with are getting better all the time. They've come a long way actually in the last year or so. We're hoping that we'll get to a point where interaction with Alfa to enable decisioning and workflow might be able to be configured using natural language only. That will be dependent on the progression within the models themselves. Importantly, current investments, investment that we're working on at the moment, we'll see Alfa, the SaaS product, so the SaaS version of Alfa, which is the only version that we sell now, coming with AI tools, pre-configured as part of the deployment, enabling our developers to use these via API. So that's what I was talking about when I referred to architecture to simplify the process for expanding the use of AI by Alfa Systems customers in a secure and importantly, in a resilient way. The second part of the questioning there was around the customers' demand. It's important to be clear that customers mainly need features. Alfa is a hugely functional system. The depth and breadth of functionality within Alfa is extreme, the extent is very, very large, very large, let's put it that way. Whether we deliver those features using AI is mainly irrelevant to our customers. I say mainly irrelevant, sometimes we'll have conversations with CTOs along the lines of, please give me something that I can show to -- show internally that shows that I'm making use of AI, and we're able to satisfy that as well, of course. But generally, whether or not we're using AI is irrelevant. Worth noting, though, that it's great when we can show customers the art of the possible. So we can say to a customer, we have this functionality that enables the upload of a contract into the system. It will then kick off credit decisioning and result in a process that ends up with a live contract. That is extremely exciting for our customers. And while we are often led by our customers' requirements and yes, the core functionality is still the core functionality, we are also able to show customers and lead where we're able to provide functionality that people haven't thought of.

Thank you. Our next question is, how easy would it be for a customer to switch away from Alfa once they've implemented your platform?

Really hard, but you probably want a little bit more than that. I often talk about trying to sustain a contradictory investment case. So we talk about Alfa being really sticky and hard to move away from and yet we make new sales. We talk about push and pull factors. Push factors lead people to buy a new piece of software. And the reason we do that is it usually takes quite a big thing or quite a big emission to get people to want to change their software at all. So a push factor might be a regulatory change, or their current system is running out of support or represents a cyber risk or something similar. These are very, very big projects and big business transformations. I mean Matt correctly points out when he answers the often posed right now AI question about delivery and business transformation being such an important part of what we do. So it's hard. These are heart and lungs systems that support the businesses in just about every way. The job for us to make sure that we continue in a way that means that our customers don't even consider that is to continue to do a great job, continue to invest in our software, make hay while the sun shines to keep it moving forward. Give our customers that art of the possible capabilities that they couldn't even conceive of but help them out in there every day. And of course, make sure that from a regulatory, cyber, data resiliency and technologically effective way that we continue to be the system that they need and make sure that they don't even think about taking the plunge. But if they did take the plunge, it would be a very, very big thing for them to do, which is why enterprise software is naturally quite sticky.

Thank you, Andy. Our next question is, how much visibility do you typically have on revenues for the following year?

That feels like the CFO to me.

Thanks, Andy. Yes, I think it's probably worth -- if you get to the back of our slide deck, which is available on our website, you'll see that we -- each time we release our results, we have a little table in there about revenue of recurring nature, which basically talks about how much of our revenue each year is coming from existing customers, how much is coming from new customers. And that can vary for 2025, 70% of our revenue is from existing customers, which is lower than the previous year, which was 79%. So 70% to 80% of our revenues are generally from existing customers. So it's really that the visibility is around the balance. Visibility is the right word because -- as opposed to contracted. So we also have TCV, which gives a flavor for what we've contracted. And if you look at the next 12 months figures, in some cases, that can look quite low. But for instance, often people will only issue us statements of work in 3-month batches even though we know the project is going to last for a year. At a very, very high level, visibility at the start of the year is pretty good. We've got a pretty good idea of where all of the revenue is going to come from by customer. There might be a small amount that we're starting the year thinking we don't actually have a name customer for that, that we need to go and find, but that's probably less than 5%. Of course, the revenue that actually ends up at the end of the year is never exactly what we thought at the start of the year because some projects go bigger, some projects go shorter, some projects don't quite start as quickly as we expect, et cetera. So it is a bit of a moving piece. But if we just give a one number answer, I would say visibility is sort of 95%, something like that.

Thank you, Duncan. I'm going to move on to our final questions now. If you do have any further questions, please e-mail the team who will respond to any questions that weren't covered this afternoon. So our next questions are about future outlook. Which regions of the world offer the biggest growth opportunities for Alfa? And looking ahead a few years, what do you think will be the biggest driver of growth for Alfa? And the final one is, if things go the way that you might hope, what do you think might be the revenue split between Asset, Commercial and Fleet in the medium term?

I'm writing those down, so I don't get halfway through a great answer and forget. Okay, let's -- I'll have a bit of a go, but I'm sure the others might weigh in on that final question. In terms of market opportunity, what do you need for growth? Matt picked up when he was speaking about the idea that Alfa actually tries to remain very focused. I get -- in my investment portfolio, I like companies that have clearly articulated and focused strategies. It would be very easy for an organization like ours with a lot of opportunity to fall into what I would call strategic dissonance, and you just got a lot of things competing for your attention. So we do try to be focused. And we focus very much on the European and U.S. markets, and we focus on auto and equipment. And together, those 2x2, 2x2 matrix of Auto and Equipment, Europe and the U.S., they make up roughly two-thirds of the global spend on asset finance, technology and services, which is about GBP 3.5 billion. So that's a GBP 2 billion opportunity. He said making the math a little bit easier. And if one thing that you need is runway, well, then there's runway there very much because you've got GBP 130 million and a big company that it's a market leader. And in terms of our focus markets, there's a couple of billion to go after. What else do you need? Well you need a competitive edge in those markets, and you need drivers for change in those markets. And we see that across all of them. So absolutely, the things that will -- the areas where we will be seeing a lot of growth are in those markets. Again, we have talked today across all of us about the plays that we're making in expanding our serviceable addressable market and our target addressable market. And in particular, thinking back to Matthew's words in the presentation replay, then if you add Commercial lending, then you're increasing the addressable market even more. Why would we spend all of that money on increasing our addressable market and indeed our serviceable addressable market when we've got so much runway is that it is absolutely our intention to eat up a lot of that target addressable market in the coming years. And we think it's important we think about making it bigger now. Plus if you're going at more market, then you're able essentially to buy more, more lottery tickets give yourself more of a chance of a win in terms of the sales process. In terms of the growth driver, again, if you'll forgive me, I'll slightly re-purpose the question and talk about operational gearing. If you think about parts of our business, and we spoke about the revenue mix earlier, there are some parts of our business that involve essentially reselling people. We take somebody and then we charge for their time. That's the professional services model. If you look at the subscription parts of our business, then you've got operational leverage in there and some big chunks of that have nothing to do with people's direct time or they're not related in such a direct way to people's time. So all of our revenue segments are good. We make good money in all of our revenue segments. But essentially, I'm answering the question by saying our strategy to grow the repeatable annual revenue in our business in the form of subscription revenue in the form of SaaS-based revenues will be over the longer term, the absolute growth driver of our revenues because we can build those revenues independently of the speed at which we build our workforce, and therefore, we can make a greater margin. The final one was about what the split looks like going forward. So I've been doing these 30 years. And over those 30 years, in general, you've got equal demand across all of those parts of the market. So if we bring it back to the fact that we focus on equipment and auto in the U.S. and in Europe, if I were to take the clock forward, then I would see fairly -- over the longer term, you'd see fairly even demand across all those market segments. I think the thing that might be interesting is that we are definitely -- and Matt mentioned this as we talked about growth. We will definitely continue to increase our geographical growth, and I certainly wouldn't bet against if you wind the clock forward, Asia-Pac in some way becoming part of our target market. And that will absolutely be net new revenue from countries where we've not had opportunity before. And of course, the thing that we do keep coming back to, which is Commercial lending, which is a whole new market for us with a whole new go-to-market strategy. So going forward, it's those 2 things that would affect the balance. But normally, one would expect to have fairly even demand from all of those markets because all of those markets are subject to push factors, as I discussed before.

Thank you, Andy. That's all the questions that we have for today. So I'll hand back over to the management team for any closing remarks.

Thank you, Ivy, and thank you for your support in this. I would just like to thank everybody on here for genuinely a very insightful set of questions, which we've enjoyed answering and talking about. You're clearly people who do pay very close attention to our story and what we're doing, and we hope that you'll continue to. But everybody's got things to do and everybody is busy, and it is a weekday. So we really do appreciate you giving us a little bit of your time to hear from us and hopefully speak to all of you this time next year.

Thank you to the management team for joining us today. That concludes the Alfa investor presentation. Please take a moment to complete a short survey following the event. A recording of this presentation will be made available on Engage Investor. I hope you enjoyed today's webinar.