GFT Technologies SE (GFT) Earnings Call Transcript & Summary

Good afternoon, everyone, and welcome to GFT's First Half 2026 Results Conference Call. I'm Andreas Herzog, Head of Investor Relations at GFT. Thank you very much for joining us today. Joining me on the call are Marco Santos, our Global CEO; and Jochen Ruetz, CFO and Deputy CEO. Before we begin, please note that today's call is being recorded. The presentation accompanying today's discussion and the half year reporting materials are already available in the Investor Relations section on our website. A replay of this conference call will be available there also afterwards following today's event. Marco will begin with an overview of the key developments and highlights during the first half of the year, followed by Jochen, who will discuss the financial performance and outlook. And we will then open the line for your questions. With that, let me hand over to you, Marco. Marco, please go ahead.

Thank you, Herzog. Good afternoon, everyone, and thank you for joining us today. Let me start with the highlights for the first half of 2026 and our full year guidance. We delivered solid revenue growth, significantly improved profitability, continued to scale our artificial intelligence capabilities and differentiation and confirmed our 2026 guidance. These results demonstrate disciplined execution of our AI-Centric 5-Year Strategy and continued progress in transforming GFT into a responsible AI-centric global digital transformation company. In the first half of 2026, GFT generated EUR 463 million of revenue, representing 5% growth in euros and 5% growth in constant currencies. At the same time, profitability improved significantly. Adjusted EBT grew by 8% to EUR 33 million, corresponding to a margin of 7.1% compared with 6.8% in the first half of 2025. EBT increased by 26% to EUR 24 million with the EBT margin improving from 4.3% to 5.2%. This margin improvement confirms that our growth is progressing hand-in-hand with stronger earnings quality. It also reflects disciplined delivery, tire operational management and the increasing contribution of AI native services, our Wynxx Agentic AI platform and high value-added service offerings. Our main growth markets in the first half of the year performed strongly. Revenue grew by 38% in Brazil, 27% in Colombia, 22% in Switzerland and 13% in Spain. We record growth across all sectors, including banking, insurance, with industry leading with a strong 14%. Overall, the first half confirms that we are progressing in line with our strategic and financial objectives, growing the business, expanding margins and scaling up our AI native assets, services and offering portfolio. Based on this performance, we confirm our full year guidance of EUR 930 million in revenue, EUR 71 million in adjusted EBT, corresponding to a margin of 7.6% and EUR 56 million in EBT corresponding to a margin of 6%. Let me now turn to the execution of our AI-Centric 5-Year Strategy and the tangible progress we are making with key clients and high value-added services and offerings. First, our AI modernization offering launched 9 months ago and supported by an integrated global marketing campaign is already achieving strong commercial traction. We won more than 20 projects across 9 countries, encompassing advisory services, application modernization, migration and application AI reimagined. This confirms that clients are moving beyond experimentation with GFT and committing budgets to production rate modernization programs, heavily driven by AI. GFT combines strategic assessment, new targets, business and technical architecture design and program governance with the Wynxx Agentic AI platform across the full life cycle from legacy analysis and business rule extraction to code transformation, validation and deployment with human oversight and governance built in. Second, we won 6 next-generation core banking programs across Germany, Canada, Spain, Poland and Thailand, working with partners, including Thought Machine and Engine by Starling. These wins reinforce GFT's position as a lead implementation partner for cloud-native core banking. They also create multiyear opportunities across architecture, integration, AI native engineering and ongoing platform evolution. Third, GFT won the strategic development of COAFI, Financial Intelligence system. COAFI is the Brazil's financial intelligence unit linked to the Central Bank of Brazil. The new solution will combine Wynxx with our specialized [ ImAA ] anti-money laundering capabilities to modernize a critical part of the country's financial intelligence system. The project brings together our Agentic AI platform, deep anti-money laundering expertise and advisory capabilities, positioning GFT at the center of the Brazilian anti-financial crime intelligence infrastructure. Fourth, we completed the large-scale go-live of the [ AMLA ] anti-money laundering platform for a Tier 1 European bank. The platform went live and now supports 25 million customers and processes approximately 1 billion transactions per month. This is one of the largest AML implementations in the region and a mission-critical implementation at exceptional scale. It confirms the maturity of our anti-financial crime capabilities and the trust clients place in GIP to operate at the core of highly regulated banking environments. Fifth, we successfully supported Commercial Bank of Dubai in launching UP by CBD, a mobile-first banking platform for micro and small businesses in the UAE. It combines digital onboarding, payments, payroll, savings and instant access to credit in a single application with direct integration into the Dubai unified license. This engagement reflects how our delivery excellence and cloud-native core banking expertise strength strategic client relationships and accelerate the launch of new digital banking propositions at scale. Taken together, these highlights demonstrate focused execution, delivering complex programs, scaling differentiated offerings and converting our AI-centric strategy into measurable clients and commercial impact. Let me now focus on the tangible results of our AI-centric strategy. Our Wynxx Agentic AI platform for software engineering continued to scale. It's now active in 12 countries and supports 113 clients. The total influence contract value has reached more than EUR 144 million since the inception of the product, representing growth of 38% quarter-over-quarter. This continued expansion shows the growing adoption of Wynxx across our software engineering and AI modernization engagements and its increasing role in GFT's AI native delivery model. Beginning this quarter, we are introducing a new KPI for Wynxx Soft Engineering to improve the measurement of tangible results. In the first half of 2026, Wynxx Soft Engineering generated EUR 24.1 million of actual influence revenue. We are also launching Wynxx Business Process as a new pillar of the Wynxx Agentic AI platform with dedicated assets, accelerators and offering portfolio. In the first half of 2026, Wynxx business processes alone generated EUR 14.8 million of actual influence revenue, supported by 6 clients reference, including a key Agentic AI credit risk platform for a Tier 1 European bank fully in production. This is important client case study is not an AI POC, AI pilot or MVP. It's a large-scale Agentic AI credit risk platform in full production for a major European bank. This AI native project involved a team of more than 30 forward deployed engineers with strong AI and data capabilities combined with banking and graduate domain knowledge. I will provide more detail on both areas in the next slides. To accelerate our AI native transformation, we are investing strongly in our engineers to make them fully capable of working in a forward deployed engineering model. We recorded more than 3,500 training completions of third-party artificial intelligence coding tools, including Claude Codes, GitHub Copilot, Codex, Gemini and other tools. In parallel, we achieved more than 1,700 completions in advanced and specialist Wynxx models. These figures strengthen our ability to deploy forward deployed engineers and AI native teams, apply the right agentic AI tools for each client's environment and industrialize a new AI native delivery model globally. Let's talk about Wynxx. I presented this slide during our 2025 full year financial results call in March this year. This is the overarching view of the Wynxx ecosystem, which encompasses the current platform and its road map evolution. Wynxx is built on a common enterprise foundation that provides orchestration, governance access to market-leading proprietary and open source AI models and tools as well as strong token consumption management and AI cost control capability. This common foundation is essential for scaling artificial intelligence responsibly across complex enterprise environments. On top of this foundation, Wynxx addresses 3 areas of client transformation. The first is Wynxx soft engineering, our Agentic AI platform for software development, life cycle, AI modernization and AI application management and support. The second, which we are very proud to launch today is Wynxx Business Process -- through which we apply Agentic AI automation to operational and industry-specific business processes and workflows. As part of our platform road map, we will launch the third pillar, Wynxx Data Intelligence over the coming quarters, which will combine AI orchestration with industry-specific data modules and business intelligence capabilities. These features, functionalities and capabilities are extended through Wynxx Agentic Studio and Wynxx Marcetplace, enabling GFP teams and clients to create, cover and reuse agents assets accelerators at scale. In the next few slides, I will show how Wynxx soft engineering and Wynxx business process are developing as distinct commercial pillars within the Wynxx Agent AI. We have primarily communicated the adoption of Wynxx soft engineering through the number of clients, geographic reach and the total cumulative influence contract value since inception of the product. The progression shown on this slide demonstrates how rapidly and successfully the platform has scaled up and being deployed across our clients' engagements. Over the past 12 months, Wynxx soft engineering has scaled from 42 to 113 clients, expanded from 4 to 12 countries and increased the total influencer contract value from EUR 26 million to EUR 144 million since its inception. This represents more than a fivefold increase in total influencer contract value, demonstrating accelerated adoption and strong commercial momentum. We are now enhancing our current set of KPIs with a year-to-date revenue KPI to precisely measure the commercial delivery performance of Wynxx. In this regard, the actual influenced revenue of Wynxx soft engineering reached EUR 24.4 million in the first half of 2026. Let me now turn to Wynxx business process. We use a GenAI designed to automate front, middle and back-office business process and workflows. Our solutions combine data perception, reasoning, orchestration and governance to deliver measurable operational outcomes across industries from anti-money laundering, know your customer and credit risk in financial service to visual inspection and condition monitoring in industrial manufacturing environments. The portfolio currently has several assets across industries and business areas, including 4 key accelerators: the Wynxx XL and Access Modernizer, the Wynxx process reengineering, the Wynxx governance operating system and the Wynxx Agentic architecture for business processes. Together, they cover the full journey from modernizing legacy business tools and redesigning process to embedding regulatory governance and implementing scalable multi-idented architectures across business process. A strong case is our agency credit risk platform for European Tier 1 bank. It supports several end-to-end business process and workflows, including credit memo generation, module validation reporting, natural language access to risk data and portfolio shot analysis. In one use case, report generation time was reduced from several hours to approximately 15 to 30 minutes, while improving standardization, auditability and the ability of analysis to focus on higher-value decisions. In the first half of 2026, Wynxx business processes generated EUR 14.8 million of actual influence revenue. We are particularly pleased to launch this new pillar of Wynxx, which is fully focused on our clients' business domains and extends far beyond software engineering. These results demonstrated our AI-centric strategy is delivering through the strong execution across our AI native IPs, assets and services from Agentic AI software engineering to Agentic AI business process operations with governance, human oversight and measurable business value built in from the start. With that, I will now hand over to Jochen for a detailed review of the financials.

Thank you, Marco. And let's move on and directly go to Slide #11 and look at the H1 financials in one page. So the headline stated sustained growth momentum. We see revenue growth of 5% in the first half year of '26 to EUR 462.6 million. It's 5% growth in current currency and in constant currency. So FX did not play a role for the overall group numbers in the first half. It did play a role on a regional level. I'll come to that a bit later. The second line, the order backlog is up 18%, strong development versus last year, roughly 5% for this year and a strong buildup for future years, especially our new SAP business in Brazil is now heavily contributing to the order backlog and the contracts are often multiyear contracts. EBIT adjusted is up 8%, reflecting an improved personnel efficiency, of which we mostly invested into AI and new services. We saw lower office expenses and managed corporate service costs and reduced FX losses. Here, the contribution is roughly EUR 700,000 of improvement. EBIT adjusted margin increased to 7.1% versus 6.8% in the last first half year. On EBT level, we see a growth of 26%, significantly above previous year's numbers. Reasons are, of course, the same as for EBIT adjusted, plus lower capacity adjustments, which only stood at EUR 3.5 million versus EUR 7 million in the first half of 2025. We had a minor effect from merchant shares. And overall, the EBT margin significantly increased to 5.2%, coming from 4.3% last year. Tax rate stood at 29%, which is also the number we foresee for the full year. Let's move to Slide #12. -- and start on the left side of the slide, looking at our sectors, all 3 sectors of GFT show growth. Let me start at the top. Industry and other clients grew by 14% in the first half year of 2026. Insurance clients, insurance business by 7% and the banking business grew by 3% in the first half of 2026. Looking at the right side, our client portfolio, we see that the Tier 1 and Tier 2, the 2 biggest groups combined stand for 54% of all our revenue, a bit down versus last year, it was 56% in '25, but overall, well-balanced client portfolio. Moving forward, Slide #13, take a look at the second quarter. The second quarter came in at EUR 233.04 million in revenues, which is a 6% increase versus previous year's second quarter. Main drivers coming from Brazil, Spain and Colombia. If we compare versus the last quarter versus Q1 of '26, we see a 2% increase in revenue. Now going to the right side of the slide, profitability. EBIT adjusted came in at EUR 16.5 million in the first half of '26. This is a 10% increase versus Q2 of '25 -- sorry, this is only the quarter, Q2 '26 versus Q2 '25. And this is mainly due to improved personnel efficiency and cost management. When we compare to the previous quarter, we see a 3% increase and the reasoning is the same personnel efficiency and cost management. That said, let's move to Slide 14 and look at our business segments. revenue first. And let me start at the top with the European business segment. Here, we show a mixed performance with a total decline of 3%. In Germany, we're still experiencing investment caution, while Spain shows strong growth. In this European business, we also include our U.K. organization and U.K. declined year-over-year, but with improving trajectory. In Q3, we expect U.K. to exceed the revenue of Q3 last year. You probably remember U.K. was challenging us in '25, and we always said we would come back to profitability in January. We will come back to growth in July of '26. This is exactly what we see. The first half is still below the first half of '25. But from Q3 onwards, we will be back to growth. If we eliminate the U.K. from the European numbers, the rest of Europe is plus/minus 0 in revenue evolution in the first half year. Now let's go to the bottom of the graph and look at Americas and APAC, where we see 14% growth versus previous first half year, mainly driven by Brazil and Colombia. Moving to Slide 15 and now focusing on profitability. On the left side, we see the EBIT adjusted evolution. And again, starting with Europe, Europe is up 29% in EBIT adjusted. Overall, strong improvement, mainly driven by the strong improvements we've seen in the U.K. and Software Solutions in the first half year of 2025, both were strongly negative in this first half year. U.K. is back to profits and Software Solutions is still in investing mode, but at smaller -- looking at Americas and APAC, we see that the EBIT adjusted improved by 15%, mainly driven by the strong demand in Brazil and Colombia. And when we move to the right side, the story doesn't change. It just gets a bit steeper, especially in Europe. EBT improved in Europe by 120%, mainly because now the restructuring costs are included, and they are far lower in '26 versus 2025. And then on the Americas side, we see an improvement of 5%, so a bit less than on the EBIT adjusted. We have a more stable restructuring cost in that area. But overall, we still show improvement, which again is linked to Brazil and Colombia. Moving to Slide #16, the breakdown by our global regions. And let me start from the bottom with the smallest region, which is APAC and others. Here, we are down 3% after 6 months. small region, 3% is a small number. And we believe APAC and others will show growth for the full year of '26. So I expect them to come back to a positive green arrow for the full year numbers. U.K. is still down 18% in the first half, as indicated, the trial happened in Q1 and Q2. And from now on, Q3 forward looking, we should see growth. North America is down 7%. But I have to explain the FX effects here. They are written on the right side in the text. We see Canada is down 12% on a euro basis. In local currency, it's 8%. Here, we do have a client with a quite pass-through low-margin business, which we're slowly reducing, which will go on until mid-2027. But at the same time, Canada is getting more profitable. U.S.A. is stable in euro. It is growing by 7% in U.S. dollars, very important. So here, the FX was against us, but the U.S. growth trajectory is still intact. And now we go to Latin America, where we see 28% growth on a euro basis, Brazil contributing 38% Colombia, 27%. Both numbers would be a bit lower in local currencies. So we have a bit of tailwind in Latin America, and we had headwinds in North America. The of the 2 lead to no FX impact on the group level, but in the different regions, contributions are different. Continental Europe, last but not least, now here, excluding U.K. at plus/minus 0. We have very strong growth in Spain at 13%, but we have a decline in Germany at minus 12%. Now moving a bit faster on the next slide, Slide 17, the income statement. I would only want to mention the third line, which is cost of purchased services. They grew by 10%. Let's remember, we acquired Megawork in September last year. The Megawork business is a 95% freelancer business. They are not included in the '25 numbers in H1 '26, Megawork is included, and this fully explains the increase in cost of purchase services that we are now having the Megawork numbers inside GFT Group. At the same time, fourth line personnel expenses only grew by 3%, so it's more slowly than the revenue. If you combine the 2, which we always do in the fourth bullet point on the right as the personnel and purchased services cost ratio, this one is stable at 85% I think that's all I have to mention on this slide. Let's directly move to the cash flows on Slide 18, cash flow statement. We started the year with EUR 55 million in net cash on the very left of the slide. And now the numbers for the first half. Operating cash flow was minus EUR 1 million, which is an improvement versus last year, as you see in the bullet points on the right. Last year, we stood at minus EUR 9 million. This is explained by the higher net income and working capital effects. Why is operating cash flow negative after 6 months? Well, it's the same seasonality as we have every year. A lot of our revenue is wrapped up in contract assets in fixed price projects with our clients, which will get paid somewhere in the second half of the year. And then we will come back to a normal cash flow by the end of the year. Looking at investing activities, small outflows of EUR 2.1 million and financing activities is dominated by our dividend payment of nearly EUR 13 million and our lease payments for our offices. Now if you add up the free cash flow, which is the last bullet point on the right, we see that the free cash flow adjusted improved to minus EUR 8.3 million after EUR 17.3 million a year ago. In a nutshell, cash flow in first half year is absolutely in line with our plans. Slide #19, our balance sheet, not much to comment here. The balance sheet total reduced a bit to EUR 627.5 million. And maybe mention on the top right, we see the equity ratio, which improved by 5 points, driven by good net income and positive currency translation effects, which only materialized in the equity ratio. So good news from the equity side. Now this brings me to Slide #20, our people slide, and let's start on the left of this slide, employee numbers at the end of June stood at 11,805. This is mostly flat versus the beginning of the year '26, and it's a 3% growth versus June last year. Growth happened in Colombia and Spain with some declines in Mexico, Canada and Germany. The number of external contractors reduced. And here, we are comparing -- this is not the bullet point on the very left bottom of the slide. We're comparing to the end of last year '25, which was 1,445 and already included Megawork. And now we stand at 1,375, still including Megawork, which means the classic GFT business used less freelancers in the first half of '26. Moving towards the middle of the slide, you see that utilization rate increased to 92.8%. This is an improvement of 0.6% versus last year's quarter and the previous quarter, mainly driven by Brazil and Colombia. The efficiencies we gained would usually show up in profitability, but we have invested our additional margins on additional business development initiatives to strengthen our overall positioning, especially on AI and banking transformation. Moving to the right side, attrition. Attrition stands at 10.4%. It reduced versus last quarter by 0.8% versus last year by nearly 2 percentage points, which is quite a big impact. We see this happening mostly in Europe, where there is not so much business dynamic and therefore, people don't change jobs easily. But we also saw a reduction in Latin America, driving down this number to 10.4% of attrition. And my last slide, additional performance indicators, the milestones we always name are all unchanged. Our free cash flow for the year is expected to be at roughly EUR 40 million. Our net debt versus EBITDA ratio is expected to be at 0.2x, and our utilization will continue to be in the area of 92% for the rest of the year.

Back to you, Marc. Thank you very much, Jochen. Let me summarize the key message for today. We delivered a solid first half of 2026 with 5% revenue growth and a strong increase in EBT while confirming our full year guidance. This reflects disciplined execution of our AI-centric strategy and continued progress in strengthening the quality of our earnings. Momentum remained strong in our key markets, particularly Brazil, Colombia, Switzerland and Spain, and we achieved growth across all business sectors. Our AI native delivery excellence and strong industry domain expertise are also translating into major engagements across next-generation core banking, data and cloud transformation as well as anti-money laundering, credit risk, digital onboarding and know your customer. Our AI-centric strategy is increasingly visible in our commercial performance, -- the AI modernization offering is gaining strong traction, confirming that our clients are moving beyond experimentation and committing to AI-powered legacy and application modernization programs. Wynxx has been successfully scaling up across our clients and expanding from software engineering to business process, creating measurable revenue impact for our AI-centric growth strategy. This demonstrates that our Identity AI platform is not only improving how AI native software is engineered and delivered for large-scale and regulated enterprise, but is also expanding to the transformation of mission-critical business and operational processes. To conclude, we are executing our AI-Centric 5-Year Strategy with constancy and discipline. We are reinforcing GFT's position as the artificial intelligence digital transformation challenger, combining engineering excellence, deep industry and domain expertise and AI native assets and capabilities in the areas where clients need them most. Thank you very much. Now Jochen and I will be happy to answer your questions.

Well, thank you very much, Marco. Thank you very much, Jochen, for your remarks. And as Marco already stated, we are now happy to take your questions. [Operator Instructions] We have already some in queue. And the first question comes from Simon Keller Sauer, NuWays, sorry.

Questions. I'll start with the first 3 and then hop back into the queue. Firstly, where do you see the market cycle right now for bank-related IT services? Do you see there any improvement, generally speaking? And then on the order backlog, I noticed that it did develop strongly. So my question is, I mean, you mentioned the SAP projects, but beyond them, did these 6 next-gen core banking projects that you mentioned have any positive or significant contribution to this? And if so, how much? And thirdly, then also a technical question within the adjustments that you highlighted, M&A effects have increased from Q1 to Q2. And I was wondering what's the reason? Does that maybe mean that a transaction is pending right now?

I'll pick up the last question first. No, it does not mean an acquisition is pending. There is no main reason. I assume the main impact is FX because the majority of our M&A effects are in South America, especially with the Megawork acquisition, also including an earn-out, the Brazilian real strengthening and is now visible simply on a euro level. It looks a bit bigger than it would have a quarter or 2 quarters ago. Same for Colombia, Sophos acquisition. Maybe I don't know if you've seen it. They have elected a very conservative group President and the currency improved by nearly 10% over the last 2 months or 3 months. Therefore, these 2 effects are the main drivers for M&A, nothing else. And on the order book, yes, you're right. Of course, the core banking projects take part in that. They support it. They are not the majority. As we said, we have invested into business development on the AI and banking transformation side. All these initiatives are now showing up also in order book for the coming years. So yes, those 6 core banking, but not alone is SAP core banking and other initiatives also around les supporting this strong order book.

And to complement the first question, what's the sentiment in the banking sector, if it's improving or not. So our understanding is, it is improving. So we see a better sentiment on our financial service clients, which is very good and especially based on our AI modernization offering. which is an area that we grew considerably, and we also see several opportunities in our pipeline. Did that answer your question?

Yes, it did. Okay.

And sorry for mixing up the company. So our next question, now we're coming to Kepler Cheuvreux and Mr. Sven should, you should now be on stage.

Can you hear me or no?

Now we hear you.