Alfa Shares Rise as Recurring Revenue Offsets Profit Fall

Alfa Financial Software Holdings (LON: ALFA), which makes software used by asset finance and leasing companies, saw its shares rise more than 2% in early trade today after its half-year report showed profit falling but recurring revenue growing strongly.

The stock traded at 165.8p by mid-morning, up 2.09% from yesterday’s close of 162.4p, within a 52-week range of 136.25p to 239.43p and above its 50-day average of 162.61p.

Alfa published its unaudited half-year report before the London open today, covering the six months to 30 June. Revenue rose 4% to £65.1m, but operating profit fell 15% to £18.4m and basic earnings per share dropped 15% to 4.55p, both hit by £1.6m of severance costs and a swing in its foreign-exchange hedge from a £1.7m gain to a £0.3m loss. Excluding those one-off items, underlying operating profit rose 2% to £20.3m, from £19.9m a year earlier. Management said the group is trading in line and expects to meet full-year expectations, though it flagged slightly reduced delivery-revenue guidance due to project delays, offset by stronger software-engineering revenue.

Beneath the statutory profit decline, Alfa’s annual recurring revenue, the value of ongoing subscription contracts, rose 17% to £48.5m, while total contract value, the lifetime worth of signed deals, grew 17% to £247.0m. Subscription revenue itself climbed 14% to £24.1m. The board chose not to declare a special dividend this time, retaining its £22.2m net cash position for possible bolt-on acquisitions. That recurring-revenue growth appears to be what the market is rewarding, despite the weaker headline profit numbers.

Chief executive Andrew Denton said: “After a very strong FY25 we continued to make excellent progress in growing high-quality subscription revenues and are set to continue doing so as customers move through implementation and reach full subscription run rates after final go-live.”