Ladies and gentlemen, welcome to the nine-month Q3 2025 results of GFT Technologies SE conference call and live webcast. I am Shari, the call's operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. Webcast viewers may submit their questions in writing via the relevant field. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Andreas Herzog, Head of Invester Relation (IR). Please go ahead.
Thank you very much, Operator. Good afternoon, ladies and gentlemen. Welcome to today's conference call with our Chief Execuctive Officer, Marco Santos, and our Chief Financial Officer and Deputy Chief Executive Officer, Jochen Ruetz. This morning, GFT published the results for the first nine months and confirmed the outlook for the full financial year 2025. Marco and Jochen will guide you through our numbers and will then be available to answer your questions, of course. Corresponding slides for today's session are available on our website in the Investor Relations section. Allow me to remind you that registration is still open for our Capital Markets Day next week in Frankfurt. Join us in person or virtually to gain deeper insights into our five-year strategy and explore, together with our experts and key clients, how agentic AI is redefining enterprise transformation.
If you have not registered yet, you still have the opportunity to do so, or simply contact the IR team. We will be happy to assist. Now, without further ado, I would like to hand over to Marco. Please go ahead.
Thank you, Andreas. Warm welcome to everyone, and thank you for joining today's call. Before we move into the figures, let me share a brief reflection from my recent Investor Roadshow in the United States and Canada, where I had the opportunity to meet with investors in those key markets. The discussions were highly engaging, and they confirmed that our AI-centric strategy is resonating with credibility in the market. Investors clearly recognize GFT's differentiation: our AI-centric mission, WINCS, our generative AI product for software development, lifecycle, and legacy modernization, our deep engineering expertise, industry focus, and ability to deliver globally at scale. GFT is not simply part of the IT service market. We are challenging it. That feedback reflects our positioning as the artificial intelligence digital transformation challenger.
We are proud of who we are, ambitious in our goals, and bold in how we compete, leading with innovation, speed, and measurable impacts with artificial intelligence. It's not about creating hype; it's about making impact. Now, let's look at our year-to-date performance. On the next slide, please. I'm pleased to share an overview of GFT's solid results, appeared to market by constant delivery of our five-year strategy. We delivered solid results for the first nine months of 2025, and we are confirming our full-year guidance with confidence and positiveness. Let's take a closer look at our nine-month 2025 results. We achieved EUR 655 million in revenue, representing 2% of growth in euros and 5% of growth in constant currencies. This is a strong performance and reflects continued client demands, the resilience of our smart shore global delivery platform, and differentiation of our offerings and our AI-centric strategy.
Our EBITDA adjusted came in at EUR 46 million, corresponding to a 7% margin. Moving to our guidance for the full year 2025, we are confirming our expectations of EUR 885 million in revenue with 2% of growth in euros and 5% of growth in constant currencies. We also confirm with confidence and positiveness our targets to reach an EBITDA adjusted of EUR 65 million at 7.3% margin. Now, regarding our financial highlights, in constant currencies and excluding the U.K. and software solutions, we delivered a quite solid, strong, and profitable operating performance with 11% of revenue growth and an EBITDA adjusted margin of 9%. Our main growth markets continue to perform very strong, with Brazil leading the way with outstanding 27% of growth, APAC with 22%, Colombia, our software solutions acquisition with 19% of growth, and the U.S. delivering an outstanding 18% of growth.
These nine-month results confirm that our five-year strategic initiatives are on track, our profitability remains solid, and we are entering the final quarter of the year with strong confidence, focus, and discipline. Let's move on to the next page to look closer at the highlights of the last quarter. Building on our solid financial performance, I am pleased to share that we are executing our five-year strategy with strong momentum, with a particular focus on the accelerated deployment and expansion of artificial intelligence across our clients' install base. Let me lead you through some of these impressive achievements in the third quarter. Firstly, I could not be more proud to present that we have achieved a highly successful artificial intelligence deployment and expansion led by our GenAI product, WINCS. We successfully rolled out WINCS to eight countries.
The number of active clients increased by 38% quarter- over- quarter, from 42 in Q2 to 58 in Q3, reaching a total contract value of EUR 42 million. WINCS is now evolving towards an agentic AI platform, which can improve its capability of learning, adaptability, collaboration, and decision-making, evolving with our clients' business needs to drive measurable outcomes such as a faster time to market, lower costs, and higher productivity and customer satisfaction. Secondly, an outstanding large-scale AI client success case study at Bradesco Seguros, Latin America's largest insurance company, which implemented WINCS and achieved an impressive proven 40% productivity improvement across 180 FTE development teams focused on AI modernization and software development. The fundamental important news is that GFT is now delivering 40% more to the clients, and the client is not asking GFT to reduce the team by 40%. On the contrary, our teams keep growing.
We currently have more than 200 professionals working at Bradesco Seguros with WINCS. This is our AI-centric vision getting materialized with tangible results for our clients and for GFT. Moving on to the next bullet points, we also secured a new AI data and software platform contract with a leading German cognitive robotics company, further expanding our footprint into the high-growth and promising robotics and physical AI industry. Our global brand's relaunch was completed successfully, positioning GFT firmly as the artificial intelligence digital transformation challenger. This marks a key milestone in implementing our next-generation technology brand and positioning. In the software solutions business, our SmartAct platform was selected by a Tier 1 German bank as its core AML transaction monitoring system.
Additionally, we also closed a strategic three-year contract with Audi AG for the extension of the central platform for digitalized project planning and management based on GFT's engineering technology. In Brazil, we signed a new three-year master service agreement with a Tier 1, one of the top three largest retail banks in the country, in a process of vendor consolidation from 20 down to eight IT partners. This was a clear sign of client trust and confidence in GFT's delivery capabilities and differentiation. Another milestone this quarter was the successful completion of the Mega Work acquisition on September 2 , and the signature of our first cross-selling contract with a Tier 1 GFT client, showing immediate synergies of SAP into our core business. This is aligned with our strategic focus on ISVs and high-value-added services.
Finally, I am proud to share that GFT has been ranked number one globally in digital banking services in the 2025 Spark Matrix and also recognized as an emerging specialist in generative AI service in the Gartner Innovation Guides 2025. We have been executing our strategy, scaling AI at the core of our services, turning our vision into measurable outcomes. All our five-year strategic initiatives, naming a few such as our AI-centric transformation, smart shore global delivery platform, expanding Tier 1 and Tier 2 client relationships, among others, have been building the foundation for sustainable growth and an innovative, efficient, and resilient GFT organization. Now, I will hand over to Jochen for a detailed presentation of the figures.
Thanks, Marco. Let's directly move to the nine-month financial results. Going to slide number seven, Marco already mentioned the solid growth to EUR 645 million in revenues. It's a 2% growth in current currencies, sorry, and a 5% growth in constant currencies. The strong euro continues to weaken our current currency growth rates. It's a bit the same on the order backlog. We're down 1% versus previous year, end of September. In constant currencies, this is an increase of 3%. Focusing on profitability, the EBIT adjusted is down by 16%, mainly due to the already mentioned turnarounds in the U.K. and software solutions. The margin stands at 7.0%. You see in the smaller bullet points the deviations to last year. U.K. software solutions are EUR 9 million behind last year. All other GFT entities are slightly up versus last year, including a EUR 2 million FX hit .
When we go to EBIT, we have additional topics besides the ones already mentioned. First of all, last year, we had a strong one-off gain in Brazil of EUR 9.9 million. It was the release of a provision for a court case. Therefore, the comparison to last year lags by these EUR 10 million in 2025. The capacity adjustments are at EUR 8.1 million. Last year was EUR 6.9 million, so slightly up in 2025. Interest M&A is down. The software integration and acquisition last year led to strong costs, especially for order book. Other longer-term amortizations are coming to an end. That is why this cost effect is reducing. Last but not least, virtual share effects contributed EUR 500,000 profit this year , compared with EUR 1 million this year. The tax rate is at 31%. This is a notch above what we used to expect for the year, but we do have a non-optimal mix of entities.
We have entities in GFT with a loss, often talking about GFT U.K. and software solutions, and we have other entities overcompensating with profit. This is always a bad time for tax rates. Therefore, we are slightly behind 2024 tax rate, and we believe this will improve again in future years. Going to slide number eight and focusing on the sector growth, which is the left side of the slide, we do see strong growth. Let's start from the top in industry and others, 13% of growth in current currencies versus last year. The insurance business is growing by 15% versus last year, and the banking business is down by 3 percentage points. Let me point out our U.K. organization, which is heavily behind 2024 revenue figures, is nearly all in banking. This is playing in the banking sector numbers.
Going to the right side, the client portfolio, not much has changed. I'll do this quite fast. The largest client is 12% of group revenue. All ratios in the four groups we're showing are pretty much unchanged, so the portfolio is more or less like the previous year. Let's move forward, slide number nine, and look at the quarters. I start with the revenue side on the left. The revenue year- over- year is down by 1%, a slight decrease year- over- year, primarily driven by the weaker development in the U.K. and Europe. On top, we do have FX impacts when we compare. When we compare quarter- over- quarter versus Q2, we see a 3% decline. The decrease is mainly due to the weaker performance in the U.K. and then to a far lesser extent, Canada, Germany, and Poland. Now let's move to EBIT adjusted on the right side.
Comparing again year over year, the EBIT adjusted is heavily down, 37%. Last year, it was EUR 24 million. This year, we did not have the spike in the Q3 EBIT adjusted, as has been expected due to our turnaround challenges that we are currently working on. That is why EBIT in the third quarter came in at EUR 15.4 million. When we now compare quarter- over- quarter, Q3 versus Q2, this is a slight improvement, but it is not the step we used to see in the last two years between Q2 and Q3, which is fully due to the two turnarounds and some FX challenges. Moving forward, slide number 10, looking at our business segments. Again, starting on the revenue side left, Continental Europe is down 5% due to macro headwinds, with noticeable reductions in Spain and Italy.
At the same time, Americas, U.K., and APAC are up 6%, which means a 13% in constant currencies, 6% in current currencies . These growth rates, as Marco mentioned, are mainly coming from Brazil, Colombia, U.S., and Canada. The U.K. is challenging these growth rates as it declines by 26% versus last year. On the EBIT on the right, let's again look at continental Europe first. Here we're down 19% in EBIT adjusted, mainly due to the lower revenues and corresponding gross margins and the software solution transformation. On Americas, U.K., and APAC, we have differing effects. We have got strong business in the US and Brazil with strong profitability, but the turnaround in the U.K. is burdening these numbers mostly. On top, FX negative EBIT adjusted effects are also only happening in Americas, U.K., and APAC segment.
Moving forward to slide number 11, growth rates by the regions we have defined. Let me start from the bottom, from small to big. APAC and others is 3% of the GFT revenue, and this region is now growing by 22%. We have named the countries which grow fastest. You do see the Emirates named in here, which is also part of others. U.K., number two, 9% of the overall revenue, down 25%. I think here I have a rounding thing to the slide before, - 25% due to the local market. I think we have discussed it in all quarterly calls. This is currently our turnaround country. North America, 17% of overall business is growing by 11% in current euro currencies. The U.S., keeping the pace, is growing 18% after nine months.
It is keeping the pace, and it is growing stronger in local currencies. Canada, a bit weaker, growing by 4% now after nine months. Latin America stands for nearly 30% of the overall business, growing by 20% versus last year, driven by Brazil and Colombia. Our biggest region, Europe, standing for roughly more than 40% of the overall GFT business. Here we are down 6 percentage points. The slowdown is not major, but it is in all of our major countries: Spain, - 4; Germany, - 3; Italy, - 3. A bit bigger hit on the software solution side, our other turnaround entity. Let's move forward, slide number 12, P&L. I'll do this fast. Not really much to talk about, maybe just a brief comment on other operating income, the second line and the second bullet point on the right. Here we are down.
Here we have booked last year the Brazilian court case release of the accrual. Therefore, the EUR 10 million ( EUR 10.8 million are previously mentioned) are not happening again in 2025. Cost of purchase services is mostly stable, 2% up, just like the revenue. Personnel cost up 4%, which is driving our current non-optimal profitability. This is the number we're working on to improve for 2026. Other operating expenses did not grow, showing that we are managing our cost base. Let's move forward to slide number 13 and look at the cash flow. We started the year with a net cash of -EUR 42 million. The cash flow in the first nine months is + EUR 2 million. This is EUR 20 million less than last year. The effect is 50/50 on two topics.
First of all, lower profitability than last year, roughly 50%, EUR 10 million less cash flow from that, and EUR 10 million higher working capital effects. We see a strong cash inflow as always in the fourth quarter. In the end, we will hit the free cash flow target. We will talk about it on the last slide. On investing, we have, besides our normal fixed asset investments, the Mega Work acquisition, which here is highlighted with EUR 6.88 million cash out for investing. For financing activities, we included the acquisition of treasury shares, for which we spent EUR 14.14 million by the end of September, and the shareholders' dividend of EUR 13 million. This all leads to a free cash flow adjusted after nine months of -EUR 10 million. It is the same EUR 20 million gap I was already commenting in the operating cash flow.
A very short look at the balance sheet on slide 14 shows no major changes. What we do see is that the balance sheet has contracted a bit, which is mainly due to the cash outflows for the dividend and for the purchased shares. That's it. I would keep it there. If you have questions, please highlight. I move directly to slide number 15, utilization and the people slide. First of all, employees are slightly above 11,600 FTEs. Not a big growth. Big growth is coming from Brazil, Colombia, France, India, U.S. At the same time, we have minor reductions in Canada, Germany, Italy, Mexico. All these effects are not major. The external contractors are more or less stable, 11,600, 1,163 by the end of September, slightly down versus last year.
Looking at utilization rate at 92.5% on a high rate, we're happy with this. So far, we have talked about the increased base after the software acquisition. When you compare to previous years, you have to take into account roughly 1-1.5% software lift-up effect when comparing. Last but not least on this slide, attrition. Attrition is up to 12.7%. This is mainly happening in our growth markets. When we looked at the regional development, we saw Latin America, North America is where the growth is. That's where also the attrition is picking up, not so much yet on the European side. It is differing by regions. That said, let me move to slide 16 and have just a couple of sentences on our share buyback program. The very first arrow, program results. We have spent our EUR 15 million by the 10th of October.
We have repurchased 761,000 shares, which is roughly 2.89% of our share capital at an average price of EUR 19.70. All of this share buyback happened from April 24 to October 14. I will not repeat the resolution details and the capital authorization. Let me focus on the purpose. For this, we have agreed with our Administrative Board that we will decide on the exact further use of the treasury shares in due course, occured in Q1, first half of next year. Of course, all the effects and costs are included in our guidance. Now, my last slide, number 17, the additional milestones we are always giving. They are mostly unchanged, free cash flow expected at EUR 35 million this year. The gap to previous year explained by the lower profitability and the very high cash inflows we saw at the end of, especially 2024.
We expect a net debt to EBITDA ratio of 0.8. We have upped the utilization target slightly to 92%. Last milestone guidance here was 91%. With that, Marco, back to you.
Thank you, Jochen. To conclude, I would like to emphasize a few key messages. First, we have demonstrated resilience, achieving solid growth in the first nine months of 2025, with some markets delivering outstanding performance, such as Brazil, APAC, Colombia, and the U.S. , all of them generating double-digit growth. We are successfully deploying and expanding artificial intelligence across our markets, clients, services, and offerings, with WINCS continuing to stand out as a key differentiator for GFT. We foresee a large-scale long-term growth opportunity in legacy modernization, where AI is breaking down traditional barriers of change and unlocking new horizons for our clients.
At the same time, our transformational initiatives in the U.K. and software solutions units are progressing well, showing tangible early improvements thanks to the disciplined management and focused execution. Above all, we are executing our five-year strategy of determination and diligency, positioning GFT as the artificial intelligence digital transformation challenger. Thank you very much, and let's go beyond together. Now, Jochen and I will be happy to answer your questions.
We will now begin the Q&A session . Anyone who wishes to ask a question may press star and one on their touch-tone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Anyone who has a question may press star and one at this time. The first question comes from the line of Wolfgang from Berenberg.
Please go ahead. Yes, hello, good afternoon. Thanks for the presentation. Three questions from my end to start with. First, on the WINCS contract value you gave at EUR 42 million, can you give us some idea over which horizons this should transfer into sales? Second question would be on the largest clients, which I suppose is still a German bank. Do you expect, let's say, stable revenues going forward, or could there be some declines in 2026? And then on the structuring of the U.K. operations and software solutions, where are we standing in the reorganization process at both topics?
Thanks, Wolfgang. Thanks for the questions. I'll pick up the one on the largest client,
Deutsche Bank.
Sorry, yes, I already mentioned it , right? Yes, I did it. No surprise, it's the long-standing biggest client of GFT.
Revenue are slightly going down, 2025 versus 2024, as the client overall is spending less on external services. For next year, we see a small further decline happening, but nothing major, right? We're around EUR 100 million, and I think we will be slightly below in 2026. On the WINCS transforming into sales, Marco, I'll leave that to you.
Yes. Regarding the number of the EUR 42 million that we mentioned, these cmprise all projects and services that we sold, that we have sold with WINCS as a generative AI tool for our clients. That's the total, what we call total contract value of service and projects with WINCS as artificial intelligence, and that will be delivered. Some of that's already delivered, and some other parts it's going to be delivered over the next few quarters. Depends upon the specific project and specific service.
There are projects that are short-term projects that are going to deliver in one month, two or three months, and others that are going to be more that will take more time. Regarding the restructuring of the U.K. and software solutions, where do we stand? I feel we are doing very well on those turnarounds of the restructuring. Software solutions, we have evolved and optimized the team and the organization with our Gravity program. We also put, let's say, strong focus on strategic clients of software solutions. I'm very proud to say that we were able to accomplish two major goals with software solutions. One, to close a strategic contract with SmartAct as the anti-money laundering solution for one of the largest banks in Europe, one of the top banks in Germany. That client positions SmartAct as their future of AML technology.
For us, it was really, really good news and a major accomplishment. The other one is the extension of the contract at Audi that also was a remarkable achievement that we did with the team from software solutions. Moving very well on the restructuring process and also in the business evolution. In terms of the U.K., we've been moving on the restructuring as well. We are now in, I would say, the conclusion of bringing the new country manager of the U.K., which is a process that we took that's in a very diligency and also doing some specific restrictions that we planned. The U.K. is also moving. We also got some signs of some good small wins here and there in the U.K., small projects yet, but good signs as well.
To come back on the anti-money laundering deal, is this really a new customer or is it, let's say, a renewal of an existing customer that had been using the SmartAct tool before?
This is a very good question. Actually, as I mentioned, one of the largest banks in the region— in Europe and in Germany. These clients already used SmartAct, okay? We were able to sell it to a new entity. It was a new sale. It was not an extension of the current contract. It was a new sale. I must even state that the client was planning to do the project with another technology, with a competitor of SmartAct. The team, in a very, very focused approach, were able to show our capabilities, our differentiation, and change the game and made that a big win for us.
We're very, very proud and very happy with that development.
Thanks a lot.
The next question comes from the line of Sneed Einkel at Electrosecurity. Please go ahead. Good afternoon.
Thanks for having me. One question from my side. Looking at your utilization rate, which is above 92%, which is good— almost too good, if I got that correctly— because I think 91% is considered optimal. It seems, or my reading is that you don't have a capacity problem, but my reading is that the lower profitability compared to the usual run rate in the last couple of years comes from unprofitable projects. Is that really correct, or am I wrong here? Thank you very much.
Let's start with the very good utilization, 92%, has now, with the software acquisition, moved to 93%, right? This is now all leveled up by roughly one percentage point.
We are satisfied with the Q3 utilization, but it could be even better. Let's not forget, utilization is people. At the same time, utilization can be measured in EUR terms— in money. There are small countries like the U.K. that have a major impact. The underutilization we have this year is still in Q3 i n the U.K., and it costs money. That's part of the challenges we have. We do have project issues in the U.K., which we are repairing this year. It's not broad-based across GFT. It's a very U.K.-specific challenge or turnaround that we are managing, including bad projects with cost overruns. They are included in the numbers as well. You don't see that in the utilization. You see that in the profitability. In other words, no, there is no broad GFT pricing challenge, right?
As Marco has pointed out, all other units except U.K. software solutions, and if you take out FX, are growing by 11%, and they show an EBIT adjusted margin of roughly 9%. So their work's intact. We have to manage the turnaround at the U.K., which will take one and a half years, right? We expect the P&L look better in 2026, and g rowthto return— hopefully—by mid-2026, with clear improvement in 2027. That's the model we're working.
Okay. Thank you very much.
You're welcome.
As a reminder, for questions, please press star- one.
We know it's a busy day today, therefore we have not so many questions as usual, but if you have one, feel free.
We have a follow-up question from Wolfgang. Please go ahead. Yeah.
One element that's a little bit concerning is definitely the order book, which is not sufficientto support mid or high single-digit growth next year, at least not from today's perspective. Can you give us some idea of how the current pipeline is looking or how the leads are developing? Are you negotiating a lot currently? Are there many opertunity for interesting projects in the market? Any insight on that would be helpful.
I would repeat what I said on the U.K. There, the order book is a challenge, and it is a burden on the overall order book. Second , in constant currencies, the order is up 3%. This is not exciting, but it means there is growth, and that's what we're seeing in the market. Yes, I would love to have an order book up 10%. That's not exactly where the market currently puts us.
This is mainly driven by Europe, right, where we still see those -6% for the year, and it is also reflected in the order book. We hope it will turn around beginning sometime in the first or possibly second quarter of 2026.
To give you more color on that, w e see some strategic markets with a very strong pipeline. Brazil, which is our largest unity, we have such a really huge and strong and resilient pipeline. This is very good for us. This is also with Colombia as well, with the acquisition that we did with Sophos and Latin America. Very positive. U.S., we are also working on some strategic deals right now. Quite positive, quite positive, very positive in the U.S.
In terms of Europe and specifically Germany, lots of activities in terms of business development, and the pipeline is getting very solid and very strong in Germany, even though we have obviously the challenge in the German market, automotive, etc. By the way, this year, we've been growing outside of financial service in Germany, and we see, let's say, a very good pipeline, okay, in Germany. It's very good. It's very good. It shows a lot about the differentiations of our offering. APAC is also showing positively. I would say that we see a very good year for next year, a good year for next year. We are now going to invite you, and we're going to have a Capital Markets Day next week.
We are also going to talk about natural areas that the market is asking and pushing GFT in a quite positive way, which is defense, bringing our capabilities in data, AI, and intelligence into the defense industry. It is something that we are being naturally requested to work on, and we are pitching right now. I think this can be very big. We are also going to talk next week. That is the modernization, legacy modernization area, especially with AI right now. We have several pitches in Europe in regards to modernization of core banks, okay? I see a good timing, a good momentum. That is my positioning, and I'm more than happy to have you next week on the Capital Markets Day.
Yeah, we could not advertise that more.
No, okay.
Are there more questions?
There are no more questions at this time.
Okay. If that's the case, thank you for your attendance.We hope to see you next week at our Capital Markets Day. Just to mention that we're here. Take care and goodbye. Bye-bye.
Thank you. Ladies and gentlemen, the conference is now over. Thank you for choosing Karlsruhe School, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.