Stable growth for GFT in persistently challenging environment

Stuttgart, 9 November 2023 – Despite a persistently challenging market environment, the digitalisation group GFT Technologies SE (GFT) continued its stable growth in the third quarter of 2023: revenue in the first nine months was up 10 percent on the prior-year figure. There was particularly strong progress in Europe with growth of 22 percent and business in the group’s largest market, Brazil, is also stabilising. On top of that, adjusted earnings before interest and taxes (adjusted EBIT) rose by 7 percent; adjusted for currency effects, GFT achieved operating earnings growth of 14 percent. In order to take account of the ongoing market uncertainties and the associated current reluctance of clients to invest, the company has slightly adjusted its revenue guidance for the current financial year. The earnings targets remain unchanged.

“Our clients know that a successful digital transformation is the prerequisite for long-term success. And they have chosen us as their partner for this transformation,” says GFT’s CEO Marika Lulay. “This is why we were able to outpace the market again in the third quarter without compromising our margins. Although the current geopolitical situation is creating greater uncertainty, we expect growth to remain solid. One of the positive signs is that business in our largest market, Brazil, is stabilising. We are also seeing growing global demand for our AI solutions, which we have pooled in the GFT AI.DA Marketplace.”

The GFT Group generated revenue of EUR 594.61 million in the first nine months of 2023. The company thus exceeded the prior-year figure of EUR 541.91 million by 10 percent. Whereas revenue in the Insurance sector fell slightly (-1%), business in the other sectors remained very positive. In the Banking sector, GFT achieved growth of 12 percent while in the Industry & Others sector revenue rose by as much as 15 percent.

Disproportionately strong growth in Europe, Brazil with positive trend in the third quarter

In the Continental Europe segment, GFT’s revenue grew by 22 percent. In Germany, revenue was 55 percent up on the first nine months of 2022. Adjusted for the acquisition of targens GmbH in April this year, organic segment growth amounted to 11 percent.

Revenue in the Americas, UK & APAC segment rose by 3 percent over the prior-year period. In the USA, GFT achieved revenue growth of 15 percent and as much as 46 percent in Mexico. This dynamic trend is mainly attributable to the strong increase in demand for complex modernisation and transformation projects in the finance sector.

Further growth in earnings

There were also improvements in the Group’s key earnings figures compared to the first nine months of 2022. Adjusted EBIT rose year on year by 7 percent to EUR 52.14 million (9M 2022: EUR 48.56 million). Despite burdens from necessary capacity adjustments, adjusted EBIT without currency effects rose by 14 percent. The adjusted EBIT margin amounted to 8.8 percent in the first nine months (9M 2022: 9.0 percent). In the third quarter of 2023, the operating profit margin rose by almost 3 percentage points over the second quarter of 2023 to 10.3 percent. This significant improvement is primarily attributable to a higher capacity utilisation rate. Compared to the prior-year period, EBT increased by 3 percent to EUR 49.38 million (9M 2022: EUR 47.91 million).

As of 30 September 2023, the Group had a total of 9,089 full-time employees (FTE). This corresponds to an increase of 3 percent compared to 8,842 FTE at year-end 2022.

Financial stability and flexibility maintained despite targens acquisition

Operating cash flow decreased year on year to EUR 13.17 million (9M 2022: EUR 22.91 million), due mainly to a negative special item. Net liquidity fell to EUR -19.18 million (31 December 2022: EUR 35.70 million). As a result of the increase in net income, the equity ratio rose to 42 percent (31 December 2022: 40 percent).

EcoVadis rating upgraded from bronze to silver

GFT also made progress with regard to its internationally recognised EcoVadis sustainability rating: the company has now achieved silver status. This puts GFT in the top 25 per cent of companies assessed by EcoVadis, one of the world's largest and most reliable providers of sustainability ratings. The global platform assesses more than 100,000 companies from over 200 sectors and 175 countries based on specific benchmarks.

“Sustainability ratings create transparency, credibility and comparability for the capital market. These ratings are therefore relevant and important for the majority of our investors and clients. I am delighted with the improvement of our EcoVadis rating, as it is the result of a strong team effort. Our goal is to continuously improve our sustainability performance – even in these challenging times,” says GFT’s CFO Jochen Ruetz.

GFT expects solid revenue and earnings growth for 2023

GFT anticipates solid revenue growth and increased earnings in the financial year 2023. However, the heightened geopolitical risks and macroeconomic uncertainties will continue to introduce uncertainty to the markets. This could lead to a reluctance to invest. Against this backdrop, the technology group has slightly downgraded its revenue guidance for 2023. The guidance for earnings remains unchanged.

Specifically, the company expects revenue of between EUR 800 and EUR 810 million (2022: EUR 730 million; previous guidance: EUR 810-820 million). GFT has confirmed its growth expectation for adjusted EBIT of EUR 74 million to EUR 76 million (2022: EUR 67 million). The group continues to expect earnings before taxes (EBT) in the range of EUR 68 million to EUR 70 million (2022: EUR 66 million). This guidance takes into account the acquisition of targens GmbH pro rata temporis as of 1 April 2023.

* Adjusted for special items from M&A activities and share price-based effects in connection with the measurement of variable management compensation.

Further information on the definition of alternative performance measures is provided here on the GFT website.