UK software group Alfa posts strong results after IPO

Specialist UK software company Alfa Financial posted better than expected maiden results following its high-profile stock market listing in June.

Big contract wins in the US and Europe drove sales at the London-based technology group, which develops IT systems for asset finance companies. Alfa said year-on-year revenues rose 57 per cent in the six months to June 30 as banks and other financing businesses chose its technology to update their ailing IT systems. Pre-tax profits increased 14.8 per cent to £14m.

Andrew Denton, chief executive, said the group had a “chockablock“ pipeline of upcoming contracts. “There’s a lot of old technology out there,” he said. “We want to be the first choice for every asset finance company in the world.”

Alfa, which was founded in 1990, supplies software to companies that lend money to small businesses and consumers to buy cars, agricultural machinery and other equipment. Analysts have estimated that the market is worth $2.9bn. 

In the past few years the company has won customers including Bank of America, Barclays, Mercedes-Benz and Nordea, as well as Uber, the ride-hailing app that has invested in its car financing programme in the US. On Wednesday night it was promoted to the FTSE 250 index of mid-cap UK companies.

Alfa’s flotation this summer was the UK’s biggest technology listing in almost two years. The company’s shares have since increased by more than a third on their offer price as investors have taken the opportunity to invest in a fast-growing British technology stock. On Thursday the share price rose by 5.4 per cent to £4.57. 

According to analysts, the need for companies to modernise their technology should give Alfa a steady stream of business. 

“The contract pipeline remains solid and the need to reduce costs and digitalise operations will force the asset finance industry to adopt package apps,” said Gerardus Vos, analyst at Barclays. “Alfa is benefiting from this, with the pipeline building and contracts expanding in scope.”

Mr Denton said the company’s focus in the next year would be on attracting more car financing companies in Europe and equipment financing companies in the US. At present, all Alfa’s US revenues come from car loan companies. The group also wants to attract more small companies with off-the-shelf technology that is hosted on the cloud.

Alfa’s longer-term plan is to use machine learning and artificial intelligence. “We are looking at how machine learning can be applied to credit policies — and can use behaviour to inform credit policy,” added Mr Denton.

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