Investors are certainly seeing the glass half full when it comes to UK asset and consumer finance industry software supplier Alfa Financial (ALFA), for today at least.
Beating full year forecasts will typically do that. ‘Revenues in line and adjusted profit across a number of measures 10% to 15% better than our forecasts’, admit analysts at broker Numis Securities today.
You can read the detailed numbers here, but the effect of today’s announcement is to send the company’s share price soaring 22.5% to 151p.
That has slapped an extra £80m-odd on Alfa’s market value, now worth about £450m.
READ MORE ABOUT ALFA FINANCIAL HERE
The company’s commentary on its sales pipeline conversion and the increase in its late-stage opportunities is encouraging, yet the same challenges still face the company - chiefly one of poor visibility.
It was this that plunged Alfa into a right old mess last year, with contracts delayed forcing revenue and profit expectations to be massively downgraded. As you can see from the chart, that took a huge toll on the share price and saw the company booted out of the FTSE 250 index.
Alfa’s platform provides new business, agreement management functionality as well as workflow and analytics capabilities to huge global enterprises including Mercedes-Benz, Toyota, Siemens, Barclays (BARC) and Bank of America.
Implementations are complex and can take several years to complete.
Alfa is trying to overcome this challenge by pulling several levers such as expending geographic and industry niches, targeting smaller businesses with a simplified, all-in-one option, and generally expending its cloud computing capabilities.
All of these measures could, in time, help smooth the inherent lumpiness of new business and make predicting future sales, profits and cash flows easier as we explained in detail in September. Time will tell.
