In its latest announcement, UK-based provider of asset finance software solutions, Alfa, has revealed stronger performance across October and November than anticipated in forecasts made earlier in 2020.
According to Alfa, the strong performance has stemmed from higher revenue driven by the continuation of existing projects, additional work being secured, pre-implementation work in advance of potential contracts for new implementations or upgrades, and a smaller than expected negative impact from staff holidays delayed from H1 2020.
Furthermore, the company has revealed that an existing UK equipment finance customer – who has been in Alfa’s late-stage pipeline for the last six months – has signed contracts to upgrade from Alfa Version 4 to Alfa Version 5.
The contract will rank as a middle tier contract by value and will be implemented into an Alfa Cloud Hosting environment.
Andrew Denton (pictured above), chief executive officer of Alfa, explained: "Given the uncertainties at the start of the year, I am delighted to be finishing with a strong performance not only financially but also by confirming the continuation of a longstanding customer relationship with a new contract to upgrade to Alfa Version 5.
“I am particularly pleased that this important customer has recommitted to Alfa. Their commitment to this upgrade underlines the continued strength of the Alfa product and the high-quality service that we have delivered over many years. The new version will give them access to the industry leading functionality and technology in the recently released Alfa 5.6 deployed using always-on Alfa Cloud Hosting with fully managed infrastructure and regular upgrades.”
Founded in 1990, Alfa delivers a range of software systems and consultancy services to the asset and automotive finance industry across the globe. With its flagship solution, Alfa Systems, currently in use by customers across 26 countries worldwide, the company operates through its network of offices in Europe, Australasia and North America.
Alfa Systems was designed as an end-to-end solution to support both retail and corporate business for auto, equipment, wholesale and dealer finance, including leases/loans, originations and servicing.
Lower operating costs
As a result of the nationwide lockdowns earlier in the year, Alfa experienced reduced travel, conference and marketing costs for the entirety of 2020, also contributing to the company’s strong performance.
Denton added: “We were also expecting to complete some internal infrastructure upgrade projects, but with time being spent supporting revenue growth, these costs have been delayed into 2021. Overall, therefore we expect to exceed our current revenue expectations for the year by just under 5% with all the benefit flowing into EBIT in addition to the continuing benefit of the reduced costs.”
Looking to 2021, the company forecasts a larger proportion of its work to be spent on upgrading existing customers to the latest version of its software and in the expansion of its global relationships under existing licenses.
Retaining and expanding its footprint with existing customers is Alfa’s key focus heading into the new year, despite these upgrades generating a lower level of perpetual licence income in 2021.
Furthermore, the company expects an increase in costs as the country returns to a more normal level of working, along with the impact of the delayed internal projects and with an increase in the number of staff taking holidays once the travel restrictions from the pandemic have eased.
Denton concluded: “Whilst the late-stage pipeline continues to develop well, we have a lower level of contractual visibility than we would like, particularly given the current macro-economic environment. We are building a business that has the capability to grow both revenue and profits, but until contractual cover is secured our expectations of 2021 financial performance remain unchanged.
“Overall, it is very encouraging to see a further increase in our expectations for 2020, and whilst our expectations for 2021 currently remain unchanged, if we continue to convert our late-stage pipeline and secure work for 2021 we should see improvements in our revenue and profit expectations."