XBP Global Q2 2026 Earnings Report

XBP Global EPS Results

• Actual EPS: -$1.42
• Consensus EPS: -$1.04
• Beat/Miss: Missed by -$0.38
• One Year Ago EPS: N/A

XBP Global Revenue Results

• Actual Revenue: $191.26 million
• Expected Revenue: $197.70 million
• Beat/Miss: Missed by -$6.44 million
• YoY Revenue Growth: N/A

XBP Global Announcement Details

• Quarter: Q2 2026
• Date: 8/14/2026
• Time: After Market Closes
• Conference Call Date: Thursday, August 13, 2026
• Conference Call Time: 5:00PM ET

XBP Europe Holdings, Inc. provides bills, payments, and related solutions and services in France, Germany, the United Kingdom, Sweden, and internationally. The company operates through two segments, Bills & Payments and Technology. The Bills & Payments segment focuses on optimizing how bills and payments are processed by businesses of all sizes and industries. This segment also offers automation of accounts payable and accounts receivables processes and seeks to integrate buyers and suppliers, as well as engages in digital transformation business. The Technology segment engages in the sale of recurring software licenses and related maintenance, and hardware solutions, as well as provision of related maintenance and professional services. In addition, the company offers XBP platform that provides a secured network allowing billers, consumers, and businesses to communicate and transact; XBP Omnidirect, a cloud-based platform that provides enterprise level client communication management; and Reaktr.ai for cybersecurity, data modernization and cloud management, and generative AI. Further, it provides request to pay solutions; enterprise information management solutions; robotic process automation solutions; digital mailroom and records digitization solutions; business process management and intelligent workflow automation solutions; integrated communications solution; banking and financial industry solutions and services; cross-border payments; digitization of checks; confirmation of payee; and mortgage and loan management solutions. The company is based in Egham, the United Kingdom. XBP Europe Holdings, Inc. operates as a subsidiary of Exela Technologies, Inc.

XBP Global Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Profitability improved materially: adjusted gross margin reached a record 24.9%, while normalized EBITDA rose 8.4% year over year to $21.9 million, with an 11.5% margin.
• Positive Sentiment: Commercial momentum strengthened, with total contract value bookings up 51.6% year over year to $121.3 million and new ACV bookings up 57% to $36 million; the pipeline remained substantial at $2.5 billion.
• Positive Sentiment: Management raised its annualized operational-efficiency target to $65 million-$75 million, including an expected $35 million in-year benefit for 2026, and expects revenue and EBITDA growth to improve in the second half of the year.
• Negative Sentiment: Revenue declined 14% year over year to $191.3 million, reflecting legacy contract exits, lower volumes, and completed one-time projects; management also expects workforce reductions of approximately 20% by year-end versus 2025.
• Neutral Sentiment: XBP has engaged a financial advisor as part of its previously announced strategic-alternatives process, but provided no further details or timeline for potential actions.

Presentation

[Operator]

Good day, and thank you for standing by. Welcome to the XBP Global second quarter 2026 financial results. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear automated messaging letting you know your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, David Shamus, Head of Investor Relations.

[David Shamus, Head of Investor Relations at XBP Global]

Thank you, and good afternoon, everyone. Welcome to XBP Global's second quarter 2026 earnings call. Joining me are Chief Executive Officer, Andrej Jonovic, and Chief Financial Officer, Dejan Avramovic. Before we begin, please note that today's remarks may contain forward-looking statements, including statements regarding our future performance, outlook, and strategy. These statements are based on current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from those described. For a detailed discussion of these risks and uncertainties, please refer to our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and our proxy statement and other filings with the SEC, copies of which are available on our investor relations website at investors.xbglobal.com. During this call, we will also reference certain pro forma and non-GAAP financial measures.

[David Shamus, Head of Investor Relations at XBP Global]

Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included in our earnings release and the appendix to our investor presentation, which are available on our investor relations website. With that, I'll turn the call over to Andrej.

[Andrej Jonovic, CEO at XBP Global]

Good afternoon, everyone, and thank you for joining us today. When we spoke last quarter, I highlighted our deliberate evolution, converting our legacy workflow platforms into high-margin agentic AI pipelines, executing our self-disruption, and making targeted go-to-market investments. Today, I'm pleased to report that our second quarter performance represents a clear step up in profitability and operational momentum with normalized EBITDA of $21.9 million and adjusted gross margin of 24.9%, our highest level to date. Our profitability trajectory and our pipeline quality give us reason for optimism. At XBP, we orchestrate essential mission-critical workflows in heavily regulated end markets such as healthcare, public sector, and BFSI, where processing precision, regulatory compliance, and auditability are non-negotiable. Our client base is rapidly moving past simple AI experimentation and aggressive ROI promises that clients naturally discount. Clients want production-grade partners who deliver real-world execution.

[Andrej Jonovic, CEO at XBP Global]

Rather than falling into the common software trap or abandoning our operational DNA, we anchor our strategy in deep domain expertise. We leverage adaptive process orchestration in combining deterministic rules engines with intelligent AI models to guarantee precision and compliance in high-consequence environments. When our AI pipeline encounters a complex exception, it doesn't fail. It routes the transaction to our subject matter experts. In mature deployments, this is approximately 50% of edge cases, which our specialists adjudicate, resolve, and feed that judgment back into the model to continuously retrain it. We aren't replacing our people. We are elevating them into high-value adjudicators. By converting manual volume-heavy workflows into high-margin intelligent AI pipelines under this model, we are building a more durable, repeatable, and profitable growth engine. Underpinning this operational shift is our ability to capture breakthroughs in the broader AI ecosystem. The era of open weight models is upon us.

[Andrej Jonovic, CEO at XBP Global]

With multiple enterprise-grade open weight models launching recently, our expedited training protocols allow us to rapidly integrate these models into our deployed agentic pipelines. This delivers significantly higher value to our clients while guaranteeing that data remains strictly within the enterprise boundary in compliance with advanced directives like the EU AI Act. Now, let's turn to slide four of our investor deck, where you can see how this operational transformation is translating into tangible financial results. We're raising our targeted annualized operational efficiency range to $65 million-$75 million, up from $55 million-$60 million, as a result of identifying additional opportunities for efficiencies throughout the organization. We have an expected 2026 in-year benefit of approximately $35 million. This transformation is correlated with our financial results this quarter. Adjusted gross margin expanded for the fourth consecutive quarter to 24.9%, marking our highest level to date.

[Andrej Jonovic, CEO at XBP Global]

Normalized EBITDA stepped up to $21.9 million, and consequently, the normalized EBITDA margin increased to 11.5%. The improvement reflects both a favorable revenue mix in the quarter and our AI-first automation efforts delivering structural margin expansion. The second part is what should compound over time. Skipping ahead to slide seven, I'd like to acknowledge that revenue remains down year-over-year and sequentially, and that is expected. It reflects the legacy contract exits and volume reductions largely tied to last year's restructuring. Our forward-looking metrics are improving across multiple parameters, especially sales. During the second quarter, we achieved a meaningful growth in bookings and pipeline quality. We closed $121.3 million in total contract value, representing a 51.6% increase year-over-year and up 12.2% sequentially. Our new ACV bookings reached $36 million, up 57% year-over-year and 32.1% sequentially.

[Andrej Jonovic, CEO at XBP Global]

Our total pipeline stands at $2.5 billion as of June 30th, roughly flat with Q1 and a 17.2% increase year-over-year. With respect to our pipeline, we're seeing significant AI interest in the healthcare and public sector practice groups, which centers around our healthcare payer and provider solutions. Demand from healthcare and public sector healthcare has been strengthening as clients are actively seeking secure, on-premise hyperautomation with strict data sovereignty guardrails and human-in-the-loop oversight. Despite strengthening public sector healthcare demand, the timing of overall public sector contracts is volatile, primarily as a result of geopolitical uncertainty. To highlight how AI interest translates to enterprise deals, we recently won a deal that will deploy agentic AI infrastructure to manage the maintenance life cycle for a global airline fleet. Every maintenance item will be vectorized and stored in a private vector database inside the client's private cloud.

[Andrej Jonovic, CEO at XBP Global]

Our agentic solution will manage data access, allowing seamless reproduction of records when aircraft go off lease or are sold. This is an example of turning data into a private secure cloud with strict enterprise controls, which can be replicated across the airline industry. In short, we feel that our current trajectory strategy is working. We are building a high-quality, repeatable growth engine and applying automation into the way we operate, which should positively reflect in our results in the coming quarters. With that, I will now turn the call over to Dejan Avramovic, our CFO.

[Dejan Avramovic, CFO at XBP Global]

Thank you, Andrej, and good afternoon, everyone. As in previous quarters, my comments will primarily focus on pro forma results to evaluate our operational performance on a comparable apples-to-apples basis. Starting on slide nine, total revenue for the quarter was $191.3 million, down 14% year-over-year on a pro forma basis. This decline remains consistent with expected client exits and volume reductions associated with legacy contract restructuring. On a consolidated basis, our reported gross margin was 21.5%, which was up 80 basis points from a year ago. We introduced a new metric this quarter, adjusted gross margin, which normalizes for one-time charges such as severance and non-recurring restructuring related costs, which can materially impact our cost of revenue. We believe that using adjusted gross margin provides a clean apples-to-apples comparison of our profitability across the reported periods.

[Dejan Avramovic, CFO at XBP Global]

In Q2, our adjusted gross margin expanded to 24.9%, up 290 basis points from a year ago and 140 basis points from the first quarter, reflecting our highest gross margin to date. Normalized EBITDA reached $21.9 million, reflecting an 8.4% increase year-over-year and 40.6% increase sequentially, with normalized EBITDA margins expanding to 11.5%. Turning to our segment breakdown on slide 10. In the applied workflow automation segment, revenue was $166.8 million, down 16.7% year-over-year, driven by lower volumes and completion of certain one-time projects along with expected exits. Adjusted gross margin for this segment reached 19.2%, up 120 basis points year-over-year. Our technology segment revenue was $24.5 million, an increase of 9.8% year-over-year, driven primarily by higher one-time projects in the quarter. Our adjusted gross margin expanded to 64.2%, growth of 690 basis points year-over-year. Turning to the next slide, where we illustrate our recent quarterly performance.

[Dejan Avramovic, CFO at XBP Global]

Our margins have increased for four consecutive quarters, and this is driven by our shift to higher margin, higher automation business, combined with expanded utilization of automation tools along with some favorable mix in the quarter. Our normalized EBITDA growth this quarter is a validation of this shift, showing a material step-up from Q1, both in terms of dollar amount and as a percent of revenue. We expect an inflection in our revenue in the second half of the year. Combined with continued expansion of our gross margins, along with SG&A savings, this positions us to further grow normalized EBITDA into the second half of 2026 and into 2027. Moving to slide 12.

[Dejan Avramovic, CFO at XBP Global]

We continue to project an approximate 20% workforce reduction by the end of the year relative to the year-end 2025, and our updated efficiency target currently stands at $65 million to $75 million in annualized run rate efficiencies. The increase versus last quarter was primarily driven by non-payroll initiatives, including third-party vendor savings. I will now hand the call back to Andrej for closing remarks.

[Andrej Jonovic, CEO at XBP Global]

Thanks, Dejan. Turning to slide 13, I want to emphasize the long-term impact of our AI operating model on labor productivity. As I talked about it last quarter, legacy business process services operated under a headcount-dependent framework. Today, XBP Global is leading the peer group in labor efficiency. Driven by our AI-first transformation, our revenue per employee grew to approximately $89,000, up from $82,000 last quarter. We continue to project that our revenue per employee will approach $100,000 by year-end, which meaningfully exceeds our peer group average of roughly $60,000 per employee, proving that our transition to high margin automated execution is taking firm hold. On slide 14, one thing I really want to emphasize is our low client concentration. Our top 10 clients represent only 34% of our revenues.

[Andrej Jonovic, CEO at XBP Global]

Additionally, we're diversified across client verticals, which is a natural hedge for us, and our average client tenure among the top 25 clients is around 15 years. Skipping ahead to slides 15 and 16, as I mentioned earlier, we've seen positive momentum in our bookings and the overall pipeline health. Our new and total bookings continue to tick higher, and the breadth of our opportunities remains diversified across industries. In closing, our profitability trajectory has inflected positively, driven by expanded use of AI and automation tools, which have led to our highest adjusted gross margins to date. Our commercial momentum is solidifying, backed by a stable $2.5 billion pipeline and strengthening in the late-stage pipeline. Our focus remains firmly on value over volume, building upon relationships with our clients to deliver the outcomes they need while ensuring we deliver the expected margin profile to our shareholders.

[Andrej Jonovic, CEO at XBP Global]

Finally, with respect to our strategic alternatives process, which we announced last quarter, we have engaged a financial advisor. We will provide updates on this as appropriate. I'd like to thank our dedicated team for their continued efforts. With that, I'll turn it over to the operator to open up Q&A. Operator?

[Operator]

Thank you. At this time, we'll conduct a question and answer session. As a reminder, to ask a question, you will need to press star one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the queuing roster. I'm showing no questions at this time. Thank you for your participation in today's conference. This concludes the program. You may disconnect.

Participants

Executives

• David Shamus, Head of Investor Relations
• Andrej Jonovic, CEO
• Dejan Avramovic, CFO