GFT Technologies ETR: GFT reported what executives described as a “solid start” to fiscal 2026, citing profitable growth, improved margins, and continued progress on its AI-centric strategy in the first quarter. The company also confirmed its full-year guidance, while discussing regional performance shifts tied to client leadership changes and ongoing restructuring in the U.K. business.
Q1 results and full-year guidance reiterated
Global CEO Marco Santos said the company generated EUR 230 million in revenue in the first quarter, representing 5% growth in constant currencies. Santos also pointed to profitability improvements, with the adjusted EBT margin increasing to 7.0% from 6.8% and the EBT margin rising to 5.2% from 4.5%.
“Those results demonstrate that our AI-centric strategy is contributing into measurable financial results with improving earnings quality,” Santos said, attributing the performance to disciplined execution and a shift toward higher value-added services.
CFO and Deputy CEO Dr. Jochen Ruetz confirmed the company’s 2026 outlook, with guidance unchanged at EUR 930 million in revenue, 7.6% adjusted EBT margin, and 6.0% EBT margin. Ruetz also said the company expects a tax rate of 29% for the full year, in line with the prior year.
Segment reporting updated as U.K. shifts under Europe
Ruetz opened his prepared remarks by detailing a change in internal management and segment reporting. Responsibility for GFT’s U.K. operations has moved under Group Executive Board Member Manuel Lavín, who now oversees all European entities. As a result, the company reclassified the U.K. from the former “Americas, U.K. and APAC” segment into Europe.
“All prior year data has been restated,” Ruetz said, noting that Q1 2025 comparisons now show the U.K. under Europe.
Order book grew 11% and Wynxx traction expanded
Ruetz said the company’s order book was “good” at the end of Q1 and up 11% versus a year ago. While the quarter benefited from a large SAP contract in Brazil, management told analysts that the increase was not solely dependent on that deal.
In response to a question on the order book, Ruetz said, “Most of the improvement is simply a good order book for 2026, full stop.” He added that order-book duration has become “somewhat longer,” driven in part by SAP projects, including business brought in through the Megawork acquisition.
Santos also highlighted the company’s AI platform momentum, saying GFT’s agentic AI orchestration platform Wynxx is active in 11 countries and serves 105 clients. He said the total influenced contract value exceeded EUR 104 million, which he described as 48% growth compared to Q4.
Clarifying the “influenced contract value” metric during Q&A, Santos said it refers to “the total contract revenue that we sold with projects and services that we utilize Wynxx to the max,” adding that Wynxx provided a competitive advantage in winning those deals. He emphasized that it is not a measure of Q1 revenue itself.
Regional performance: Latin America strength offset by Europe weakness
Management cited strong growth in several markets. Santos called out “strong momentum” in Brazil, Colombia and Spain, and said growth was recorded across all sectors. Ruetz reported sector growth of 15% in “industry and others,” 6% in insurance, and 1% in banking, noting that banking was affected by the U.K. reduction; excluding the U.K., he said banking would have grown 4%.
By segment, Ruetz said Europe revenue fell 4% to EUR 112 million, with Germany down 10% year over year. He linked part of that decline to a tier-1 client CIO change. Spain, meanwhile, was up 9%. He reiterated that the U.K. is in the “lowest revenues of its transition” in Q1 and Q2 2026 and was about EUR 5 million behind the prior year. Excluding the U.K., he said the rest of Europe was roughly flat.
Americas and APAC revenue grew 12% (or 15% in constant currencies), driven by Brazil and Colombia. Ruetz explained that quarter-over-quarter softness versus Q4 was due to seasonality, including calendar-year client budgeting patterns and South American summer holidays that reduce billable days in January and February.
On a regional breakdown, Ruetz said Latin America grew 25%, while North America declined 8% on a euro basis, which he said was heavily burdened by FX. He noted Canada was down 12% in euros (and 5% in local currency), while the U.S. was down 1% in euros but up 8% in U.S. dollars.
Profitability drivers, working capital improvement, and workforce changes
Ruetz said adjusted EBIT rose 7%, citing improved personnel efficiency, lower office lease expenses, reduced FX losses, and continued AI and sales investments. He said EBT grew 20% year over year, aided by lower capacity adjustments of EUR 12.5 million and “positive share price effects.”
In Europe, profitability improvements were led by the U.K. and software solutions. Ruetz said the U.K. returned to a “mid-single-digit” adjusted EBIT margin and that the company expects revenue growth in the U.K. to resume in the second half versus the prior year as the pipeline shifts from onshore work to a more smartshore approach.
He also addressed why Germany’s profitability improved despite lower revenue, explaining in Q&A that delivery was “heavily smartshore” and that efficiency work completed in 2025 lowered the cost base.
For the Americas/APAC segment, Ruetz said Q1 profitability is typically the lowest of the year due to holiday seasonality in South America. He added that year-over-year profitability pressure was largely driven by Mexico, where revenue fell more sharply after a global client CIO change. “We believe Mexico will normalize in the second half of 2026,” he said.
On the income statement, Ruetz said cost of purchased services increased 6%, largely because Megawork relies heavily on freelancers. Personnel expenses rose 2%, and he noted revenue grew “double the speed” of personnel costs. The combined personnel and purchased services cost ratio improved to 84.6%.
GFT’s cash flow also improved. Ruetz said the company began the year with EUR 55.2 million in net debt and generated EUR 4.4 million in operating cash flow, compared with negative operating cash flow in Q1 2025. Free cash flow adjusted was about EUR 1 million, roughly EUR 9 million better than last year. The balance sheet saw “no major effects,” though total assets declined due to loan repayments, which boosted the equity ratio.
On headcount, Ruetz said GFT reduced about 130 FTEs versus the end of 2025, mostly in Mexico, with smaller reductions in Canada and Brazil, while growing in Spain, Poland and the U.S. Utilization was 92.2% and attrition decreased by 1 percentage point, which he attributed mainly to European markets and stabilization in Colombia.
Asked whether CIO changes at tier-1 clients could accelerate internalization, Santos said he did not see an acceleration. “We always have internalization,” he said, adding that GFT’s differentiation is delivering AI-enabled enterprise software modernization for highly regulated industries.
In closing remarks, Santos said the company is positioning itself “at the intersection of AI, modernization, and highly-regulated industries,” and argued that clients are moving beyond experimentation toward systemic AI adoption in large-scale modernization programs—an area where GFT expects demand to build.
About GFT Technologies ETR: GFT
GFT Technologies SE, together with its subsidiaries, provides digital transformation services. The company operates in two segments in the Americas, the UK & APAC; and Continental Europe. It offers consulting on the development and implementation of IT strategies; development of bespoke IT solutions; implementation of sector-specific software; and maintenance and development of business-critical IT solutions. The company serves clients in investment and retail banking, insurance, and industrial sectors.
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