Core Insights - XBP Europe Holdings, Inc. has been registered with the European Payments Council as a vendor of Verification of Payee (VOP) services, positioning the company to assist organizations in the Eurozone with compliance to new instant payment regulations [1][2] Group 1: Company Overview - XBP Europe is a pan-European integrator of bills, payments, and related solutions, serving over 2,000 clients across various sectors including banking, healthcare, and utilities [7] - The company has a physical presence in 15 countries with 32 locations and employs approximately 1,500 individuals [7] Group 2: VOP Services - The VOP regulations require payment service providers in the Eurozone to comply by October 5, 2025, aiming to reduce annual losses of around $120 billion from erroneous payments and fraud [2] - XBP Europe's cloud-based VOP solution is distinguished in the market, utilizing deterministic AI technologies to enhance accuracy in verifying payee accounts, thereby minimizing false positives and negatives [3][4] Group 3: Market Position and Experience - XBP Europe has nearly 30 years of experience in account name verification and was among the first to implement the UK's equivalent service, Confirmation of Payee (CoP) [4][5] - The company supports over 400 banks for account name verification and is positioned to enable Eurozone banks to deploy VOP services rapidly [5] Group 4: Future Innovations - The company is focused on further innovations beyond VOP, including broader data sharing initiatives to further mitigate errors and payment fraud [6]

Company Overview - XBP Europe Holdings, Inc. is a pan-European integrator of bills, payments, and related solutions, aiming to enable digital transformation for over 2,000 clients across various sectors including banking, healthcare, insurance, utilities, and the public sector [6] - The company operates in 15 countries with 32 locations and employs approximately 1,500 individuals, providing business process management solutions through proprietary software [6] Conference Details - XBP Europe has been invited to present at the Emerging Growth Conference on January 15, 2025, at 10:15 AM Eastern time for a duration of 30 minutes [1][3] - The conference will allow existing shareholders and the investment community to interact with the company's CEO, Andrej Jonovic, who will present prepared remarks and answer questions [2][5] Conference Significance - The Emerging Growth Conference serves as a platform for public companies to present new products, services, and major announcements to the investment community efficiently [4] - The audience for the conference includes potentially tens of thousands of individual and institutional investors, as well as investment advisors and analysts [5]

Core Viewpoint - XBP Europe Holdings, Inc. has achieved NF461 certification for electronic document management in France, enhancing its position in the European market and demonstrating its commitment to efficient document management solutions [1][3]. Group 1: Certification and Standards - The NF461 standard establishes strict guidelines for the lifecycle of documents, ensuring quality and security in creation, storage, use, and disposal [2]. - Compliance with NF461 allows companies to meet both French and international standards, as it aligns with ISO 14641-1 [2]. Group 2: Company Solutions and Offerings - XBP Europe's electronic archiving solution is part of its Enterprise Information Management suite, aimed at optimizing document management and supporting digital transformation for various organizations [3]. - The EFA-SAE electronic archiving system enables organizations to store diverse data types and documents, regardless of their format, and integrates with business platforms to streamline information flows [4]. Group 3: Company Overview - XBP Europe serves over 2,000 clients across multiple sectors, including banking, healthcare, and public services, focusing on optimizing bills and payments through digital solutions [6]. - The company operates in 15 countries with a workforce of approximately 1,500 individuals, emphasizing its role in advancing digital transformation and sustainable business practices [6].

Revenue Performance - Revenue for Q3 2024 was $35.4 million, a decrease of 5.6% year-over-year but an increase of 5.5% sequentially[1]. - The Bills & Payments segment generated revenue of $24.6 million, a decline of 3.1% year-over-year, while the Technology segment revenue was $10.8 million, down 10.8% year-over-year[4]. - Total revenue for the three months ended September 30, 2024, was $35,330,000, a decrease of 5.9% from $37,429,000 in the same period of 2023[17]. - Revenues for the three months ended September 30, 2024, were reported at $35,400,000, down from $37,496,000 in 2023, reflecting a constant currency revenue of $34,712,000[19]. - The company experienced a foreign currency exchange impact of $(688,000) on revenues for the three months ended September 30, 2024[19]. Profitability Metrics - Gross margin improved to 32.6%, reflecting an increase of 800 basis points year-over-year and 1,300 basis points sequentially[1]. - Operating profit reached $2.5 million, up from $0.3 million in Q3 2023, driven by higher gross margins and SG&A improvements[5]. - Adjusted EBITDA from continuing operations was $4.8 million, a 116% increase compared to $2.2 million in Q3 2023, with an adjusted EBITDA margin of 13.7%[6]. - Operating profit for the three months ended September 30, 2024, was $2,509,000, significantly up from $348,000 in the same period of 2023[17]. - Adjusted EBITDA from continuing operations for the three months ended September 30, 2024, was $4,846,000, compared to $2,244,000 in 2023[20]. Net Loss and Financial Position - The company reported a net loss of $2.8 million, a slight improvement from a net loss of $2.9 million in Q3 2023[5]. - Net loss for the three months ended September 30, 2024, was $2,769,000, compared to a net loss of $2,887,000 in the same period of 2023[17]. - The company reported a net loss from continuing operations of $1,226,000 for the three months ended September 30, 2024, compared to a loss of $1,219,000 in the same period of 2023[17]. - Net loss for the nine months ended September 30, 2024, was $9,700,000, compared to a net loss of $5,951,000 for the same period in 2023[18]. Cash Flow and Liquidity - The company has adequate liquidity with cash and cash equivalents totaling $7.8 million as of September 30, 2024[7]. - Cash and cash equivalents increased to $7,770,000 as of September 30, 2024, from $6,537,000 as of December 31, 2023[16]. - Cash and equivalents at the end of the period increased to $7,960,000 from $2,819,000 in the previous year[18]. - The company reported a net cash used in operating activities of $11,154,000 for the nine months ended September 30, 2024, compared to a net cash provided of $1,743,000 in 2023[18]. - The company incurred $1,441,000 in net cash used in investing activities for the nine months ended September 30, 2024, compared to $2,254,000 in 2023[18]. Investments and Future Outlook - Capital expenditures were 2.0% of revenue, up from 0.7% in Q3 2023, indicating increased investments for growth[6]. - Plans to divest the on-demand printing operation were announced, which had generated approximately $6.8 million in revenue year-to-date[8]. - The company is optimistic about future growth opportunities, particularly due to being selected for the UK government's G-cloud 14 framework[2]. Balance Sheet Highlights - Total current assets decreased to $47,511,000 as of September 30, 2024, from $49,867,000 as of December 31, 2023[16]. - Total liabilities increased to $120,408,000 as of September 30, 2024, compared to $115,307,000 as of December 31, 2023[16]. - Accounts receivable decreased to $24,576,000 as of September 30, 2024, from $30,238,000 as of December 31, 2023[16]. - Selling, general and administrative expenses for the three months ended September 30, 2024, were $6,818,000, slightly down from $6,846,000 in the same period of 2023[17]. Debt and Interest Expenses - Borrowings under the 2024 Term Loan A Facility amounted to $3,830,000, and under the 2024 Term Loan B Facility, $11,413,000[18]. - The company reported interest expense of $1,843,000 for the three months ended September 30, 2024, compared to $1,251,000 in 2023[20]. - The impairment of goodwill was recorded at $87,000 for the nine months ended September 30, 2024[18].

Financial Performance - The Company reported a net loss from continuing operations of $1,226,000 for the three months ended September 30, 2024, compared to a net loss of $1,219,000 for the same period in 2023[186]. - Adjusted EBITDA from continuing operations was $4,846,000 for the three months ended September 30, 2024, compared to $2,244,000 for the same period in 2023, reflecting a significant increase[186]. - For the three months ended September 30, 2024, the company's net revenue decreased by $2.1 million, or 5.6%, to $35.4 million from $37.5 million for the same period in 2023[200]. - The Bills & Payments segment generated $24.6 million in revenue, a decline of $0.8 million or 3.1%, primarily due to lower postage revenue and client contract ends[201]. - The Technology segment's revenue decreased by $1.3 million or 10.8%, to $10.8 million, largely due to lower license sales[202]. - For the nine months ended September 30, 2024, the company's net revenue decreased by $9.4 million, or 8.1%, to $107.0 million compared to $116.4 million for the same period in 2023[219]. - The Bills & Payments segment generated $75.9 million in revenue, a decline of $7.0 million, or 8.4%, primarily due to project completions and lower volumes[220]. - The Technology segment's revenue decreased by $2.4 million, or 7.2%, to $31.1 million, attributed to lower software license sales[222]. Costs and Expenses - Total cost of revenue decreased by $4.4 million, or 15.6%, compared to the same period in 2023, with a total cost of revenue of $23.8 million[203]. - Cost of revenue for the Bills & Payments segment decreased by $3.2 million, or 14.2%, due to completed projects and optimization efforts[204]. - Selling, general and administrative expenses slightly decreased by $28 thousand, or 0.4%, to $6.8 million[207]. - Selling, General and Administrative (SG&A) expenses decreased by $1.6 million, or 7.8%, to $19.8 million, driven by cost optimization initiatives[227]. - Interest expense increased to $1.8 million for the three months ended September 30, 2024, compared to $1.2 million for the same period in 2023[212]. - Interest expense increased to $4.7 million for the nine months ended September 30, 2024, compared to $3.6 million in the prior year, due to higher borrowing costs[230]. Foreign Exchange and Tax - The Company has experienced foreign exchange losses of $668,000 for the three months ended September 30, 2024[186]. - Foreign exchange losses were $0.7 million for the three months ended September 30, 2024, compared to gains of $0.5 million for the same period in 2023[214]. - The company reported an income tax expense of $1.7 million for the three months ended September 30, 2024, compared to $1.0 million for the same period in 2023[217]. Workforce and Operations - As of September 30, 2024, the Company had approximately 1,500 employees, with 147 being part-time, across 16 countries[173]. - A restructuring plan was approved in Q4 2023 to realign the Company's business and strategic priorities, involving workforce rightsizing[276]. Business Segments - The Company has two reportable segments: Bills & Payments and Technology, focusing on optimizing bill processing and software solutions respectively[177]. - Revenue from the Bills & Payments segment includes both project-based and recurring digital transformation revenue[178]. Debt and Financing - As of September 30, 2024, total debt increased by $14.8 million primarily due to borrowings under the 2024 Senior Credit Facilities[237]. - The Company incurred $1.6 million in debt issuance costs related to the 2024 Facilities Agreement[265]. - The 2024 Facilities Agreement requires maintenance of a consolidated total leverage ratio of not greater than 2.50 to 1.00, with stepdowns starting January 1, 2025[266]. - The Company had fully repaid the outstanding balance under the 2022 Committed Facility Agreement as of September 30, 2024[261]. - The Company incurred a loss on the sale of accounts receivables totaling approximately $0.3 million and $0.7 million for the three and nine months ended September 30, 2024, respectively[250]. Strategic Initiatives - The Company may explore strategic transactions, including joint ventures and acquisitions, which may require additional funds[278]. - There have been no material changes to the Company's market risk during the nine months ended September 30, 2024[282].

Third Quarter Highlights Revenue of $35.4 million, decrease of 5.6% year-over-year and increase of 5.5% sequentiallyGross margin increased to 32.6%, a 800 bps increase year-over-year and 1,300 bps increase sequentiallyOperating profit of $2.5 million, an increase of $2.2 million year-over-year and $3.8 million sequentiallyNet loss of $2.8 million includes $0.7 million of FX losses, a decrease of $0.1 million year-over-year and $2.0 million sequentiallyAdjusted EBITDA from continuing operations of $4.8 milli ...

Core Viewpoint - XBP Europe Holdings, Inc. has been awarded a place on the UK government's G-Cloud 14 framework, enabling it to provide cloud services to public sector organizations, thereby facilitating their digital transformation [1][2]. Group 1: G-Cloud 14 Framework - G-Cloud 14 is a procurement framework managed by the Crown Commercial Service, designed to simplify the acquisition of cloud services for public sector organizations, with an estimated cumulative total exceeding £5 billion for all suppliers [2]. - XBP Europe will offer cloud services through its Reaktr.ai business unit, which provides AI-driven solutions for multi-cloud management, cloud hosting, and contact center automation [2]. Group 2: Company Overview - XBP Europe is a pan-European integrator of bills, payments, and related solutions, serving over 2,000 clients across various industries, including banking, healthcare, and public sector [4]. - The company operates in 15 countries with a workforce of approximately 1,500 individuals, focusing on optimizing clients' billing and payment processes through its cloud-based solutions [4].

Core Viewpoint - XBP Europe Holdings, Inc. has received approval from Pay.UK to become a Confirmation of Payee (CoP) Aggregator, enhancing its position as a leading provider of CoP services in the UK [1][2]. Group 1: Company Overview - XBP Europe serves over 2,000 clients across various sectors, including banking, healthcare, and utilities, aiming to optimize bills and payments through digital transformation [6]. - The company operates in 15 countries with a workforce of approximately 1,500 individuals, leveraging a cloud-based structure for service deployment [6]. Group 2: CoP Services - As a CoP aggregator, XBP Europe simplifies the implementation process for payment service providers (PSPs), enabling faster participation in the CoP ecosystem [2][3]. - The company's CoP solution allows organizations to implement services in days rather than months, which is crucial for financial institutions to meet compliance deadlines [3]. - XBP Europe's account name verification service is utilized by hundreds of banks across Europe, ensuring high accuracy in payee account verification [4][5]. Group 3: Industry Impact - The approval from Pay.UK is significant as firms must implement CoP as a live service by 31 October 2024 to comply with Payment Systems Regulation [3]. - XBP Europe is the only CoP provider actively engaged in the Request to Pay system, indicating its innovative approach within the industry [4].

Financial Performance - Revenue for Q2 2024 was $36.1 million, a decrease of 14.8% year-over-year from $42.4 million in Q2 2023[2] - Gross margin declined to 18.4%, a decrease of 630 basis points sequentially and 920 basis points year-over-year[1] - Net loss for the quarter was $4.7 million, compared to a net loss of $0.6 million in Q2 2023[3] - Adjusted EBITDA was $0.3 million, a decrease of 92.8% compared to $4.0 million in Q2 2023, with an adjusted EBITDA margin of 0.8%[3] - Bills & Payments segment revenue was $27.3 million, down 9.6% year-over-year, while Technology segment revenue was $8.8 million, a decrease of 27.6% year-over-year[2][3] - For the three months ended June 30, 2024, net revenue was $36,031, a decrease of 15% compared to $42,294 for the same period in 2023[12] - The company reported a net loss of $4,723 for the three months ended June 30, 2024, compared to a net loss of $558 for the same period in 2023[12] - Revenues at constant currency for the three months ended June 30, 2024, were $36,371, compared to $42,367 for the same period in 2023, reflecting a decrease of 14%[14] - Adjusted EBITDA (Non-GAAP) for the three months ended June 30, 2024, was $287,000, a decrease of 92.85% from $4,009,000 in the same period of 2023[15] - Net loss (GAAP) for the three months ended June 30, 2024, was $(4,723,000), compared to a net loss of $(558,000) in the prior year, indicating a significant increase in losses[15] Cash and Liquidity - Cash and cash equivalents totaled $15.6 million as of June 30, 2024, with additional borrowing capacity of up to $15 million from a Revolving Credit Facility[4] - The company completed a financing transaction with HSBC to provide up to $33 million of incremental liquidity[5] - Cash and cash equivalents rose significantly to $15,562 as of June 30, 2024, compared to $6,905 as of December 31, 2023, marking an increase of 125%[11] Assets and Liabilities - Total current assets increased to $57,668 as of June 30, 2024, up from $49,867 as of December 31, 2023, representing a growth of 15%[11] - Total liabilities increased to $126,411 as of June 30, 2024, compared to $115,307 as of December 31, 2023, reflecting an increase of 10%[11] - The company’s total assets increased to $108,031 as of June 30, 2024, from $102,739 as of December 31, 2023, indicating a growth of 5%[11] Operating Performance - Operating loss for the three months ended June 30, 2024, was $(2,413), compared to an operating profit of $1,427 for the same period in 2023[12] - Net cash used in operating activities for the six months ended June 30, 2024, was $(5,540), compared to $(1,469) for the same period in 2023[13] Expenses - Income tax expenses increased to $542,000 in Q2 2024 from $385,000 in Q2 2023, reflecting a rise of 40.65%[15] - Interest expenses, including related party interest, rose to $1,488,000 in Q2 2024, up from $1,136,000 in Q2 2023, marking a 31.06% increase[15] - Employment litigation expenses surged to $917,000 in Q2 2024, compared to $345,000 in Q2 2023, representing a 166.67% increase[15] - Foreign exchange losses were $704,000 in Q2 2024, slightly up from $660,000 in Q2 2023, indicating a 6.67% increase[15] - Restructuring and related expenses decreased to $249,000 in Q2 2024 from $472,000 in Q2 2023, a reduction of 47.25%[15] - Non-cash equity compensation was recorded at $160,000 in Q2 2024, with no corresponding expense in Q2 2023[15] - Transaction fees decreased significantly to $30,000 in Q2 2024 from $202,000 in Q2 2023, a decline of 85.15%[15] Outlook - The company is optimistic about the rest of 2024 due to a strong sales funnel and large public sector contracts expected to launch soon[2] - Active revenue ramp of approximately $25 million in Annual Contract Value (ACV) from new business[1] Financial Reporting - The company emphasizes that non-GAAP financial measures should be considered alongside GAAP results for a comprehensive view of performance[17]

Table of Contents Title of Each Class Trading Symbol Name of Each Exchange On Which Registered Common Stock, Par Value $0.0001 per share XBP The Nasdaq Global Market Redeemable warrants, each whole warrant exercisable for one share of common stock at an exercise price of $11.50 XBPEW The Nasdaq Capital Market UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (Mark One) FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the period end ...