Core Insights - XBP Europe Holdings, Inc. reported financial results for Q1 2025, showing continued revenue growth and gross margin expansion, driven by AI technology and operational improvements [2][4]. Financial Performance - Total revenue for Q1 2025 was $37.7 million, a decrease of 1.2% year-over-year but an increase of 5.7% sequentially [6][7]. - Gross margin improved to 30.1%, reflecting a 380 basis points increase year-over-year and a 190 basis points increase sequentially [6]. - Adjusted EBITDA was $3.7 million, representing a 25.6% increase year-over-year but a 16.1% decrease sequentially [6][7]. Segment Performance - Revenue from the Bills & Payments segment was $26.3 million, down 1.2% year-over-year but up 1.8% sequentially [7]. - Revenue from the Technology segment was $11.4 million, a decrease of 1.0% year-over-year but an increase of 16% sequentially [7]. Operating Loss and Net Loss - The company reported an operating loss of $1.8 million compared to an operating profit of $1.3 million a year ago [7]. - The net loss from continuing operations was $3.9 million, which adjusted for non-cash stock-based compensation, resulted in a net loss of $0 million [7]. Acquisition Plans - XBP Europe has entered into a non-binding letter of intent to acquire Exela Technologies BPA, LLC, which could potentially increase revenue to approximately $1 billion from $143 million on a pro forma basis for the year ending December 31, 2024 [4]. Liquidity Position - As of March 31, 2025, the company had cash and cash equivalents totaling $9.7 million [6].

Revenue Performance - Total revenue for Q1 2025 was $37.7 million, a decrease of 1.2% year-over-year and an increase of 5.7% sequentially[5] - Revenue for the three months ended March 31, 2025, was $37,531 million, a decrease of 1.4% from $38,047 million in the same period of 2024[22] - Revenues at constant currency for Q1 2025 were $38,438 million, compared to $38,113 million in Q1 2024, reflecting a growth of 0.9%[25] - The technology segment revenue was $11.4 million, a decrease of 1.0% year-over-year but an increase of 16% sequentially[6] Profitability Metrics - Gross margin improved to 30.1%, reflecting a 380 basis points increase year-over-year and a 190 basis points increase sequentially[5] - Adjusted EBITDA from continuing operations was $3.7 million, representing a 25.6% increase year-over-year[5] - Adjusted EBITDA from continuing operations for Q1 2025 was $3,694 million, an increase of 25.5% from $2,942 million in Q1 2024[25] - Operating profit (loss) for Q1 2025 was $(1,787) million, a decline from an operating profit of $1,331 million in Q1 2024[22] Net Loss and Adjustments - Net loss from continuing operations was $3.9 million, but adjusted for non-cash stock-based compensation, the net loss was $0 million[6] - Net loss for the same period was $4,350 million, compared to a net loss of $2,208 million in 2024, representing an increase in loss of 97.4%[22] Cash Flow and Liquidity - Cash and cash equivalents totaled $9.7 million as of March 31, 2025, down from $12.1 million at the end of 2024[6] - Cash used in operating activities for Q1 2025 was $(929) million, an improvement from $(3,610) million in Q1 2024[24] - Cash and equivalents at the end of Q1 2025 were $9,726 million, up from $3,501 million at the end of Q1 2024[24] - Net cash used in investing activities for Q1 2025 was $(1,091) million, compared to $(385) million in Q1 2024, showing a significant increase in cash outflow[24] Assets and Liabilities - Total assets increased to $98.977 million as of March 31, 2025, compared to $88.045 million at the end of 2024[20] - Total liabilities rose to $119.365 million as of March 31, 2025, up from $109.391 million at the end of 2024[20] Acquisition Potential - The pending acquisition of Exela Technologies BPA, if completed, could expand XBP Europe's revenue to approximately $1 billion from $143 million on a pro forma basis for the year ending December 31, 2024[4] Expenses - Selling, general and administrative expenses for Q1 2025 were $10,953 million, a significant increase of 57.5% from $6,968 million in Q1 2024[22] - Interest expense, net for Q1 2025 was $1,721 million, compared to $1,417 million in Q1 2024, indicating an increase of 21.4%[22]

Financial Performance - The Company reported a net loss from continuing operations of $3,855,000 for the three months ended March 31, 2025, compared to a net loss of $858,000 for the same period in 2024[175]. - Adjusted EBITDA from continuing operations was $3,694,000 for the three months ended March 31, 2025, an increase from $2,942,000 in the same period of 2024[175]. - For the three months ended March 31, 2025, net revenue decreased by $0.4 million, or 1.2%, to $37.7 million compared to $38.1 million for the same period in 2024[188]. - The Bills & Payments segment generated $26.3 million in revenue, a decline of $0.3 million or 1.2%, primarily due to foreign currency impacts, while on a constant currency basis, revenue increased by $0.3 million or 1.2%[189]. - The Technology segment's revenue decreased by $0.1 million or 1.0%, totaling $11.4 million, attributed to lower license sales, with a constant currency increase of $0.0 million or 0.1%[190]. - Total cost of revenue decreased by $1.8 million, or 6.3%, to $26.3 million, with a constant currency decrease of $1.1 million or 3.9%[191]. - Selling, general and administrative expenses increased by $4.0 million, or 57.2%, to $11.0 million, primarily due to $3.8 million in stock-based compensation[195]. - Interest expense increased to $1.7 million for the three months ended March 31, 2025, compared to $1.4 million in 2024, due to higher borrowing costs[200]. - Net cash used in operating activities improved to $0.9 million for the three months ended March 31, 2025, from $3.6 million in 2024, a decrease of $2.7 million[212]. - Net cash used in financing activities was $0.4 million for the three months ended March 31, 2025, a decrease of $1.1 million compared to net cash provided of $0.7 million for the same period in 2024[217]. Workforce and Operations - As of March 31, 2025, the Company employed approximately 1,500 employees across 16 countries, with 145 being part-time[159]. - The Company approved a restructuring plan in Q4 2023 to realign its business, which includes rightsizing its workforce in certain regions[234]. Strategic Initiatives - The Company has entered into a non-binding letter of intent to acquire Exela Technologies BPA, LLC, a leading provider of business process automation solutions[161]. - The Company may explore strategic transactions, including joint ventures and acquisitions, which may require additional funds[235]. - The Company is undergoing a pending divestiture of certain on-demand printing operations, which have been classified as discontinued operations[164]. Debt and Financing - As of March 31, 2025, total debt increased by $0.8 million primarily due to borrowings under the 2024 Senior Credit Facilities[207]. - The outstanding balance of the Term Loan A Facility, Term Loan B Facility, and Revolving Credit Facility was approximately $3.3 million, $9.7 million, and $15.4 million, respectively[227]. - The Company incurred $1.5 million in debt issuance costs related to the 2024 Facilities Agreement[222]. - The outstanding principal amount of the 2024 Term Loan A Facility shall be repaid in fifteen equal quarterly installments of £150 thousand commencing September 30, 2024[229]. - The 2024 Facilities Agreement requires maintaining a consolidated total leverage ratio of not greater than 2.50 to 1.00, with step-downs to 2.25 to 1.00 starting January 1, 2025, and 2.00 to 1.00 starting January 1, 2026[223]. - As of March 31, 2025, the XBP Group was in compliance with all affirmative and negative covenants under the 2024 Facilities Agreement[230]. Currency and Foreign Exchange - The Company has experienced foreign exchange losses, netting $71,000 in losses for the three months ended March 31, 2025[175]. Revenue Sources - Revenue is primarily derived from transaction processing, with additional income from recurring and perpetual software licenses and professional services[178]. - The Bills & Payments segment focuses on optimizing bill and payment processing, while the Technology segment emphasizes software licenses and related maintenance[165]. Digital Transformation - The Company serves over 2,000 clients across various industries and geographies, emphasizing its role in digital transformation and market-wide liquidity[154]. - The Company’s digital foundation includes SaaS offerings and hybrid solutions tailored to client needs[157].

Financial Performance - Total revenue for 2024 was $142.8 million, a decline of 8.0% year-over-year, primarily due to project completions and lower volumes [4]. - Gross margin for the full year was 26.8%, reflecting a 110 basis points increase year-over-year [4]. - Operating profit for 2024 was $3.5 million, an increase of $2.4 million compared to 2023 [4]. - Adjusted EBITDA from continuing operations was $13.4 million, a decrease of 15.1% compared to 2023, with an adjusted EBITDA margin of 9.4% [5]. - The company reported a net loss from continuing operations of $6.5 million, compared to a net loss of $5.6 million in 2023 [5]. - Net loss for 2024 was $12,366,000, compared to a net loss of $11,047,000 in 2023, reflecting a 12.0% increase in losses [16]. - Adjusted EBITDA from continuing operations decreased to $13,390,000 in 2024 from $15,774,000 in 2023, a decline of 15.1% [20]. Revenue Breakdown - Bills & Payments segment revenue was $101.9 million, a decline of 7.8% year-over-year, while Technology segment revenue was $40.9 million, a decrease of 8.5% year-over-year [5]. - Total revenue for 2024 was $142,408,000, a decrease of 8.0% from $154,943,000 in 2023 [16]. Liquidity and Assets - Cash and cash equivalents totaled $12.1 million as of December 31, 2024, indicating adequate liquidity [6]. - Cash and cash equivalents increased to $12,106,000 at the end of 2024, up from $6,905,000 at the end of 2023, representing a 75.0% increase [18]. - Total assets decreased to $88,045,000 in 2024 from $102,739,000 in 2023, a reduction of 14.3% [15]. - Total liabilities decreased to $109,391,000 in 2024 from $115,307,000 in 2023, a decline of 5.5% [15]. - Accounts receivable decreased to $19,810,000 in 2024 from $30,238,000 in 2023, a decrease of 34.5% [15]. Strategic Initiatives - The company signed a non-binding letter of intent to acquire Exela Technologies BPA, LLC, which could potentially expand revenue to approximately $1 billion annually [4][7]. - The company is optimistic about its organic growth trajectory in 2025 and is pursuing the acquisition to benefit from global scale [2]. - Approximately $25 million of annual contract value (ACV) was in active ramp, contributing to improved margins in the second half of 2024 [4]. Other Financial Impacts - The company reported a foreign currency exchange impact of $(1,055,000) on revenues, indicating the effect of currency fluctuations on financial performance [19]. - The company incurred $1,611,000 in stock-based compensation expense in 2024, reflecting ongoing investment in employee incentives [20].

Full Year 2024 Highlights - Total revenue for 2024 was $142.8 million, a decline of 8.0% year-over-year, primarily due to project completions and lower volumes [6][7] - Gross margin improved to 26.8%, an increase of 110 basis points year-over-year [6] - Operating profit increased to $3.5 million, up $2.4 million from 2023, driven by higher gross margins and cost optimizations [6][7] - Net loss from continuing operations was $6.5 million, compared to a net loss of $5.6 million in 2023 [7][19] - Adjusted EBITDA from continuing operations was $13.4 million, a decrease of 15.1% compared to 2023 [7][25] Fourth Quarter 2024 Highlights - Revenue for Q4 2024 was $35.6 million, a decrease of 7.5% year-over-year but an increase of 0.7% sequentially [6][7] - Gross margin for Q4 was 28.3%, a 480 basis point increase year-over-year [6] - Operating profit for Q4 was $1.0 million, an increase of $3.4 million year-over-year [6][7] - Net loss for Q4 was $2.7 million, which included $0.5 million of foreign exchange losses [6] Segment Revenue and Profitability - Bills & Payments segment revenue was $101.9 million, a decline of 7.8% year-over-year [7][9] - Technology segment revenue was $40.9 million, a decrease of 8.5% year-over-year [7][9] - Segment gross profit for Bills & Payments was $16.4 million, while for Technology it was $21.9 million for the full year [9] Pending Acquisition - XBP Europe has signed a non-binding letter of intent to acquire Exela Technologies BPA, LLC, which could potentially increase annual revenue to approximately $1 billion [4][8] - The acquisition is contingent upon Exela completing a corporate reorganization to create a sustainable capital structure [8] Liquidity and Capital Expenditures - Cash and cash equivalents totaled $12.1 million as of December 31, 2024, compared to $6.5 million in 2023 [7][17] - Capital expenditures were 1.2% of revenue, down from 1.7% in 2023 [7]

Financial Performance - For the year ended December 31, 2024, the company reported a net loss of $12.366 million, compared to a net loss of $11.047 million in 2023, representing an increase in loss of approximately 11.97%[426]. - Revenue for the year ended December 31, 2024, was $142.408 million, down from $154.943 million in 2023, indicating a decrease of about 8.06%[426]. - The company reported an operating profit of $3.472 million for 2024, compared to $1.117 million in 2023, reflecting an increase of approximately 211.5%[426]. - The company’s accumulated deficit increased from $11.339 million in 2023 to $23.705 million in 2024, representing a growth of approximately 109.5%[425]. - The net loss for the year ended December 31, 2024, was $12,366,000, compared to a net loss of $11,047,000 for 2023, representing an increase in loss of approximately 11.9%[433]. - The Company recorded a net revenue of $8.064 million from discontinued operations for the year ended December 31, 2024, down from $11.393 million in 2023, representing a decrease of approximately 29.5%[449]. - The net loss from discontinued operations, after income taxes, was $5.833 million for 2024, compared to a loss of $5.479 million in 2023, reflecting an increase in loss of approximately 6.4%[449]. Assets and Liabilities - The company's total current assets decreased from $49.867 million in 2023 to $41.338 million in 2024, a decline of approximately 17.3%[425]. - Total liabilities decreased from $115.307 million in 2023 to $109.391 million in 2024, a reduction of about 5.3%[425]. - The company’s cash and cash equivalents increased from $6.537 million in 2023 to $12.099 million in 2024, an increase of approximately 85.5%[425]. - Accounts receivable, net decreased to $19.8 million as of December 31, 2024, down from $30.2 million in 2023[491]. - Total current liabilities held for sale were $2.443 million as of December 31, 2024, compared to $3.818 million in 2023, showing a decrease of approximately 36%[450][451]. - Total accrued liabilities decreased from $23,850 thousand in 2023 to $17,993 thousand in 2024, representing a reduction of about 24.6%[545]. Cash Flow and Financing - Cash used in operating activities for 2024 was $5,227,000, a significant increase from $1,535,000 in 2023[433]. - The Company incurred interest expense of $0.6 million related to the Secured Borrowing Facility in 2023, which was eliminated in 2024[547]. - The outstanding balances payable under the Secured Borrowing Facility decreased from $0.1 million in 2023 to $0 in 2024[547]. - The Company repaid a total of $1.9 million under the Term Loan A Facility, $0.4 million under the Term Loan B Facility, and $6.4 million under the Revolving Credit Facility during the year ended December 31, 2024[551]. - The maturity of the Revolving Credit Facility was further extended to August 31, 2025 on May 10, 2024[551]. Operational Challenges - The company is uncertain about achieving continued and sustained profitability[17]. - The company may need to raise debt or equity financing, which could be on unfavorable terms[18]. - The company's revenues are highly dependent on the banking and finance industries, and any decrease in demand could reduce revenues[24]. - The company faces significant competition, including from clients who may choose to perform business processes in-house[22]. - The company relies on ETI, which is a highly leveraged company facing substantial doubt about its ability to continue as a going concern[18]. - The company may not be able to offset increased costs with increased fees under its contracts[22]. - The company is subject to regular client and third-party security reviews, and failure to pass these may adversely impact operations[27]. - The invasion of Ukraine by Russia and the resulting sanctions have caused significant economic disruption[31]. Shareholder Information - The company does not expect to declare any dividends in the foreseeable future[34]. - The company reported a total of 30,166,102 shares of common stock outstanding following the business combination[444]. - The weighted average common shares outstanding increased from 22,535,920 in 2023 to 30,166,102 in 2024[515]. - Basic and diluted loss per share for continuing operations improved from $(0.25) in 2023 to $(0.22) in 2024[515]. Expenses and Costs - The company incurs significant increased expenses and administrative burdens as a result of being a public company[35]. - The Company recognized stock-based compensation expense of $1,611,000 in 2024, compared to no such expense in 2023[433]. - Research and development expenses were $0.6 million for the year ended December 31, 2024, down from $0.9 million in 2023[502]. - Advertising expenses increased to $0.2 million in 2024 from $0.1 million in 2023[500]. - Restructuring charges for the years ended December 31, 2024 and 2023 were $1.1 million and $4.3 million, respectively[504]. Currency and Translation Adjustments - Foreign currency translation adjustments resulted in a gain of $1.890 million in 2024, compared to a loss of $2.995 million in 2023[429]. - Foreign exchange losses were $2.5 million in 2024, compared to $0.6 million in 2023[512]. - The company’s foreign currency translation adjustment resulted in a loss of $1,416,000 for the year ended December 31, 2023[431]. Goodwill and Impairment - The Company recorded an impairment charge of $0.1 million related to goodwill for the year ended December 31, 2024[449]. - The impairment of goodwill recorded in 2024 was due to the classification of certain operations as held for sale, indicating a significant strategic shift[449]. - The Company recorded a goodwill impairment of $0.1 million in discontinued operations for the year ended December 31, 2024[473].

Core Viewpoint - XBP Europe Holdings, Inc. has entered into a non-binding letter of intent to acquire Exela Technologies BPA, LLC, which will significantly increase XBP Europe's revenue and enhance its market position in business process automation solutions [1][2]. Company Overview - XBP Europe is a pan-European integrator focused on bills, payments, and related solutions, serving over 2,000 clients across various industries including banking, healthcare, and public sector [3]. - The company aims to facilitate digital transformation and optimize clients' billing and payment processes through proprietary software and cloud-based solutions [3]. - XBP Europe operates in 15 countries with a workforce of approximately 1,500 employees [3]. Exela Technologies BPA Overview - BPA is a leading provider of business process automation solutions, serving over 1,550 customers globally [4]. - The company utilizes proprietary technology to enhance quality, productivity, and user experience across various sectors including finance, healthcare, and legal management [4]. - BPA employs around 11,000 individuals and operates in 5 countries, providing integrated technology and operations as a digital journey partner [4]. Transaction Details - The acquisition, if completed, will increase XBP Europe's revenue from $145 million to over $1 billion on a pro forma basis for the twelve months ending September 30, 2024 [1]. - The transaction is contingent upon BPA completing a corporate reorganization to achieve a sustainable capital structure [1]. - Both parties are committed to negotiating definitive agreements and completing due diligence, although there is no guarantee that the transaction will be finalized [2].

Core Insights - XBP Europe Holdings, Inc. has been selected as a supplier for the AGIRC-ARRCO framework, which is valued at over €25 million for all suppliers, to provide data processing and payment services [1][2][3] Group 1: Company Overview - XBP Europe is a pan-European integrator focused on bills, payments, and related solutions, aiming to facilitate digital transformation for over 2,000 clients across various sectors including banking, healthcare, and public services [5] - The company operates in 15 countries with a workforce of approximately 1,500 individuals, leveraging a cloud-based structure to deploy its solutions across Europe, the Middle East, and Africa [5] Group 2: AGIRC-ARRCO Framework - AGIRC-ARRCO manages a compulsory supplementary pension scheme for private-sector employees in France, collecting contributions from 27 million employees and 1.8 million companies, and disbursing €90 billion annually [2] - XBP Europe will collaborate with three other suppliers to support pension applications and administrative services related to pension contributions, utilizing its advanced IDP/TTY, workflow solutions, and Digital Mailroom platforms [3][4] Group 3: Strategic Importance - The partnership with AGIRC-ARRCO enhances XBP Europe's reputation as a trusted partner in digital transformations, emphasizing its expertise in data digitization and workflow automation to ensure operational efficiency and accuracy [4]

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] - The VOP regulations, effective by October 5, 2025, aim to reduce annual losses in the payments industry, which amount to approximately $120 billion due to 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] Company Overview - XBP Europe has nearly 30 years of experience in account name verification and was an early adopter of the UK's equivalent service, Confirmation of Payee (CoP), supporting over 400 banks [4][5] - The company operates across 15 countries with a workforce of approximately 1,500 individuals, providing services to over 2,000 clients in various sectors including banking, healthcare, and utilities [7] - XBP Europe aims to facilitate digital transformation and improve market liquidity by expediting payments, while also promoting sustainable business practices [7]

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]