XBP Europe (US:XBP)2025-05-15 20:13Financial 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].