GFT's FY'25 prelims indicate improving growth momentum, sequential margin recovery and a clear positioning as an AI enabler, supporting our BUY recommendation.
Q4 25 fx-adj. sales grew 7% yoy to € 233m (eNuW: € 229m, eCons: € 230m), driven by growth in the Americas (US: +17% yoy in FY, Brazil: +28%, Colombia: +19%) and including a c. 2pp inorganic growth contribution from Megawork.
Q4 25 adj. EBIT came in at € 21.9m, c. 13% ahead of the implied guidance (€ 19.5m; eNuW: € 18.3m), down c. 9% yoy mainly due to the weak UK unit, which likely remained unprofitable in Q4. The adj. EBIT margin arrived at 9.4%. While still below last year's level (also see p.2), this marks a sequential improvement of +2.2pp qoq.
The outlook into 2026 assumes 5% yoy growth to € 930m, in line with our expectations (eNuW: 3.3% organically, 1.6% inorganic from the Megawork acquisition closed in Sep'25). Peers have guided similarly, supporting the credibility of this outlook. For example, Capgemini issued a 2026 organic growth outlook of 1.5-4% yoy, despite being also exposed to less dynamic growth sectors (e.g. Retail). At the same time, the adj. EBIT margin is set to remain stable yoy at 7.6%, according to GFT (eNuW: 7.3%), as the weak UK unit continues to mask the stronger underlying group performance.
Meanwhile, GFT's positioning as an AI enabler is highlighted by its Wynxx platform, which is built on top of the newest AI models from Anthropic (Claude), OpenAI and Google (Gemini). Anthropic's recently announced COBOL modernisation tool, which triggered market concerns, is in fact directly embedded into GFT's work processes via these platforms. Importantly, these tools continue to require operators and, knowing how to best utilise them, GFT looks set to be this orchestrating entity. As a consequence of new AI tools, modernisation projects clear ROI hurdles, become less risky and faster to execute. With approx. 75% of banks still running on legacy systems, there remains a sizeable market opportunity, expected to result in a market CAGR of c. 18% into 2030 (source: Mordor Intelligence).
Market momentum is indeed on GFT's side. The company's FY'25 fx-adj. sales improved c. 11% yoy, when excluding the UK unit, which had been restructured in H2 25, following what appear to have been largely idiosyncratic issues (UK management was replaced during restructuring).
In sum, GFT's Q4 prelims de-risk the near-term, in our view: Growth is re-accelerating, margins are improving sequentially, and the 2026 outlook looks achievable even with the UK still acting as a drag (eNuW: FY'26 sales -12% yoy). As such, we continue to see the current valuation as discounting an overly bearish scenario on structural demand. BUY, PT of € 32, on DCF.
ISIN: DE0005800601
