We hosted GFT at our London conference, which reinforced the key pillars of the equity story:
Quality remains the bedrock. GFT is a banking specialist in one of the hardest IT verticals, where security, regulation and legacy stacks make execution risk the real cost. Quality leadership in digital banking is externally validated (e.g. IDC and QKS), and the client roster speaks for itself, with Deutsche Bank, HSBC, JPM and Santander among them. While the business does not generate recurring revenue by design, relationships are very sticky due to trust and system knowledge: once GFT has done a complex project it is deeply embedded in the client's IT estate, which makes it hard to displace. Consistently high utilisation points to disciplined capacity management and supports the margin resilience of the model.
The market is large and still growing, although a broad-based pick-up is not yet visible in group-reported numbers, partly masked by the struggling UK business. With approx. 75% of banks still running on legacy systems, there remains a sizeable market opportunity in banking IT modernisation, expected to result in a market CAGR of c. 18% into 2030 (source: Mordor Intelligence). This is not a one-to-one read-through to GFT sales, yet the need for integration, data flows, APIs and core platform work fits GFT's capabilities well. AI should act as a demand multiplier, shifting the bottleneck to precisely those areas.
AI looks net accretive on balance. While prices per project decline thanks to efficiencies, volume growth is seen to more than offset this effect, as more projects clear the ROI hurdle and clients broaden the scope. GFT's proprietary Wynxx platform, mainly a project enabler, is more than a wrapper around individual LLMs. Its model-agnostic setup routes tasks across ChatGPT, Claude, Gemini, proprietary and open-source models based on cost, speed, capability, security and use case. The value-add lies in GFT's orchestration know-how and preconfigured agents, making AI deployable in complex enterprise IT environments. At Bradesco Seguros, the client reinvested efficiency gains into additional scope, following intense Wynxx testing, lifting revenue above pre-Wynxx levels for GFT. Similarly, a Brazilian automotive group's documentation programme, uneconomical pre-AI at c. 1.5 years and $ 1.1m, was reframed into a 16-week, $ 100k delivery, turning it into incremental revenue.
Margins are set to expand, and Q1 already showed the first signs, with the adj. EBIT margin up 0.2pp yoy to 7%. Two levers are seen to support the remaining quarters. The first is the UK turnaround: we expect the unit to return to profitability in Q2 and to resume growth in Q3, following capacity rightsizing, new leadership and an improving pipeline. Second, strategic mid-term initiatives: smartshore should scale to 40% by 2029 from c. 20%, while high-value-added services should increase from c. 25% today to up to 50%, supported by bolt-on M&A such as Megawork (closed in Sep 25).
Guidance remains for c. 5% fx-adj. growth and a slight EBT margin improvement to 6% (+0.8pp yoy), which appears achievable without any meaningful market recovery.
BUY, PT € 32, based on DCF.
ISIN: DE0005800601
