74Software (74SW) Q2 2026 earnings summary

Executive summary

• Organic revenue grew 8.6% year-over-year in H1 2026 to €367.0m, with strong contributions from both Axway and SBS brands.

• Operating margin improved to 15.2%, with profit on operating activities up 34.8% to €55.7m and net profit more than quadrupling to €27.4m.

• Recurring revenue and ARR grew strongly, with recurring revenue accounting for 91.3% of product revenue and both brands exceeding €250m in ARR.

• Artificial intelligence integration advanced across both brands, supporting new offerings and early client adoption.

• Full-year 2026 guidance was raised, reflecting strong H1 execution and improved strategic flexibility.

Financial highlights

• H1 2026 revenue: €367.0m (+8.6% organic YoY); product revenue: €304.1m (+10.8% organic YoY); recurring revenue: €277.6m (+10.0% organic YoY).

• Gross margin expanded to 67.2% (up from 66.3% YoY); gross profit reached €246.8m.

• Earnings per share rose to €0.94 (from €0.20 YoY); net profit margin increased to 7.5%.

• Unlevered free cash flow was €32.8m (8.9% of revenue), down year-over-year due to working capital outflows.

• Net debt reduced to €181.3m, leverage ratio improved to 1.39x.

Outlook and guidance

• FY 2026 organic revenue growth guidance raised to 3–6%, margin on operating activities to 15–18%.

• Unlevered free cash flow guidance maintained at around 10% of revenue.

• Medium-term ambition: 4–6% organic growth, 16–18% margin, revenue close to €800m by 2028, and €1bn including M&A.

• Pipeline supports guidance; H2 revenue expected to be lower than H1 due to deal timing.