Alpha growth continues in FY 2023 amid headwinds

Alpha growth continues in FY 2023 amid headwinds

B2B payments player Alpha Group has provided a trading update that includes top-level FY 2023 numbers and while the company has faced a tough operating environment, it has continued to see positive growth.

Alpha revenues rise despite challenging economic conditions
Alpha yearly revenues and operating profit margin, 2018-2023

Reporting a 12% revenue increase to £110m ($140m) for FY 2023, the company retained operating profit margins of 39%. This is the result of challenging economic conditions that produced both headwinds and benefits for the company. Alpha saw lower levels of activity from clients across its corporate and institutional businesses, although did see growth in its international FX risk management (FXRM) business, including the launch of offices in Madrid and Munich, which has offset a decline in revenue from its UK corporate business. By contrast, its UK institutional FXRM business has seen growth, which the company expects to continue as macroeconomic conditions improve.

Critically, while this tough environment suppressed growth and produced the company’s most challenging sales period on record in Q3 2023, it saw record revenues in Q4, indicating a rebound is underway, despite expecting “challenging” conditions to continue in 2024.

However, Alpha also saw levels of interest income from client balances reach £73m for the year, up from £9.3m in 2022, which the company has described as “exceptional”. Here, the company saw average balances climb to £2.1bn in Q4, with an average interest rate of 3.8%, which helped the company’s overall pre-tax profits climb above its revenue for the year to £115m ($146m) – a YoY increase of 140%.

Alpha has also shifted its strategy to discourage the sale of complex hedging-based products, which have become increasingly popular in the B2B payments space. The group believes these sacrifice long-term client benefits for short-term gains, harming client retention, and so has adopted a commission structure that incentivises less complex products.

Finally, the company has also broadened its corporate client offering with the completion of its acquisition of multibank connectivity platform Cobase. Completed in December 2023, this was Alpha’s first acquisition and is set to allow the group to offer a range of treasury-focused products, with benefits expected to be seen from 2024 onwards.

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