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    XBP
    Earnings call· Jun 2026(Q2 FY26)

    XBP Global Holdings Q2 FY26 earnings call XBP

    Aug 13, 2026 Source

    Executive summary

    XBP Global Q2 FY26 — Profitability Step-Up Driven by AI Automation

    XBP Global reported a significant step-up in profitability for Q2 FY26, driven by its AI-first transformation and automation efforts, leading to record adjusted gross margins and strong normalized EBITDA growth. Despite a revenue decline due to legacy contract restructuring, the company demonstrated robust commercial momentum with substantial increases in bookings and pipeline quality, positioning it for an expected revenue inflection in the second half of the year.

    Highlights

    5

    • Normalized EBITDA of $21.9 million, an 8.4% increase year-over-year and 40.6% sequentially.

    • Adjusted gross margin expanded to 24.9%, marking the highest level to date and up 290 basis points year-over-year.

    • Total contract value closed increased by 51.6% year-over-year to $121.3 million.

    • New ACV bookings reached $36 million, up 57% year-over-year and 32.1% sequentially.

    • Total pipeline stands at $2.5 billion as of June 30th, a 17.2% increase year-over-year.

    Concerns

    2

    • Total revenue for the quarter was $191.3 million, down 14% year-over-year on a pro forma basis, consistent with expected client exits and volume reductions.

    • The timing of overall public sector contracts is volatile, primarily due to geopolitical uncertainty.

    Guidance & targets

    5
    CategoryTargetConfidence
    Annualized operational efficiency
    $65 million to $75 million
    high materiality
    High
    In-year operational efficiency benefit
    approximately $35 million
    medium materiality
    High
    Workforce reduction
    approximate 20%
    medium materiality
    High
    Revenue inflection
    inflection
    high materiality
    Medium
    Revenue per employee
    approach $100,000
    medium materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Applied Workflow Automation
    Revenue driven by lower volumes and completion of certain one-time projects along with expected exits.
    Adjusted gross margin: 19.2% (up 120 bps year-over-year)
    		$166.8 milliondown 16.7 percent—19.2%
    Technology
    Revenue driven primarily by higher one-time projects in the quarter.
    Adjusted gross margin: 64.2% (growth of 690 bps year-over-year)
    		$24.5 millionincrease of 9.8% year-over-year—64.2%

    Operational metrics

    11
    Normalized EBITDA
    $21.9 million8.4% increase year-over-year and 40.6% increase sequentially
    Q2 FY26

    Reflects both a favorable revenue mix and AI-first automation efforts.

    Normalized EBITDA margin
    11.5%
    Q2 FY26

    Expanded due to favorable revenue mix and AI-first automation.

    Adjusted gross margin
    24.9%up 290 basis points from a year ago, and 140 basis points from the first quarter
    Q2 FY26

    Highest level to date, normalizing for one-time charges like severance and restructuring costs.

    Reported gross margin
    21.5%up 80 basis points from a year ago
    Q2 FY26

    Consolidated basis.

    Total contract value closed
    $121.3 million51.6% increase year-over-year and up 12.2% sequentially
    Q2 FY26

    Reflects meaningful growth in bookings.

    New ACV bookings
    $36 million57% year-over-year and 32.1% sequentially
    Q2 FY26

    Strong growth in new annual contract value.

    Total pipeline
    $2.5 billion17.2% increase year-over-year
    as of June 30th

    Reflects overall pipeline health and future opportunities.

    Revenue per employee
    $89,000Up from $82,000 last quarter
    Q2 FY26

    Driven by AI-first transformation and labor efficiency.

    Workforce reduction
    approximate 20%relative to year-end 2025
    by year-end 2026

    Part of efficiency initiatives, primarily driven by non-payroll initiatives including third-party vendor savings.

    Top 10 clients revenue concentration
    34%
    Q2 FY26

    Indicates low client concentration and diversification.

    Average client tenure
    around 15 years
    Q2 FY26

    Indicates stable and long-term client relationships.

    Deals & partnerships

    1
    global airline fleet clientDeployment of agentic AI infrastructure to manage maintenance lifecycle, including vectorization of maintenance items and data access management for record reproduction.

    The solution will store vectorized maintenance items in a private vector database within the client's private cloud, ensuring seamless record reproduction for aircraft going off-lease or sold.

    Risks & headwinds

    3
    Revenue decline from legacy contract exits and volume reductionsQ2 FY26

    Total revenue down 14% year-over-year on a pro forma basis to $191.3 million

    Mitigation: Company is undergoing AI-first transformation and focusing on higher-margin business; expects revenue inflection in H2 FY26.

    Volatility in timing of public sector contractsOngoing

    Despite strengthening public sector healthcare demand, the timing of overall public sector contracts is volatile

    Mitigation: Company notes diversification across client verticals as a natural hedge.

    Geopolitical uncertainty impacting public sector contract timingOngoing

    primarily as a result of geopolitical uncertainty

    Mitigation: Diversified client verticals.

    What to watch in Q3 FY26

    5

    Revenue inflection

    second half of the year
    Currentdown 14% year-over-year
    Targetinflection in revenue

    Why it matters

    A turnaround in revenue growth is critical to validate the success of the AI-first transformation and offset legacy contract exits.

    We expect an inflection in our revenue in the second half of the year.

    2 min read6 chapters

    Detailed Narrative

    01

    AI-First Transformation & Profitability

    XBP Global is undergoing a deliberate evolution, converting legacy workflow platforms into high-margin, agentic AI pipelines. This self-disruption and targeted go-to-market investments have led to a clear step-up in profitability, with adjusted gross margin reaching a record 24.9% and normalized EBITDA increasing to $21.9 million. The company emphasizes its strategy of combining deterministic rules engines with intelligent AI models to ensure precision and compliance in regulated markets like healthcare and BFSI.

    02

    Human-in-the-Loop AI Model

    The company's AI pipeline is designed to handle complex exceptions by routing them to subject matter experts, who then adjudicate, resolve, and feed that judgment back into the model for continuous retraining. This approach elevates employees into high-value adjudicators rather than replacing them, building a more durable and profitable growth engine by converting manual, volume-heavy workflows into intelligent AI pipelines.

    03

    Operational Efficiency & Workforce Reduction

    XBP Global is raising its targeted annualized operational efficiency range to $65 million to $75 million, up from $55 million to $60 million, with an expected in-year benefit of approximately $35 million for 2026. This is correlated with a projected approximate 20% workforce reduction by year-end 2026 relative to year-end 2025, driven by both payroll and non-payroll initiatives like third-party vendor savings.

    04

    Commercial Momentum & Pipeline Health

    Despite a 14% year-over-year revenue decline due to legacy contract exits, the company is seeing improving forward-looking metrics. Total contract value closed increased by 51.6% year-over-year to $121.3 million, and new ACV bookings grew 57% year-over-year to $36 million. The total pipeline stands at $2.5 billion, up 17.2% year-over-year, with significant AI interest in healthcare and public sector practice groups.

    05

    Low Client Concentration & Diversification

    XBP Global highlights its low client concentration, with the top 10 clients representing only 34% of revenues. The company is diversified across client verticals, which acts as a natural hedge, and boasts an average client tenure of around 15 years among its top 25 clients, indicating stable and long-term relationships.

    06

    Strategic Alternatives Process

    The company announced that it has engaged a financial advisor for its strategic alternatives process, which was initiated last quarter. Updates will be provided as appropriate, indicating a potential for significant corporate actions in the future.

    AI-generated summary of the company’s earnings call. Not investment advice.