Executive Summary

Q1 2025 delivered the third consecutive quarter of sequential revenue growth to $37.7M (+5.7% q/q; -1.2% y/y), with gross margin expanding to 30.1% (+190 bps q/q; +380 bps y/y) and Adjusted EBITDA at $3.7M (+25.5% y/y; -16.1% q/q) .
GAAP operating loss of $(1.8)M) reflected $3.8M of non-cash stock-based compensation from accelerated vesting; on an adjusted basis, operating profit was $2.0M, up y/y and q/q; net loss from continuing operations was $(3.9)M; cash and equivalents were $9.7M .
Mix and execution: Technology segment posted strong profitability (54.5% gross margin), while Bills & Payments grew sequentially; active project ramps (including HMPO) supported growth and margin .
Strategic/M&A and listing: Management reiterated the non-binding LOI to acquire Exela Technologies BPA, LLC (potentially transformative scale) and confirmed continued Nasdaq listing via transfer to the Capital Market after meeting Rule 5550(b)(2) requirements .
Consensus context: Wall Street (S&P Global) consensus for Q1 2025 revenue/EPS was unavailable, so beats/misses vs estimates cannot be assessed this quarter (see Estimates Context).

What Went Well and What Went Wrong

What Went Well
- Margin execution: Gross margin expanded 380 bps y/y and 190 bps q/q to 30.1%, driven by automation/AI enablement and operational leverage; CEO: “strong momentum continued into 2025, reflected by growing revenue, gross margin, and Adjusted EBITDA” .
- Underlying profitability: Adjusted EBITDA rose 25.5% y/y to $3.7M; adjusted operating profit reached $2.0M (vs. $1.3M a year ago and $1.0M in Q4), reflecting higher gross profit and cost optimization .
- Segment strength and ramps: Technology gross margin at 54.5% and three straight quarters of sequential revenue growth supported by ~$25M active ACV ramp (including HMPO go-live) .
What Went Wrong
- GAAP earnings pressure: Operating loss of $(1.8)M) and net loss from continuing operations of $(3.9)M) were driven primarily by $3.8M non-cash stock-based compensation from accelerated vesting .
- Cost line optics: SG&A headline increased due to stock-based comp (non-cash); related party expenses rose to $1.6M amid COE expansion and new related-party services .
- Financing headwinds: Interest expense increased to $1.7M y/y on higher borrowings and pension interest, while operating cash flow was $(0.9)M) for the quarter, underscoring the need for continued discipline .

Financial Results

Consolidated summary (oldest → newest):

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($M)	$35.4	$35.6	$37.7
Gross Margin %	32.6%	28.3%	30.1%
Adjusted EBITDA ($M)	$4.8	$4.4	$3.7
Operating Income (Loss) ($M, GAAP)	$2.5	$1.0	$(1.8)
Diluted EPS (Total, GAAP)	$(0.09)	N/A	$(0.14)
Diluted EPS – Continuing Ops (GAAP)	$(0.04)	N/A	$(0.12)
Cash & Equivalents ($M, period-end)	$7.8	$12.1	$9.7

Estimates comparison (S&P Global): Not available for Q1 2025 (see Estimates Context).

Segment performance (oldest → newest):

Segment	Q3 2024 Revenue ($M)	Q3 2024 GM %	Q4 2024 Revenue ($M)	Q4 2024 GM %	Q1 2025 Revenue ($M)	Q1 2025 GM %
Bills & Payments	$24.6	21.0%	$25.9	20.9%	$26.3	19.6%
Technology	$10.8	59.0%	$9.8	47.8%	$11.4	54.5%

KPIs (Q1 2025 revenue by geography):

Geography	Q1 2025 Revenue ($M)
France	$12.724
Germany	$10.623
United Kingdom	$8.706
Sweden	$3.461
Other	$2.017
Total	$37.531

Non-GAAP reconciliation notes: Adjusted EBITDA from continuing operations reconciles from net loss by adding back taxes, interest, D&A, restructuring, stock-based compensation, FX and warrant fair value changes as shown in the press release schedules .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Company guidance	FY 2025 / FY 2024 exit	None disclosed	None disclosed	N/A (No formal quantitative guidance in Q1 2025 press release or 10-Q)

Note: Management reiterated the non-binding LOI to acquire Exela Technologies BPA, LLC and the potential pro forma scale, but did not issue quantitative outlook metrics .

Earnings Call Themes & Trends

(Note: No Q1 2025 call transcript was available in SEC filings; themes derive from press releases/investor materials.)

Topic	Q3 2024	Q4 2024	Q1 2025	Trend
AI/Automation and tech enablement	Emphasis on expanding technology sales; margin lift from optimization	Margin gains with leverage/automation	Margin expansion attributed to expanded use of AI and operational leverage	Positive, consistent emphasis
Government/public sector ramps	Selected for UK G-Cloud 14 framework; ramp building	HMPO go-live noted in 4Q presentation	Active ~$25M ACV ramp including HMPO supports growth	Ramps progressing
Cost optimization & SG&A	Cost optimization aided operating profit	SG&A cost optimizations cited with margin gains	Adjusted operating profit improved despite SBC; continued optimization	Sustained focus
FX/Macro	FX losses weighed on net loss	Net loss included $0.5M FX losses	FX a small net gain (+$0.07M)	FX volatility persists
M&A/Strategic	—	LOI to acquire Exela BPA highlighted (transformational)	LOI reiterated; ~$1B pro forma revenue potential if consummated	Strategic optionality
Listing/Compliance	—	—	Nasdaq Panel confirmed compliance under NCM; listing continued	Listing status stabilized

Management Commentary

“Our strong momentum continued into 2025, reflected by growing revenue, gross margin, and Adjusted EBITDA… driven by expanded use of AI technology and improved operational leverage.” — Andrej Jonovic, CEO (Q1 2025 PR) .
“Our focus on expanding technology sales and cost structure optimization contributed to our performance in the quarter… we are… excited by opportunities… from being selected for the UK government’s G-cloud 14 framework.” — CEO (Q3 2024 PR) .
“We ended 2024 with growing momentum… ramp our recently awarded contracts… improving profitability and operating metrics… excited about our organic growth trajectory in 2025… and potential acquisition of Exela BPA.” — CEO (Q4 2024 PR) .

Q&A Highlights

No Q1 2025 earnings call transcript was available in SEC filings; therefore, specific Q&A themes, guidance clarifications, or tonal shifts cannot be assessed from a transcript this quarter [ListDocuments showed no earnings-call-transcript for the period].

Estimates Context

S&P Global (Capital IQ) consensus for Q1 2025 (revenue, EPS, EBITDA) was unavailable; as a result, we cannot provide beat/miss analysis vs. Street for this quarter. This limits near-term estimate-revision conclusions for the sell-side model set [GetEstimates returned no data for “Q1 2025”].

Key Takeaways for Investors

Underlying improvement masked by non-cash SBC: Adjusted operating profit and y/y Adjusted EBITDA growth reflect improving fundamentals despite a GAAP operating loss driven by a one-time $3.8M stock-based comp acceleration .
Execution on ramps supports growth and margin: Three consecutive quarters of sequential revenue growth and project ramps (HMPO) underpin trajectory; Technology segment margins remain robust .
Mix and cost discipline matter: Continued focus on automation and optimization is expanding gross margin; monitor related party expenses and interest costs as potential drags on GAAP earnings .
Liquidity adequate but watch cash conversion: Cash was $9.7M and operating cash flow was $(0.9)M) in Q1; continued improvement in collections and opex discipline will be key to deleveraging and funding growth without dilution .
Strategic upside via LOI: If the Exela BPA transaction progresses to a definitive agreement and closes, scale and positioning could change materially; regulatory, governance, and financing terms remain key swing factors .
Listing risk eased: Confirmation of Nasdaq Capital Market compliance reduces a governance overhang and may broaden investor access/liquidity .
Near-term catalyst path: Continued sequential growth/margin expansion, clarity on LOI progression, and any disclosure of 2025 quantitative guidance could be stock catalysts; lack of Street estimates limits “beat/miss” trading set-up this quarter .

Supporting materials and data sources:

Q1 2025 8-K (Item 2.02) and press release with exhibits, including investor presentation and non-GAAP reconciliations .
Q1 2025 10-Q (financial statements, segment/geography detail, and MD&A) .
Q4 2024 8-K press release and investor presentation (trend and segment context) .
Q3 2024 8-K press release and investor presentation (trend and segment context) .
Nasdaq listing compliance update (8-K Item 8.01) .

XBP Europe Holdings, Inc. (XBP)·Q1 2025 Earnings Summary