XBP Global (NASDAQ:XBP) reported second-quarter 2026 revenue declines tied to legacy contract exits and lower volumes, while profitability improved as the company expanded automation and shifted toward higher-margin work.
Chief Executive Officer Andrej Jonovic said normalized EBITDA reached $21.9 million in the quarter and adjusted gross margin rose to a company high of 24.9%. The company also increased its annualized operational-efficiency target to between $65 million and $75 million, from a prior range of $55 million to $60 million.
Margins Expand Despite Revenue Decline
Reported consolidated gross margin was 21.5%, up 80 basis points from the year-earlier period. XBP introduced adjusted gross margin as a new metric, excluding one-time charges such as severance and non-recurring restructuring costs from cost of revenue. Adjusted gross margin increased 290 basis points year over year and 140 basis points sequentially to 24.9%.
Normalized EBITDA increased 8.4% year over year and 40.6% sequentially to $21.9 million. Normalized EBITDA margin was 11.5%.
“Our margins have increased for four consecutive quarters,” Avramovic said, attributing the trend to the company’s mix shift toward higher-margin, more automated business, expanded use of automation tools and favorable quarterly mix.
- Applied workflow automation revenue was $166.8 million, down 16.7% year over year.
- Applied workflow automation adjusted gross margin was 19.2%, up 120 basis points year over year.
- Technology segment revenue was $24.5 million, up 9.8% year over year, primarily due to higher one-time projects.
- Technology adjusted gross margin was 64.2%, an increase of 690 basis points year over year.
Automation Strategy and Efficiency Measures
Jonovic said XBP is converting legacy workflow platforms into “high-margin agentic AI pipelines” for regulated industries including healthcare, public sector and banking, financial services and insurance. The company combines rules engines with AI models and routes complex exceptions to subject-matter specialists, whose judgments can be used to retrain the models.
In mature deployments, specialists handle about 50% of edge cases, according to Jonovic. He said the approach is intended to maintain precision, regulatory compliance and auditability in high-consequence workflows while shifting employees into adjudication roles.
The company expects approximately $35 million in in-year benefits during 2026 from its efficiency initiatives. It also continues to project a workforce reduction of roughly 20% by the end of 2026 compared with year-end 2025. Avramovic said the higher efficiency target was driven primarily by non-payroll actions, including third-party vendor savings.
Jonovic said revenue per employee rose to about $89,000 from $82,000 in the prior quarter. XBP continues to project that revenue per employee will approach $100,000 by year-end, compared with a peer-group average of about $60,000, according to the company.
Bookings and Pipeline Activity
While revenue remains under pressure, XBP cited improving sales activity and pipeline quality. Total contract value closed in the second quarter was $121.3 million, up 51.6% year over year and 12.2% sequentially. New annual contract value bookings totaled $36 million, increasing 57% from a year earlier and 32.1% from the first quarter.
The company’s total pipeline stood at $2.5 billion as of June 30, approximately flat sequentially and up 17.2% year over year. Jonovic said healthcare and public-sector healthcare demand has strengthened as customers seek secure, on-premise automation systems with data-sovereignty controls and human oversight.
He cautioned that timing for broader public-sector contracts remains volatile because of geopolitical uncertainty.
XBP also recently won a contract to deploy agentic AI infrastructure to manage maintenance lifecycle data for a global airline fleet. Under the arrangement, maintenance records will be vectorized and stored in a private vector database in the client’s private cloud, with the company’s system managing data access and record reproduction when aircraft are sold or come off lease.
Outlook and Strategic Review
Avramovic said XBP expects a revenue inflection in the second half of 2026. Combined with further gross-margin expansion and SG&A savings, the company expects this to support additional normalized EBITDA growth in the second half of 2026 and into 2027.
Jonovic said XBP’s top 10 clients account for 34% of revenue, while the average tenure of its top 25 clients is about 15 years. He said the company’s client and industry diversification provides a hedge against concentration risk.
Regarding the strategic alternatives process announced in the prior quarter, Jonovic said XBP has engaged a financial adviser and will provide updates as appropriate.
About XBP Global (NASDAQ:XBP)
XBP Europe Holdings, Inc provides bills, payments, and related solutions and services in France, Germany, the United Kingdom, Sweden, and internationally. The company operates through two segments, Bills & Payments and Technology. The Bills & Payments segment focuses on optimizing how bills and payments are processed by businesses of all sizes and industries. This segment also offers automation of accounts payable and accounts receivables processes and seeks to integrate buyers and suppliers, as well as engages in digital transformation business.
