XBP Global (NASDAQ:XBP) reported lower first-quarter 2026 revenue and normalized EBITDA as management said the company continued moving away from legacy, manual processing work and toward higher-margin AI-led workflow automation.
On the company’s earnings call, Chief Executive Officer Andrej Jonovic said XBP is intentionally “disrupting” its own business model by converting workflows that historically defined its business process-as-a-solution operations into AI pipelines. He said the company is focusing on regulated industries such as healthcare, banking, financial services and the public sector, where security, oversight and accountability are important requirements.
Revenue declines, margins improve
Chief Financial Officer Dejan Avramovic said XBP generated first-quarter total revenue of $197.1 million, down 14.2% year over year on a pro forma basis. Gross margin rose 70 basis points to 22.9%, driven by margin expansion in the Applied Workflow Automation segment.
Normalized EBITDA was $15.6 million, down 39.9% year over year. Avramovic said the revenue and EBITDA declines were largely tied to expected exits related to restructuring, including impacts from the bankruptcy process of the Americas business formerly known as BPA.
In the Applied Workflow Automation segment, revenue fell 12.6% year over year on a pro forma basis and 3.7% sequentially. However, gross margin in the segment increased 260 basis points from a year earlier and 190 basis points sequentially to 19.9%, which Avramovic said was the highest gross margin to date for the segment.
Technology revenue declined 26.4% year over year and 14% sequentially. Avramovic attributed the decrease to lower one-time projects, delays in several larger deals and expected customer exits. He said the company expects Technology segment gross margin of approximately 55% to 60% going forward, in line with prior periods.
AI transition central to strategy
Jonovic described the company’s AI strategy as a shift from legacy rules-based automation to inference-based models powered by large language models. He highlighted XBP’s patented Komodo Rule Engine, which has historically used binary Boolean logic to automate workflows, and said the company has begun migrating those rules into AI models.
According to Jonovic, XBP’s subject matter experts create logic diagrams and standard operating procedures for edge cases, which are then distilled into smaller domain-specific models. He said the approach is designed to provide secure private models, proprietary subject-matter expertise and data privacy for clients.
Jonovic said XBP is achieving approximately 40% to 60% first-pass auto-resolution rates at the start of deployments, with improvement to about 85% or more over time. He compared that with traditional industry automation tools, which he said typically begin around 20% to 35% auto resolution rates and improve over longer time horizons.
The company’s healthcare business is the most advanced sector for AI deployment, Jonovic said, describing it as a business of more than $200 million. He said XBP is also making significant progress in the public sector.
In a healthcare example, Jonovic said the company’s AI pipeline can take paper and unresolved claims and convert them into a digital payload for processing into paid claims. He said automation can reduce processing time, lower manual effort, reduce handoffs, improve consistency and help providers get paid faster, while reserving human review for cases requiring judgment or accountability.
Pipeline momentum improves
Chief Revenue Officer Mike Shufeldt said XBP is seeing “a tale of two timelines,” with near-term revenue still reflecting legacy restructuring while forward-looking indicators are improving.
Shufeldt said the company’s pipeline grew 17% from a year ago and 10% from the prior quarter. He said total contract value, or TCV, in the mid- to late-stage funnel expanded by nearly 45% compared with a year earlier.
Avramovic said total TCV bookings increased 68.8% from the year-ago quarter and were 45% above the prior four-quarter average. New annual contract value bookings fell 3.7% from a year ago but rose 4.4% over the last four-quarter average.
Jonovic said XBP closed $27.3 million of new ACV in the first quarter across more than 460 transactions. He said bookings were diversified by industry and not overly concentrated in one area.
Shufeldt singled out the public sector as a key area of strength. He cited a February report from Everest Group that recognized XBP’s AI-driven document processing capabilities as foundational to public sector automation. He also pointed to a recent win at a major French health insurance institution, which began as a EUR 1 million pilot and is showing signs of expanding into a multi-year, multi-departmental program.
Cost actions and strategic review
Avramovic said XBP expects an approximately 20% reduction in its global workforce by the end of 2026 compared with the end of 2025, driven by AI-related productivity and efficiency gains. Along with more than 80 non-payroll initiatives, the company expects approximately $55 million to $60 million in annual operational efficiencies. Avramovic said nearly half of the underlying actions have been implemented but are not yet reflected in financial results.
He said XBP has increased confidence that quarterly revenue will be stable in the near term and that revenue growth will occur in the second half of 2026. The company also expects gross margin improvement to accelerate as its sales pipeline converts, with a greater focus on agentic workflows and automation.
Jonovic also said XBP’s board has authorized a formal process to explore strategic alternatives. He said the process was prompted by what management views as a deep discount between the company’s stock price and its intrinsic value, as well as a desire to focus on core growth engines. Potential options could include divestitures.
During the question-and-answer session, Jonovic said the process remains open-ended and that the company is interacting with advisors and expects to select one in the near term. He said the board has not reached conclusions and will take advice from advisors before deciding how to proceed.
Asked about AI differentiation, Jonovic said XBP benefits from decades of domain experience, deep regulatory knowledge and existing rules-based automation that can be supplemented with new AI capabilities. He said the company has won clients that tried to build similar capabilities in-house but were unsuccessful.
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.
