XBP Global Holdings Inc's Q3 2025 Earnings and Strategic Resilience Amid Revenue Declines

In the ever-shifting landscape of business, resilience isn't just about weathering storms-it's about building a ship that can sail through them. XBP Global Holdings Inc (NASDAQ: XBP) has faced a tempest in Q3 2025, with reported revenue declining 10.4% year-over-year to $209.1 million and pro forma revenue dropping 18.1% to $220.4 million. Yet, beneath the surface of these numbers lies a story of strategic recalibration, automation-driven efficiency, and a CEO's bold vision to transform a beleaguered business into a leaner, more agile competitor.

Earnings Overview: A Tale of Two Margins

While the revenue declines are stark, XBP's margin improvements tell a different story. The company's pro forma gross margin rose 190 basis points to 21.9%, and reported gross margin surged 310 basis points to 22.0%. Pro forma adjusted EBITDA grew 7.4% year-over-year to $24.7 million. These gains, according to CFO Dan Abramovich, stem from "operational efficiencies driven by automation and better operating leverage" as the CFO noted. The key question for investors is whether these margin gains can offset the revenue headwinds and position XBP for sustainable growth.

Management's Response: Automation as a Lifeline

CEO Andrej Jonovic has made no secret of his belief in AI and hyperautomation as the company's salvation. During the Q3 earnings call, he emphasized that XBP's "agentic AI and hybrid workflows" have achieved automation rates of 70%-75% in key sectors like healthcare and finance. This isn't just about cutting costs-it's about redefining value. By automating repetitive tasks, XBP has reduced headcount while boosting revenue per employee to over $80,000, a figure that dwarfs industry peers.

The acquisition of Exela Technologies BPA, LLC, which closed in July 2025, has been a pivotal move. While the integration has contributed to short-term revenue volatility, Jonovic framed it as a "transformative" step toward building a "mission-critical system for hyperautomation" according to management. The company's ability to absorb this acquisition and still improve margins suggests a disciplined approach to integration.

Cost Optimization: The AI-Driven Edge

XBP's cost optimization strategies are rooted in its aggressive adoption of AI. According to the Q3 call transcript, the company has deployed "intelligent document processing powered by neural networks," which has streamlined workflows and reduced manual labor. This isn't just theoretical-pro forma adjusted EBITDA growth of 7.1% year-over-year to $24.6 million underscores the tangible benefits.

However, the path isn't without risks. The revenue decline, partly attributed to the completion of client projects and exits, raises questions about the sustainability of these gains. As Abramovich noted, "revenue declines are beginning to moderate," but the lack of specific guidance for future quarters leaves investors in a holding pattern. The company's reliance on automation to offset lost business could backfire if client demand for AI-driven services slows.

Long-Term Value Preservation: New Contracts and Strategic Partnerships

To mitigate revenue declines, XBP has doubled down on sales force expansion and strategic partnerships. Two notable wins in Q3-a contract with the New York City Department of Finance to streamline parking violation transactions and a deal with a major insurance carrier for re-mail processing-highlight the company's ability to secure high-margin, mission-critical work. These contracts, while not yet reflected in Q3 results, signal a long-term strategy to diversify revenue streams and anchor clients in a competitive market.

Jonovic's emphasis on "domain expertise and measurable outcomes" as highlighted in the earnings call suggests a shift from transactional services to value-added solutions. This could be a game-changer in an industry where commoditization often erodes margins.

Conclusion: A Balancing Act

XBP Global's Q3 results are a mixed bag. The revenue declines are troubling, but the margin expansion and automation-driven efficiency gains are promising. Management's focus on AI and hyperautomation is a bold bet, one that could either redefine the company's trajectory or expose its vulnerabilities if execution falters. For investors, the key is to monitor how well XBP can translate its technological investments into sustained revenue growth.

As the company heads into 2026, the upcoming quarters will test its resilience. If the automation initiatives continue to deliver and the new contracts gain traction, XBP could emerge as a leader in the workflow automation space. But if the revenue moderation proves temporary, the stock may remain under pressure. For now, the jury's still out-but the tools in XBP's toolbox are undeniably cutting-edge.