Fashion tech firm Lectra posts higher Q3 operating profit despite market headwinds

French technology group Lectra reported an increase in operating profitability for the third quarter of 2026, supported by operational cost discipline and an expanding recurring revenue base.

The board of directors, chaired by chairman Daniel Harari, reviewed the company’s unaudited consolidated financial statements for the third quarter and the first nine months on October 29, 2026.

Equipment orders reached 18.9 million euros (21.07 million dollars), down 10 percent like-for-like (LFL) compared with the third quarter of 2025. This contraction reflected a continued wait-and-see investment approach from manufacturing and retail clients across key sectors.

Profitability increases in third quarter

Third-quarter revenue stood at 121.6 million euros, remaining stable at actual exchange rates and down 2 percent LFL.

Recurring revenue represented 78 percent of total revenue during the quarter, supported by a 12% LFL increase in software-as-a-service (SaaS) subscription revenue. This momentum countered lower demand for consumables and parts alongside mixed maintenance contract activity, while non-recurring revenue fell 7 percent LFL.

EBITDA before non-recurring items grew 10 percent LFL to 23.4 million euros, raising the EBITDA margin before non-recurring items by two percentage points to 19.3 percent.

Net income climbed 45 percent at actual exchange rates to 10.4 million euros, up from 7.2 million euros in the prior-year period.

Business model strengthens over nine-month period

Across the first nine months of 2026, revenue totaled 361.3 million euros, down 4 percent LFL. Recurring revenue accounted for 285 million euros, up 1 percent, with SaaS subscriptions climbing 13 percent to 73.7 million euros; non-recurring revenue dropped 21 percent to 76.2 million euros.

Annual recurring revenue (ARR) reached 106.5 million euros as of September 30, 2026, marking an 8 percent LFL increase compared with December 31, 2025, or an annualised growth rate of 11 percent.

Gross profit rose to 269.3 million euros, delivering a gross margin of 74.5 percent, up 1.9 percentage points.

The security ratio, which measures the coverage of fixed costs by gross profit generated from recurring activities, reached 99 percent, nearing the target of more than 100 percent set for 2028.

EBITDA before non-recurring items declined 3 percent LFL to 57.1 million euros, yielding a margin of 15.8 percent, up 0.3 percentage points.

Company updates 2026 outlook

Lectra indicated that full-year growth in SaaS ARR and recurring contract revenues will trend below the initial 2026 to 2028 roadmap benchmarks of 15 percent and 5 percent to 8 percent LFL, respectively.

However, ongoing operational realignment has lifted structural earnings power above early-year projections. The structural improvement in the EBITDA margin before non-recurring items is now projected to exceed the February guidance range of 1.2 to 1.8 percentage points on an LFL basis, alongside continued progress toward the target security ratio.