Iress reports growth across the board in its latest financial results
ASX-listed financial technology company Iress have today announced its financial results for the first half of FY24 (1H24).
Iress’ Chief Executive Officer and Managing Director, Marcus Price, said, “We are executing well on our transformation initiatives and are on track to complete the program in the second half, with benefits being realised well ahead of schedule. Strong action on cost reduction has delivered operating leverage with our Adjusted EBITDA margin up 760 basis points to 21.7% and Adjusted EBITDA up 52% versus PCP.
“Along with disciplined capital management we are now seeing revenue growth and have upgraded our FY24 Adjusted EBITDA guidance to $126 – $132 million post the sale of UK Mortgages (equivalent to $135 – $141 million before asset sales), a 9% uplift from the last guidance provided on 1 May 2024.
“Through the sale of non-strategic assets, including our UK Mortgages early in the second half, we have considerably strengthened our balance sheet which now sits within our target range at 1.2x leverage. Pleasingly, we now plan to reinstate a final dividend for FY24.”
Iress’ transformation is delivering a stronger and more streamlined business with improved financial returns.
Pro forma revenue increased 4% on PCP to $302.4 million, with headline revenue decreasing by 1% due to asset sales. The increase was driven by the implementation of a refreshed pricing framework and investment into bolstering sales and account management capabilities within the business units. A strong improvement in the UK business under renewed leadership has also seen improved earnings, and the renewal of several notable Wealth clients with a contract value of $A84m over the next five years.
Iress is resetting its cost base, delivering a 4% reduction in pro forma operating costs to $236.9 million, despite a high inflationary environment. This was achieved through operating model enhancements and an 11% headcount reduction which reduced staff costs by 5% ($8m) with the full benefit to flow through into the second half of FY24. Non-wage opex was also reduced, offsetting inflationary impacts from third-party vendors. Revenue per employee has also grown to $360,000 (annualised) from $300,000 in 1H23. Iress continues to operate with an embedded culture of cost discipline across all businesses and a focus on non-wage opex.
During the half year, Iress sold its UK Mortgages business for a total gross cash consideration of £85 million ($A167 million, net sales proceeds of $A147 million), with the sale completing on 1 August 2024. Iress also successfully sold its Platform and Pulse businesses, with all proceeds being used to retire debt and providing greater capacity to focus on core competencies.
