In a release to the ASX, financial services technology company Iress said that it would implement a cost-efficiency program to deliver $32 million in annualised savings, which represents 10 per cent of its headcount.
Excluding redundancy costs, the company said it will realise a benefit of $16 million in the 2023 financial year with the full benefit to be realised in FY24.
Iress’ Group CEO and managing director, Marcus Price, said: "Since being appointed in October, a thorough review of the Iress Group has been undertaken focused on increasing profitability and improving returns for shareholders.
“Our analysis has confirmed that the core of the Iress business is well positioned at the centre of the Australian wealth and trading ecosystem. These businesses are at, or close to, the ‘Rule of 40’ benchmark defining leading global SaaS players.
“While Iress has loyal clients and enjoys high recurring revenue, more needs to be done to reinvest in the software and service we provide to deliver value to these clients. Additionally, there are aspects of the Iress portfolio which have diluted earnings, distracted focus, and reduced our ability to consistently deliver satisfactory returns on capital to shareholders.
Mr Price added that the cost-efficiency program is aimed at “reinvigorating growth in Iress’ core businesses” and will involve “executing a carefully managed program of work to deliver efficiencies and release capital across the group”.
“This includes commencing plans to divest Iress’ MFA and platforms businesses,” he said.
“Iress is also committed to leading the development of the next generation of advice software, as well as investing in future growth in industry connectivity and data and analytics.
“With higher earnings and releases of capital, our objective is to reduce debt and reward shareholders with long-term, sustainable growth.”
The business also detailed the activity numbers for its financial planning software Xplan, which it said had 37,584 Australian users. The software had 21,000 monthly “digital advice journeys”, 120 million records processed daily, and 203 data integrations.
Iress added that there were more than 3 million superannuation member accounts and over $630 billion in super investments managed through Iress software, accounting for 27 per cent of total super funds under management in Australia.
The company also reaffirmed its guidance from its full-year results, which the company released in February. Segment profit on a constant currency basis is expected to be in the range of $166–171 million, while underlying EBITDA on a constant currency basis is expected to be in the range of $144–149 million including $16 million of benefit from the cost-efficiency program.