In an ASX announcement on Monday, Iress announced an adjusted EBITDA in the 1H24 period of $67 million, up 52 per cent from $44 million in the prior corresponding period (pcp).
This is on the high end of what the firm projected last month, with chief executive and managing director Marcus Price spruiking the “transformation initiatives” Iress has undertaken.
“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,” Price said.
“Strong action on cost reduction has delivered operating leverage with our adjusted EBITDA margin up 760 basis points to 21.7 per cent and adjusted EBITDA up 52 per cent versus pcp.”
In April, Iress completed the sale of its OneVue platform business to Praemium for an initial $1 million in cash consideration and a further payment of up to an additional $20 million over 18 months as milestones are met.
Then, earlier this month, the financial services software provider confirmed the sale of its UK mortgages business to Bain Capital Tech Opportunities LP for a total cash consideration of £85 million ($167 million) before costs.
“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 per cent uplift from the last guidance provided on 1 May 2024,” Price said.
“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.”
According to the Iress announcement, its Asia-Pacific wealth management sector increased revenue 3 per cent in the first half to $66.6 million, up from $64.9 million in the first half of 2023.
“This was achieved via pricing initiatives to mitigate increasing costs of doing business in a higher inflationary environment, and an increase in project related activity focused on enhancing digital advice services for superannuation clients,” it said.
“Adjusted EBITDA improved 36 per cent in 1H24 which was delivered with a lower cost base and modest revenue growth.”
Iress added that the ongoing transformation program has produced a “stronger and more streamlined business with improved financial returns”, pointing to its pro forma revenue increasing 4 per cent on pcp to $302.4 million and headline revenue decreasing by 1 per cent due to asset sales.
The sales have also seen the firm reduce its cost base, noting a 4 per cent 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 per cent headcount reduction which reduced staff costs by 5 per cent ($8 million) with the full benefit to flow through into the second half of FY24,” Iress said.
The first half of the calendar year also saw the technology firm impacted by a breach of its user space on the third-party code repository platform GitHub.
The firm stressed that “Iress does not store client information on GitHub”.
In a statement to the ASX earlier this month, Iress said it had concluded its internal investigation and “found no evidence of unauthorised access to Iress’ production environment, software or client data other than a limited portion of Iress’ OneVue production environment”.
“This environment primarily contained information of a technical nature such as metadata, blank questionnaires, and test files,” it said at the time.
“Within the test files, Iress also identified a limited amount of personal information relating to 20 individuals who were employees of OneVue and its clients and had entered their personal information for testing purposes.
“Each of these individuals has been contacted directly about the incident and provided with appropriate guidance and support.”
