Iress eyes ‘growth opportunities’ emerging from QAR amid $137m loss

Iress has reported a statutory net profit after tax (NPAT) loss of $137 million in FY2023 compared to a profit of $52.7 million in FY22.

In an ASX announcement on Wednesday, the firm said its operating revenue for last year was $625.7 million, up from $615.6 million, and reported an underlying EBITDA of $128.3 million – down from $146.4 million in 2022.

Conceding that 2023 has been a “challenging” year in many respects, Iress chief executive Marcus Price said that the firm is still progressing ahead of expectations.

“Looking ahead, Iress is well positioned to grow in 2024, while also developing our product strategy to reinvent our world-class core platforms and capabilities for the future. We are progressing well – ahead of expectations – and remain on track to complete our transformation program by the end of FY24,” Mr Price said.

He added that performance continues to be driven through its transformation program announced in early 2023.

Namely, Iress has begun a restructure of its core businesses, which the firm has previously deemed “incredibly strong” in wealth management, trading and market data, and superannuation.

This includes APAC Wealth, which brought in $130.4 million in revenue in FY23 – its other two core businesses, APAC Trading and Global Market Data and Superannuation, brought in $178.5 million and $54.2 million, respectively.

“Recurring revenue and market share were stable in the core APAC Wealth Management business, with pricing discipline offsetting economic headwinds and cost base pressures,” Iress said in an ASX statement on Wednesday.

“The business’ launch of Advisely, a community supporting industry innovation and efficiency, during the second half has been well received and growth opportunities are emerging from the Quality of Advice Review through digital and scaled advice, where Iress is well positioned.”

Iress also outlined its priorities in advice including the development of longer-term advice software roadmap and an ongoing refresh of pricing frameworks aligned to usage and value propositions.

The firm also noted that Xplan remains the wealth software of choice with over 60 per cent market share.

On the business front, Mr Price said that Iress’ balance sheet is strengthening, particularly with the sale of MFA for a total cash consideration of $52 million in October, alongside future asset divestments in 2024 being used to retire debt.

“We’ve successfully enacted a cost management program delivering a 16 per cent improvement in earnings in the second half compared to the first half. Our revenue has stabilised, with improvement in the second half, culminating in a result at the top end of our FY23 revised guidance,” he added.

As the firm looks to continue its transformation process, which it has previously said has incurred “high one-off costs”, Iress will continue to suspend its interim dividend, but confirmed that it will consider resuming dividends when the company achieves its target leverage range.

As part of its transformation, Iress also previously committed to more transparent reporting of its financial performance.

Mr Price said: “Today also marks the beginning of our transition to clearer financial reporting, with fully cost allocated business units and a shift underway towards simplified profit measures.”

“We also completed our new capital management plan which is designed to deliver a stronger balance sheet with lower leverage, create capacity to increase our R&D innovation, and enhance shareholder returns from a cash-generative business,” he concluded.