Computershare (CPU) H2 2024 earnings summary

Executive summary

• Management EPS rose 8.9% year-over-year to 117.6 cps, slightly ahead of guidance, driven by growth in core fees, event and transaction revenues, and margin income.

• Strategic simplification and divestment of US Mortgage Services reduced complexity and increased returns, with a focus on core, capital-light businesses.

• Strengthened balance sheet and robust free cash flow support ongoing investment, technology upgrades, and shareholder returns.

• Positive FY25 outlook with Management EPS guidance of around 126 cps, up 7.5%, assuming lower interest rates.

• Cost-out programs and selective acquisitions in Employee Share Plans and Corporate Trust continue to drive efficiency and growth.

Financial highlights

• Management revenue reached $3.3bn, up 2.1% year-over-year; margin income was $832.1m, up 7.3%.

• EBIT ex Margin Income grew 20.9% to $310.9m; EBIT margin expanded by 270bps to 34.8%.

• Management NPAT increased 8.0% to $704.2m; Management EPS (with buybacks) was 117.6 cps, up 8.9%.

• ROIC improved to 30.2%, up 753bps year-over-year.

• Free cash flow was $612.3m, with net debt reduced to $461m and net leverage at 0.36x.

Outlook and guidance

• FY25 Management EPS expected to increase 7.5% to around 126 cps; EBIT ex Margin Income to rise ~15%.

• Margin Income revenue forecast at $745m with average client balances of $28.5bn, assuming four U.S. rate cuts and lower yields.

• Group tax rate expected between 26%-27% due to a simpler business structure post-disposals.

• Cost growth expected to be modest, between 0%-3% in FY25, with cost-out programs targeting $45-$60m in savings over three years.

• Guidance excludes additional buyback purchases and the BNY Mellon Canada Corporate Trust acquisition, expected to close by year-end.