Iress (IRE) H1 2024 earnings summary

Executive summary

• Transformation program delivered strong results ahead of schedule, with adjusted EBITDA up 52% to AUD 67 million, significant margin expansion, and substantial cost reductions across core businesses.

• Balance sheet leverage reduced to 1.2x, with net debt down by AUD 240 million year-over-year, enabling reinstatement of the final dividend for FY 2024.

• FY24 adjusted EBITDA guidance upgraded by 9% post-asset sales to AUD 126–133 million.

• Divestments of non-core businesses (Platforms, Mortgages, Pulse) completed, with proceeds used for debt reduction.

• Statutory NPAT for 1H24 was AUD 17.3 million, a turnaround from a AUD 139.8 million loss in 1H23, driven by the absence of prior year impairments and cost efficiencies.

Financial highlights

• Adjusted EBITDA up 52% to AUD 67 million for the half; pro forma revenue up 4%, pro forma costs down 4%.

• Adjusted EBITDA margin expanded to 21.7%, up 760bps year-over-year.

• Underlying profit after tax (NPATA) up AUD 17.2 million to AUD 33 million; underlying EPS increased to 18.2cps.

• Operating expenses fell 10% to AUD 242 million, with staff costs reduced by 11% and FTEs down 19%.

• Net debt reduced by AUD 240 million, lowering annual interest charges by over AUD 10 million.

Outlook and guidance

• Upgraded adjusted EBITDA guidance for FY 2024 to AUD 126–133 million post-asset sales, up 9% from previous midpoint.

• Further improvement expected in Superannuation in H2 due to contract renegotiations and cost control.

• Transformation program to conclude by year-end, with ongoing cost and commercial discipline to continue into 2025.

• Guidance for 2025 to be provided in February 2025, focusing on Adjusted EBITDA and NPATA.

• Stronger balance sheet creates capacity for reinvestment and shareholder returns.