Iress Limited, one of the potential growth companies, got a boost with expectations of its full year earnings reaching towards the top end of the guidance range.
Iress Limited (ASX: IRE)
Iress Limited (ASX: IRE) has reaffirmed its FY24 guidance, projecting Adjusted EBITDA of $126 million to $132 million, with expectations of achieving earnings towards the higher end of the range. The company’s CEO and Managing Director, Marcus Price, highlighted the success of Iress’ transformation program, which has already delivered expected benefits and significant earnings improvements. He emphasized that, with the foundations for growth now in place, Iress positioned for a financially and strategically stronger future could be among high growth stocks. Looking ahead, the company plans to reinstate dividends, marking a return to a more robust financial position as it enters 2025. The full FY24 results will be announced on 24 February 2025.
For the first half of FY24, Iress reported strong results, with Adjusted EBITDA rising 52% to $67 million compared to the previous corresponding period (PCP). This performance was driven by operational efficiencies, with the company achieving a 54% improvement in its Adjusted EBITDA margin, which climbed 760 basis points to 21.7%. The company’s balance sheet also strengthened following the sale of its UK Mortgages business, bringing its leverage ratio to a target range of 1.2x.
Iress' transformation efforts have been successful in streamlining operations and improving financial outcomes. The company’s pro forma revenue increased by 4% compared to PCP, reaching $302.4 million, although headline revenue fell by 1% due to asset sales. This revenue growth was driven by the implementation of a new pricing framework and strengthened sales and account management teams. Additionally, the UK business showed notable improvements under new leadership, and Iress secured a significant contract renewal worth $84 million over the next five years. On the cost side, the company achieved a 4% reduction in operating costs, thanks to a combination of operating model enhancements and an 11% reduction in headcount, leading to a $8 million reduction in staff costs.
Looking forward to the second half of FY24, Iress plans to complete its transformation program, which is already yielding results ahead of schedule. Management is also exploring future growth opportunities and conducting strategic reviews to drive product development and increase revenue. The focus would remain on maintaining operational discipline and cost management, and the gains from transformation are sustained in the long run. With these strategic moves, Iress aims to emerge as a more streamlined and efficient business, positioning itself for sustained growth and profitability in the coming years.
Source: Company’s Report
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