IRESS/IRE

Pleasing to see IRESS upgrade earnings today.

Headlines

Fair to say Marcus (the CEO) has won back his credibility. It took a sizeable dent after the surprise downgrade post the investor day (recall, we had thought the investor day strategy outline sounded quite good; divest underperforming assets, focus on the core, pay down debt, improve the cashflows, change the rem structure to do away with SBC, all of which we liked).

The transformation program is delivering ahead of schedule, and hence earnings are being upgraded. FY24 exit run rate back to normal.

Churn, customer satisfaction

Churn rates remain “very very low”, which is a pleasing update. Net promoter scores are increasing.

Often IRESS products had “frustrated clients”, to put it mildly, given we speak to hundreds of advisors across multiple dealer groups all of whom use the product; some who found modules complex, some who found modules unnecessary, and some who found being charged for modules they didn’t use upsetting. Others still who found product requests going unanswered.

Advice

The transformation initiatives and the move towards cloud-based SaaS products are removing a lot of those issues and pain points, which seem to be gaining traction.

Trading

Trading, if you are active on social media, was an even more “frustrating product”, by customer accounts and feedback.

Gearing

Gearing is back on track, down to $308m (note, the below includes off balance sheet items, IRE would say their debt was $375m) as at the end of October, and so will finish the year lower, and lower still into the new calendar year as asset sales come through.

Conclusion

Revenues across wealth and trading are expected to grow between 5-7%, 3-4% price, the remainder volume growth, driven by new product launches, new features that are expected to be well received by advisors and traders that should drive increase adoption/utilisation.

Overall, a vastly better update.

Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.

This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

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