Iress has claimed improved customer sentiment and reduced costs due to its corporate restructuring and cutting staff numbers.
The firm announced earlier this year it would reduce its staff numbers by 10 per cent, divest its Managed Fund Administration and platform services, amongst other initiatives to improve business bottom line and pay off debt.
In an update to investors on Thursday morning, the company announced it has reduced staff numbers by 4 per cent and revenue per employee has increased 30 per cent year-on-year, from $272,000 to $356,000.
During a presentation to investors, Iress CEO Marcus Price said change is something “we can do”. “The change management inflection point is passed,” he said.
“It’s hard when you get to that first moment of change for an organisation that hasn’t changed a lot. Going through that process, we’ve now got a group of people who are well engaged with change and embrace the need for it.”
Additionally, Price said the company’s client satisfaction score has improved and that customer retention stands at 99 per cent.
“We’ve got a full program of work to speak to each of our customers about the value they’re getting from our products,” Price said.
“Not a conversation they’ve had before – this is not about pricing, it’s about what value do you get from utilising Iress tools… We’re seeing a tide turning with the attitude towards us with our customers.”
In terms of the overall restructure of the Iress business, Price said there are 10 major workstreams covering 80 programs of work and 300 separate initiatives.
“There are 300 or more people engaged in one form or another in transformation as a part of their day-to-day business – this is a whole-of-enterprise effort,” Price said.
Revenue grew 2.6 per cent in 2H23 over 1H23 and combined with the reduced cost base, Iress revised its underlying EBITDA (earnings before interest, taxes, depreciation, and amortsation which measures net profit).
Market sentiment appears to back the Xplan owner which saw its share price boost almost 15 per cent today, closing at $7.03, although still down from a 12 month high of $10.98.
Updated EBITDA guidance
| Previous guidance | New guidance | |
| 2H FY23 Underlying EBITDA | $58m-$62m | $63m-$68m |
| FY23 Underlying EBITDA | $118m-$122m | $123m-$128m |
| FY24 Underlying EBITDA | $124m-$134m | $135m-$145m |
| FY24 Exit run rate | $142m-$158m | $150m-$170m |
Source: Iress update
Iress will divest one of its four UK businesses in FY24, although the firm would not specify which one citing confidentially due to the nature of the sales process.
Meanwhile the MFA divestment was completed in 2H23 and the platforms sale is still in progress.
The MFA business was sold to SS&C Technologies for $52 million in August, which was originally acquired along with the platforms business during the purchase of OneVue in November 2020.
Sale proceeds will be used to pay down debt, which has reduced from $375 million at the end of FY23 to $308 million as of 31 October.
“As we deal with disentanglement and how to actually deal with the four companies that reside in the UK group, we’ve determined that it’s better to deal with them each individually,” Price said.
“As a result of that we’ve been able to bring forward the sale of one of those businesses which will be material in our results in 2024.”
*This article was edited on 4 December 2023 to specify Iress is selling part of its UK business, not all of it.
