Bravura Solutions Limited · ASX:BVS
Bravura Solutions — H1 2023 Earnings Presentation
33 slides from Bravura Solutions's earnings presentation, Mar 6, 2023
Slide 1: 1H23 Results Presentation
1H23 Results Presentation 6 March 2023
Slide 2: Important Notice and Disclaimer
Important Notice and Disclaimer The information contained in this document (including this notice) and discussed at this presentation (collectively, the Presentation) has been prepared by Bravura Solutions Limited (Bravura). The Presentation is subject to the conditions outlined below. Your receipt,
Slide 3: Important Notice and Disclaimer
Important Notice and Disclaimer PAST PERFORMANCE Past performance information given in this presentation is given for illustrative purposes only and should not be relied upon (and is not) an indication of future performance. DISCLAIMER The information is supplied in summary form and is therefore not
Slide 4: Agenda
Agenda .01 Key Highlights .02 1H23 Results .03 Strategy Update and Organisational Change Program .04 FY23 Guidance and Outlook Bravura Solutions 1H23 Results Presentation 4
Slide 5: 1H23 Result Highlights
1H23 Result Highlights As expected, 1H23 was a challenging period however we continue to progress our strategic plan Down from OCF $2.2m: $14.1m in FY23 guidance3 Revenue $118.3m 1H22 Revenue: $240 – 245m Down from Down 10.6% vs 1H22 Recurring as % of revenue1: 84% FCF2 ($17.1m): ($11.4m) in EBITDA:
Slide 6: Operational Update
Operational Update Bravura has a clear strategic plan to drive improved financial performance from its mission-critical solutions Bravura 1H23 Bravura Tomorrow1 Results reflect historic operating model and strategy Organisational Change Program to drive operational improvement • 1H23 saw lower reven
Slide 7: 1H23 Results
.02 1H23 Results Bravura Solutions 1H23 Results Presentation 7
Slide 8: 1H23 Result – Income Statement
1H23 Result – Income Statement A$m 1H22 1H23 $ chg % chg Earnings impacted by revenue headwinds, cost increases Wealth Management 82.7 77.3 (5.4) (6.6%) ▪ Total revenue declined 10.6% in 1H23 vs the pcp, driven by: Funds Administration 49.7 41.1 (8.7) (17.5%) Total revenue 132.3 118.3 (14.0) (10.6%)
Slide 9: 1H23 Result – Revenue
1H23 Result – Revenue Historical Revenue Reporting Comparison (A$m) 1H23 Revenue Waterfall (A$m) Contracted Recurring Attached Recurring Project fees Licence fees 140.0 (4.8) 8.9 9.3 120.8 (2.9) 120.0 7.0 16.4 16.4 2.2 (0.4) 118.3 5.7 14.7 132.3 (6.7) 10.6 17.0 (2.3) 100.0 (2.5) (1.0) 34.9 34.6 38.9
Slide 10: 1H23 Segment Result – Wealth Management
1H23 Segment Result – Wealth Management Wealth Management Financial Performance (A$m) ▪ Of the $9.6m decline vs 2H22: 46% was attributable to non-recurring licence fees, with EBITDA margin Revenue ($Am) EBITDA ($Am) a further 14% due to FX ▪ Project fees increased due to a number of projects in APAC
Slide 11: 1H23 Segment Result – Funds Administration
1H23 Segment Result – Funds Administration Funds Administration Financial Performance (A$m) ▪ Revenue fell $6.3m or 13.0% vs 2H22 EBITDA margin Revenue ($Am) EBITDA ($Am) ▪ Of the $6.3m decline vs 2H22: 43% was attributable to non-recurring licence fees, with a further 21% due to FX 49.7 ▪ The remai
Slide 12: 1H23 Result – Expenses
1H23 Result – Expenses 1H23 Expense Waterfall (A$m) 2.0 125.3 Operating Expenses – Labour Costs Key Driver of Increase 5.9 140 Corporate Costs Operating Costs (ex. corp costs) 120 8.2 100 80 2.2 100.0 87.3 95.2 60 80.3 76.9 107.0 40 20 19.7 19.7 19.2 25.3 16.8 0 1H22 Expenses Resetting Investing Inf
Slide 13: 1H23 Result – R&D
1H23 Result – R&D R&D Program – Disciplined Investment in Core Areas of Strategy 1H23 & Historic Capitalised R&D1 ▪ R&D spend for 1H23 was $8.3m or 7% of revenue 15.0 7% 9% 9% 7% 7% ▪ Identified $12.7m in WIP software spend that has been written off as part of the 1H23 Capitalised impairment, with t
Slide 14: 1H23 Result – Balance Sheet
1H23 Result – Balance Sheet A$m 30 Jun 2022 31 Dec 2022 Overview of 1H23 Balance Sheet Cash 48.7 32.7 ▪ Working capital reflects disciplined debtor collections Trade receivables 39.8 36.3 ▪ R&D spend to date has been reviewed in detail, including assessment of Contract assets 30.6 19.0 carrying valu
Slide 15: 1H23 Result – Cash Flow
1H23 Result – Cash Flow A$m 1H22 1H23 Earnings headwinds to be softened by dividend suspension, strategic Receipts from customers 130.9 114.4 program Payments to suppliers and employees (113.4) (110.6) ▪ Operating cash flow positive at $2.2m in 1H23, albeit down from $14.1m in pcp Interest received
Slide 16: Strategy Update and Organisational Change Program
.03 Strategy Update and Organisational Change Program Bravura Solutions 1H23 Results Presentation 16
Slide 17: New Product-Focused Strategy
New Product-Focused Strategy CHALLENGES STRATEGIC PILLARS BUSINESS OUTCOMES Product and Proposition Product Centric Business Model Limited product life-cycle management Improved financial position Significant client-driven customisation Dedicated and independent product function Low-return R&D, slow
Slide 18: Voice of the Customer
Voice of the Customer Our customers need: We aim to provide: Seamless access to a An interoperable and open ecosystem that readily integrates .05 with industry leading partner solutions network of partners Leverage their data to Data-as-a-Service offerings as well as AI/ML capabilities through .04 d
Slide 19: Transitioning to a Product-Focused Strategy is a Multi-Year Journey
Transitioning to a Product-Focused Strategy is a Multi-Year Journey Horizon 1 Horizon 2 Horizon 3 Launch product centric model Scale product centric model Embed product centric model foundations 1 2 3 4 5 Organisation and Product and Delivery Model Economics Partnerships People Architecture Produc
Slide 20: Core Principles of Our Change Program
Core Principles of Our Change Program to Deliver Our Purpose, Strategy and Financial Objectives Build deep industry knowledge and understanding of our client’s Industry leading problems to design and create innovative technology-based solutions Enable clear end-to-end accountability for client and b
Slide 21: Operational Change Program Targets $25m+ Cost Reduction Once Fully Implemented
Operational Change Program Targets $25m+ Cost Reduction Once Fully Implemented Clear strategy to enact operational change and drive earnings improvement • Defined an operational structure, realigned resources and streamlined to a product centric model PRODUCT STRATEGY • Aligned sales organisation wi
Slide 22: Change Program Indicative Timeline
Change Program Indicative Timeline FY23 FY24 FY25 1 PRODUCT STRATEGY EXECUTION OPTIMISE OPERATING MODEL 2 Organisation Re-alignment Geographic location of work PRODUCTIVITY ENABLERS 3 Implement in tandem process, tools and governance to drive efficiency and effectiveness 4 REDUCING EXTERNAL COSTS Im
Slide 23: Refreshed Management Team
Refreshed Management Team Refreshed management team empowered to drive strategic development plans CEO & MD – Libby Roy MD APAC – Paul Dunn - CEO & MD since Aug 2022 - MD APAC since Feb 2022 - Bravura Independent Non-Executive - Previously Sales Director, APAC since Sep 2018 Director in April 2020 -
Slide 24: Executive Leadership – Accountabilities and Success Measures
Executive Leadership – Accountabilities and Success Measures Functional Accountabilities Success Measures Sales ✓ Regional P&L MD EMEA ✓ Average Product holding per Enterprise Account Management ✓ New client revenue & client margin Client ✓ Existing client retention, ✓ Proportion of Business on clou
Slide 25: Board of Directors
Board of Directors New Non-Executive Director appointments with technology backgrounds Non-Executive Director, Andrew Russell Chairman – Neil Broekhuizen - Independent NED since Feb 2023 - Independent Non-Executive Chairman since 2019 - Remuneration and Nomination Committee - Co-founder and CEO, Iro
Slide 26: FY23 Guidance and Outlook
.04 FY23 Guidance and Outlook Bravura Solutions 1H23 Results Presentation 26
Slide 27: Updated FY23 Guidance
Updated FY23 Guidance FY23 guidance lowered to EBITDA of ($10) – ($5)m, with benefits from Operational Change Program already making an impact ▪ Stronger 2H revenue expected however reduced from prior expectations: FY23 Guidance Current Previous ▪ 2H revenue higher than 1H driven by program change w
Slide 28: Outlook
Outlook Organisational Change Program targeting to drive improved profitability and margins once fully implemented ▪ Bravura’s product-centric strategy sets up Bravura to better meet client needs in today’s constrained economic environment Measurable targets ▪ The Organisational Change Program is ta
Slide 29: Appendix
Appendix 29
Slide 30: ESG – Social Responsibility
ESG – Social Responsibility Diversity and Inclusiveness People Sustainability ✓ The Global D&I Leadership Team ✓ Refreshed Bravura’s purpose and values through ✓ Established a global environmental working champions employee networks for engaging representative groups across the company group (bGreen
Slide 31: What We Do
What We Do Bravura’s digital software solutions underpin sophisticated financial services products Core record keeping Process support Capabilities ▪ Investment products ▪ Automation ▪ Cloud deployment ▪ Wrap platforms ▪ New product creation ▪ On-premises and hybrid cloud ▪ Superannuation and pensio
Slide 32: Presentation of R&D Expense and R&D Capitalised
Presentation of R&D Expense and R&D Capitalised 35.0 R&D / 22% 19% 22% 18% 16% Revenue 30.0 25.0 11.3 7.8 20.0 9.9 11.4 15.0 8.3 10.0 18.0 18.4 14.3 13.0 5.0 10.1 0.0 1H21 2H21 1H22 2H22 1H23 R&D Expensed R&D Capitalised Bravura Solutions 1H23 Results Presentation 32
Slide 33: For more information, visit: www.bravurasolutions.com/investors
For more information, visit: www.bravurasolutions.com/investors investors@bravurasolutions.com