Iress Limited · ASX:IRE
Iress — FY2021 Earnings Presentation
50 slides from Iress's earnings presentation, Feb 17, 2022
Slide 1: Full year results presentation
2021 Full year ended 31 December 2021 Full year results presentation
Slide 2: Agenda
Iress full year results presentation 2 Agenda Andrew Walsh John Harris Managing Director & CEO Chief Financial Officer Overview of Iress 3 2021 results summary 4 Performance review 18 Outlook 24 Appendix 32
Slide 3: Overview of Iress
Iress full year results presentation 3 Overview of Iress Our vision: Simpler, faster with higher returns Highlights Key statistics 2021 pro forma Segment Profit up 6%, pro forma NPAT up 14%: guidance 10,500+ clients delivered with strong 2H performance. Annual Contract Value $610.8m³ 2022 Segment Pro
Slide 4: 2021 constant currency and pro forma financial performance
Iress full year results presentation 4 2021 constant currency and pro forma financial performance Delivered on pro forma Segment Profit and NPAT guidance Segment profit guidance delivered 166.4 164-168 157.1 (1) Pro forma revenue Pro forma Up 3% 583.7 600.2 Segment Profit & margin (1) (2) 26.9% 27.7% Se
Slide 5: 2021 reported financial performance
Iress full year results presentation 5 2021 reported financial performance Earnings growth and improved return on capital 166.2 152.9 Reported revenue Reported Up 10% 542.6 595.9 Segment Profit & margin 28.2% 27.9% Segment Profit up 9% 2020 2021 2020 2021 NPAT guidance delivered Reported NPAT Reported
Slide 6: 2021 results summary
Iress full year results presentation 6 2021 results summary Delivered Growth Progress Pro forma Segment Profit up 6% v 2020. Strong revenue growth in APAC Trading and Market Super client Guild and two Mortgage clients went Data, Mortgages and North America. live, successful implementation and go live
Slide 7: UK growth strategy
Iress full year results presentation 7 UK growth strategy Strong progress in private wealth, rejuvenating growth in retail wealth Financial updates Medium-term targets Progress report Revenue ($AUDm) ⁽¹⁾ 2021 Growth vs 2020 Revenue Growth: ~10% New sales leadership and restructure in place. Retail W
Slide 8: Superannuation growth strategy
Iress full year results presentation 8 Superannuation growth strategy Successful implementations, pipeline growing Financial updates Medium-term targets Progress report Revenue ($AUDm) 2021 Growth vs 2020 Revenue Growth: >10% p.a. Recurring revenue for the period increased 7%. Superannuation Margin:
Slide 9: Investment Infrastructure growth strategy
Iress full year results presentation 9 Investment Infrastructure1 growth strategy Commercial launch in 2022 Financial updates Medium-term targets Progress report ($AUD) 2021 Growth vs 2020 Revenue Growth: >10% Sales leader appointed to drive commercialisation Margin: of Investment Infrastructure. Pr
Slide 10: Single technology platform & operating model
Iress full year results presentation 10 Single technology platform & operating model Transition on track 2021 update Medium-term targets 2022 priorities Appointment of Global Head of Technology Transition to single product & technology platform Platform enablement: Key functional capabilities Platfo
Slide 11: Australian financial advice: analysis
Iress full year results presentation 11 Australian financial advice: analysis Positive outlook, stable market share Highlights Xplan user & adviser numbers Total lifetime value (1): increasing Digital advice Responding to unmet advice needs and scaled advice delivery. We are seeing increasing interes
Slide 12: Mortgages sale update
Iress full year results presentation 12 Mortgages sale update Process advanced, potential sale proceeds to be distributed Highlights Features The sale process Iress announced the assessment of divestment options Modern, end-to-end mortgage software that 2021 for the UK mortgages business in June 202
Slide 13: SaaS metrics summary
Iress full year results presentation 13 SaaS metrics summary¹ $28bn of total LTV, 10+ times Iress’ market capitalisation 2020 2021 Change Highlights Avg. Revenue per Customer (A$k) 51.3k 55.1k 3.8k Annual Churn rate (%) 1.8% 1.4% (40 bps) Total LTV of A$28.4b: c.12.4 times the current market No. of
Slide 14: Capital management: Consistent returns with conservative gearing
Iress full year results presentation 14 Capital management: Consistent returns with conservative gearing Net debt ROIC Leverage Dividends Increase in net debt reflects the Pro forma 2021 ROIC is 8.5%, above Iress maintains conservative gearing Iress’ very high dividend payout ratio impact of on-marke
Slide 15: Capital management: Scope for significant shareholder distributions
Iress full year results presentation 15 Capital management: Scope for significant shareholder distributions Cumulative share buyback (A$m) Cumulative dividends (cents per share) Leverage ratio post buyback c.50% of the $100m buyback to be purchased Significant dividend under current policy (at least L
Slide 16: People: Attraction and retention
Iress full year results presentation 16 People: Attraction and retention 2021 People Update The market for top talent is under pressure in the current environment. While challenging, Iress has successfully attracted and recruited new people. We successfully recruited and onboarded 380 new people glo
Slide 17: Environment, Social & Governance
Iress full year results presentation 17 Environment, Social & Governance Environment Social Foundation Renewable energy in Sydney and All permanent employees and fixed-term Melbourne offices (representing contractors at Iress are able to take a 615 volunteering hours 95% of Australian footprint). Frida
Slide 18: Performance review
Performance review
Slide 19: Segment performance
Iress full year results presentation 19 Segment performance Constant currency using average 2020 rates Segment ($AUDm) 2020 2021 2021 vs 2020 Historic segment profit performance¹ Revenue APAC 289.8 336.0 16% UK & Europe 154.6 159.5 3% Mortgages 26.9 29.9 11% South Africa 42.9 42.4 (1%) North America
Slide 20: Pro forma Segment Profit breakdown
Iress full year results presentation 20 Pro forma Segment Profit breakdown¹ +6% Pro forma Segment Profit driven by UK & Europe, North America and Mortgages Reflecting successful project deliveries and Mortgages growth driven by Project work driven by regulatory customer wins in trading and market data,
Slide 21: Pro forma costs breakdown
Iress full year results presentation 21 Pro forma costs breakdown¹ Strong cost discipline with focus to scale: jaws positive Reported P&T costs were up 5% v 2020. Pro forma P&T costs (adjusting Increased investment in for acquisitions and internal staff transfers) were down 1% v 2020. information se
Slide 22: Pro forma net profit after tax analysis
Iress full year results presentation 22 Pro forma net profit after tax analysis¹ 14% pro forma NPAT growth vs 2020 Impact of forfeitures in 2021 New UK and Sydney Pro forma corporate tax rate was 27% in Provision release associated with as a result of employees leases, office line with 2020 and guidanc
Slide 23: Net debt analysis
Iress full year results presentation 23 Net debt analysis Strong cash generation and distributions to shareholders 2021 free cash flow of $76.2m¹ (2020: $107.4m²) reflects the timing of tax payments and prepaid annual expenses across the years. These timing effects normalise over time and free cash flo
Slide 24: Outlook
Outlook
Slide 25: 2022 Outlook
Iress full year results presentation 25 2022 Outlook¹ Segment profit expected to grow by 7-10% incl. Mortgages (6-9% excl. Mortgages) Highlights Guidance (constant currency) ($AUDm)¹ Segment profit expected to grow by 7-10% incl. Mortgages (6-9% Excl. Mortgages Incl. Mortgages excl. Mortgages). 2021 2
Slide 26: 2022 Outlook - NPAT breakdown
Iress full year results presentation 26 2022 Outlook¹ - NPAT breakdown 30% - 43% Underlying NPAT growth vs 2021 (Excl. Mortgages) Provision release associated with finalisation of QuantHouse earnout (+$14.2m), BCG earnout (+$8.1m), offset by Warwick office closure (-$5.5m) and costs Post tax investment
Slide 27: Cash generation & anticipated shareholder returns
Iress full year results presentation 27 Cash generation & anticipated shareholder returns Strong cash generation and conservative gearing. Significant dividend opportunity plus distribution of potential Mortgages sales proceeds. Remainder of $100m on-market buyback to be executed in 2022. EPS impact
Slide 28: Iress' vision: simpler, faster with higher returns
Iress full year results presentation 28 Iress’ vision: simpler, faster with higher returns Benefits Technology Capital management 2022 We see benefits being A single technology platform New medium term target of Positive outlook. realised at a greater rate with is key to unlock scale and more than 2x
Slide 29: Q&A
Q&A
Slide 30: Close
Close Andrew Walsh Managing Director & CEO
Slide 31: Thank you
Thank you
Slide 32: Appendix
Appendix
Slide 33: Income statement - constant currency
Iress full year results presentation 33 Income statement - constant currency¹ Constant Currency $AUDm 2020 2021 2021 vs 2020 Operating Revenue 542.6 600.2 11% Operating Costs (389.7) (433.8) 11% Segment Profit 152.9 166.4 9% Share Based Payments (21.0) (17.4) (17%) Segment Profit after SBP 131.9 149.0
Slide 34: Income statement - reported results
Iress full year results presentation 34 Income statement - reported results Reported Currency $AUDm 2020 2021 2021 vs 2020 Operating Revenue 542.6 595.9 10% Operating Costs (389.7) (429.7) 10% Segment Profit 152.9 166.2 9% Share Based Payments (21.0) (17.4) (17%) Segment Profit after SBP 131.9 148.8 1
Slide 35: Pro forma NPAT reconciliation
Iress full year results presentation 35 Pro forma NPAT reconciliation 2020 2021 Add: Add: One-Off Remove One-Off $AUDm Reported OneVue Pre-Acq¹ O&M Pre-Acq² Adjustments³ Pro forma Reported Currency⁴ Adjustments⁵ Pro forma Operating Revenue 542.6 40.3 0.7 - 583.7 595.9 4.3 - 600.2 Operating Costs (38
Slide 36: Pro forma segment profit reconciliation by region
Iress full year results presentation 36 Pro forma segment profit reconciliation by region Reported segment profit to pro forma segment profit by region 2020 2021 2021 vs 2020 Add: Add: OneVue O&M Staff Remove Pro forma % $AUDm Reported Pre-Acq¹ Pre-Acq² Transfers³ Pro forma Reported Currency ⁴ Pro form
Slide 37: Segment performance
Iress full year results presentation 37 Segment performance Reported currency Segment ($AUDm) 2020 2021 2021 vs 2020 Revenue APAC 289.8 335.3 16% UK & Europe 154.6 156.2 1% Mortgages 26.9 29.5 9% South Africa 42.9 43.4 1% North America 28.4 31.5 11% Total Revenue 542.6 595.9 10% Direct contribution
Slide 38: APAC
Iress full year results presentation 38 APAC Ongoing demand for financial advice software & high client retention. Super admin client delivery momentum building. AUD (m) 1H 20 2H 20 2020 1H 21 2H 21 2021 2021 vs 2020 Operating revenue Trading & Market Data 61.7 63.1 124.8 65.0 68.3 133.3 7% Financial
Slide 39: UK & Europe
Iress full year results presentation 39 UK & Europe Stable underlying revenue. Market data feeds growing. Client delivery and ongoing demand to drive growth. GBP (m) 1H 20 2H 20 2020 1H 21 2H 21 2021 2021 vs 2020 Operating Revenue Wealth 17.0 17.9 34.9 17.4 18.0 35.4 1% Trading 5.7 5.7 11.4 6.0 6.4
Slide 40: Mortgages
Iress full year results presentation 40 Mortgages Two clients went live in 2020. Another two clients in 2021. Size of opportunity remains. GBP (m) 1H 20 2H 20 2020 1H 21 2H 21 2021 2021 vs 2020 Operating revenue Recurring revenue 2.9 3.8 6.7 4.4 5.0 9.5 42% Non-Recurring revenue 3.3 4.6 7.9 3.2 3.5
Slide 41: South Africa
Iress full year results presentation 41 South Africa Successful client deliveries amidst challenging market conditions. ZAR (m) 1H 20 2H 20 2020 1H 21 2H 21 2021 2021 vs 2020 Recurring revenue 234.3 222.1 456.4 226.5 226.1 452.7 (1%) Non-Recurring revenue 12.4 14.9 27.3 12.8 16.1 28.9 6% Operating r
Slide 42: North America
Iress full year results presentation 42 North America Stable underlying client base. QuantHouse broadens market data capability. CAD (m) 1H 20 2H 20 2020 1H 21 2H 21 2021 2021 vs 2020 Recurring revenue 12.6 12.5 25.2 13.0 14.1 27.1 8% Non-Recurring revenue 0.5 0.5 1.0 1.4 1.1 2.6 large Operating rev
Slide 43: Ongoing cost discipline across functional segments
Iress full year results presentation 43 Ongoing cost discipline across functional segments¹ Product & Technology (P&T) Reported Pro forma ⁽¹⁾ AUD (m) 2020 2021 2021 vs 2020 2020 2021 2021 vs 2020 P&T Costs ($m) 128.4 135.1 5% 136.7 135.9 (1%) As a % of revenue 24% 23% 23% 23% Operations Reported Pro
Slide 44: Strong balance sheet and cash conversion averaging >90% over time
Iress full year results presentation 44 Strong balance sheet and cash conversion averaging >90% over time $AUDm 2020 2021 Cash conversion (%)³ Total current assets 133.8 148.6 Total non-current assets 872.6 884.0 Total Assets 1,006.5 1,032.6 Total current liabilities 103.8 108.8 Total non-current li
Slide 45: Depreciation and Amortisation (D&A)
Iress full year results presentation 45 Depreciation and Amortisation (D&A) D&A – Operational $AUDm 1H 20 2H 20 2020 1H 21 2H 21 2021 Depreciation Plant & Equipment 5.4 5.6 11.0 5.7 6.0 11.7 Amortisation Software 0.6 0.8 1.4 0.8 0.8 1.6 Leases 5.7 6.6 12.3 7.5 8.3 15.9 Total D&A - Operational 11.7 1
Slide 46: Foreign exchange rates
Iress full year results presentation 46 Foreign exchange rates 2021 foreign exchange rates 2020 foreign exchange rates 2021 Rate 2020 Rate GBP 0.5477 GBP 0.5391 CAD 0.9435 CAD 0.9244 ZAR 11.0981 ZAR 11.3504 EUR 0.6367 EUR 0.6052
Slide 47: Glossary
Iress full year results presentation 47 Glossary Pro forma 2020 pro forma results adds back the pre acquisition trading for OneVue and O&M and adjusts to exclude a $5.1m benefit in Non-Operating Expenses relating to provision revaluations for BCG and QuantHouse earn-outs. 2021 pro forma results exclu
Slide 48: Glossary
Iress full year results presentation 48 Glossary Annual Churn rate Measured as the percentage of revenue from lost customers / prior year total group revenue. Value of revenue from lost customers is equal to the last 12 months of revenue recognised prior to the month of leaving. Avg. Customer Lifeti
Slide 49: Disclaimer
Iress full year results presentation 49 Disclaimer The material in this presentation is intended to be general background information on Iress Limited and its activities, current at the date These risks and uncertainties could cause actual results, performance or events to differ materially from tho
Slide 50: Contact
Contact Andrew Walsh Managing Director & CEO John Harris Chief Financial Officer +61 3 9018 5800 iress.com © Iress 2022