The Iress Ltd (ASX: IRE) share price is rising this morning after releasing its 2020 full-year results (FY20). At the time of writing the financial software company's shares are 6.5% higher at $10.44.
What's moving the Iress share price?
Steady sustainable returns for shareholders
The results for FY20 were ahead of the company's reinstated guidance as a result of solid momentum in the fourth quarter.
Iress reported a 6.6% lift in operational revenue to $542.6 million for the year. Recurring revenue was responsible for 90% of this, growing 8% from the previous year.
Looking at profits, the company's net profit after tax (NPAT) fell 9% to $59.1 million. This flowed onto a 15% decrease in earnings per share (EPS) for shareholders, at 32.3 cents.
In the Chair and CEO's letter, it was pointed out that although Iress experienced growth during the year, the company remains impacted in locations still hampered by COVID-19. As stated in the letter, "While our significant growth opportunity remains intact, project timing and new business development have been delayed with revenue growth deferred."
Throughout the year the company completed 3 acquisitions: BC Gateways, O&M Systems, and OneVue. Following this, Iress raised $175 million in equity raising to strengthen the balance sheet and prepare for future opportunities. Aided by stronger cash conversions, the company increased cash assets to $63.141 million from $33.386 million.
Outlook for the year ahead
Iress is guiding for an NPAT of $63 million in FY21, representing a 6.6% increase on the current result.
Management expects low single-digit growth in Australian financial advice and super revenue. In the medium-term, the company sees opportunities for this business with the risk of seasonal movements.
The company will continue to focus on its Iress Cloud for client and Iress benefit rollout momentum. In addition, management is seeking to maintain high-quality recurring revenue to continue to deliver growth and higher margins.
Iress chair succession
Announced alongside today's results, the current chair Tony D'Aloisio will step as director and chair of the Iress board. D'Aloisio will take this action at the end of the AGM on 6 May. D'Aloisio's tenure on the board began in 2012, and he assumed the role of chair in 2014. Commenting on the news, D'Aloisio said:
I am a firm believer in Board and chair renewal and after more than eight years as a director and the past six years as chair, this is the right time both for me and for Iress to step down. Being director and chair of Iress has been a privilege and I am confident that Iress will continue to adapt and grow in the years ahead.
D'Aloisio will be replaced by Roger Sharp, who was added as a non-executive director effective as of today.
