The Bravura Solutions Ltd (ASX: BVS) share price is sinking today after the company announced mixed results for FY22.
At the time of writing, shares in the wealth management software company are down 8.41% to $1.47 each.
Let's go over the report's highlights.
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Bravura Solutions share price falls as earnings slump
- Group revenue up 10% year over year (yoy) to $266.7 million
- Group earnings before interest, taxes, depreciation and amortisation (EBITDA) down 8% yoy to $45.3 million
- Net profit after tax (NPAT) down 14% yoy to $29.99 million
- Net assets per ordinary security of 134.8 cents
- Earnings per share (EPS) down 14% to 12.1 cents per share (cps)
- Unfranked dividend of 3.2 cps
Bravura notes that its operations suffered "unprecedented macroeconomic challenges caused by the COVID-19 pandemic". These were said to have affected investors' outlook for making long-term investments, affecting its top and bottom lines, driving up wage costs, and causing disruptions.
A slowdown in rolling out its software projects was also observed due to the virus.
Other highlights from the year were that it successfully integrated its FinoComp and Delta acquisitions into its operations.
The unfranked dividend of 3.2 cps has a record date of 5 September and a payment date of 29 September.
What else happened in FY22?
In terms of the company's operating segments, wealth management revenue grew 6% and fund administration revenue grew 17%. Contracted recurring revenues also grew during the same period, growing 8% to $142.1 million.
Bravura also invested substantially into research and development (R&D) during the period with a $21.2 million investment. These funds were primarily used to develop its Sonata Alta wealth management software built to be used by Australian super funds.
Two major corporate changes occurred during the year, including appointing Libby Roy as the new chief executive officer and Brent Henley as chief financial officer.
What did management say?
Bravura Solutions chief executive officer Libby Roy said:
The long-term nature of Bravura's client relationships, our high proportion and continued growth of recurring revenue and our strategic acquisitions helped us return to revenue growth in FY22.
In FY22, Bravura's financial results reflected revenue growth of 10%, offset by increased operating costs in a challenging technology labour market.
Group EBITDA was down 8% to A$45.3m, compared to A$49.3m in FY21. The EBITDA result was driven by continued wage pressure driven by resource shortages and the global resource mix, staff attrition and investment in key delivery resources across APAC and EMEA. This resulted in the EBITDA Margin of 17% (20% in FY21).
What's next?
For FY23 and beyond, Bravura will continue to work on its flagship Sonata product to deliver business process as a service (BPaaS) offers to its key customers. The company also notes it has a strong sales pipeline for its Sonata offering to increase its growth in the future.
Besides that, the company plans to increase its number of partnerships with its client base, allowing for more cross-selling and upselling opportunities.
"Funds Administration represents 36% of Bravura's revenue and we will continue to explore opportunities for expansion," Roy said.
A further focus on transitioning its products to the cloud is underway.
Bravura Solutions share price snapshot
The Bravura Solutions share price is down 40% year to date and 52% in the past 12 months. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is down around 8% and 7%, respectively, over the same periods.
Bravura has a market capitalisation of $398.61 million.
