The share price of Integrated Research Limited (ASX: IRI) has risen 3.6% in today's trading session to $3.77 following the release of its half-yearly result for the six-month period ending 31 December 2017.
Key highlights from today's earnings release include. Total revenue grew 5% to $45.7 million (up 8% at constant currency). Net profit after tax rose by 20% to $9.3 million (up 25% at constant currency). Basic earnings per share increased by 19% to 5.41 cents. A fully franked dividend of 3.00 cents per share is payable on April 10.
Overall, I thought this was another excellent operational result for the company as it continues to execute its growth strategy in overseas markets where 95% of its revenues are generated. Today's announcement was also at the high end of the guidance management provided in January when it projected net profit after tax to be between $8.9 million and $9.3 million for the period.
Revenue from Unified Communications continues to grow impressively, rising by 18% to $27.8 million with strong growth from the Microsoft and Cisco platforms.
The company is also growing its recurring revenues which now comprise 87% of revenues, up from 81% in the prior corresponding period. However, the news was not entirely positive on the revenue side, with infrastructure revenues declining by 16% to $10.4 million. Management attributed the drop to a typical cyclical downturn after an exceptional performance last year.
The strong rise in the company's bottom line was fueled by a higher operating margin which rose to 20% from 18% in the prior corresponding period. The material improvement in the company's margins was mainly due to a 21% decrease in general and administrative expenses.
Foolish takeaway
Integrated Research remains one of the better technology plays on the Australian market. The company has an enviable track record over the last couple of years in growing the business and generating long-term shareholder wealth.
It currently trades for around 32 times trailing earnings which is on the high side, even for a well managed high quality business. However, as we've seen recently, a more compelling entry point is possible for a thinly traded high growth stock which tends to overshoot on down days as we saw last week when it touched $3.30.
