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Why the Integrated Research share price crashed 17% lower today

Data technology share investing

The Integrated Research Limited (ASX: IRI) share price has crashed lower this morning following the release of its full year profit guidance.

At the time of writing the shares of the leading global provider of proactive performance management software for critical IT infrastructure, payments and communications ecosystems are down 17% to $2.85.

What did Integrated Research announce?

This morning the company revealed that it is in the early stages of preparing its financial statements. And whilst these accounts are still subject to audit, management expects to report record full year revenue and profit after tax in August.

According to the release, total revenue is expected to be in the range of $100 million to $101.5 million in FY 2019, which represents year on year growth of 10% to 12%.

This solid top line growth was driven largely by Licence sales, which are expected to be in the range of $61.5 million to $63 million. This will be an increase of 17% to 20% on the prior period and is courtesy of strong growth from the company’s Payments product line.

On the bottom line, profit after tax for the year is expected to be in the range of $21.2 million to $22 million compared to $19.2 million for the prior year. This represents year on year growth of 10% to 15%.

Why are its shares trading lower?

Whilst this is a solid result from Integrated Research, I suspect that some investors were expecting even better.

Especially given how the company reported a 10% increase in revenue to $50.3 million and a 26% increase in profit after tax to $11.7 million in the first half. This appears to show that the company’s margins have narrowed in the second half.

And with its shares hitting a 52-week high on Friday, expectations clearly were high and it isn’t overly surprising to see them come under pressure today following this update.

Elsewhere on the market today, the AMP Limited (ASX: AMP) share price has crashed lower after providing a disappointing update on its AMP Life sale and the Praemium Ltd (ASX: PPS) share price has charged higher following its quarterly update.

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Returns as of 6th October 2020

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Integrated Research Limited and Praemium Limited. The Motley Fool Australia has recommended Praemium Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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