Bravura Solutions share price higher after reporting strong profit growth and acquisition news

The Bravura Solutions Ltd (ASX:BVS) share price has charged higher this morning after reporting strong profit growth in FY 2019 and an earnings accretive acquisition…

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In morning trade the Bravura Solutions Ltd (ASX: BVS) share price has surged higher following the release of its full year results and the announcement of an acquisition.

At the time of writing the shares of the provider of software solutions to the wealth management, life insurance, and funds administration industries are up 11% to $5.23.

What did Bravura Solutions announce?

In FY 2019 Bravura posted a 16% increase in revenue to $257.7 million, a 27% jump in EBITDA to $48.1 million, and a 21% lift in net profit after tax to $32.8 million.

Group earnings per share increased 19% to 15 cents, allowing the Bravura board to declare an unfranked final dividend of 4.8 cents per share.

This strong result was driven by robust growth across the Bravura product suite and margin expansion due to the benefits of continued operating leverage.

Once again, the company’s key Sonata product delivered strong growth. It underpinned a 14% increase in Wealth Management segment revenue to $176.8 million and a 17% lift in segment EBITDA to $53.9 million. This was the result of new contracts, successful client implementations, and the commencement of additional projects for new and existing clients.

The Funds Administration segment was also a strong performer in FY 2019 thanks to increased implementation and project work arising from a renewed and enhanced contract with a significant global client. The segment reported a 22% increase in revenue to $80.9 million and a 21% rise in EBITDA to $32.3 million.

Acquisition news.

Bravura may have failed with its GBST Holdings Limited (ASX: GBT) takeover, but this morning announced that it has finally secured an acquisition.

It has entered into an agreement to acquire Midwinter Financial Services for $50 million. Midwinter’s financial planning software, AdviceOS, powers back office administration for financial advisers and drives online self-directed digital advice portals for superannuation funds in Australia.

Management believes the acquisition is a strong strategic fit, with AdviceOS being a natural extension to Bravura’s existing software solutions and client base and opens an important avenue for growth in Australia, the UK and other geographies in which Bravura currently operates.

It is expected to be earnings per share accretive in the first year of ownership.


Bravura’s chief executive officer, Tony Klim, appears confident on the company’s future.

He said: “We see continued long term demand from our client base across the Bravura product suite, with structural changes in the global financial services industry providing a long growth runway. Our clients continue to deeply embed our products as mission critical technology platforms which is driving new project activity.”

As a result of strong recurring revenue and new sales opportunities, FY 2020 net profit after tax growth is expected to be in the mid-teens.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bravura Solutions Ltd. 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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