The Integrated Research Limited (ASX: IRI) share price will be on watch when trade opens on the ASX this morning, following the release of its half year earnings for the period ended 31 December 2019.
Integrated Research is a provider of performance management software for critical IT infrastructure, payments and unified communications.
What did Integrated Research announce?
The company recorded its 5th consecutive year of interim profit growth and achieved a 1% increase in profit after tax to $11.8 million, when compared to the prior corresponding period (pcp).
Integrated Research reported that its overall license sales increased by 7% to $33.4 million and total revenue increased by 6% to $53.2 million.
The company declared a fully franked interim dividend of 3.5 cents per share and noted that it has maintained a strong financial position with total cash of $7.6 million at 31 December 2019.
However, the company also reported that its payments revenue declined by 14% to $7.8 million. Commenting on this decline, Integrated Research stated that while there is a cyclical aspect to the result, there are “clear signs” its revenue stream is growing. Underlying growth in new business for the company was 17%, which it feels will provide it further momentum for longer term growth in a market with expanding transactional volumes.
Revenue by product division
Looking at product and service revenue performance by segment, the company’s unified communications revenue was up by 10% to $29.7 million, but revenue from its payments segment dropped 14% to $7.8 million. The infrastructure segment was up 1% to $11.2 million and professional services segment was up 39% to $4.5 million.
Over 95% of Integrated Research’s revenue was derived outside of Australia, in over 60 countries. The company commented that Asia Pacific was the standout performance, with 62% growth and the unified communications business returned to growth as expected. The company noted that some of its more significant sales during the period were to customers such as ANZ Bank, AT&T, BT, Capgemini, Fiserv, HCL Technologies, and Prisma Medios.
The company’s profit margins remained steady for the half. The net profit after tax (NPAT) margin came in at 22% compared to 23% for the equivalent prior half. Total staff numbers at the end of the half were 268.
Product rollout update
Integrated Research’s cashflow from operations increased by 28%1 to $13.2 million, with gross spend on research and development for the half coming in at 21% of revenues.
On 20 December, the company’s new ‘real time’ SaaS platform went live and it has now moved into the customer beta phase with a payments assurance product.
Outlook for remainder of FY20
Integrated Research anticipates delivering a strong result for the full year, based on the quality of its second half pipeline.
Phil Harpur 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. The Motley Fool Australia has no position in any of the stocks mentioned. 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.
- Why I’d buy Wesfarmers and 1 other quality ASX dividend right now – August 31, 2020 12:30pm
- Elixinol share price edges higher on half year earnings release – August 31, 2020 11:54am
- 2 top ASX tech shares to buy and hold beyond 2025 – August 28, 2020 8:33am