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Integrated Research share price falls 13% on FY 2020 earnings

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The Integrated Research Limited (ASX: IRI) share price has slumped by 13.88% today after the company released its FY 2020 financial results. The fall in the Integrated Research share price came despite the company posting its 7th year in a row of profit growth.

Integrated Research is a locally based tech company that provided solutions for unified communications, payments and IT infrastructure.

Solid revenue and profit growth

Total revenue increased by 10% to $110.9 million for Integrated Research, while total license sales revenue increased by 15% during the 12 months to $72.1 million. Over 95% of all revenue was derived overseas.

The tech company reported profit after tax of $24.1 million, which was a 10% increase on the corresponding year. This result was at the top end of guidance. It was also the seventh consecutive year that Integrated Research had seen annual profit growth.

Total expenses for FY 2020 increased by 7% to $78.2 million. A significant focus was made by Integrated Research to reduce costs in the fourth quarter as a result of the coronavirus pandemic

Integrated Research’s EBIT margin remains in a solid position, coming in at 28% for FY 2020 compared to 29% in FY 2019. Its net profit after tax margin was also healthy at 22%, the same level as recorded last year.

The company ended the financial year with a solid balance sheet. It had a net cash position of $4.7 million as at 30 June 2020.

Integrated Research achieved a number of major sales wins during FY 2020. These included major brands such as Australia and New Zealand Banking Group Limited (ASX: ANZ), BT, JP Morgan, NTT and Woolworths Group Ltd (ASX: WOW).

Multiple divisions perform strongly

The Unified Communications and Contact Centre was one of the top performing divisions for Integrated Research. Revenue totalled $59.8 million, which was an impressive rise of 17% on the prior year. Professional services revenue also grew strongly by 17% to $8.6 million.

The infrastructure division’s revenue increased by 9% to $28.7 million for FY 2020. Meanwhile, revenue for the Payments division totalled $13.8 million, which was a decline of 14%.

Commenting on the results, Paul Brandling, chair of Integrated Research, said:

IR has again delivered strong financial results for 2020 in a tumultuous global environment.  Our solutions have become even more relevant to enterprise customers and we believe the structural changes in market dynamics are an opportunity for the Company. We continue to invest in research and development to accelerate innovation and expand IR’s value proposition for customers across the globe.  

Outlook and dividend

Due to the global uncertainty surrounding the coronavirus pandemic, Integrated Research decided not to provide any forward guidance for FY 2021.

The company declared a fully franked final dividend of 3.75 cents per share. This took the total dividend for FY 2020 to 7.25 cents per share.

At the time of writing, the Integrated Research share price is down by almost 14%, sitting at $4.22 per share.

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Phil Harpur owns shares of Australia & New Zealand Banking Group Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Integrated Research Limited. The Motley Fool Australia owns shares of Woolworths 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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