Iress share price rallies as profit lifts 29%

The trading and wealth platform provider released its 2022 half-year results this morning.

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Key points

  • The Iress share price jumped 4.6% after it posted its first half results, which showed growth at both its top and bottom lines
  • Underlying net profit after tax increased 29% to $31.8 million, as revenue improved 6% to $306.4 million 
  • Management is sticking to its FY22 profit guidance but said that this will likely come in at the lower end of the range

The Iress Ltd (ASX: IRE) share price is defying the broader market today after the company delivered its first-half profit results.

The trading and wealth platform provider reported a 29% uplift in underlying net profit after tax (NPAT) to $31.8 million. This was on a 6% increase in revenue to $306.4 million for the six months ended 30 June 2022.

The statutory NPAT declined 25% to $30.6 million, but investors don't appear to be perturbed. The underlying figure excludes one-off earn-out payments for the QuantHouse and BC Gateway acquisitions.

The Iress share price jumped 4.6% to an intraday high of $11.89 in early trade. It has since slipped back to be up 2.7% at $11.67. In contrast, the S&P/ASX 200 Index (ASX: XJO) is down 0.32%.

Summary of Iress 1H FY22 results

  • Constant Currency Segment Profit up 6% to $306.4 million
  • Underlying NPAT up 29% to $31.8 million
  • Return on invested capital (ROIC) increased 140 basis points (bps) to 9.6% on an underlying basis but fell 110 bps to 9.4% on a statutory basis
  • Strong performance in APAC trading and market data and financial advice
  • Xplan user numbers in financial advice are stable and the outlook for technology-enabled solutions is strong
  • United Kingdom private wealth and trading delivered strong growth, with a plan to rejuvenate growth in retail wealth, and mortgages are performing well.

What the CEO said about the results

Iress CEO Andrew Walsh said:

Coupled with the benefits of the continuing share buy-back program and the purchase of shares for employee remuneration, underlying EPS rose by 32%.

The lifetime value of our client relationships sits at $25.7bn, many multiples of our market capitalisation, highlighting the strength of our client base and continued revenue growth.

It is pleasing to see our core business in Australia deliver another strong performance, with financial advice and trading & market data revenue growing by 8% on pcp. Recurring revenue grew by 9% on pcp for trading & market data and 8% for financial advice.

FY22 outlook and guidance

The company reaffirmed its full-year guidance range for segment profit to come in between $177 million and $183 million. This represents an increase of 7% to 10% over the previous year.

However, the results are now expected to be at the lower end of its guidance. Management is blaming this on the investment in fund registry, as part of investment infrastructure, and delayed growth in the UK.

Iress share price snapshot

Despite today's rally, the Iress share price has fallen 23% over the past year. That's worse than the 5%-plus fall by the ASX 200.

Some of its peers have also performed better. The Computershare Limited (ASX: CPU) share price has surged 50% and the Netwealth Group Ltd (ASX: NWL) share price has shed 7% over the same period.

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Netwealth. The Motley Fool Australia has positions in and has recommended Netwealth. 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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