• New Business Revenue: $7.6 million, an increase of 76% compared to the prior corresponding period.
• Total Contract Value (TCV): $26.5 million, down 36% from the prior corresponding period.
• Statutory Revenue: $28.8 million, down 29% from the prior corresponding period.
• Pro-forma Revenue: $36.6 million, down 2% from the prior corresponding period.
• EBITDA: $4.6 million, down 58% from the prior corresponding period.
• Pro-forma EBITDA: $11.8 million, up 53% from the prior corresponding period.
• Net Cash: $31.1 million as of December 31, 2024.
• New Product Release: High Value Payments, with a foundation client secured in a major US bank.

• Warning! GuruFocus has detected 5 Warning Signs with ASX:IRI.

Release Date: February 19, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Integrated Research Ltd (ASX:IRI) reported a 76% increase in new business revenue, contributing $7.6 million, indicating early progress in their product-led growth strategy.
• The company launched a new product, High Value Payments, and secured a major US bank as a foundation client, enhancing their product portfolio.
• Pro-forma revenue, which provides a more stable view of revenue over time, was down only 2%, showing underlying business stability despite softer statutory revenue.
• The Americas and APAC regions, which represent 90% of the company's pro-forma revenue, delivered stable results, with strong new business wins.
• The company's balance sheet remains strong with $31.1 million in net cash, providing a solid foundation for future investments and growth initiatives.

Negative Points

• Total contract value (TCV) was down 36% compared to the prior corresponding period, primarily due to a soft renewal TCV.
• Statutory revenue decreased by 29% to $28.8 million, reflecting the challenges in the renewals book.
• EBITDA was down 58% to $4.6 million, highlighting the impact of reliance on renewals and a largely fixed cost base.
• The Collaborate product, which represents 43% of pro-forma revenue, declined by 10%, indicating challenges in maintaining revenue from this segment.
• The European market underperformed with a 17% decline in pro-forma revenue, showing regional challenges amidst a market refresh.

Q & A Highlights

Q: Can you provide an update on the renewal of the JPMorgan Chase contract? A: Ian Lowe, CEO: We are not in a position to make any specific references or disclosures on that. It remains commercial in confidence at this point.

Q: How is the revenue recognition structured for the new High Value Payments product? A: Christian Shaw, CFO: The revenue recognition follows our dominant policy for on-premise software, with an upfront revenue recognition profile, similar to the majority of our revenue.

Q: Was the revenue from the initial client for the High Value Payments product recognized in the first half? A: Christian Shaw, CFO: Yes, it was recognized in the first half, and the contract was for five years.

Q: With a strong cash position, was there any discussion at the board level about capital management, such as share buybacks or dividends? A: Ian Lowe, CEO: The Board regularly discusses capital management. There is no interim dividend, but capital management remains a priority to ensure value return to shareholders.

Q: How many new products do you plan to launch in the second half? A: Ian Lowe, CEO: We are not providing a specific number but expect a more regular cadence of new product releases than historically, aligned with our product-led growth strategy.

Q: With $31 million in cash, why not leverage the balance sheet more aggressively, such as through share buybacks? A: Christian Shaw, CFO: The company is in advanced stages of assessing capital use related to its product-led growth strategy. The priority is to maximize shareholder returns through strategic investments.

Q: What is being done to address the decline in the Collaborate product's revenue? A: Ian Lowe, CEO: We are focusing on larger clients with more complex requirements, where we have better conversion and retention rates, to mitigate churn and enhance client service efforts.

Q: How do you ensure that new products developed by IR Labs will meet market demand? A: Ian Lowe, CEO: We have a structured process with checkpoints for client validation, technical proof points, and prototyping to ensure new products align with market needs and business DNA.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.