Half Year 2026 Iress Ltd Earnings Call

August 16, 2026

Speaker #2: Thank you for standing by, and welcome to the Iress Limited 2026 half-year financial results conference call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session.

Operator 2: Thank you for standing by, and welcome to the Iress Limited 2026 H1 financial results conference call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Andrew Russell, Iress CEO and Managing Director. Please go ahead.

Operator: Thank you for standing by, and welcome to the Iress Limited 2026 H1 Financial Results Conference Call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Andrew Russell, Iress CEO and Managing Director. Please go ahead.

Speaker #2: If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Andrew Russell, Iress CEO and Managing Director.

Speaker #2: Please go ahead.

Speaker #3: Good morning, and thank you for joining us. I'm Andrew Russell, Group CEO and Managing Director, and I'm joined by Cameron Williamson, our Chief Financial Officer.

Andrew Russell: Good morning, and thank you for joining us. I am Andrew Russell, Group CEO and Managing Director, and I am joined by Cameron Williamson, our Chief Financial Officer. Today, we will take you through our H1 performance, updated FY26 guidance, and the progress we are making against the strategic priorities we outlined at our AGM. Most importantly, we will show how disciplined execution is building a stronger, higher quality software business and positioning Iress for sustainable long-term value creation. There are five key messages for our shareholders today. First, we have delivered a solid H1 result with materially improved earnings quality driven by disciplined execution, a simpler operating model, and continued margin expansion. Second, we have continued to simplify the business, progressed our business efficiency program ahead of plan, and strengthened the balance sheet. This provides greater financial flexibility to self-fund disciplined investment in product evolution.

Andrew Russell: Good morning, and thank you for joining us. I am Andrew Russell, Group CEO and Managing Director, and I am joined by Cameron Williamson, our Chief Financial Officer. Today, we will take you through our H1 performance, updated FY 2026 guidance, and the progress we are making against the strategic priorities we outlined at our AGM. Most importantly, we will show how disciplined execution is building a stronger, higher quality software business and positioning Iress for sustainable long-term value creation. There are five key messages for our shareholders today. First, we have delivered a solid H1 result with materially improved earnings quality driven by disciplined execution, a simpler operating model, and continued margin expansion. Second, we have continued to simplify the business, progressed our business efficiency program ahead of plan, and strengthened the balance sheet. This provides greater financial flexibility to self-fund disciplined investment in product evolution.

Speaker #3: Today, we'll take you through our first half performance, updated FY26 guidance, and the progress we're making against the strategic priorities we outlined at our AGM.

Speaker #3: Most importantly, we'll show how disciplined execution is building a stronger, higher-quality software business and positioning Iress for sustainable, long-term value creation. There are five key messages for our shareholders today.

Speaker #3: First, we have delivered a solid first-half result, with materially improved earnings quality driven by disciplined execution, a simpler operating model, and continued margin expansion.

Speaker #3: Second, we have continued to simplify the business, progressed our business efficiency program ahead of plan, and strengthened the balance sheet. This provides greater financial flexibility to self-fund disciplined investment in product evolution.

Speaker #3: Third, our focus has now shifted to evolving our products. Having mobilized our partnership with Thoughtworks in April, we are now embedding AI into our product and engineering strategy, and improving our delivery velocity.

Andrew Russell: Third, our focus has now shifted to evolving our products. Having mobilized our partnership with Thoughtworks in April, we are now embedding AI into our product and engineering strategy and improving our delivery velocity. Fourth, our focus is on building a higher quality software business with better products, stronger customer relationships, and more consistent commercial execution. We believe that is the right foundation for sustainable growth and driving long-term shareholder value. Finally, we have updated our FY26 guidance, reflecting softer revenue growth of 1% to 2%, driven by lower non-recurring revenue, and a higher Cash EBITDA growth of 21% to 26% due to stronger underlying profitability. We remain confident in delivering our FY26 Cash EBITDA margin exit run rate target of 25%. Our H1 financial performance demonstrates the disciplined execution is translating into stronger financial results.

Andrew Russell: Third, our focus has now shifted to evolving our products. Having mobilized our partnership with Thoughtworks in April, we are now embedding AI into our product and engineering strategy and improving our delivery velocity. Fourth, our focus is on building a higher quality software business with better products, stronger customer relationships, and more consistent commercial execution. We believe that is the right foundation for sustainable growth and driving long-term shareholder value. Finally, we have updated our FY 2026 guidance, reflecting softer revenue growth of 1% to 2%, driven by lower non-recurring revenue, and a higher cash EBITDA growth of 21% to 26% due to stronger underlying profitability. We remain confident in delivering our FY 2026 cash EBITDA margin exit run rate target of 25%. Our H1 financial performance demonstrates the disciplined execution is translating into stronger financial results.

Speaker #3: Fourth, our focus is on building a higher-quality software business, with better products, stronger customer relationships, and more consistent commercial execution. We believe that is the right foundation for sustainable growth and for driving long-term shareholder value.

Speaker #3: And finally, we have updated our FY26 guidance, reflecting softer revenue growth of 1% to 2%, driven by lower non-recurring revenue, and a higher cash to bid growth of 21% to 26% due to stronger underlying profitability.

Speaker #3: We remain confident in delivering our FY26 cash-to-bid margin exit run rate target of 25%. Our first-half financial performance demonstrates that disciplined execution is translating into stronger financial results.

Speaker #3: Revenue has remained resilient, up 2.5% on a constant currency basis, driven by higher-quality recurring revenue, which increased 3.4% and now represents 95% of total revenue.

Andrew Russell: Revenue has remained resilient, up 2.5% on a constant currency basis, driven by higher quality recurring revenue that increased 3.4% and now represents 95% of revenue. Cash EBITDA increased materially, up 47.1%, and margins expanded more than 740 basis points, reflecting both disciplined cost management and improved operational execution. Importantly, these results are not simply the outcome of cost reduction. They demonstrate the benefits of simplification, disciplined execution, and a sharper operating focus. We now have greater financial flexibility to invest selectively in product evolution while maintaining a strong balance sheet. The board has declared a AUD 0.14 per share dividend, which is up 27% on the corresponding period, reflecting our stronger earnings and financial position. At our AGM, I outlined four FY26 strategic priorities. These were operational excellence, product evolution, AI-enabled productivity, and customer-led execution. I am pleased with the measurable progress we have made against each of these priorities.

Speaker #3: Cash to bid increased materially, up 47.1%, and margins expanded more than 740 basis points, reflecting both disciplined cost management and improved operational execution. Importantly, these results are not simply the outcome of cost reduction.

Speaker #3: They demonstrate the benefits of simplification, disciplined execution, and a sharper operating focus. We now have greater financial flexibility to invest selectively in product evolution while maintaining a strong balance sheet.

Speaker #3: The board has declared a 14-cent per share dividend, which is up 27% on the corresponding period, reflecting our stronger earnings and financial position.

Speaker #3: At our AGM, I outlined four FY26 strategic priorities: operational excellence, product evolution, AI-enabled productivity, and customer-led execution. I'm pleased with the measurable progress we've made against each of these priorities.

Andrew Russell: These were operational excellence, product evolution, AI-enabled productivity, and customer-led execution. I am pleased with the measurable progress we have made against each of these priorities.

Speaker #3: Product evolution has now moved from planning to execution. We are targeting investment in our core platforms, improving product quality, and accelerating delivery through our partnership with Thoughtworks.

Andrew Russell: Product evolution has now moved from planning to execution. We are targeting investment in our core platforms, improving product quality, and accelerating delivery through our partnership with Thoughtworks. Initial Xplan enhancements are being delivered to our customers while the rollout of the new EMS in our trading business is also underway. AI is embedded within this work, not treated as a separate initiative. We are using AI-enabled development tools to improve engineering productivity and delivery velocity while building AI capabilities into our product roadmaps, including Xplan. Our approach remains disciplined, with appropriate governance and a clear focus on measurable customer value. Customer engagement is gaining momentum, supported by clearer roadmaps, improved transparency, and a commitment to deeper enterprise partnerships. While there is significant work ahead, strengthening customer advocacy is central to our long-term growth strategy.

Speaker #3: Initial Explan enhancements are being delivered to our customers, while the rollout of the new EMS in our trading business is also underway. AI is embedded within this work.

Speaker #3: Not treated as a separate initiative, we are using AI-enabled development tools to improve engineering productivity and delivery velocity, while building AI capabilities into our product roadmaps, including explainability.

Speaker #3: Our approach remains disciplined, with appropriate governance and a clear focus on measurable customer value. Customer engagement is gaining momentum, supported by clearer roadmaps, improved transparency, and a commitment to deeper enterprise partnerships.

Speaker #3: While there is significant work ahead, strengthening customer advocacy is central to our long-term growth strategy. These efforts define our next phase, moving from simplifying and strengthening to product evolution, deepening client relationships, and driving sustainable value through focused execution and investment.

Andrew Russell: These efforts define our next phase, moving from simplifying and strengthening to product evolution, deepening client relationships, and driving sustainable value through focused execution and investment. I will now pass over to Cameron to speak in more detail about the H1 financial results and our updated FY26 guidance.

Speaker #3: I will now pass over to Cameron to speak in more detail about the first half financial results and our updated FY26 guidance.

Speaker #4: Thanks, Andrew, and good morning, everybody. I'll take you through the financial performance in more detail, as well as our updated 2026 guidance. But the key financial message today is that there is a material improvement in the quality of our earnings, as referenced by recurring revenue growth, structural improvements in our cost base, margin expansion, and disciplined execution.

Cameron Williamson: Thanks, Andrew, and good morning, everybody. I will take you through the financial performance in more detail, as well as our updated 2026 guidance. The key financial message today is that there is a material improvement in the quality of our earnings, as referenced by recurring revenue growth, structural improvements in our cost base, margin expansion, and disciplined execution. In terms of the overview, I will focus on the continuing business, and there are four points that I would highlight. Firstly, recurring revenue remains resilient and grew at 3.4% on a constant currency basis. Secondly, the business efficiency program, which we announced in H2 2025, is delivering ahead of plan in both its quantum and pace of delivery. We have now delivered AUD 31.5 million of annualized efficiencies through this period, which is materially resetting the group's structural cost base.

Speaker #4: In terms of the overview, I will focus on the continuing business. There are four points that I would highlight. Firstly, recurring revenue remains resilient and grew by 3.4% on a constant currency basis.

Speaker #4: Secondly, the business efficiency program, which we announced in the second half of 2025, is delivering ahead of plan in both its quantum and pace of delivery.

Speaker #4: We've now delivered $31.5 million of annualized efficiencies through this period, which is materially resetting the group's structural cost base. Third, this is translating into a significantly stronger and cleaner set of earnings.

Cameron Williamson: Third, this is translating into a significantly stronger and cleaner set of earnings. Cash EBITDA increased 47.1% on a constant currency basis, with the Cash EBITDA margin increasing more than 740 basis points to 24.5%. These represent material improvements over the last 12 months. Additionally, there is a 45% reduction in below-the-line items, and these are trending lower. You will see that in the H2 of this year. Finally, the balance sheet remains strong with leverage of 0.5 times as at 30 June. This provides financial flexibility to continue disciplined investment in product evolution while retaining capital management optionality going forward. Together, these outcomes demonstrate a structurally stronger and improving financial position for Iress entering the H2 of 2026. Turning to revenue. Continuing business revenue increased 2.5% on a constant currency basis. As I have already highlighted, recurring revenue grew at 3.4% versus the same period last year.

Cameron Williamson: Third, this is translating into a significantly stronger and cleaner set of earnings. Cash EBITDA increased 47.1% on a constant currency basis, with the cash EBITDA margin increasing more than 740 basis points to 24.5%. These represent material improvements over the last 12 months. Additionally, there is a 45% reduction in below-the-line items, and these are trending lower. You will see that in the H2 of this year. Finally, the balance sheet remains strong with leverage of 0.5x as at 30 June. This provides financial flexibility to continue disciplined investment in product evolution while retaining capital management optionality going forward. Together, these outcomes demonstrate a structurally stronger and improving financial position for Iress entering the H2 of 2026. Turning to revenue. Continuing business revenue increased 2.5% on a constant currency basis. As I have already highlighted, recurring revenue grew at 3.4% versus the same period last year.

Speaker #4: Cash to bid increased 47.1% on a constant currency basis, with the cash to bid margin increasing more than 740 basis points to 24.5%. These represent material improvements over the last 12 months.

Speaker #4: Additionally, there's a 45% reduction in below-the-line items, and these are trending lower. You'll see that in the second half of this year. Finally, the balance sheet remains strong, with leverage of 0.5 times as at 30 June.

Speaker #4: This provides financial flexibility to continue disciplined investment in product evolution while retaining capital management optionality going forward. Together, these outcomes demonstrate a structurally stronger and improving financial position for Iress entering the second half of 2026.

Speaker #4: Turning to revenue, continuing business revenue increased 2.5% on a constant currency basis. As I've already highlighted, recurring revenue grew by 3.4% versus the same period last year.

Speaker #4: Recurring revenue is 95% of our continuing business revenue, reinforcing the resilience of the underlying revenue base, as can be seen in the step changes half-on-half in the graph.

Cameron Williamson: Recurring revenue is 95% of our continuing business revenue, reinforcing the resilience of the underlying revenue base, as can be seen in the step changes half on half in the graph. For the H1 of 2026, the APAC Wealth business delivered notable growth in its recurring revenue, while the trading and market data business also continued to grow. Non-recurring revenue was lower, particularly in the UK, and this reflected the completion of large client projects and a lengthening sales cycle. This distinction is important. While total revenue growth remains measured, the recurring component of our revenue continues to grow and remains our focus as we improve customer retention, product value, and commercial execution. The business efficiency program continues to deliver ahead of expectations. We have delivered AUD 31.5 million of annualized efficiencies to date across organizational structure, technology and software, property and other OpEx items.

Speaker #4: For the first half of 2026, the APAC wealth business delivered notable growth in its recurring revenue, while the trading and market data business also continued to grow.

Speaker #4: Non-recurring revenue was lower, particularly in the UK, and this reflected the completion of large client projects and a lengthening sales cycle. This distinction is important.

Speaker #4: While total revenue growth remains measured, the recurring component of our revenue continues to grow and remains our focus as we improve customer retention, product value, and commercial execution.

Speaker #4: The business efficiency program continues to deliver ahead of expectations. We have delivered $31.5 million of annualized efficiencies to date, across organisational structure, technology and software, property, and other OPEX items.

Speaker #4: But these are not simply short-term reductions in discretionary expenditure. The program is resetting the structural cost base of Iress and embedding greater operating discipline across the business.

Cameron Williamson: These are not simply short-term reductions in discretionary expenditure. The program is resetting the structural cost base of Iress and embedding greater operating discipline across the business. We expect to deliver a further AUD 6 to 9 million in annualized efficiencies during the H2, with the full benefit of this flowing into 2027. This gives us confidence in the sustainability of the margin improvement while continuing to invest selectively in our strategic priorities. Turning to slide 10, you can see the impact of that discipline in the earnings bridge. Revenue growth contributed positively, but the more significant improvement has come from the reset of our operating cost base, particularly across staff and non-job OpEx. This resulted in Cash EBITDA of AUD 62.5 million on a constant currency basis, up 47.1% on the prior period. A stronger A dollar detracted AUD 1.4 million in delivering a headline Cash EBITDA of AUD 61.1 million.

Cameron Williamson: These are not simply short-term reductions in discretionary expenditure. The program is resetting the structural cost base of Iress and embedding greater operating discipline across the business. We expect to deliver a further AUD 6 to 9 million in annualized efficiencies during the H2, with the full benefit of this flowing into 2027. This gives us confidence in the sustainability of the margin improvement while continuing to invest selectively in our strategic priorities. Turning to slide 10, you can see the impact of that discipline in the earnings bridge. Revenue growth contributed positively, but the more significant improvement has come from the reset of our operating cost base, particularly across staff and non-job OpEx. This resulted in cash EBITDA of AUD 62.5 million on a constant currency basis, up 47.1% on the prior period.

Speaker #4: We expect to deliver a further $6 to $9 million in annualized efficiencies during the second half, with the full benefit of this flowing into 2027.

Speaker #4: This gives us confidence in the sustainability of the margin improvement while continuing to invest selectively in our strategic priorities. Turning to slide 10, you can see the impact of that discipline in the earnings bridge.

Speaker #4: Revenue growth contributed positively, but the more significant improvement has come from the reset of our operating cost base, particularly across staff and non-wage OPEX.

Speaker #4: This resulted in cash to bid of $62.5 million on a constant currency basis, up 47.1% on the prior period. A stronger A dollar detracted $1.4 million, delivering a headline cash to bid of $61.1 million.

Cameron Williamson: A stronger A dollar detracted AUD 1.4 million in delivering a headline cash EBITDA of AUD 61.1 million. CapEx was also materially lower in the H1, reflecting the completion of significant prior year investment and the timing of our current product evolution program. Importantly, we see a step up in investment in the H2 as product evolution moves further into execution. Even with that increase, we currently expect full-year CapEx to be approximately 20% to 25% lower than the prior year. While lower CapEx benefited H1 cash EBITDA, the improvement in profitability also reflects the structural reduction in our operating cost base. Turning to the balance sheet. Our stronger operating performance is also translating into a stronger financial position. Leverage has reduced to 0.5x over the last 12 months, providing significant balance sheet flexibility. Our capital allocation priorities remain disciplined.

Speaker #4: CAPEX was also materially lower in the first half, reflecting the completion of significant prior-year investment and the timing of our current product evolution program.

Cameron Williamson: CapEx was also materially lower in the H1, reflecting the completion of significant prior year investment and the timing of our current product evolution program. Importantly, we see a step up in investment in the H2 as product evolution moves further into execution. Even with that increase, we currently expect full year CapEx to be approximately 20% to 25% lower than the prior year. While lower CapEx benefited H1 Cash EBITDA, the improvement in profitability also reflects the structural reduction in our operating cost base. Turning to the balance sheet. Our stronger operating performance is also translating into a stronger financial position. Leverage has reduced to 0.5 times over the last 12 months, providing significant balance sheet flexibility. Our capital allocation priorities remain disciplined.

Speaker #4: Importantly, we see a step up in investment in the second half, as product evolution moves further into execution. Even with that increase, we currently expect full-year capex to be approximately 20% to 25% lower than the prior year.

Speaker #4: So, a lower CAPEX benefited first half cash to bid. The improvement in profitability also reflects the structural reduction in our operating cost base. Turning to the balance sheet, our stronger operating performance is also translating into a stronger financial position.

Speaker #4: Leverage has reduced to 0.5 times over the last 12 months, providing significant balance sheet flexibility. Our capital allocation priorities remain disciplined. We will continue to invest in the evolution of our core products, where we see clear customer and financial returns, while maintaining balance sheet strength and capital management optionality.

Cameron Williamson: We will continue to invest in the evolution of our core products, where we see clear customer and financial returns, while maintaining balance sheet strength and capital management optionality. Reflecting the strength of the financial position and confidence in the outlook, the board has declared a fully franked interim dividend of AUD 0.14 per share, an increase of 27% on the prior corresponding period. This represents the third consecutive growth in the dividend since it was reactivated for the final 2024 dividend. We believe this strikes the appropriate balance between investment in the business, shareholder returns, while maintaining financial flexibility going forward. Finally, turning to guidance. We have updated our FY26 outlook to reflect three key factors. Firstly, lower non-recurring revenue. Secondly, stronger underlying profitability. Thirdly, a higher Australian dollar versus relevant currencies.

Cameron Williamson: We will continue to invest in the evolution of our core products, where we see clear customer and financial returns, while maintaining balance sheet strength and capital management optionality. Reflecting the strength of the financial position and confidence in the outlook, the board has declared a fully franked interim dividend of AUD 0.14 per share, an increase of 27% on the prior corresponding period. This represents the third consecutive growth in the dividend since it was reactivated for the final 2024 dividend. We believe this strikes the appropriate balance between investment in the business, shareholder returns, while maintaining financial flexibility going forward. Finally, turning to guidance. We have updated our FY 2026 outlook to reflect three key factors. Firstly, lower non-recurring revenue. Secondly, stronger underlying profitability. Thirdly, a higher Australian dollar versus relevant currencies.

Speaker #4: Reflecting the strength of the financial position and confidence in the outlook, the Board has declared a fully franked interim dividend of 0.4 cents per share, an increase of 27% on the prior corresponding period.

Speaker #4: This represents the third consecutive increase in the dividend since it was reactivated for the final 2024 dividend. We believe this strikes the appropriate balance between investment in the business and shareholder returns, while maintaining financial flexibility going forward.

Speaker #4: And finally, turning to guidance, we've updated our FY26 outlook to reflect three key factors: firstly, lower non-recurring revenue; secondly, stronger underlying profitability; and thirdly, a higher Australian dollar versus relevant currencies.

Speaker #4: We're highlighting things firstly on a constant currency basis for ease of prior-year and guidance comparability. As highlighted at the AGM in April, we guided FY26 revenue growth to be at the lower end of the 3% to 5% range, which we pre-announced at the beginning of the year.

Cameron Williamson: We are highlighting things firstly on a constant currency basis for ease of prior year and guidance comparability. As highlighted at the AGM in April, we guided FY26 revenue growth to be at the lower end of the 3% to 5% range, which we pre-announced at the beginning of the year. We now expect FY26 revenue of AUD 509 to AUD 515 million, representing growth of 1% to 2%. This reduction primarily reflects approximately AUD 7 to AUD 8 million of lower non-recurring revenue compared with our previous expectations. At the same time, our structural improvement in our cost base means we have increased our Cash EBITDA outlook to AUD 121 to AUD 126 million, representing growth of 21% to 26%. UPAT is expected to be AUD 84 to AUD 88 million.

Cameron Williamson: We are highlighting things firstly on a constant currency basis for ease of prior year and guidance comparability. As highlighted at the AGM in April, we guided FY 2026 revenue growth to be at the lower end of the 3% to 5% range, which we pre-announced at the beginning of the year. We now expect FY 2026 revenue of AUD 509 to 515 million, representing growth of 1% to 2%. This reduction primarily reflects approximately AUD 7 to 8 million of lower non-recurring revenue compared with our previous expectations. At the same time, our structural improvement in our cost base means we have increased our cash EBITDA outlook to AUD 121 to 126 million, representing growth of 21% to 26%. UPAT is expected to be AUD 84 to 88 million.

Speaker #4: We now expect FY26 revenue of $509 to $515 million, representing growth of 1 to 2%. This reduction primarily reflects approximately $7 to $8 million of lower non-recurring revenue compared with our previous expectations.

Speaker #4: At the same time, our structural improvement in our cost base means we have increased our cash to bid outlook to $121 to $126 million, representing growth of 21% to 26%.

Speaker #4: UPAT is expected to be $84 million to $88 million. We also expect to step up product investment and R&D capex during the second half, as the product evolution program accelerates into execution.

Cameron Williamson: We also expect a step up in product investment and R&D CapEx during the H2 as the product evolution program accelerates into execution, alongside a further AUD 6 to AUD 9 million of annualized business efficiencies. Importantly, we remain on track to deliver our FY26 Cash EBITDA margin exit run rate target of 25%. The stronger Australian dollar during the H1 2026 also impacts our reported results, with the A dollar appreciating 6% to 8% against the British pound and Canadian dollar year to date. This results in full year headline expectations of AUD 499 to AUD 505 million of revenue, AUD 119 to AUD 124 million of Cash EBITDA, and AUD 82 to AUD 86 million of UPAT. While the revenue outlook is lower, the underlying earnings outlook has strengthened, and our 25% exit margin commitment remains on track. With that, I will hand it back to Andrew to continue the presentation.

Cameron Williamson: We also expect a step up in product investment and R&D CapEx during the H2 as the product evolution program accelerates into execution, alongside a further AUD 6 to 9 million of annualized business efficiencies. Importantly, we remain on track to deliver our FY 2026 cash EBITDA margin exit run rate target of 25%. The stronger Australian dollar during the H1 2026 also impacts our reported results, with the A dollar appreciating 6% to 8% against the British pound and Canadian dollar year-to-date. This results in full-year headline expectations of AUD 499 to 505 million of revenue, AUD 119 to 124 million of cash EBITDA, and AUD 82 to 86 million of UPAT. While the revenue outlook is lower, the underlying earnings outlook has strengthened, and our 25% exit margin commitment remains on track.

Speaker #4: Alongside a further $6 to $9 million of annualized business efficiencies. Importantly, we remain on track to deliver our FY26 cash to bid margin exit run-rate target of 25%.

Speaker #4: The stronger Australian dollar during the first half of '26 also impacts our reported results, with the A dollar appreciating 6 to 8% against the British pound and Canadian dollar year to date. This results in full-year headline expectations of $499 to $505 million of revenue, $119 to $124 million of cash to bid, and $82 to $86 million of UPAT.

Speaker #4: So, while the revenue outlook is lower, the underlying earnings outlook has strengthened, and a 25% exit margin commitment remains on track. And with that, I'll hand it back to Andrew to continue the presentation.

Cameron Williamson: With that, I will hand it back to Andrew to continue the presentation.

Speaker #1: Thank you, Cam. I'd like to step back and explain how we are continuing to think about the evolution of IRIS as we execute at post.

Andrew Russell: Thank you, Cam. I would like to step back and explain how we are continuing to think about the evolution of Iress as we execute at pace. When we entered 2026, our priority was to build the foundations to sustainable long-term value creation. We see the Iress evolution journey in four stages. The first stage was to simplify the business. That included simplifying our portfolio through the divestment of non-core assets, returning focus to our core businesses of wealth and trading, and strengthening our balance sheet. That work is now complete. The second stage has been to strengthen the business. We will now focus on simplifying the continuing business, as well as materially improve profitability and cash generation through the execution of the business efficiency program, creating greater financial flexibility. We are now in the third stage, evolving our products and platforms to create higher quality revenue.

Speaker #1: When we entered '26, our priority was to build the foundations for sustainable, long-term value creation. We see the IRIS evolution journey in four stages.

Speaker #1: The first stage was to simplify the business. That included simplifying our portfolio through the divestment of non-core assets, returning focus to our core businesses of wealth and trading, and strengthening our balance sheet.

Speaker #1: That work is now complete. The second stage has been to strengthen the business. We will now focus on simplifying the continuing business, as well as materially improving profitability and cash generation through the execution of the business efficiency program, creating greater financial flexibility.

Speaker #1: We are now in the third stage—evolving our products and platforms to create higher-quality revenue. Through our strategic partnership with Thoughtworks, we're accelerating the delivery of product roadmaps, embedding AI into our product and engineering strategy, improving productivity, and delivering greater value to our customers.

Andrew Russell: Through our strategic partnership with Thoughtworks, we are accelerating the delivery of product roadmaps, embedding AI into our product and engineering strategy, improving productivity, and delivering greater value to our customers. Together, these foundations position Iress for the next phase, which is growth. Sustainable revenue growth driven by better products, increased platform adoption, stronger customer retention, and disciplined commercial execution while maintaining attractive software margins. Each stage builds on the one before it. Sustainable growth is earned through disciplined execution. Turning to our H2 strategic priorities. This pathway which we have outlined brings us back to our strategic priorities for FY26. These have not changed. In H2, our focus is on executing against the commitments we have already made and translating investment into measurable outcomes. Turning to the first priority, operational excellence. The efficiency program will remain ongoing as the business evolves in the new AI landscape.

Andrew Russell: Through our strategic partnership with Thoughtworks, we are accelerating the delivery of product roadmaps, embedding AI into our product and engineering strategy, improving productivity, and delivering greater value to our customers. Together, these foundations position Iress for the next phase, which is growth. Sustainable revenue growth driven by better products, increased platform adoption, stronger customer retention, and disciplined commercial execution while maintaining attractive software margins. Each stage builds on the one before it. Sustainable growth is earned through disciplined execution. Turning to our H2 strategic priorities. This pathway which we have outlined brings us back to our strategic priorities for FY 2026. These have not changed. In H2, our focus is on executing against the commitments we have already made and translating investment into measurable outcomes. Turning to the first priority, operational excellence. The efficiency program will remain ongoing as the business evolves in the new AI landscape.

Speaker #1: Together, these foundations position Iress for the next phase, which is growth—sustainable revenue growth driven by better products, increased platform adoption, stronger customer retention, and disciplined commercial execution, while maintaining attractive software margins.

Speaker #1: Each stage builds on the one before it. Sustainable growth is earned through disciplined execution. So, turning to our second-half strategic priorities, this pathway, which we've outlined, brings us back to our strategic priorities for FY26.

Speaker #1: These haven't changed. In the second half, our focus is on executing against the commitments we have already made, and translating investment into measurable outcomes.

Speaker #1: So, turning to the first priority: operational excellence. The efficiency program will remain ongoing as the business evolves in the new AI landscape. We will embed the structural improvements already made and deliver a further $6 to $9 million of annualized efficiencies in the second half.

Andrew Russell: We will embed the structural improvements already made and deliver a further 6 to 9 million of annualized efficiencies in H2. This is about sustaining productivity and creating greater capacity for focused and selective investment. Our second priority, product evolution. We are delivering new Xplan capabilities, including AI-enabled advisor workflow and productivity tools, as well as a refreshed client portal. In our trading business, our partnership with Thoughtworks is supporting accelerated delivery of new data and insights features. If you would like to hear more about this, we will soon be sharing details of our product evolution showcase events to be held in the UK and Australia in November. Our third priority is AI-enabled products and productivity. We will accelerate adoption across Iress with a clear commercial focus and disciplined governance, translating AI capability into measurable customer value and improved productivity. Finally, customer-led execution.

Speaker #1: This is about sustaining productivity and creating greater capacity for focused and selective investment. Our second priority: product evolution. We are delivering new Explain capabilities, including AI-enabled advisor workflow and productivity tools.

Speaker #1: As well as a refreshed client portal. In our trading business, our partnership with Thoughtworks is supporting the accelerated delivery of new data and insights features.

Speaker #1: If you'd like to hear more about this, we'll soon be sharing details of our Product Evolution Showcase events to be held in the UK and Australia in November.

Speaker #1: Our third priority is AI-enabled products and productivity. We will accelerate adoption across Iress with a clear commercial focus and disciplined governance, translating AI capability into measurable customer value and improved productivity.

Speaker #1: And finally, customer-led execution. We will continue our strategy to deepen enterprise relationships through stronger strategic engagement and contract renewals, while improving pipeline conversion through disciplined commercial execution.

Andrew Russell: We will continue our strategy to deepen enterprise relationships through stronger strategic engagement and contract renewals while improving pipeline conversion through disciplined commercial execution. This will remain my priority and focus as we have much more work to do. I would like to leave you with five key takeaways today. First, we have delivered a solid H1 financial result. Iress is simpler, stronger, and more focused. Second, improved profitability and cash generation provide a greater financial flexibility, supported by disciplined capital allocation and a strong balance sheet. Third, our business efficiency program remains ahead of plan, and we are on track to deliver our 25% FY26 Cash EBITDA margin Q4 exit run rate target. Fourth, product evolution is now in execution. We are accelerating delivery, strengthening engineering capability, and increasingly focusing investment on measurable customer value.

Andrew Russell: We will continue our strategy to deepen enterprise relationships through stronger strategic engagement and contract renewals while improving pipeline conversion through disciplined commercial execution. This will remain my priority and focus as we have much more work to do. I would like to leave you with five key takeaways today. First, we have delivered a solid H1 financial result. Iress is simpler, stronger, and more focused. Second, improved profitability and cash generation provide a greater financial flexibility, supported by disciplined capital allocation and a strong balance sheet. Third, our business efficiency program remains ahead of plan, and we are on track to deliver our 25% FY 2026 Cash EBITDA margin Q4 exit run rate target. Fourth, product evolution is now in execution. We are accelerating delivery, strengthening engineering capability, and increasingly focusing investment on measurable customer value.

Speaker #1: This will remain my priority and focus, as we have much more work to do. I would like to leave you with five key takeaways today.

Speaker #1: First, we've delivered a solid first-half financial result. Iress is simpler, stronger, and more focused. Second, improved profitability and cash generation provide greater financial flexibility, supported by disciplined capital allocation and a strong balance sheet.

Speaker #1: Third, our business efficiency program remains ahead of plan, and we are on track to deliver our 25% FY26 cash-to-bid margin Q4 exit run-rate target.

Speaker #1: Fourth, product evolution is now in execution. We're accelerating delivery, strengthening engineering capability, and increasingly focusing investment on measurable customer value. And finally, while revenue growth will remain measured as we evolve our platforms, we remain confident in our strategy, our FY26 outlook, and the long-term opportunity for Iress.

Andrew Russell: Finally, while revenue growth will remain measured as we evolve our platforms, we remain confident in our strategy, our FY26 outlook, and the long-term opportunity for Iress. Our priority is to build sustainable long-term value through the delivery of better products, stronger customer relationships, growing recurring revenue, and building a higher quality software business. We know trust is earned through execution and consistently delivering on our commitments. That remains our focus. Thank you for your continued support. Before we go to questions, I also want to acknowledge today's announcement regarding Cam. After three years as CFO, Cam will step down as we move into the next phase of Iress' strategy. On behalf of the board, I want to thank Cam for his significant contribution and support through an important period of change. Cam will remain closely engaged through the remainder of the year to ensure an orderly transition.

Andrew Russell: Finally, while revenue growth will remain measured as we evolve our platforms, we remain confident in our strategy, our FY 2026 outlook, and the long-term opportunity for Iress. Our priority is to build sustainable long-term value through the delivery of better products, stronger customer relationships, growing recurring revenue, and building a higher quality software business. We know trust is earned through execution and consistently delivering on our commitments. That remains our focus. Thank you for your continued support. Before we go to questions, I also want to acknowledge today's announcement regarding Cam. After three years as CFO, Cam will step down as we move into the next phase of Iress' strategy. On behalf of the board, I want to thank Cam for his significant contribution and support through an important period of change. Cam will remain closely engaged through the remainder of the year to ensure an orderly transition.

Speaker #1: Our priority is to build sustainable, long-term value through the delivery of better products, stronger customer relationships, growing recurring revenue, and building a higher-quality software business.

Speaker #1: We know trust is earned through execution, and consistently delivering on our commitments. That remains our focus. Thank you for your continued support. Before we go to questions, I also want to acknowledge today's announcement regarding Cam.

Speaker #1: After three years as CFO, Cam will step down as we move into the next phase of our IRIS strategy. On behalf of the board, I want to thank Cam for his significant contribution and support through an important period of change.

Speaker #1: Cam will remain closely engaged through the remainder of the year to ensure an orderly transition. So with that, Cam and I are happy to take your questions.

Andrew Russell: With that, Cam and I are happy to take your questions.

Speaker #2: Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then two.

Operator 2: Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then two. If you are using a speakerphone, please pick up the handset to ask your question. The first question today comes from Nick McGarrigle from Barrenjoey. Please go ahead.

Operator: Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then two. If you are using a speakerphone, please pick up the handset to ask your question. The first question today comes from Nick McGarrigle from Barrenjoey. Please go ahead.

Speaker #2: If you're using a speakerphone, please pick up the handset to ask your question. The first question today comes from Nick McGarrigal from Barr and Joey.

Speaker #2: Please go ahead.

Speaker #3: Hi team, thanks for taking questions. Just around the UK business, can you talk us through the projects, just at a high level, that we cycled into H1 '26, and were there projects that were delayed as well that are still in the pipeline to pick up into the second half that carry you through into recurring revenue into '27?

Nick McGarrigle: Hey, team. Thanks for taking questions. Just around the UK business, can you talk us through the projects, just at a high level, that we cycled into H1 2026? Were there projects that were delayed as well that are still in the pipeline to pick up into the second half that carry through into recurring revenue into 2027?

Speaker #4: Hi Nick. Yeah, look, there's a couple of things at play here. The recurring revenue in the UK is actually quite reasonable, relative to what we had in the prior year.

Cameron Williamson: Hi, Nick. Yeah, look, there is a couple of things at play here. The recurring revenue in the UK is actually quite reasonable, relative to what we had in the prior year. That has seen a step-up in that. What has been the more significant drop-off is in the project and implementation work. As you may be aware, there was a significant client, and that body of work was a multi-year exercise, and that project has largely come to completion, albeit there are elements of that that are now feeding into a go forward. But some of that sales cycle is longer than what we have seen in the past. So we are going through that with them at the moment. But the potential for the non-recurring in the back end of this year, I would say, is quite limited, albeit we are looking at next year.

Speaker #4: There has been a step up in that. What has been the more significant drop-off is in the project and implementation work. As you may be aware, there was a significant client, and that body of work was a multi-year exercise, and that project has largely come to completion, albeit there are elements of that that are now feeding into a go-forward.

Speaker #4: But some of that sales cycle is longer than what we've seen in the past, so we are going through that with them at the moment.

Speaker #4: But the potential for the non-recurring in the back end of this year, I would say, is quite limited, albeit we are looking at next year.

Speaker #4: The recurring revenue that we have seen in the UK has stepped up. We have had a couple of accounts that have landed in the first half of this year, and you'll start to see that come through in the revenue growth.

Cameron Williamson: The recurring revenue that we have seen in the UK has stepped up. We have had a couple of accounts that have landed in the H1 of this year that you will start to see come through in that revenue growth. All in all, net revenue in the UK is broadly flat, albeit revenue at the recurring level is growing and the non-recurring is not as strong.

Speaker #4: So, all in all, net-net, revenue in the UK is broadly flat, albeit revenue at the recurring level is growing, and the non-recurring isn't as strong.

Speaker #3: And then just in terms of the TMD and the APAC Wealth businesses, can you talk through the mix between price and volume anecdotally? It felt like maybe volume turn was slowing down.

Nick McGarrigle: In terms of the TMD and the APAC Wealth businesses, can you talk through the mix between price and volume? Anecdotally, it felt like maybe volume churn was slowing down. Just reconciling the price rises versus the actual continuing revenue print.

Speaker #3: So, just reconciling the price rises versus the actual continuing revenue print.

Speaker #4: Yeah, in both—well, I'll start with the trading business. There was a little bit of churn that we saw. Volume was, I would say, more structural churn.

Cameron Williamson: Well, I will start with the trading business. There was a little bit of churn that we saw. Volume was what I would say is more structural churn. We had a couple of exits in that business for people that were exiting markets, in particular in South Africa. We had a little bit in Australia as well. What was lost in all of that, there has been some momentum in new business wins and logos, and the team have done a great job in the H1 of this year in terms of getting momentum in that segment of the business. On the wealth side, the recurring revenue has been the key driver of that. We have had one significant project that has come to conclusion in the H1 of this year, so the non-recurring will start dropping off. But on the recurring side, substantially price, a little bit of volume.

Speaker #4: We had a couple of exits in that business, for people that were exiting markets, in particular in South Africa. We had a little bit in Australia as well.

Speaker #4: What was sort of lost in all of that is that there has been some momentum in new business wins and logos. The team have done a great job in the first half of this year in terms of gaining momentum in that segment of the business.

Speaker #4: On the wealth side, the recurring revenue has been the key driver of that. We've had one significant project that's sort of come to a conclusion in the first half of this year, so the non-recurring will start dropping off.

Speaker #4: But on the recurring side, there's substantially price, a little bit of volume, but for the most part, it's effectively a price story for the wealth business.

Cameron Williamson: But on the recurring side, substantially price, a little bit of volume. But for the most part, it is effectively a price story for the wealth business.

Cameron Williamson: But for the most part, it is effectively a price story for the wealth business.

Speaker #3: And I think in the past we were working towards a pickup in intangibles, capex towards like a 5% or 6% run rate of revenue.

Nick McGarrigle: I think in the past, we were working towards a pick-up in intangibles CapEx towards a 5% or 6% run rate of revenue. How should we think about that? You guided us, I think your comment was more around the software CapEx being 75% of what it was last year. But how to think about that picking up into the future periods once you get everything re-engineered with Thoughtworks and have a different model?

Speaker #3: How should we think about that? I mean, you kind of guided us—I think your comment was more around the software CapEx being 75% of what it was last year.

Speaker #3: But how do you think about that picking up into the future periods, once you get everything re-engineered with ThoughtWorks and have a different model?

Speaker #4: Yeah, the software R&D is roughly—we should be at about the bottom end of that range through the course of this year, about 5% of revenue.

Cameron Williamson: Yeah. The software R&D is roughly, we should be around the bottom end of that range through the course of this year, about 5% of revenue. Where we are seeing some of the CapEx drop-off is actually in the PP&E side, where we have actually had some office moves and incurred some PP&E that is going to be slightly lower this year than what we had last year. on the R&D front, a little bit lower. The pace of some of the delivery in the H1 of this year, as you can see, was a bit slower than what we had at the back end of this year. But we are expecting that to ramp up as the year goes on. And where we finish the year, we have guided on a medium-term target of 5% to 7% of revenue.

Speaker #4: Where we are seeing some of the CapEx drop-off is actually on the PP&E side, where we have actually had some office moves and incurred some PP&E that's going to be slightly lower this year than what we had last year.

Speaker #4: On the R&D front, a little bit lower. The pace of some of the delivery in the first half of this year, as you can see, was a bit slower than what we had at the back end of this year.

Speaker #4: But we are expecting that to ramp up as the year goes on. And where we finish the year, we've guided on a medium-term target of 5% to 7% of revenue.

Speaker #4: We're going to be at the bottom end of that range over the course of the year.

Cameron Williamson: We are going to be at the bottom end of that range over the course of the year.

Speaker #3: All right, thanks for taking those questions.

Nick McGarrigle: All right. Thanks for taking those questions.

Speaker #2: Thank you. The next question comes from Cameron Halcott from Canaccord Genuity. Please go ahead.

Operator 2: Thank you. The next question comes from Cameron Halkett from Canaccord Genuity. Please go ahead.

Operator: Thank you. The next question comes from Cameron Halkett from Canaccord Genuity. Please go ahead.

Speaker #3: Hey team, thanks for taking questions. Can I start with just the first one around the DNA in the first half? You’ve made a comment there’s some accelerated depreciation and a small software write-off.

Cameron Halkett: Hey, team. Thanks for taking questions. Can I start with just the first one around the D&A in the H1? You have made a comment there is some accelerated depreciation and a small software write-off. Are you able to confirm if there is a one-off amount in the half just gone, please? If so, can you quantify that amount? Thanks.

Speaker #3: Are you able to confirm if there's a one-off amount in the half just gone, please? And if so, can you quantify that amount? Thanks.

Speaker #4: Yeah, hi Cam. Yeah, it's about $5 million I would call out as impacting the first half. On the DNA front, it's both a combination of a couple of projects that we've stopped—there was a little bit of R&D that was capitalized that we wrote off.

Cameron Williamson: Yeah. Hi, Cam. Yeah, it is about AUD 5 million I would call out as impacting the H1 on the D&A front. Both a combination of a couple of projects that we have stopped. There was a little bit of R&D that was capitalized that we wrote off. The other component was actually to do with the Melbourne office lease, where we have actually moved office at the back end of June, and we accelerated an Iress lease for the back end of 2026. By and large, the D&A line for the H1 is overinflated, probably to the tune of about AUD 5 million that you will see unwind as the year goes on.

Speaker #4: The other component was actually to do with the Melbourne office lease, where we've actually moved office at the back end of June. And we accelerated notice lease for the back end of 2026.

Speaker #4: So, by and large, the DNA line for the first half is overinflated, probably to the tune of about $5 million, that you'll see unwind as the year goes on.

Speaker #3: Yeah, thanks, Cam. That's really helpful. And the last one I've got is just around the Kership Adar margin run rate exiting the year. Prior disclosures either had a plus symbol or a greater than symbol next to the 25%—just noting in this release, that's dropped off.

Cameron Halkett: Yeah, thanks, Ken. That is really helpful. The last one I have got is just around the Cash EBITDA margin run rate exiting the year. Prior disclosures either had a plus symbol or a greater than symbol next to the 25%. Just noting in this release, that has dropped off. Can I just confirm that is purposeful or that is just a small oversight?

Cameron Halkett: Yeah, thanks, Cam. That is really helpful. The last one I have got is just around the Cash EBITDA margin run rate exiting the year. Prior disclosures either had a plus symbol or a greater than symbol next to the 25%. Just noting in this release, that has dropped off. Can I just confirm that is purposeful or that is just a small oversight?

Speaker #3: Can I just confirm if that's intentional, or is it a small oversight?

Speaker #4: I think what we're saying is, we're setting 25% as a floor. Where it goes from there, we're still working through the pace of some of the delivery.

Cameron Williamson: I think what we are saying is we are setting 25% as a floor. Where it goes from there, we are still working through the pace of some of the delivery. We have Thoughtworks mobilized. We have a whole bunch of activity that we will be looking to share with the market as the back end of this year goes on. We are starting our planning into 2027. The pace at which that goes and the revenue growth, as you can see, some of the revenue growth has slowed in the back end of this year as well. We are being a little bit cautious, but we are setting a floor as a 25% in terms of our target and our thinking. We may remain on track for the Q4 exit, which we set out at the beginning of the year.

Speaker #4: We've got ThoughtWorks mobilized. We've got a whole bunch of activity that we'll be looking to share with the market as the back end of this year goes on.

Speaker #4: We're starting our planning into 2027. The pace at which that goes, and the revenue growth—as you can see, some of the revenue growth has slowed in the back end of this year as well.

Speaker #4: We're being a little bit cautious, but we are setting a floor at 25% in terms of our target and our thinking.

Speaker #4: We may remain on track for the Q4 exit, which we set out at the beginning of the year.

Speaker #3: And nice. All right, thanks again, Jens.

Cameron Halkett: Yeah, nice. All right. Thanks again, James.

Cameron Halkett: Yeah, nice. All right. Thanks again, Cam.

Speaker #2: Thank you. The next question comes from Tim Lawson from Macquarie. Please go ahead.

Andrew Russell: Thank you. The next question comes from Tim Lawson from Macquarie. Please go ahead.

Speaker #3: Hi, gentlemen, thanks for taking my question. Just on the capex guidance—you’re talking about sort of 5% over the year, Cam, but obviously a lower first half.

Tim Lawson: Hi, gentlemen. Thanks for taking my question. Just on the CapEx guidance, you are talking about the 5% over the year, but obviously a lower H1. Just in terms of the run rate in the H2, is that what we should expect to continue into 2027?

Speaker #3: Just in terms of the run rate in the second half, is that what we should expect to continue into '27?

Speaker #4: Well, I would say the 5% to 7% is a guidance range that we've set. I would say we're earning the right to be at the upper end of that range at the moment. Five percent, given the pace at which we're looking to enact some of the modernization, is comfortable for where we sit.

Cameron Williamson: Well, I would say the 5% to 7% is a guidance range that we've set. I would say we're earning the right to be at the upper end of that range. At the moment, 5%, given the pace at which we're looking to enact some of the modernization, is comfortable for where we sit. I would look at that over the full year, Tim. 5% of, let's call it AUD 500 and change in terms of our revenue is going to get you roughly about AUD 25 million CapEx R&D. You can divide that by two, and it probably means that the H2 of this year is going to be a little bit more than that. The H1 of this year is a bit lower than that.

Cameron Williamson: Well, I would say the 5% to 7% is a guidance range that we've set. I would say we're earning the right to be at the upper end of that range. At the moment, 5%, given the pace at which we're looking to enact some of the modernization, is comfortable for where we sit. I would look at that over the full-year, Tim. 5% of, let's call it AUD 500 and change in terms of our revenue is going to get you roughly about AUD 25 million CapEx R&D. You can divide that by two, and it probably means that the H2 of this year is going to be a little bit more than that. The H1 of this year is a bit lower than that.

Speaker #4: I would look at that over the full year, Tim. So, 5% of, let's call it $500 million and change in terms of our revenue, is going to get you roughly about $25 million CapEx R&D.

Speaker #4: So you can divide that by two, and it probably means that the second half of this year is going to be a little bit more than that.

Speaker #4: The first half of this year is a bit lower than that, so some of it's done because we're being far more measured in terms of the way we allocate capital.

Cameron Williamson: Some of it's done because we're being far more measured in terms of the way we allocate capital and the way that we think about each stage of the modernization. They're having to go through some gates, and the pace at which we move through those gates dictates, I guess, the quantum in each half. A little lower the H1, ramping up the H2. As we look into 2027, I would extrapolate on a straight line over the course of the year, and we should end up by and large at that level.

Speaker #4: And the way that we think about each stage of the modernization, they're having to go through some gates. And the pace at which we move through those gates dictates, I guess, the quantum in each half.

Speaker #4: So, a little bit lower in the first half, ramping up in the second half as we look into 2027. I would sort of extrapolate on a straight line over the course of the year, and we should end up, by and large, at that level.

Speaker #3: Okay, thank you.

Tim Lawson: Okay. Thank you.

Speaker #2: Thank you. The next question comes from Olivia Coulon from ENP Financial Group. Please go ahead.

Andrew Russell: Thank you. The next question comes from Olivier Coulon from E&P Financial Group. Please go ahead.

Operator: Thank you. The next question comes from Olivier Coulon from E&P Financial Group. Please go ahead.

Speaker #5: Hi guys. Just wondering if you can dig in a little bit more on the non-recurring revenue and, I suppose, the drop-off relative to original expectations. My understanding, historically, is that a lot of that work is related to new clients and onboarding clients.

Olivier Coulon: Hi, guys. Just on, if you can dig in a little bit more on the non-recurring revenue and I suppose the drop-off relative to original expectations, because my understanding historically is that a lot of that work is related to new clients and onboarding clients. But it sounds like you've managed to get some recurring revenue growth from new clients without significant non-recurring revenue. How should we think about that linkage? What does the pipeline of opportunities look like? Is the pipeline moving to the right, or have you just failed to convert a lot of inquiries? Thanks.

Speaker #5: But it sounds like you've managed to get some recurring revenue growth from new clients without significant non-recurring revenue. I mean, how should we think about that linkage?

Speaker #5: What does the pipeline of opportunities look like? Is the pipeline moving to the right, or have you just failed to convert a lot of inquiries?

Speaker #5: Thanks.

Speaker #4: Thanks for the question. It's Andrew here. Just in terms of the business, we're strategically focused on growing our recurring revenue line. We've had to make disciplined choices over the course of the last nine months on the things that we are going to prosecute and the things that we're not, because we can't do everything, but we want to execute and deliver well on those that we choose.

Andrew Russell: Thanks for the question. Oli, it's Andrew here. Just in terms of the business, we're strategically focused on growing our recurring revenue line. We've had to make disciplined choices over the course of the last nine months on the things that we are going to prosecute and the things that we're not, because we can't do everything, but we want to execute and deliver well on those that we choose. There have been a number of projects that have been small revenue line items in non-recurring, which given our focus on modernizing and evolving the technology stacks that we've decided not to focus on. Just let's get the evolution work completed. In the UK, there was just a number of projects with existing clients that have been pushed to the right. But once again, we're adopting exactly the same strategy.

Speaker #4: There have been a number of projects that have been small revenue line items in non-recurring, which, given our focus on modernizing and evolving the technology stacks, we've decided not to focus on—just let's get the evolution work completed.

Speaker #4: And then in the UK, there were just a number of projects with existing clients that have been pushed to the right. But once again, we're adopting exactly the same strategy.

Andrew Russell: We're focused on delivering and executing the uplift in the core technologies.

Speaker #4: We're focused on delivering and executing the uplift in the core technologies.

Speaker #5: Yeah, that's fair to say. The UK client base—that's more a lengthening of the sales cycle. You're still reasonably confident that, at some point, they'll go live.

Olivier Coulon: Well, fair to say, the UK client base, that's more a lengthening of the sales cycle. You're still reasonably confident that at some point they'll go live?

Speaker #4: It is lengthening the sales cycle. I think that the clients are strong, the engagement is strong, and there's a lot of work to be done.

Cameron Williamson: It is lengthening the sale cycle. I think that the clients are strong, the engagement is strong. There is a lot of work to be done, and we still think that that is a great opportunity for us with a good pathway to growth in that market. But we have got to get the fundamentals right, and as you can see from today's presentation, we are progressing with that.

Andrew Russell: It is lengthening the sale cycle. I think that the clients are strong, the engagement is strong. There is a lot of work to be done, and we still think that that is a great opportunity for us with a good pathway to growth in that market. But we have got to get the fundamentals right, and as you can see from today's presentation, we are progressing with that.

Speaker #4: And we still think that's a great opportunity for us, with a good pathway to growth in that market. But we've got to get the fundamentals right.

Speaker #4: And as you can see from today's presentation, we're progressing with that.

Speaker #5: Yeah. So, I mean, obviously you're not going to give 2027 guidance, but I suppose it's a roundabout way of asking: do you expect, at some point, that non-recurring revenue growth to lift off the '26 base?

Olivier Coulon: Yeah. You are not going to give 2027 guidance, but I suppose it is a roundabout way of asking, do you expect at some point that non-recurring revenue growth to lift off the 2026 base? Is this in the deal?

Speaker #5: Is this in the dear?

Speaker #4: Ali, I think what we'd say is it's lumpy. It does depend on the size of the client and the level of involvement of integration. Some of these, as you'd be aware, are multi-year exercises in terms of working on and implementing the relevant tech stacks into the client.

Cameron Williamson: Oli, I think what we would say is it is lumpy. It does depend on the size of client, the level of involvement of integration. Some of these, as you would be aware, are multi-year exercises in terms of working and implementing the relevant tech stacks into the client. So some of that, unfortunately, will be a lumpy part of our revenue base. We are very much focused on the core, which is the recurring revenue. And ultimately, as you say, the non-recurring leads to a growth in recurring. You will see that in the UK, where we have had an uptick in our recurring revenue as clients have gone live in the H1 of this year. So that is our focus at this point.

Speaker #4: So, some of that will unfortunately be a lumpy part of our revenue base. We're very much focused on the core, which is the recurring revenue.

Speaker #4: And ultimately, as you say, the non-recurring leads to a growth in recurring. You'll see that in the UK, where we have had an uptick in our recurring revenue as clients have gone live in the first half of this year.

Speaker #4: So, that's our focus at this point.

Speaker #5: Yeah, thank you.

Olivier Coulon: Yeah. Thank you.

Speaker #2: Thank you once again. To ask a question, please press star one on your telephone. The next question is a follow-up from Nick McGarrigle from Barron Joey.

Andrew Russell: Thank you once again. To ask a question, please press star one on your telephone. The next question is a follow-up from Nick McGarrigle from Barrenjoey. Please go ahead.

Operator: Thank you once again. To ask a question, please press star one on your telephone. The next question is a follow-up from Nick McGarrigle from Barrenjoey. Please go ahead.

Speaker #2: Please go ahead.

Speaker #3: Thanks, Tim. Obviously, you're targeting that fourth quarter to be at 25%, but you've already effectively gotten there in the first half. Is there anything in terms of reinvestment into next year that's worth flagging, or should we assume that the operating leverage and the margin run rate are looking like they're running better than that target?

Nick McGarrigle: Thanks, team. Obviously, you are targeting that Q4 to be at 25%, but you have already effectively gotten there in the H1. Is there anything in terms of reinvestment into next year that is worth flagging, or should we assume that that operating leverage and the margin run rate is looking like it is running better than that target?

Speaker #4: Yeah, what we would say, Nick, is you look through the capex program, right? So, whilst the margin looks attractive in the first half, we're expecting a ramp-up in the second half, in terms of capex, when you look through that.

Cameron Williamson: Well, what we would say, Nick, is you look through the CapEx program, right? Whilst the margin looks attractive in the H1, we are expecting a ramp-up in the H2 in terms of CapEx. When you look through that, and we will try and normalize that for an exit run rate, what is our run rate CapEx number over the course of the year? That provides the true margin. The margin is probably a little bit inflated H1, given the pace of the CapEx delivery. In the H2, it will probably be a bit lower. But when we look at the Q4, we try and look through and normalize for some of the lumpiness that we have got in that program. Hence the focus is trying to make sure that we have got a look-through when it comes to some of the lumpy expenditure in the group as well.

Speaker #4: And we'll try and normalize that for an exit run rate. What is our run rate CapEx number over the course of the year? That provides the true margin.

Speaker #4: So, the margin is probably a little bit inflated in the first half, given the pace of the capex delivery. In the second half, it will probably be a bit lower, but when we look at Q4, we try and look through and normalize for some of the lumpiness that we've got in that program.

Speaker #4: So, yeah, hence the focus is trying to make sure that we've got a look through when it comes to some of the lumpy expenditure in the group as well.

Speaker #3: All right, thanks.

Nick McGarrigle: All right. Thanks.

Speaker #2: Thank you. At this time, we're showing no further questions. That does conclude our conference for today. Thank you for participating. You may now disconnect.

Operator 2: Thank you. At this time, we are showing no further questions. That does conclude our conference for today. Thank you for participating. You may now disconnect.

Operator: Thank you. At this time, we are showing no further questions. That does conclude our conference for today. Thank you for participating. You may now disconnect.

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Half Year 2026 Iress Ltd Earnings Call

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