Full Year 2026 Bravura Solutions Ltd Earnings Call
Speaker #1: Buyer, Chief Financial Officer Neil Montford. And I'm going to cover 5 areas today: 2026 result, highlights, 2026 results details, capital management, outlook and guidance, and intake questions and answers.
Speaker #1: I think the headline is pretty straightforward for 2026: it was a very strong year for Bravura. We delivered continued revenue growth and material improvement in profitability.
Speaker #1: Revenue grew 10% to $283.6 million in cash EBITDA increase 76% to $77.1 million. Giving us a cash EBITDA margin of 27.3%. Our strategy of growing existing customers continues to deliver.
Speaker #1: We're seeing that through project work, ongoing maintenance income, and closer alignment with customer roadmaps. The shift to empowered business units has also sharpened accountability and improved execution.
Speaker #1: We've also realigned the business around our core product solutions, with global wealth and a mere funds administration as our key operating divisions. P&L ownership now sits closer to products than the markets, with rewards aligned to growth and profitability.
Speaker #1: I'm just pulling out a few things. In APAC, we supported a successful client migration and are aligned to that client's future growth and migration plans.
Speaker #1: In the UK, we supported expansion into Workplace and now supporting a client in the annuities market. In EMEA, we're supporting a major client through integration and migration projects with a strong pipeline of opportunities into 2027.
Speaker #1: And global product forums are increasing customer engagement and helping direct our focus on new features and innovation. Our business continues to generate strong cash flows.
Speaker #1: For the financial year 2026, we've announced total dividends of £25.23 per share, including 10.23 paid in March and a further 15 cents to be paid in September.
Speaker #1: The ordinary dividend again represents 100% of underlying MPAT, reflecting our confidence in the profitability and stability of the company. To support future growth and improve capital efficiency, we've established a combined £100 million debt facility.
Speaker #1: We're also announcing a 12-month on-market buyback of up to £50 million, reflecting the value we see in the business. Financial year 2026 reflects continued financial improvement supported by customer-led growth and disciplined cost management.
Speaker #1: On an underlying basis, adjusted for the prior year fidelity international license sale, and deferred tax, asset recognition, the key financial headlines are as follows: the cash EBITDA of 77.1 million resulting in a 27% margin for the year; this was driven by improving margins through the year to approximately 30% in the second half of 2026; we've reduced our administration cost base by 10% and have focused investment in customer-facing teams, where results productivity has grown project revenue achieved by 18% year-on-year.
Speaker #1: Revenue of £28.283.6 million grew organically by 9.6% versus the financial year 2025. This is across a mix of contract renewals, project work, and customer growth.
Speaker #1: Of this, £165 million or 58% was recurring revenue, which increased organically by 6.9% versus 2025, as customers committed to new contracts with improved terms.
Speaker #1: And the net closing cash was 50.3 million. Further details include in the appendix covering cash flow, balance sheet, operating results, and the reconciliation of cash EBITDA to underlying MPAT.
Speaker #1: These sections provide a detailed bridge from operating performance through to underlying MPAT. So the slide that we've, we're putting on the screen bridges our recurring revenue from exceeding corresponding periods.
Speaker #1: Recurring revenue growth continues to be driven by deeper engagement with existing customers, increased functionality and utilization, and successful contract renewals. Growth has come through migration projects, product enhancements, and expanded services.
Speaker #1: We're pricing reflecting the value we are delivering. We now have an anchor client in the UK workforce, a supporting and new annuities client, and a working with two major customers on integration programs.
Speaker #1: Innovation in digital advice remains the focus of the mid-winter business in Australia. And this has now been implemented across several major superannuation funds. These funds have seen 10 times increase in advice given to members and as their business grows, we grow.
Speaker #1: Approximately two-thirds of recurring revenue growth over the past year has come from price increases agreed in renewing contract renewals that reflect the value that we add to customers' businesses.
Speaker #1: We've renewed all key customer contracts due this year, typically on 2 to 5-year terms. We previously highlighted 3 expected material attrition events. The first client exited several years ago, the second exited in December this, this financial year.
Speaker #1: However, this has not disrupted the half-to or full-year revenue trajectory. The third client has agreed to extend its relationship with us. We will disclose further information regarding churn events even when appropriate.
Speaker #1: This chart shows the operating leverage in the business. Revenue growth has been delivered without a corresponding increase in the cost base, supported by disciplined cost control and full-year benefit of financial year 2025 cost savings.
Speaker #1: As a result, cash EBITDA has continued to improve. We believe the business is well positioned for further financial improvement in the financial year 2027, and that confidence is reflected in our guidance.
Speaker #1: We're closely managing our delivery capabilities and will add resources as they're required. From a capital management perspective, the support for the growth opportunities and optimized capital efficiency we've established a combined £100 million debt facility with HSBC Australia.
Speaker #1: We're also announcing a 12-month on-market buyback of up to £50 million, to give us the flexibility to return capital to shareholder through buybacks when we feel it's appropriate to do so.
Speaker #1: Today we're announcing an ordinary dividend of 8.31 cents per share, representing 37.3 million and a special dividend of 6.9 cents per share, representing £30 million.
Speaker #1: Together this is a total dividend of 15 cents per share. The dividends will be unfranked, and the dividend reinvestment plan remains suspended. The record date is the 25th of August 2026, with payment expected in September 2026.
Speaker #1: Over the past 2 years we've returned over £56.76 per share, through a mix of capital returns and dividends. From a guidance perspective, from a revenue around £65 to £70 of annual renew is now pre-contracted through maintenance pricing committed services.
Speaker #1: Being this good visibility of the, position into the financial year 2027. We're forecasting revenue of between £280 million and £300 million, based on an assumed AUD to GBP exchange rate of 1.9, and that compares to the financial year 2026 where the average was 1.98.
Speaker #1: From a profitability perspective, we're forecasting cash EBITDA of £84 to £94 million. This reflects a continuing benefit of prior year cost initiatives, lower one-off costs, and incremental services revenue, delivered without a material increase in cost.
Speaker #1: The midpoint of our guidance represents a cash EBITDA margin of about 30%, which is largely in line with our margin performance in the second half of 2026.
Speaker #1: So if I just conclude on that, the financial year 2026 was clearly a very strong year for, for Bravura. we renewed key customer agreements, deepened strategic engagement, and continued to deliver growth and value for both our customers and our shareholders, aligning to the strategic plans so that as they grow, we grow.
Speaker #1: With a disciplined operating model and strengthened funding position, we're in a position to consider how to ca allocate capital between organic initiatives, exploring M&A opportunities, although to note these will take time, and through dividends and the share buyback.
Speaker #1: I'm really encouraged by the momentum of the business, all that we've achieved, and really excited about the prospects going into the financial year 2027.
Speaker #1: Thank you for taking the time to listen, and we'll now open to questions.
Speaker #2: Thank you. If you would like to ask a question, please press star 1 on your telephone and wait for your name to be announced.
Speaker #2: If you would like to cancel your request, please press star 2. If you are in a speakerphone, please pick up the handset to ask your question.
Speaker #2: Your first question today comes from Olivier Coulon from ENP Financial Group. Please go ahead.
Speaker #3: hi guys. Thanks for taking my call. my question, just around, the UK, you know, I think in the past you've mentioned that, you know, you felt that, the lack of, I suppose, a internal administrative, capability, you know, had caused some return events.
Speaker #3: have your view changed at all with, you know, some of the things that have occurred in that marketplace more recently, like the Lloyds outage?
Speaker #1: Olivier, I'm sorry to interrupt. The line is terrible.
Speaker #3: Right. Yeah. Can you repeat that?
Speaker #1: It's, we're getting quite a lot of feedback, and it's quite hi it's difficult to hear what you're saying. Could we maybe take a different question and then come back, to your question?
Speaker #1: I don't know if there's something specific about, your line.
Speaker #3: Yeah, I might, I might start back again. Thanks.
Speaker #1: Yeah, it's, it's just, it's hard to hear.
Speaker #2: Thank you. Your next question comes from Tim Lawson from Macquarie. Please go ahead.
Speaker #4: hi gentlemen. I'm just kind of a bit clearer.
Speaker #1: Much better, yeah. Thanks, Tim.
Speaker #4: Okay. maybe a couple of questions on, on the outlook. you talked about that third client that extended. Can you sort of maybe what you can, is that, extended for a certain amount of period or is still negotiating, or you expect to retain that client?
Speaker #1: it's extended for a certain amount of, time. I think I, I said all of our agreements are between 2 and 5 years, so, what they, what they choose to go, longer than that is up to them, but we're in very active discussions with them, so.
Speaker #1: It's, it's a positive move for everybody.
Speaker #4: Okay. So if they do the headwind, you sort of cycling into '27. Is that, that client from, was it December, I think you mentioned, that rolled off?
Speaker #4: Is that right?
Speaker #1: Yeah. So we talked I think we talked at the half year that there was a client that, that said they were going to roll off in 2022, and they eventually did roll off in 2026.
Speaker #1: So despite that, that headwind, we talked about this in some of the meetings, in February. Despite that, we've then grown the revenue, on top of losing that customer.
Speaker #4: Yeah. a-and then you, you talked about how you'd renewed, existing contracts to sort of new terms with it sounds like beneficial pricing. I mean, how, how far are you sort of through, the sort of client base effectively on, on, on sort of renewed pricing?
Speaker #1: so we review all the contracts as they come through, and they tend to be on a 2 to 5 year basis. So over the, the period of 3 years, we'll, we'll get to look at most of the clients, the, the customer contracts that come up.
Speaker #1: It's not necessarily a case of how far through they, they continually are there to be looked at. but, particularly in the, the UK, the business unit have made a really good, effort this year at getting those, contracts renewed.
Speaker #4: Yeah. and then just you, you, you sound relatively positive on sort of the level of project, project activity within the client base. Could you maybe expand a bit more on where you're seeing, most activity?
Speaker #1: I think in what, what's particularly encouraging with our, our bigger clients and, and, one of our, our bigger clients in the Australia, you'll have probably followed as much as, as we have, are announcing that they're growing, and, as they grow and they continue to grow and take on books of business, we support them in doing it.
Speaker #1: So a-as long as they continue to grow, we continue to grow as well, and, and those, positions are only appear to be continuing. They've got very active pipelines and discussions, but you'd have to talk to them more specifically about their, their strategic plans.
Speaker #4: Okay. Thanks for taking my questions.
Speaker #1: All right.
Speaker #2: Thank you. Once again, if you'd like to ask a question, please press star 1 on your telephone and wait for your name to be announced.
Speaker #2: Your next question comes from Cameron Halkett from Canaccord Unity. Please go ahead.
Speaker #5: Hi team. Is, my line okay?
Speaker #1: Yes, thanks, Cameron.
Speaker #5: Nice one. Okay. thanks for taking questions. Just one if I can start around, the revenue guidance that you're providing for '27. when we look at the top of the range, number that's given there, just I suppose, can you help us unpack the pieces of how you'd get there?
Speaker #5: You know, is that more project work? Are there active tenders that you're sort of hinting at there that if they went your way, then you'd maybe hit more towards the top end?
Speaker #5: And then maybe just, you know, pricing and, escalation there as well. Thanks.
Speaker #1: it I'm going to say, Cameron, on a call, it's probably going to be quite difficult to get into breaking all of those things down.
Speaker #1: I think you've covered quite a lot of the major drivers that we'll go through, and potentially we'll pick up when we talk to you in more detail, but, if you look at the, the business, we've delivered, in the second half of the year, revenue that aligns to that trajectory of growth, and, and we've outlined what we've done and how we've done it.
Speaker #1: So I think if you if you take that forward, you'll get a view of how we're seeing that playing out into 2027. what was, good is you've, you've highlighted some other opportunities that might be out there as well.
Speaker #1: but we're not we're not talking about those or confirming anything at the moment.
Speaker #5: Yeah, nice. license fees were good in the second half as well. not sure if you want to sort of suggest that, you know, if by '26 was a big or bigger than usual renewal year, but how are you thinking about that into '27?
Speaker #1: I think in lots of the work that's been done in '26 is what sets us up for '27. So the majority of the renewals and a lot of the renewals that are in place are about, sustaining ongoing projects and ongoing, prov-provisions to customers.
Speaker #1: With ongoing fees, so in that, that's what gives us a lot of confidence in the numbers that we're giving.
Speaker #5: Yeah, nice. Last one would be just around the costs. obviously, continuing to extract efficiency, the opex is down half on half, so a good indicator into '27.
Speaker #5: But just, I suppose, like key areas of focus you might be looking at into '27, just to keep that efficiency going?
Speaker #1: so we're, we are sitting in our, new office, which is, smaller than our old office. but are the appropriate size to, to actually run our business from in Australia.
Speaker #1: And I've done that collectively across all the, the territories. So we continue to look to optimize about how we work, where we work, the cost that we spend, and what we, we put into the business from an administration perspective.
Speaker #1: Where we tend to not, not look so much and not compromising is making sure we've got absolutely the right resources to and cost to serve the customers.
Speaker #1: So we've made big strides there before. We continue to look at that. That, that includes where we've bought into and, and put in place tooling for automation in some of that administration.
Speaker #1: Making sure we take that forwards and, and really take the full benefits from that activity.
Speaker #5: Nice. Thanks, Colin. Well done.
Speaker #1: Thanks, Cameron.
Speaker #2: Thank you. Once again, if you'd like to ask a question, please press star 1 on your telephone. And wait for your name to be announced.
Speaker #2: Your next question comes from Olivier Coulon from ENP Financial Group. Please go ahead.
Speaker #4: All right, guys. can you hear me now, or is it still pretty horrible?
Speaker #1: No.
Speaker #4: There you go, Fred. Okay, excellent. so I guess, yeah, I had in Australia, I think you've, you know, highlighted since the, I guess, APRA, you know, crackdown on some of the players that had outsourced solution providers.
Speaker #4: you felt pretty good about being a software-only player, whereas I think, you know, a year or two ago, you were a bit worried about the fact that you didn't have an internal administrative kind of capability in the UK market.
Speaker #4: Has that changed at all with some of the recent issues that, say, Lloyd's had, with the FCA?
Speaker #1: so it's interesting you ask this. So there, there is a, a pressure in the UK, and you, you mentioned the name. So I won't mention it again, but you've already mentioned it, where they've been asked to insource rather than outsource.
Speaker #1: so they're going away from a BPO model, into a software, and then they're providing the solutions model. in that, that's early, in terms of the discussion, but I think when we met and the discussions we've had on this, we see ourselves as very much we are a software provider.
Speaker #1: We believe our software stands up very well in the market as do, some of our competitors who still also use our software and work with us on our software.
Speaker #1: And so that is an encouraging thing for us if anything that, big customers are being encouraged to insource effectively or, or, or run their operations themselves.
Speaker #1: And that I'd, I'd share your knowledge of that one, Olivier. I'm not seeing others, but I think the, the trajectory of, both, Australia and the UK is that it's not okay anymore for companies to say they're outsourcing for it to be cheaper.
Speaker #1: It needs to be protecting the customer outcomes and, and a better solution. so we just need to watch how that one plays out, but feel we're, we're very well positioned.
Speaker #4: Yeah. terrific. and, and then I think you'd given some details, you know, previously that kind of workforce, type clients were, you know, they're probably in between, in between a digital advice client and a, you know, full registry client in terms of size.
Speaker #4: in terms of this annuity client that you were talking about, what, you know, what sort of, dollars are we talking about for, you know, for those type of arrangements?
Speaker #4: Are they you know, are they pretty material, or, or they're, they're fairly bite-sized and they're closer to, to what, you know, a client in Australia would be paying, say, for digital advice?
Speaker #1: So, so we're not we're not going to go down to that, that level of detail, but, suffice to say, it's meaningful enough that we're talking about it, and we, we spoke about it in the meetings in February, and continue to talk about it as an area.
Speaker #1: In, in the, the key thing, I think, is we're branching out the products that we offer and engaging with people across the wealth management, the, the, the product range that's there.
Speaker #1: So that we are able to support different products within the pension world and also, annuities.
Speaker #4: Yeah. Okay. No, perfect. Thanks, Vince. Appreciate it.
Speaker #2: Thank you. There are no further questions at this time. I'll now hand back to Mr. Greenhill for any closing remarks.
Speaker #1: Well, thank you all for joining. thank you for your time, this morning, and for taking the time to, ask the questions. And, Olivier, for his persistence to, to get through despite the, the reception.
Speaker #1: I said earlier, we're very encouraged by where we are as a business. I'm really enjoying my time at Bravura. It's been a fantastic six months, and I'm really looking forward to how we take that business forward.
