Iress financial advice revenue drops 4%

Iress has seen a decline in its financial advice and superannuation revenue, which it attributes to advisers migrating to independent advice firms.

Reporting its half year results to the Australian Securities Exchange (ASX), the financial advice segment decreased 4% to $60.3 million, while superannuation decreased 15% to $14.9 million, over the previous corresponding period (PCP).

“As expected, financial advice declined versus the first half of 2020 due to the timing impact of advisers migrating to independent advice firms,” Iress said.

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“Xplan users remained high and growing comparatively to the decline in registered advisers.

“We remain confident in medium-term growth opportunities in advice driven by ongoing demand for Xplan as advisers continue to focus on operational efficiency, data, client engagement and compliance.”

Pro forma revenue was up 1% PCP to $298.7 million, while pro forma net profits after tax (NPAT) was up 9% PCP to $27.1 Million. The interim dividend would 16 cents per share, 80% franked.

The acquisition of OneVue in 2H20 had contributed $24.5 million in revenue, which it announced last year along with a capital raising.

Andrew Walsh, Iress chief executive, said recurring revenue continued to underpin Iress and made up around 90% of total revenue.

“As expected, revenue in Australian financial advice declined as a result of re-sizing of enterprise client contracts. Underlying demand remains resilient,” Walsh said.

“The OneVue integration is meeting all milestones. The rollout of our integration between Xplan and OneVue is planned to start in the second half of the year.

“The deployment of our highly competitive Automated Super Admin offer is also progressing well. A major client went live in the half with another due to go live in early 2022.

“These use cases validate our offer and build market interest. Our UK results are improving too, with margin expansion, as activity levels rise and markets reopen.”

Following a board-led review, Walsh said the opportunity for Iress was “greater than previously anticipated”.

“In July we announced plans to accelerate growth and returns for shareholders with a new medium target to more than double net profit after tax by 2025, with potential for further upside,” Walsh said.

“In completing the transition to a single technology platform, we will also achieve greater operating leverage and speed to market.

“We have built solid foundations enabling us to capture more market share in large addressable markets and are focused on executing the plan.”

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XPlan is designed for dealer groups, not advisers.

As more advisers escape dealer groups, they will switch to software that is simpler to implement and easier to use for advisers.

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