Integrated reserach has disclosed its largest ever deal; a 5-year US10m renewal and extension contract with long-standing customer JP Morgan Chase (a client of over 25 years).
For context, IRI reported ~US$35m in revenue for the half just ended.
It's only a single data point, but a sign of IRI's defensive revenue stream and the continued relevance/importance of its offering.
Results came out towards the upper end of last year's revised guidance, with Net profit up 1% to $11.8m. This was on a 6% lift in revenue to $53.2m and a 7% rise in license sales. With 95% of revenues sourced offshore, a weaker AUD was very helpful..
The groups largest segment, Unified Communications returned to growth with revenue up 10%, and the outlook for the full year is positive.
Payments revenue (which represents about 1/7th of the total) was down 14% after a very strong prior period, but remains roughly double that of 2018's half and management said there were clear signs the revenue stream is growing.
The Asia Pacific region did especilly well with 62% growth, and CEO John Ruthven said he expected "a strong result for the full year based on the quality of the second half pipeline".
Cashflow from operations grew 28%, and net margins remain steady at an impressive 22%. The company remains debt free and has $7.6m in cash.
This is a company with a long history of delivering steady and profitable growth, it has a strong market position and very sticky customers. Not many company can maintain net profit margins >20% without enjoying some pretty major competitive advantages.
While they hit some operational snags a couple years back, there's nothing structurally wrong with this business in my view.
Results presentation here
Very strong business with a 30 year pedigree. It is the global leader in performance management software
Lots to like
Integrated Research said it expects to report record revenue and profit for the year ending Jun 2020.
Revenue should come in 9-10% higher at $109.5-$111m.
Profit likely between 8-11% stronger between $23.6-24.2m.
License sales should be up 13-15% between $70.8 and $72.3m, driven by Unified Communications segment.
ASX announcement is here
At the midpoint, this gives IRI an EPS of 13.9c (just shy of my 14c estimate). Will wait for detail in the full results report, but happy to keep my valuation unchanged for now.