# IRE - IRESS Limited



## Basilisk (26 August 2006)

I've seen the online trading software Webiress mentioned a few times in ASF and I'm wondering if anyone  has shares in the developer Iress Market Technology. 
Friday it closed over 3% higher after their half yearly report.


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## GreatPig (26 August 2006)

*Re: IRE - Iress Market Technology*

I've had some in the past, and was looking at buying again earlier this month. However, I was waiting for them to go a bit lower but they went up instead, so I'm still waiting 

GP


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## kermit345 (25 May 2012)

Nutmeg just mentioned IRE in the TGA thread and its a company I really like the look of but agree with Nutmeg that it is overvalued. Can't believe it hasn't been discussed here since 2006.

I'm just curious what other people have as their valuations and where they would be willing to buy. IRE to me seems like a company that rarely even approaches its valuation and its even more rare for it to drop under it. My valuation is around the $6.00-$6.20 although thats just back of the envelope as i'm at work at the moment.

Interested to see where people consider it good buying as I think its a great company to take a long term holding in. I work in the finance industry and we use IRESS software (Xplan) and its brilliant. It's also to see how they can make a motza from it as all the additional modules cost aditional licensing fees etc etc.

I feel that anything under $6.00 is starting to represent a real opportunity for making an entry into IRE and just interested in the thoughts of others. In my view its the kind of company you'd almost be willing to give up a bit of MOS if the price doesn't look like dropping any further.

thoughts?


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## Nutmeg (25 May 2012)

I'd want to see IRE go below $5 before I even think about buying.  Personally, I think there is a good chance that it will fall below that figure.  

If you look at IRE's most recent announcements, they are very gloomy - "_neutral outlook on revenue, segment profit declining *at a rate exceeding H2’11 decline*_", ongoing capex in its start-up operations in the UK.  

If you are patient and can get IRE below $5, it would be a good buy in my view and one to hold for the long term.  I'm just watching and waiting.


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## kermit345 (25 May 2012)

Thanks Nutmeg for the input, I agree that it needs to be monitored for a little longer given the recent decline in earnings etc.

If nothing major changed in their operatings and they continued their historical growth before the most recent hiccup then $5.00 would be a great entry price long term.

Certainly a stock thats on my radar, will be watching with interest.


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## McCoy Pauley (25 May 2012)

I bought into IRE when it was just above $7.00/share earlier this year but sold out when IRE downgraded its profit forecast by 10% for the current financial year.

Seemed to maintain a fairly constant ROE over the last 10 years and I like the fact that it makes much of its revenue from recurring sources (licence agreements, in particular).  Not so sure that I like the expansions into foreign markets, though.

Still keeping an eye on it, but probably won't enter it until the price drops a fair amount more.


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## skc (25 May 2012)

kermit345 said:


> Thanks Nutmeg for the input, I agree that it needs to be monitored for a little longer given the recent decline in earnings etc.
> 
> If nothing major changed in their operatings and they continued their historical growth before the most recent hiccup then $5.00 would be a great entry price long term.
> 
> Certainly a stock thats on my radar, will be watching with interest.




FWIW I use their WebIress for the last 3 years and nothing has changed that I can see. Disappointed with them on the product innovation front.

However, keep in mind that the WebIress is just their cheap and nasty retail platform and may not be on their development focus at all.

Also, it seems to me that at least some of their earning is tied to the market activity level, which in turn is tied to the bullishness of the market. Volume tends to shy away in volatile / bearish markets (at least as far as brokers are concerned).


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## McLovin (25 May 2012)

I bought Bridge DFS on the float in 2000 and sold it back in about September '06 (along with most of what I had in the market at the time). IRE looks like a bit of a value trap, IMO. The justification for the price seems to revolve around even though the market isn't doing that well the wall of money that flows from superannuation will eventually have to find a home outside of cash. That maybe true, but super funds, because of their size, are buy and hold types, and IRE needs transactions and volume. What we saw last decade is was an outlier and will not be repeated.

The realtively small size of the Australian market means it's probably pretty unlikely a serious competitor will try and challenge IRE's market share. So it's pretty safe from that perspective.

Just my


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## kermit345 (25 May 2012)

I haven't really investigated with a huge amount of depth into what makes up Iress' revenue but by the sound of these posts its the trading side of their systems?

In our office we don't use it for any trading at all, we simply use it as a database tool firstly, and then use its various modules for client modelling, insurance quotes, portfolio tracking all with datafeeds etc.

As i've only worked with this company I can't comment on other programs/tools like Xplan, but it seems to cater to almost everything a financial planner needs to do. All the additional modules have additional costs involved and i'd be interested to know how much revenue comes from the Xplan package for IRESS. I know for sure the group i'm involved with love Xplan, its flexibility and would be paying for a large number of licenses.


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## Nutmeg (25 May 2012)

McLovin said:


> IRE looks like a bit of a value trap, IMO.




A value trap is a big call.  I associate value traps with something more than the risk that a stock will potentially grow at a slower rate (or at no rate) than shareholders have previously been accustomed to.  

Rather, value traps are, as Jim Chanos has explained about FMG, a stock which, should something external happen like iron ore prices decline, would be at risk of suffering a liquidity event and thus need to undertake a capital raising or some other remedial action which would fundamentally reduce or destroy shareholder value.  

I can't foresee anything in the short to medium term that would fundamentally reduce or destroy shareholder value in IRE.


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## McLovin (25 May 2012)

Nutmeg said:


> A value trap is a big call.  I associate value traps with something more than the risk that a stock will potentially grow at a slower rate (or at no rate) than shareholders have previously been accustomed to.




PE compression can lead to a permanent loss of capital if your anticipating higher growth than materialises.


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## Nutmeg (25 May 2012)

McLovin said:


> PE compression can lead to a permanent loss of capital if your anticipating higher growth than materialises.




That's a risk inherent in any stock.  But it would seem to imply that you're anticipating a contraction of IRE's business and/or earnings power.  As I see it, there are few small cap stocks in the ASX that so dominate their market and enjoy a high barrier to entry as to enable them to raise prices as IRE.  Quite apart from the changeover costs for those contemplaiting switching from IRE's systems, those systems really have no competitor in Australia.


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## McLovin (25 May 2012)

Nutmeg said:


> That's a risk inherent in any stock.  But* it would seem to imply that you're anticipating a contraction of IRE's business and/or earnings power.*  As I see it, there are few small cap stocks in the ASX that so dominate their market and enjoy a high barrier to entry as to enable them to raise prices as IRE.  Quite apart from the changeover costs for those contemplaiting switching from IRE's systems, those systems really have no competitor in Australia.




Not at all. They don't need a decline in their business for their PE to come down, just a little less blue sky in the valuation. There's no doubt they have a very strong position and very high barriers to entry but that doesn't necessarily mean they should be trading on 15x 2011 OCF.


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## Ves (25 May 2012)

McLovin said:


> Not at all. They don't need a decline in their business for their PE to come down, just a little less blue sky in the valuation. There's no doubt they have a very strong position and very high barriers to entry but that doesn't necessarily mean they should be trading on 15x 2011 OCF.



Agree.  Waiting until the P/E is much lower before I look at this company properly.  Same with CPU.


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## McLovin (25 May 2012)

This is presentation is from last week.

http://asx.com.au/asxpdf/20120517/pdf/4269zwj22pz2yl.pdf

Slides 21 and 22 tell you all you need to know about this business at the moment. Note their use of the phrase "challening environment in global capital markets prolonged". I have no idea when that challening environment will cease but certainly it's going to keep a lid on revenue while it persists.


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## Nutmeg (25 May 2012)

McLovin said:


> There's no doubt they have a very strong position and very high barriers to entry but that doesn't necessarily mean they should be trading on 15x 2011 OCF.




Agree.


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## Ves (30 May 2012)

Closed under $6 for the first time in a long time tonight. Starting to struggle on a technical level, definitely needs to retreat a bit as discussed above. Priced for healthy growth at the moment and in reality it will struggle to match that in the next few years.  Perhaps this is the omen that will start the price capitulation. Canoz or tech/a might be able to tell us some more about that.


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## JTLP (30 May 2012)

Ves said:


> Closed under $6 for the first time in a long time tonight. Starting to struggle on a technical level, definitely needs to retreat a bit as discussed above. Priced for healthy growth at the moment and in reality it will struggle to match that in the next few years.  Perhaps this is the omen that will start the price capitulation. Canoz or tech/a might be able to tell us some more about that.




I've had this one on my radar for over a year now - watching it slip slide from $7 to where it sits today.

I read on HC that someone thought $5.75 was a real possibility (basing it on profit downgrade and P/E) but I think this needs to be priced down further as technically it's in a long downtrend...


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## McLovin (30 May 2012)

JTLP said:


> I've had this one on my radar for over a year now - watching it slip slide from $7 to where it sits today.
> 
> I read on HC that someone thought $5.75 was a real possibility (basing it on profit downgrade and P/E) but I think this needs to be priced down further as technically it's in a long downtrend...




I reckon $4 is a possibility over the medium term. Then it starts getting interesting.


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## Ves (30 May 2012)

McLovin said:


> I reckon $4 is a possibility over the medium term. Then it starts getting interesting.



Yeah, depends on profit.  Honestly hard to say what P/E it would be on if it got to $4.  Either earnings take a fair hit or it over-corrects  (probably best scenario for us).


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## skc (30 May 2012)

Ves said:


> Yeah, depends on profit.  Honestly hard to say what P/E it would be on if it got to $4.  Either earnings take a fair hit or it over-corrects  (probably best scenario for us).




Current trailing PE 18.4x. A company trading on this multiple should have at least 5 years of 10% p.a. EPS growth ahead of it.

Assuming flat profit, it's difficult to understand why IRE's 33c EPS can support anything substantially higher than $4.


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## McLovin (30 May 2012)

Ves said:


> Yeah, depends on profit.  Honestly hard to say what P/E it would be on if it got to $4.  Either earnings take a fair hit or it over-corrects  (probably best scenario for us).




Well they earnt 32cps last year and their outlook statement a couple of weeks ago pointed to flat our declining profits across all their segments. So $4 doesn't seem that unreasonable. It would also put them on about 10x OCF.


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## Ves (30 May 2012)

Perhaps the market is waiting for some more certainty around the impact of FoFA before sending it into a proper spiral? Market darlings sometimes have more "brownie points" than you'd expect, is all I'd think of.


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## piggybank (6 November 2013)

Closed at ATH today of $10.38c.


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## rnr (4 May 2019)

Iress has performed well during ytd 2019 to make a new ATH of $14.77 during the week.


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## Dona Ferentes (1 June 2020)

Iress IRE has launched a takeover bid for Onevue Holdings at 40c per share. The offer values the company at $107m.

The friendly deal sees Iress, a financial software business, gain access to OneVue’s wealth management software.

Iress will raise $170m to help fund the transaction, with Goldman Sachs underwriting a $150m placement at $10.42, a 7 per cent discount to its last closing share price.

_- likely need some dollars spent, to grow FUM (but a problematic exercise where many have fallen short)_


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## Dona Ferentes (14 August 2020)

piggybank said:


> Closed at ATH today of $10.38c.



and closed at $10.76 today .... seven years later

Has been higher, but plodding along.
*Livewire Markets:* _Okay. Ben, what's a small cap that you've got for me today that's spitting out cash?_


> *Ben Clark (TMS Capital):* Mine's IRESS Market Technologies. So this is a fairly mature tech business I'd say. It's not going to have kind of the hypergrowth that the businesses that are flying at the moment, but it's quite defensive. It's got the number one platform that financial planners use in the country. It's also got the IRESS screens that a lot of advisors use. It's the dominant player, it puts up its prices consistently each year, it is slowly expanding offshore, and it's starting to get some gains there. Did a capital raising recently, reaffirmed guidance for the year, it's going to pay about 4.4 per cent, 40 per cent franked. And it is unloved. It is well off its recent highs. I think that for me is a buy.



- _but not cheap, PE in high 20's. Gearing creeping up @ 57%



_
......................_Earnings ........................        ..............Return on Equity_  ............................


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## So_Cynical (17 August 2020)

Dona Ferentes said:


> Has been higher, but plodding along.




Has been higher and lower but overall the trend is up, would of been a good stock to build a position in over the last decade, selling a few 
on the highs and buying the lows as lots of consistent ups and downs. A little aussie global tech success story bubbling along with a low
risk growth strategy, 2 dividends per year for the last 18 years with only 1 annual dividend reduction along the way.
`


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## Dona Ferentes (10 June 2021)

Iress said that it notes media speculation today in _The Australian Financial Review _about market activity by an unknown participant or participants.

The  company can confirm that it has *not received any direct approach*. As a  result, it said it is not in a position to comment further. 


Iress shares are up 17 per cent this morning at $11.90


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## Dona Ferentes (20 June 2021)

For more than a decade, Iress has made acquisitions but profits have stalled. The 2020 EPS of 32¢ was the same as that of 2014 and that of 2009.

Meanwhile, its return on equity has trended downwards, falling from 18 per cent in 2019 to 12 per cent this year.


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## peter2 (20 June 2021)

I haven't used the Iress trading platform for more than a decade. Has it improved at all? I doubt it.
Iressaurus is a dinosaur of the pre-GFC period.


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## Dona Ferentes (20 June 2021)

peter2 said:


> I haven't used the Iress trading platform for more than a decade. Has it improved at all? I doubt it.



They kept adding bells and whistles. 

Camel = horse designed by a committee.


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## Dona Ferentes (17 September 2021)

> _11 Aug - EQT Fund Management lifted its takeover bid for Iress to $15.91 per share when including a cash dividend  of 16¢ per share. Previous proposals assumed there would be no dividends  paid by Iress. The offer was at a 45 per cent premium to June trading, when initial reports arose a takeover._



And today: _Iress advises that discussions between Iress and EQT have concluded and that the parties have been unable to agree a transaction. As a result, the Process Deed, incorporating exclusivity terms, between Iress and EQT has been terminated_.

Iress intends commencing its on-market share buy-back as previously announced to ASX on 29 July 2021.

_Down more than 10%, now around $12_


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## Dona Ferentes (29 September 2022)

.... but wait, there's more (or less) ...



> ..... against a backdrop of challenging macro conditions, Iress experiencing some timing delays to the conversion of new sales opportunities which are expected to impact FY22 guidance. In addition, there have been some higher than anticipated supplier costs largely in technology and in part driven by FX rates on USD pricing.




Full year Segment Proﬁt for FY22 is now expected to be in the range of $166m - $170m on a constant currency basis.
In August, Iress guided that Segment Proﬁt in constant currency would be at the bottom of the range of $177m - $183m.
NPAT is now expected to be in the range of $54m-$58m as a result of the updated outlook for Segment Proﬁt. The previous guidance range for NPAT was $63m-$72m.
The primary contributor to the reduced 2H FY22 proﬁt expectation is extensions to sales cycles on new client opportunities in APAC and Mortgages resulting in revenue previously anticipated in 2022 being pushed into 2023.



> Iress’ CEO Andrew Walsh, noted, _“Proﬁt expectations for the second half of this year have been impacted primarily by delays in the timing of new client opportunities. In addition, some costs are higher than we previously expected, including US dollar priced technology and software. While external macro conditions are volatile, we are making good progress in executing on our long-term strategies to build a more proﬁtable and eﬃcient Iress_.”


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