Shares in Iress slumped 20% at one stage yesterday hitting their lowest levels for more than 8 years after the company sprang a shock earnings downgrade on the market.
The downgrade of around 15% in after tax profits was blamed on rising pressures in the current second half of its December 31 financial year.
The company said it faced what it termed “challenging macro conditions” for “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.”
Iress said its full year profit for its 2022 financial (calendar) is now expected to be in the range of $166 million – $170 million on a constant currency basis.
“In August, Iress guided that Segment Profit in constant currency would be at the bottom of the range of $177 million – $183 million.”
Net after tax profit will also drop – Iress said it is now expected to be in the range of $54 million-$58 million “as a result of the updated outlook for Segment Profit.
The previous guidance range for NPAT was $63 million – $72 million.
“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 said in the statement to the ASX that “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.”
The shares plunged at the opening and touched a low of $8.43, the lowest they have been since mid 2014. The shares later recovered to $8.70 at the close, a loss of more than 17%.
Including yesterday’s losses, Iress shares have lost more than 30% year to date.
It was an unwelcome final update for the company by CEO Walsh. As announced in July, he retires in October after 13 years in the job and will be replaced by Marcus Price.
