Iress Limited (IRE) Earnings Call Transcript

Thank you for standing by, and welcome to the Iress Limited 2025 Half Year Financial Results Conference Call. [Operator Instructions] I would now like to hand the conference over to Mr. Marcus Price, our CEO. Please go ahead.

Thanks very much for the introduction. I'm delighted to be here today to take you through the first half results of 2025 for Iress. I'm joined today by our CFO, Cameron Williamson. I will first provide an overview of our strong first half results and our strategic achievements before Cameron will take you on a deep dive in the financials and our framework to support what we think are some exciting growth initiatives. I'll then talk through our growth strategy and the outlook for the remainder of the year. As you know, we did make an announcement on Friday relating to private equity interest in Iress. We do not intend to be commenting on that today. We're here to discuss today what we think is a great first half performance and our growth plans for the future. Before we dive into our first half '25 performance, I wanted to touch on some of the fundamentals of the Iress business. This slide provides an overview of where Iress stands following the successful completion of its transformation program. This has allowed us to reset and refocus the business, positioning us for long-term growth. Following asset sales, Iress is now a much more streamlined business, leveraging its core competencies and its strong businesses to grow into businesses, wealth and trading. In wealth, we are the market leaders in Australia and the U.K. with 2,000 clients and more than 60,000 end users. Our trading business is a leader in Australia with strong presence in the U.K., Canada and South Africa. One of the features of Iress are the client relationships, which is so strong and enduring. More than 90% of our top 20 clients have been with us for more than a decade. And despite industry consolidation, despite regulatory intercessions, despite the ebbs and flows of market, churn is very low at below 2% across the group. Given the nature of this client base, recurring revenue was also very strong at above 94%, and that provides a consistent and reliable revenue stream that supports ongoing investment. With transformation complete, we are investing to accelerate growth to capture the significant opportunities we see in large and growing addressable markets in both trading and wealth tech, which are right adjacent to our core businesses. I look forward to talking to you about that in greater detail later in the presentation. On the next slide, we're really going to be talking about the continuing business. Cameron will talk about the reported results, but the continuing business is the focus for Iress. These are the businesses post divestments. These are the businesses that are going forward will be the basis of how we report in the future. This slide, we think, provides a better representation of the performance of Iress' underlying business as they exclude the contribution from divested businesses that have been sold over the last few years. In 2025, in our first half, on a continuing business basis, revenue increased by 6.8%, driven by solid performance in our trading and U.K. businesses. Adjusted EBITDA was at $60.2 million, which is up 8.7% with margins continuing to improve, up 40 basis points to 24.1% during the period. This has led to growth in the continuing -- on a continuing business basis in UPS and UPAT of more than 19%. This has enabled the Board to declare an interim dividend of $0.11 per share, 50% franked. I'm really pleased to be able to share these results. They represent a real inflection point for the company. Transformation is complete and has delivered the expected results. The continuing business of Iress is more streamlined and capital-light and profitable with a continuing focus on disciplined execution. The momentum of our continuing businesses and the stranded cost savings that are yet to come and the balance sheet strength provides us the opportunity to selectively invest for sustainable growth. There are significant tailwinds in industries we serve, making this an exciting new chapter for Iress. With our execution capabilities, our data strength and domain expertise, we're well placed to capitalize on growth trends. Iress has momentum. The 2025 guidance is affirmed. And on a continuing business basis, this actually represents an upgrade. We've removed significant parts of the business and being able to maintain guidance. Moving on to the operational highlights. This slide summarize our 2025 first half performance. During the half, we saw the core businesses strengthening while advancing investment in new products. The U.K. had another strong performance, with revenue up 12.1% and good momentum. What's even more pleasing is there's more momentum in the pipeline with significant RFPs in place in the U.K., we're expecting a strong second half there. Our trading business has also had a really strong start to the year with an uplift of 7.8% in revenue. I should also note here that I'm incredibly proud of the team delivering what is colloquially known as the ASX single open, which was part of ASX' service relief [ 15 ]. It didn't get a lot of media attention, but this was significant because it brought the ASX into line with exchanges around the world and was a significant project for us and the ASX. This was an incredibly significant project for the team, but also has paved the way for further improvements in Iress' trading technology and most significantly includes the delivery of our new cloud-native buy-side EMS. During the period, we are continuing to focus on cost and cost disciplines and what we call our stranded cost program. This will take out another $12 million to $16 million of the corporate cost base over the next few years, and this is providing us with additional capacity to invest for growth. Cameron will provide a few more details on this later in the presentation. We've also made very good progress in building out our data and AI platforms and our capabilities. In fact, we've just appointed a Head of AI who joined the company with substantial experience from AWS and CBA. We've also been focused on accelerating growth through investment in new product initiatives. It's been an exciting period on that front with the launch of our Iress Data Insights and Funds Flow product. We've also continued to develop our wealth division's retirement income solution as well as a new wealth tech offering for the millions of people who want help and guidance, but don't currently have access to traditional advice solutions. We also continue to build on our strategic partnerships to drive that innovation. This has been a really impressive set of achievements on a continuing business basis makes us really excited about where the company is at, and there's more to come. Before handing over to Cameron, I just want to sort of cover off on the continuing business across a number of years. This slide shows the positive impact of transformation and benefits of a streamlined business, and it's delivering strong and improved results. As you can see, we are reaping the benefits of embedded financial discipline and significant efficiencies from transformation with strong and improving results across key metrics. For example, adjusted EBITDA is close to double that of the first half in 2023, and EPS has tripled over the same period. These are fantastic results. We're really pleased with them, and we're really pleased about where the continuing business is at. I'm going to hand Cameron over -- sorry, I hand over to Cameron now to take you through the detailed first half financial results.

And thank you, Marcus, and good morning to everyone on the call. I'll take you through the first half results with a particular focus on the continuing business that Marcus has touched on already, but I will also take you through the headline results, which do include the contribution for the divested businesses. For clarity, the continuing business represents our global wealth and trading businesses, that being APAC Wealth, U.K. Wealth and Sourcing, and our Global Trading and Market Data business, which now captures South Africa and Canada. More details are available in the downloadable Excel analyst pack which has been provided in addition to the appendices to this presentation. They split out the impact on asset sales and the continuing business, so you can understand the trends and the financial performance of Iress going forward. These are a strong set of results for the half from the continuing business with the uplift in revenue highlight. The balance sheet has continued to strengthen following the sale of our superannuation business and the impending sale of our QuantHouse business, which is due to complete this quarter. Leverage now sits at 0.8x and is expected to decline further post the completion of the QuantHouse sale. Earlier this year, if you recall, we did refinance our debt facilities. They are on lower limits and have been rightsized for Iress' needs going forward. And the business is very comfortable with where the balance sheet is sitting at this time. We have just commenced the stranded cost program, which is looking to reset the corporate cost base following asset sales, and we are targeting annualized savings of $12 million to $16 million over the next 2 years, and I'll take you through that shortly. At the same time, the Board has declared an interim dividend of $0.11 per share. That's [Audio Gap] divested businesses through this period and the summary of those divested businesses and the related TSAs is included as an appendix to the pack. The group for the half has delivered a statutory net profit after tax result of $17.3 million. That's in line with the same period of last year. Our adjusted EBITDA was down 3.9% to $64.4 million, again, impacted by asset sales. However, when looking at holistically across the group, the group's underlying profit after tax of $32.9 million, our underlying earnings per share of $0.176 per share and statutory NPAT are all pretty much in line with the first half of last year. So while assets have been sold, the continuing business has continued to improve, making up for the earnings that have departed the group through those asset sales. Turning to Slide 10 now. On the continuing business and its performance for the half, operating revenue up 6.8% versus the same period last year. That's significantly higher growth than the past few years, which has been more in the 2% to 3% range. Strong ongoing growth coming from the U.K. Wealth business and pleasing improvement coming out of our Trading business. There was some favorable currency, and I'll touch on that shortly. At the cost line, operating costs up 6.2%. On a constant currency basis, that's more like 4.2%. So currency, obviously, having an adverse effect on our cost line. The most significant part of our cost increase has been our R&D investment in new products of about $5.8 million. Notable focus on our new generation of wealth tech, particularly for the U.K. unadvised market, and we have progressed that quite significantly through the first half of this year. Other costs have been well contained, and costs remain an area of focus, as I've said, particularly with the stranded costs looking to come out of the group. At the adjusted EBITDA level, up 8.7%. That has got also ongoing margin expansion. And very pleasingly, UPAT and underlying EPS across the continuing business, so adjusting for the divested businesses, both up about 19% on the same period last year. So stronger operating performance. We are benefiting from reduced leverage on the balance sheet, all delivering a pleasing set of results for the group going forward. Turning to the revenue now. Revenue of 6.8% growth or 4.4% on a constant currency basis did benefit from a lower Australian dollar through the period. The uptick in revenue came via the global trading business as well as the U.K. Wealth business, where we are winning new RFPs, as Marcus has alluded to. APAC Wealth was down $1.1 million versus the prior period, and it was impacted by a client restructure in mid-2024, which we flagged last year. Adjusting for this client impact, revenue for this group for this part of our business was actually up 4% on the first half of last year and 2% on the second half. So we have got growth coming from our APAC Wealth business after adjusting for that particular impact. The other revenue was also higher, $1.8 million. That's largely on the back of TSA income as there are a number of divested assets are transitioned. And as previously mentioned, these are captured in the appendices, so you can see the time lines associated with those. Just turning to the costs now. Costs up 6.2% to $189.2 million. That increases about $11 million on the same period of last year. $3.5 million of that is FX, as I've mentioned. The most notable uplift is in our R&D investment of $5.8 million for the unadvised U.K. market. Nothing could be capitalized in the prelim work that was undertaken in regards to the work that we have been doing. We've made great progress in this area. We do understand there's an opportunity there, and we are pursuing that. Other costs across the business were kept very tightly controlled. They were up 1% versus the same period last year. Lower staff cost of about $3.1 million. That's about a 3% reduction in headcount over the course of the last 12 months. And higher nonwage costs due to an increase in software and cyber-related spend, together with a number of one-off benefits that we saw in the first half of last year. At the adjusted EBITDA level on Slide 13, for the half on the continuing business was $60.2 million, that's 8.7% up or 5.1% on a constant currency basis. Growth coming out of our U.K. Wealth business, which was up $2.2 million. That represents a more than 30% increase on the same period last year and follows on from the growth that we saw in 2024, highlighting the recovery in that part of our business. And the Global Trading business, up $2.1 million, that's a 7% increase on the prior period as well. APAC Wealth did see a decline based on lower revenue, as I've already mentioned, and that was largely a result of the client restructure in 2024. Just turning to the balance sheet now. The last couple of years, Iress has made a conscious decision to strengthen the balance sheet. The first half of '25 has seen that trend continue. Net debt and leverage levels are significantly down on where they were 12 months ago. Net debt at 30 June was $92.6 million, with leverage at 0.8x, both of these will improve further following the sale of the QuantHouse business expected in the coming month or 2. At the same time, and as outlined in our capital management plan, our R&D investment has increased. R&D CapEx as a percentage of revenue rose to a touch on 5% of revenue and at the lower end of our target band of 5% to 7%. Notable investment has been made in the last 6 months in our new cloud-native EMS application, as Marcus has already mentioned. And this will provide greater interoperability and improve client functionality going forward. And this comes on top of the R&D OpEx already outlined and demonstrates Iress' commitment and willingness to reinvest back into the business to drive new revenue streams. We do have aspirations for further growth, and I'll touch on that shortly. Our capital plan settings and improved cash flow means we're now able to reward shareholders with ongoing dividends, sustainable dividends. And the first half dividend of $0.11 per share is an uptick on the $0.10 dividend that was paid in February. This represents a payout ratio of 62% for the half, and that sits within our 50% to 70% payout ratio target range as we have established. So we're confident in our balance sheet settings. We feel we have the right balance for growth capital and rewarding shareholders via sustainable dividends going forward with sufficient dry powder to take advantage of other opportunities as and when they present themselves. Just turning to Slide 15 now, and you will have heard that we have got a program of work to address stranded costs and realign our corporate cost base in light of the continuing business. We are looking at reducing our annualized corporate cost base by $12 million to $16 million over the next 2 years. And this will come about by rationalizing software and IT-related spend, downsizing our property footprint, and reducing our ongoing discretionary spend across the group, and headcount will also be looked at. The timing of these benefits are significantly impacted by the completion of the 5 remaining transitional services arrangements that we have. And as I've mentioned, they're captured as an appendices -- in the appendices. We are looking at $8 million to $11 million in annualized savings achieved over the next 12 months, with an additional $4 million to $5 million in the 12 month subsequent. We feel this will significantly feed into a more efficient Iress with improved operating metrics going forward. Just turning to Slide 16 and our growth outlook. It provides a capital framework for the next 3 years as we look to accelerate growth. You'll have heard today that notwithstanding an improvement in our operating performance this year, we do have ambitions for further growth. Our revenue has seen an improvement in its growth rate from 2% to 3% the last 2 or 3 years, up to 4% to 5% in the current year, while our EBITDA margin has improved up to the mid-20s, and that was up from in the teens not so long ago. In our capital management plan, we've targeted R&D on new product and revenue streams to be in the 5% of revenue range. The last couple of years, it's been lower than that, but we are moving up within our target range as we are developing our product road maps. Things are moving forward. The next 3 to 5 years, we will be investing in our R&D efforts to build new revenue streams. And you'll hear more from Marcus shortly on this. We do see a pathway for our revenue growth to be in the 6% to 8% range over the coming years, likely 6% in that sort of lower end of that band by 2028 and growing from there. Our stranded cost program creates capital for reinvestment into this. We see margins edging up slightly over the coming 3 years with ongoing cost management helping fund that growth. Our R&D CapEx as a percentage of revenue will increase and be in the 5% to 7% band as set out in the capital plan. And we do not see leverage increasing through this period. If anything, we see it actually declining whilst we maintain a dividend payout within our 50% to 70% target range. So the program itself will be self-funding as we look to build new revenue streams. So all of this is really to set Iress up in its next stage of organic growth. We have a strong core business with improving performance metrics and organic growth strategy over the next 3 years to build new revenue streams with a flexible balance sheet with capacity to take advantage of opportunities as and when they present themselves. So with that, I'll hand it back to Marcus, who will take you through the rest of the presentation.

Thanks, Cameron. As we enter the next phase of our strategy, Iress is well placed to capitalize on a couple of key growth opportunities. We're really doubling down on our core capabilities while selectively investing in trading in wealth tech. Most importantly, that's coming with the funds from the business that -- from the funds we have actually from the existing business. Cameron made that point on the last slide. So that we regard this as a sustainable growth. The unmet advice needs across Australia and the U.K. are significant. There are huge unadvised populations in Australia of around 12 million, and in the U.K., that's about 25 million, and there's a strong need and appetite to access advice. There's also strong demand for AI-led solutions in both Australia and the U.K. where consumers are severely lacking access to financial advice. These unmet needs come at a time when need for advice is growing as intergenerational wealth transfers continue to rise, and it's just an increasing pool of people wanting advice. The regulators are responding, creating even greater tower wins what is already a significant opportunity for those in wealth tech, who can develop technology and deploy to those unmet needs. Iress is well placed to win in this sector. If it's not us, who is it? If it's not now, when is it? We are well placed. Why? Well, we are trusted. And the trust in the AI world is becoming an increasingly large issue. Who can you trust? Where do you go to get trusted advice trust? Trust is more crucial globally now than ever before. We've got deep industry expertise in Iress. Our team are highly experienced in navigating regulatory changes and challenges. Our security standards are second to none. And we're known. We're known business, a trusted business. We have a network that is fast. We've got 2,000 clients in wealth and about 1,200 in trading across the globe, reaching hundreds of thousands of end users. We're expanding and deepening our engagement with our clients, including on these new opportunities, and we've got a powerful distribution framework in this company. And the most important point probably is the last one. I'm sure this reporting season, you're going to hear a lot about Agentic AI solutions. AI is only as useful as the data that's powering it. And it's going to -- the companies that are going to win the sector are going to be those that have got the data assets. We have a distinct data advantage, particularly in wealth. We've got more than 20 years of data of history -- of data history and advice, strategy, asset flows, client profiles, adviser behavior. The richness integration of that data set mix is a significant moat for this company and is a huge platform for us in launching Agentic solutions. It's core to our strategy. We've been working on that data asset for quite some time now over the last 2 years with considerable investment, but we are now ready to deploy into that space. To say we are really excited about these opportunities for Iress. On the trading suite, this slide talks to the strength of our trading businesses and the opportunities to expand our suite of applications. Trading remains a strong Iress business. We're leading in Australia with solid footprint in the U.K., Canada and South Africa. We've got a strong platform, existing trading applications, well on truly industry standards, and we are focused on expanding that suite, expanding connectivity and interoperability developing the next generation of trading tech for our existing customers as well as new customers. What that means is we want our customers to be able to connect more easily with other applications with those with which they run their businesses. That is the whole purpose around what's called the interop standard. Our development of the single open recently was a major milestone for us. And I think that's really about bringing the Australian market into line with international standards. But single open for us was only the first phase in delivering our advanced EMS solution. We are migrating more clients on to it for better integrations, and it gives us the ability to avoid data products as well. So it remains an ongoing focus for the team for this year. To support the delivery of those new products and services, we're expanding our partnerships, enhancing APIs to enable modular, personalized, high-performance trading experiences, helping clients optimize and personalize their workflows. It's the partnering that's going to make a difference in the future in trading, and that's what the interop standard is all about. In wealth, our position is also very strong. Xplan alone has about 60,000 users across Australia and the U.K. It's #1 by market share in Australia, #2 overall in the U.K. But importantly, in the enterprise space, we are clearly the market leader. There's a significant opportunity though for further expansion. Firstly, by delivering greater value to our existing customers using a data and AI-led approach to help them grow their practices and make them more efficient. We've got a significant focus on bringing agentic tools to the advice world through the existing Xplan network. Through modularizing software and developing new technologies with data agentic AI at the footprint, we think there's significant growth available in this business. Secondly, we're expanding our suite of solutions to meet the substantial and growing needs of the unadvised. This is a new section, a new sector, if you like, in wealth. It's what we call the next-generation platforms, primarily in Australia and the U.K. Cameron has already mentioned some of the investment we've made in this space. But it's a considerable market research here. This is a new frontier for wealth advice. Our product research confirms strong client and consumer demand for AI-led digital advice solutions with a new bunch of customers and partners that want to deliver into this space. The development of new product solutions to this population will be a really key focus for Iress over the coming months and years. In summary, we've seen good revenue momentum this half, particularly in our U.K. trading businesses. And on a continuing business basis, we are growing well. We have financial flexibility. We've got a strong balance sheet and low leverage that will decline further following the completion of the QuantHouse sales. We've got a stranded cost program, which is going to increase further our efficiencies. There's $12 million to $16 million to come out. Some of that will be reinvested in some of our growth initiatives. Growth is our priority in our existing wealth or trading businesses as well as through new revenue streams enabled by data and AI. So given the strength of our first half results and expectations for this to continue into the remainder of the year, we're reaffirming our 2025 guidance on a -- 2025 guidance, sorry. This represents an upgrade actually on a continuing business basis because we've removed certain parts of the business and yet the continuing business has grown sufficiently to allow us to maintain that guidance. That represents an upgrade, and it demonstrates the strength of the underlying business, the continuing business. Thank you. I'll now hand over to the operator to answer any questions you may have.

[Operator Instructions] The first question today comes from Nick McGarrigle from Barrenjoey.

Just a quick question on the wealth business in Australia. I guess, in the last couple of years, we've seen a bit of volume churn and restructuring, and that's worn out some of the price increases that have been implemented. Can you just give us a sense on the shape of that business looks in terms of volume, seats, any other kind of restructuring you think might be underway and what the outlook is for TMD -- or sorry, the looks for APAC well?

I think this is -- I'm going to answer that question, Nick. It's a one-off effect. There was a restructuring of a contract in the second half of 2024, which we've flagged and we've discussed in the market in some length. It's literally a one-off due to a particular client restructure. When you look at the underlying wealth business, it's actually grown in terms of its footprint. The good thing about, I guess, that is, and we've said this before, we're not seeing any future evidence of restructuring of that type. We generally know 12 to 18 months in advance if we see clients moving like that or things changing. And we obviously have been through a period of a lot of change in APAC Wealth, and this is specifically APAC Wealth. It's kind of dumb. There's nothing more in the pipeline that we can see. So we feel like the wealth business in Australia has now got its new baseline, the reset's over, and we can see growth from where we're at. And I think Cameron mentioned that [indiscernible]

That impacts...

Yes. Go on. Sorry.

That, in fact, is now fully cycled in -- when it comes to looking at the second half, you're not kind of cycling some revenue that might have been associated with that in the second half [indiscernible]?

Nick. Yes. No, that's correct. As I said, adjusting for that particular client contract that Marcus has just talked to, we're up about 4% on the first half of last year and about 2.3% on the second half of last year. So you're seeing progressive growth in all those halves, after adjusting for that. So we do see growth coming through. Your comment about the churn, obviously, given our incumbency, given our size, I guess, of the Australian market, the reality is some of our -- we do see a little bit of churn each year. We did call out we see less than 2% in any sort of -- across the board. But that's sort of -- we've sort of got the baseline, if you like, for our Australian wealth business now. We don't see any sort of significant changes to that sort of growth profile going forward at this point.

Okay. Great. And then maybe just the T&D business was a positive surprise and just any particular call-outs there. I mean the revenue growth seems well ahead of expectation.

Yes, that was a very pleasing outcome to see that. And it's come about right across the board. I mean we obviously had growth coming out of our APAC trading business, but also the U.K. and South Africa part as well. So we did have elements of that part of our business all contributing to that growth. And we do see -- hopefully, we see that continue, particularly given the investment that we've made on the EMS side. We do see greater potential and new revenue streams coming into that business over time.

Yes. I guess a particular -- maybe just final question for me around the guidance because there was a bit of confusion trading to clients. But maybe it's worth clarifying. You -- the Super and QuantHouse businesses contributed $4.2 million in the first half, predominantly the first 5 months. So the implication is you've now excluded, call it, $4 million or $5 million EBITDA contribution from the second half but maintained the guidance. So it's an implicit upgrade of that $4 million or $5 million quantum. Is that the right thinking?

Yes, that's right, Nick. So we'll just call out the Slide 21 that talks about FY '25 guidance for continuing business actually is a headline guidance. So it includes their contribution while they're part of the group as opposed to just continuing business. So as you rightly say, the contribution from Super and QuantHouse is positive. So it's not quite as it states, it is a headline guidance as opposed to continuing business.

Your next question comes from Cameron Halkett from Wilsons Advisory.

If I can build on Xplan there just around the guidance. So to be maintained the half-on-half expansion to EBITDA, you've done $60 million this half on a continuing basis. That implies around $70 million in the second half to get you to the midpoint of your guidance. So I suppose, guys, help us with the building blocks there. What gets you there since some of the benefits from the TSOs concluding around MFA and platforms are -- and you're really done by October, and you can maybe act so quickly?

No. As I said, Cameron, the -- that guidance does include the contribution from Super. So whilst it's done 60 for the half, that's just continuing business. Super and QuantHouse contribution was 4 and a bit. So that does get captured in our guidance numbers. So it's not quite 70. It's in the mid-60s. And so we do see growth coming through in the second half. We've got a confidence level around that. And where we see, we did put a lot of R&D efforts into the first half, the R&D OpEx, which we've called out on a few slides today about those efforts. We don't see the same contribution to that in the second half. So that will give us an uplift. We have the benefit of a lot of our price rises come through in the first half of the year, and you obviously get a stronger benefit coming through on the revenue line in the second half. So all of which is contributing to further growth in the bottom line in the second half.

Yes. Okay. Good point. And then I suppose on the medium-term targets you've put out today. So I think it's very clear on your bridge there around revenue, but I suppose on an EBITDA margin basis just the band of 26% to 27% that's talked about, I suppose, just given the volume of revenue growth that you're looking to be targeting plus sort of rightsizing the cost base post TSAs, I suppose, question there is why not perhaps a bit more on the margin side? Is that conservative or just a reflection of the reinvestment you expect to sustain?

I think it's a timing thing, to be fair. A lot of the investment that you make front runs the revenue. And to be honest, over the next 2 to 3 years, there is an investment to be made, which we've called out today. A lot of the benefits we get from that investment are really '28, '29, '30 revenue streams that come through. So whilst we've got ambitions to grow that revenue and we do see a pathway to 8% revenue, we don't think we're going to get there by the end of 2028. It will be more of a gradual glide path, if you like. But the cost in actually delivering that is front loaded. So yes, the margin is probably at the lower end, but we do see that margin expansion probably up towards 29%, 30% over the following 2 years.

Okay. Sort of where my head is as well. Last one quickly. Marcus, perhaps one for you here. Just seen in the release that in the materials that have come out, there had been sort of a mention there around Harry's role being made redundant. In the past, you've certainly praised his efforts in turning around the U.K. business, even promoting them to Deputy CEO back in October. And less than a year into that raise and made redundant. So just help us understand, I suppose, some of the changes that have gone there with sort of leadership restructuring and I suppose why the change?

It was really about flattening out the structure post divestment of businesses. Obviously, we've divested a lot of businesses. The group is a lot smaller now. And it was -- and we really parted on very good terms with Harry. Harry did great work for us. We're really pleased with what he did. And so we've got the update respect to Harry and what he did for the business. But really, it's about to streamlining the business going forward, a smaller footprint in the management ranks as well as focusing on growth for the future. I think that was what was driving it. So it was really just a, I guess, a point in time, that's the way I'd describe it.

Your next question comes from Scott Hudson from MST.

Maybe just ask a couple of questions. Firstly, just on the time line of these new sort of AI-driven revenue streams. Are these sort of the '28, '29, '30 type benefit. So we just expect to see something earlier than that?

This is Marcus here. Yes, quite a number of them, and there's a range, I guess, to be fair. We've identified at least 3 that we look to put into the market in 2025. Now how -- some of those are just adjunctive things which clients will take has added value to the platform. There's a couple of in there that are value adding, and we think things that people want to buy. We are not, however, putting huge legs of revenue against them at this point in time. There is a bit of test and learn with this. Some of these agentic tools do change the way processes work for advice in particular. And so we're being mindful of that we're going to be working with clients over a period of time to actually build out how they are used for their clients and what the best applications for AI are. I would say though, I think it's pretty well accepted across the entire industry that AI is going to have a lot to say in advice, and we're right in the thick of it. So -- but how that all plays out, I think it's still -- some of that's to be learned. So we're being very conservative about that. We do think there'll be some revenues early on. But it's just -- we just want to test and learn that. So I guess, again, probably a bit conservative on our part, but it's not a trend that we don't intend to be fully invested in.

And I guess just -- I guess, in terms of the route to market for those products, is that just partnering with existing wealth and trading clients? Or are you looking to go to...

No, no. Certainly a segmented strategy here. There are a bunch of tools and tool kits with AI that apply front and center to existing advice clients with Xplan, things we can add to the stack or can augment the stack, which will make their lives a lot better, more efficient, allow them to get efficiencies for their clients and provide better service to their clients. That's the first thing. There's also, right next door, a huge unadvised population who -- and a real demand for agenetic AI advice. And we're seeing it across the globe. It's interested in -- it's everywhere. We've got a separate strategy, a separate string of strategy. We look at what we call next-generation advice solutions. We've built prototypes, been out with clients, done a whole raft of work there, and that was part of that investment that we've already made, and we've got a pathway forward there that we're pretty excited about. That is literally -- that is new business, new clients.

The new clients isn't new user? You'll be going through -- another distribution channel? Or are you going to...

Other -- particularly in the U.K. and other markets. There are other participants in the wealth ecosystems, particularly with regulatory changes, who will, we believe, come back into the wealth sector. Not perhaps in a traditional advice sense, but in what we call more -- a different type of product-led advice, if you want to call it that.

Yes. Do you need regulatory change to do that? Or is QAR in Australia sufficient to...

In the U.K., no. Yes, sorry, in the U.K., no, I think we're there in the U.K. It's a more mature market from a regulatory settings. In Australia, there's still a little bit of work going on, particularly in defining what that sort of advice looks like, particularly for the superannuation sector, we are expecting another iteration of the current regulatory settings, but all of the super funds are interested in this particular space. And that will be an example of a sector that are going to enter this advice area in the next 5 years. And we want to be building tools with them.

And then just looking on Page 27, Cameron, that sort of -- I guess, I'm just looking at the sequential growth first half '25 versus second half '24 looks like about 4% revenue growth, but margins down, I guess, close to 100 basis points. Can I just understand, I guess, what the key driver of that margin compression is?

Yes, that's the R&D efforts, Scott, that we put into the first half that Marcus is talking to, right? So we've spent $5.8 million in this first half. In the absence of that, if we did not -- if we didn't go down that path and this obviously trying to build further revenue streams, earnings would have been up 15% for the first half, right? And the margin we would have had significant margin expansion. So really, it's about sort of front running the R&D OpEx efforts, and we couldn't capitalize things because we're still in blueprint phase around what that looks like that fed into the first half of this year, and that's been the key driver behind that margin contraction.

And I'm correct in saying that you said that you won't -- we won't see the same level of OpEx investments in R&D in the second half?

No, it's slightly lower. Definitely, there was more efforts that went into the first half because we're very much focused on the U.K. market. But yes, we've got some great learnings from that. We -- from here on in, there's better balance between OpEx and CapEx build. So we'll see the OpEx component decline over time.

And then just lastly, on the, I guess, Trading and Market Data in the first half, I mean, and maybe even in the second half, is there like a one-off benefit from Single Open? And do we expect revenue growth, I guess, domestically then maybe slow into '26?

There's not a one-off benefit. It's Single Open is more was -- for us, it was really keeping the industry up to date with the international standards. It's a longer-term benefit to us, though, because we have -- we are replacing the EMS application with a cloud-native application. That gives us the ability to do a couple of things. First of all, to be sell new data products through that network through the EMS side. But also most importantly, because it's using what's called the Interop platform, we can actually, more easily and quickly bring new products to market through partnering as well. So we think there's a real -- it's actually quite strategic for us having that EMS platform out there. And using the Interop technologies right through the trading group will modernize our stack significantly and allow us to bring new products and services to market over the next 2 or 3 years. So the outlook is pretty strong for trading actually.

Your next question comes from Jack Daly from Shaw and Partners.