Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bravura Solutions Ltd (BVSFF, Financial) outperformed its upgraded EBITDA guidance, delivering a full-year result of AUD25.8 million and cash EBITDA of AUD10 million.
- The company reported revenue of AUD250.4 million, in line with guidance, and maintained a strong cash balance of AUD90 million as of June 30, 2024.
- Bravura Solutions Ltd (BVSFF) announced a capital return of up to AUD75.3 million to shareholders, subject to necessary approvals, and a AUD20 million on-market buyback.
- The company has successfully executed a fast-paced transformation, resulting in materially improved financial results and a significant reduction in costs.
- All FY24 expiring contracts were renewed with improved economics, indicating strong client trust and engagement.
Negative Points
- Revenue is expected to decrease in FY25 to a range between AUD235 million and AUD240 million due to the removal of one-off license fees and lower professional services fees.
- The company is still in the process of rebuilding trust with clients, indicating that there is more work to be done in this area.
- Professional services revenues are expected to be lower as Fidelity establishes internal capabilities, impacting Bravura's revenue by up to AUD9 million annually.
- The transformation strategy, while successful, incurred costs that impacted the P&L, with AUD1.9 million spent in FY24.
- The company has not disclosed specific details on the duration of renewed contracts or the exact amount of ARR up for renewal in FY25, which may create uncertainty for investors.
Q & A Highlights
Q: Can you talk a little bit about the variance in the reported EBITDA guidance for FY25 and the amount of CapEx and amortization you're considering?
A: We haven't provided specific guidance on those categories. The bridge between EBITDA and cash EBITDA is relatively small. In FY24, we spent more on PP&E due to moving and downsizing premises, which won't repeat in FY25. Future premises changes will likely involve moving to serviced offices.
Q: Is the potential for more cost reductions in FY25 included within the cash EBITDA guidance range?
A: Yes, the guidance reflects our expectations for further efficiencies in FY25.
Q: How do you see the opportunity to regain some lost revenues through price increases in FY25 contract renewals?
A: There's always an opportunity to gain more. Our guidance is based on expected outcomes of FY25 contract renewals. We will continue to negotiate appropriately with our customer base.
Q: What is the medium-term outlook for new contracts or customers?
A: FY25 is about engaging with clients regarding our product suite and aligning our business with their strategic roadmaps. We are already having these conversations in both A-Pac and EMEA regions.
Q: Can you clarify the AUD9 million reduction in revenue from the Fidelity contract change?
A: The AUD9 million includes professional services revenue. We expect there will be work required from Bravura, but this is our estimate for the maximum annualized revenue impact.
Q: Are there more restructuring expenses expected in FY25, and are they captured in the guidance?
A: There will be a small amount of restructuring costs, but it won't be material and is reflected in the FY25 guidance.
Q: Does the FY25 revenue growth require new logos, or can it be achieved with existing clients?
A: We see significant opportunities to grow with existing clients now that the business is stabilized. We will also compete for new business in the Asia-Pac market and other regions.
Q: Can you provide more detail on the next leg of cost reductions in FY25 and their realization profile?
A: We are exploring further efficiencies, including optimization work in our center of excellence in India and reviewing our premises globally. The cost reductions will be progressive over the next 12 months.
Q: What is the expected impact of contract renewals on ARR in FY25?
A: We haven't disclosed the exact amount of ARR up for renewal in FY25. However, our guidance assumes no new license fees but includes some new client wins.
Q: How sustainable is the current level of software development spend, and could it increase if you aim to grow the top line?
A: We only capitalize spend with a clear business case. Our overall product investment remains significant, and we will continue to invest appropriately where we see returns. We may seek Board approval for new product investments if the business case makes sense.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
