Bravura Solutions Limited (BVS) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Bravura Solutions Limited Full Year Results Announcement.[Operator Instructions] I'd now like to hand the conference over to Mr. Colin Greenhill, Group CEO. Please go ahead.

Good morning, and thank you for joining Bravura Solutions 2026 results presentation. I'm Colin Greenhill, CEO. I'm joined today by our Chief Financial Officer, Neil Montford. I'm going to cover 5 areas today: 2026 results highlights, 2026 results details, capital management, outlook and guidance and then take questions and answers. I think the headline is pretty straightforward for 2026 is a very strong year for Bravura. We delivered continued revenue growth and material improvement in profitability. Revenue grew 10% to $283.6 million and cash EBITDA increased 76% to $77.1 million, giving us a cash EBITDA margin of 27.3%. Our strategy of growing existing customers continues to deliver. We are seeing that through project work, ongoing maintenance income and closer alignment with customer road maps. The shift to empower business units has also sharpened accountability and improved execution. We've also realigned the business around our core product solutions with Global Wealth and EMEA funds administration as our key operating divisions. P&L ownership now sits closer to products in the market with rewards aligned to growth and profitability. Just pulling out a few things. In APAC, we supported our successful client migration and are aligned to that client's future growth and migration plans. In the U.K., we supported expansion into Workplace and now supporting a client in the annuities market. In EMEA, we're supporting a major clients through integration and migration projects with a strong pipeline of opportunities into 2027, and global product forums are increasing customer engagement and helping direct our focus on new features and innovation. Our business continues to generate strong cash flows. For the financial year 2026, we've announced total dividends of $0.2523 per share including $0.1023 paid in March and a further $0.15 to be paid in September. The ordinary dividend again represents 100% of underlying NPAT, reflecting our confidence in the profitability and stability of the company. To fuel future growth and improved capital efficiency, we established a combined $100 million debt facility. We're also announcing a 12-month on market buyback of up to $50 million, reflecting the value we see in the business. Financial year 2026 reflects continued financial improvement supported by customer led growth and disciplined cost management. On an underlying basis, adjusted for the prior year Fidelity International license sale and deferred tax asset recognition, the key financial headlines are as follows. The cash EBITDA of $77.1 million, resulting in a 27% margin for the year. This was driven by improving margins through the year to approximately 30% in the second half of 2026. We've reduced our administration cost base by 10% and a focused investment in customer-facing teams, where resource productivity has grown project revenue achieved by 18% year-on-year. Revenue of $283.6 million grew organically by 9.6% versus the financial year 2025. This is across the mix of contract renewals, project work and customer growth. Of this, $165 million or 58% was recurring revenue, which increased organically by 6.9% versus 2025 as customers committed to new contracts with improved terms, and the net closing cash was $50.3 million. Further details included in the appendix, covering cash flow, balance sheet, operating results and the reconciliation of cash EBITDA to underlying NPAT. These sections provide a detailed bridge from operating performance through to underlying impact. So the slides that we're playing on the screen bridge our recurring revenue from proceeding corresponding period. Recurring revenue growth continues to be driven by deeper engagement with existing customers, increased functionality and utilization and successful contract renewals. Growth has come through migration projects, product enhancements and expanded services with pricing reflecting the value we are delivering. We now have an anchor client in the U.K. workforce are supporting a new annuities client and are working with 2 major customers on integration programs. Innovation in digital advice remains the focus of the Midwinter business in Australia, and this has now been implemented across several major superannuation funds. These funds have seen 10x increase in the advice given to members and as their business grows, we grow. Approximately 2/3 of the recurring revenue growth over the past year has come from price increases agreed in renewing contract renewals that reflect the value that we add to customers businesses. We've renewed all key customer contracts through this year, typically on 2- to 5-year terms. We previously highlighted 3 expected material attrition events. The first client exited several years ago, the second exited in December this financial year. However, this has not disrupted the half 2 or full year revenue trajectory. The third client has agreed to extend its relationship with us. We will disclose further information regarding churn events given when appropriate. This chart shows the operating leverage in the business. Revenue growth has been delivered without a corresponding increase in the cost base supported by disciplined cost control and full year benefit of financial year 2025 cost savings. As a result, cash EBITDA has continued to improve. We believe the business is well positioned for further financial improvement in the financial year 2027, and that confidence is reflected in our guidance. We're closely managing our delivery capabilities and will add resources as they're required. From a capital management perspective, to support further growth opportunities that optimize capital efficiency, we've established a combined $100 million debt facility with HSBC Australia. We're also announcing a 12-month on-market buyback of up to $50 million to give us the flexibility to return capital to shareholders through buybacks when we feel it's appropriate to do so. Today, we're announcing an ordinary dividend of $0.0831 per share, representing $37.3 million and a special dividend of $0.069 per share, representing $30 million. Together, this is a total dividend of $0.15 per share. The dividend will be unfranked and the dividend reinvestment plan remains suspended. The record date is the 25th of August 2026, with payment expected in September 2026. Over the past 2 years, we've returned over $0.5676 per share through a mix of capital returns and dividends. From a guidance perspective for revenue, around 65% to 70% of annual revenue is now precontracted through maintenance pricing and committed services, giving us good visibility of the position into the financial year 2027. We're forecasting revenue of between $280 million and $300 million based on an assumed AUD to GBP exchange rate of $1.9, and that compares to the financial year 2026, where the average was $1.98. From a profitability perspective, we're forecasting cash EBITDA of $84 million to $94 million. This reflects the continuing benefit of prior year cost initiatives, lower one-off costs and incremental services revenue delivered without a material increase in cost. The midpoint of our guidance represents a cash EBITDA margin of about 30%, which is largely in line with our margin performance in the second half of 2026. If I just conclude on that, the financial year 2026 was clearly a very strong year for Bravura. We renewed key customer agreements, deepened strategic engagement and continue to deliver growth and value for both our customers and our shareholders, aligning to the strategic plans so that as they grow, we grow. With a disciplined operating model and strengthened funding position, we're in a position to consider how to allocate capital between organic initiatives exploring M&A opportunities, although to note these will take time and through dividends and the share buyback. I'm really encouraged by the momentum of the business, all that we've achieved and really excited about the prospects going into the financial year 2027. Thank you for taking the time to listen, and we'll now open to questions.

[Operator Instructions] Your first question today comes from Olivier Coulon from E&P Financial Group.

Just on U.K., I think in the past you mentioned that you felt that the lack of, I suppose, internal administrative capability [indiscernible]. Has your view changed at all with some of the things that have occurred in that marketplace more recently like [indiscernible]?

Olivier, sorry to interrupt the line is terrible. I don't know -- it's -- we're getting quite a lot of feedback, and it's quite -- it's difficult to hear what you're saying. Could we maybe take a different question and then come back to your question. I don't know if there's something specific about your line. Yes. It's hard to hear.

Your next question comes from Tim Lawson from Macquarie.

Maybe a couple of questions on the outlook. You talked about that third client that extended. Can you sort of -- maybe what you can? Is that extended for a certain amount of period you're still negotiating or you expect to retain that client?

It's extended for a certain amount of time. I think I said all of our agreements are between 2 and 5 years. So what they choose to go longer than that is up to them, but we're in very active discussions with them. So it's a positive move for everybody.

Okay. So if we do the headwind, you're sort of cycling into 27 is that decline from -- was it December that you mentioned that rolled off. Is that right?

Yes. So we talked -- I think we talked at the half year that there was a client that said they were going to roll off in 2022, and they eventually did roll off in 2026. So despite that headwind, we talked about this in some of the meetings in February. Despite that, we've been growing the revenue on top of losing that customer.

Yes. And then you talked about how you'd renewed existing contracts or sort of new terms with some of the beneficial pricing. I mean how far are you sort of through the sort of client base effectively on sort of renewed pricing?

So we review all the contracts as they come through and they tend to be on a 2- to 5-year basis. So over the period of 3 years, we'll get to look at most of the client -- the customer contracts that come up. It's not necessarily a case of how far through they continually are there to be looked at. But particularly in the U.K., the business unit have made a really good effort this year at getting those contracts renewed.

Yes. And then just you sound relatively positive on sort of the level of project activity within the client base. Could you maybe expand a bit more on where you're seeing most activity?

I think what's particularly encouraging with our bigger clients and one of our bigger clients in Australia, you'll probably follow as much as we have announcing that they're growing. And as they grow and they continue to grow and take on books of business, we support them in doing it. So as long as they continue to grow, we continue to grow as well. And those positions only appear to be continuing. They've got very active pipelines and discussions, but you'd have to talk to them more specifically about their strategic plans.

[Operator Instructions] Your next question comes from Cameron Halkett from Canaccord Genuity.

Just one, if I can start around the revenue guidance that you're providing for '27. When we look at the top of the range number that's given there, just I suppose can you help us unpack the pieces of how you'd get there? Is that more project work? Are there active tenders that you're sort of hinting at there that if they went your way, then you'd maybe hit more towards the top end? And then maybe just pricing and escalation there as well.