Iress Limited (IRE) Earnings Call Transcript & Summary

Good morning, everyone. My name is Andrew Walsh, I'm the CEO of Iress, and thanks for joining us today. Today we released an announcement regarding an indicative offer to acquire Iress. And what is to be said is included in that release, and there's nothing more that I can add here. Today, what we're here to talk about is our accelerated organic growth plans for our product and technology and its role in delivering great value to our clients, users and to Iress. As we announced in June, we've been undertaking a review with a view to accelerating returns and increasing pace. This has been underway since the last quarter of 2020, with a new Chair elect, Roger Sharp, announced in February, who was appointed to that role in May. Our intention has been to hold an Investor Day at or around our integration of software following the acquisition of OneVue that is today. Today, we'll cover plans to accelerate and set out our medium-term targets. We'll discuss the execution of our product and technology strategy and also the market context for it and how we will win. We'll also discuss finer financial detail. We will take questions after speakers have presented. I want to start by first introducing the leadership team at Iress and specifically those who will be presenting alongside me today. There's a high-quality leadership team behind the strategy and its execution at Iress. Today, I'm joined by several colleagues to expand on our plans, and I'll introduce them briefly now. Joydip Das is our Chief Product Officer, and he joined Iress in September 2020. He's a globally regarded product leader and has recently returned to Melbourne after 20 years in Silicon Valley at recognized names and [ startups ]. Joydip leads our global team of product experts, designers and researchers and is also driving our data strategy at Iress. Andrew Todd is our CTO, and he's been part of our team since 2017. Andrew leads technology and operating strategy at Iress and its execution. He's been a driving force behind our cloud transition, its evolution, engineering methods at Iress and our platform strategy. Michael Blomfield joined Iress in October 2020 to lead the commercial business at Iress responsible for all clients and revenue. His experience and leadership across financial services [ globally ], spanning broking, banking, wealth, uniquely positions him to understand the current and future role of technology for our clients. And like in other areas of Iress, Michael is aligning the way that we work commercially to leverage the power of the products and technologies we design and deliver, bringing a single focus on enhancing revenue growth. And certainly not least, John Harris will be familiar to many of you. John is our CFO and joined Iress in 2015 following a finance and banking career. Today, we're setting up plans to accelerate growth, to build upon unique foundations in financial technology and market positions that we hold today and to leverage capability and assets. We believe that these will translate to benefits for clients and users, our people and to shareholder returns. Today, we'll share our plans to provide -- and provide more transparency for what these mean to investors. We will also provide preliminary financial results for the first half of 2020, a firm 2020 guidance and most importantly, set out accelerated growth plans for the next 5 years. Our strategy to evolve the product and technology strategy builds upon strong, successful and leading technology business today. The operating model has been successful and is optimized well beyond what I see in our businesses. The plan that we're presenting today is an acceleration to Iress' next horizon to realize and bring forward opportunities and return. These plans and the medium-term targets that we're providing today are rare in these markets. They provide insight to the opportunities that we see and our confidence in securing them. The strategy and its business objectives, though, are not new. There are many aspects that are underway and well advanced. We've been making good progress in our strategy to deliver efficient outcomes by connecting the financial services value chain, doing that with the products and technology that the future will require. But as we indicated to the market in June, we're looking for accelerated growth. We're looking for improved returns, and we will use capital management to enhance returns to shareholders. These plans are organic only. but the opportunity to augment these plans with accretive inorganic additions remains real and important aspect of growth at Iress. My fellow leaders at Iress will take you through that today. The execution of our product and technology strategy brings an acceleration of returns. This supports a medium-term target of more than double net profit in 2025 based on modest market share gains. And from there, we see upside potential to 3x net profit. Today, we've also announced 12-month on-market buyback in 2021 of up to $100 million. In addition, and as already indicated, following a potential sale of U.K. mortgages, our intention is to distribute surplus proceeds to shareholders in a way that will enhance EPS, and we would expect that to occur in early 2022. The acceleration discussed today will require a one-off investment of $30 million, spread evenly over 2022 and '23. In addition to our net profit expectations, the target for earnings per share in 2025 is also more than twice its level in 2020. The strategic context for our clients today is changing and accelerating. Business interests and opportunities are converging, and consumers are imposing digitization on business. It used to be the other way around. And the rules of business and competition are breaking down. The opportunities for technology solutions and capability are multiplying. We see new businesses emerging, and we see new needs being required by tomorrow's winners. Iress has functionality that spans the end-to-end core needs in financial services. and is relied upon today for connectivity, integration and smart functionality. Our acceleration plans are to more quickly progress our operating model and the target benefits. This will hasten our transition from discrete by connected software applications to an Iress wide technology platform where scale benefits translate to operating leverage for Iress and ease, access and flexible speed to help realize the future for our clients. We are already unlocking benefits from our existing cloud transition. Engineering and operating benefits are already being realized as our client outcomes, but the opportunities possible and foreseen exceed our patience. This strategy accelerates our cloud transition, but also establishes the next operating horizon for Iress. The opportunities, including participating in very large addressable markets, are not new. We've presented growth opportunities, our positioning and our progress in the U.K., superannuation, investment infrastructure and data. Today is about the acceleration of revenue growth and operating leverage through how we do this in addition to what we've previously presented. These represent opportunities that exceed current market consensus. These are the areas in which we will win, building upon strength and foundation of our existing business. In each of these areas, we bring the intellectual property, know-how and capability across all of Iress. [ The deep ] focus in these areas come from these acceleration plans. The growth and acceleration we are presenting today is not a product and technology strategy in isolation. It's considered in the context of business value that you will understand and existing positions in each of these addressable markets. Michael will discuss these opportunities, the need and the revenue opportunity in more detail today. The key point on this next slide is that we are leveraging our capability to establish a new product and technology platform. This is central to acceleration. As you'll be aware, our functionality spans the needs of financial services businesses, and in Australia, nearly all of it. We've built, innovated and expanded and acquired capability that is uniquely housed and connected by a single strategic owner. Over time, we've optimized the deployment and the combination of these, typically, in a purposeful application architecture. This is a strength, and there is nothing wrong with this and is leading when compared to other businesses that we observed, but the potential now is greater. The next horizon Iress is from taking the breadth of capability, extracting functionality from those applications, collapsing our operating environment and delivering that functionality in an unbounded platform architecture that is intended for scale. We are not building a new dream, accelerating the one that we're already executing upon. Proven technology platform architecture and the benefits from it are visible in many other industry segments. Iress is uniquely placed to leverage this across our client segments and our geographies. It will accelerate the flexibility and the agility that we consider vital for the current and future world to realize internal benefits to the way in which we operate and bring [indiscernible] and scale benefits to shareholder returns. Andrew and Joydip will talk with you more about how we will execute on this. This strategy and achieving it represents material value for investors and benefits for clients. Those benefits will be realized over time, not when complete. And this is a whole of Iress approach that we will [ initiate ] around our investment infrastructure strategy. Today, this is an undervalued strategy by the market but represents material opportunity in a very large addressable marketplace. As Andrew and Joydip will take you through, this business strategy is a combination of all of Iress' functionality. Everything we do is captured in this strategy, and that allows us to deliver on our product and technology strategy end-to-end while delivering business context and value. And it's this context that all Iress functionality will be unleashed in. The proposition brought about by our investment infrastructure strategy and the execution underway is unique in Australia. It takes our learnings from scaled solutions and client outcomes in international markets and applies them to the large addressable market in Australia. Integration of our adviser desktop and advice retail broking and wealth with the largest unlisted registry and with retail investment infrastructure is a tech-driven integration, but it's also a value proposition intended to unbundle the value chain and bring value and more flexible options. As we have seen and you will note in other markets, technology that connects consumers with manufacturers as directly as possible plays a fundamental role in changing the experience and cost paradigm. This is a key building block for profitable and sustainable business futures for our clients. As Michael will talk to in more detail, scale should provide pricing efficiency for consumers and manufacturers. That is something that is not always evident in Australia. Already, we observed headline pricing that appears to be reducing, but is a function of margin compression, subsidization and in some cases, is existential. Proper scale is required to operate sustainably and improve the value chain for retail investments as headline pricing approaches 0. Through technology strategy, we will deliver this confidently on a fixed dollar subscription base per account at less than half of the headline prices available today. This is a fundamental pricing and business model change from today's environment, combined with meaningful integration and connectedness. The acquisition of OneVue in 2020 will connect advisers and investors with the ultimate registry of unlisted investments, where these funds represent nearly 80% of all investments on retail investment platforms today. We will bring end-to-end advice and execution and monitoring that is fit for future demographics, value expectations and sustainable intermediary businesses. In February, we presented the medium-term outlook for our strategic growth initiatives. These remain unchanged. However, investors have sought more detail on how these translate to group results, and a review of our business segments and geographies has been underway with a view on pace and acceleration. In June, we provided some high-level direction. And today, we're providing more detail on our strategy and operational plans for execution, how they translate to returns and the enhancement of those returns through capital management. From this medium-term outlook, our initiatives will bring these revenue profiles forward and introduce a target for operating leverage through scale. One result of our exciting product technology and business strategy will be enhanced returns to shareholders. The result of which will be an acceleration of growth and returns being more than doubling of net profit by 2025. The level of market shares assumed in this are modest, and this represents a confident outlook but not the full potential of these strategies or their execution. We will enhance returns through specific capital management. As I mentioned earlier, today, we've also announced an on-market buyback in 2021 of up to $100 million. In addition, our intent is to distribute net proceeds from the potential sale of U.K. mortgages to shareholders. Decisions relating to share count will also bias neutralizing any dilutive impact. This includes through equity-based remuneration and also dividend reinvestment plans. The result of this is that in addition to the net profit target, the 2025 EPS outcome will also be more than twice its level in 2020. The initiatives that we present today to accelerate revenue profile and our future operating model will require a one-off investment of $30 million. We've done the business case on this investment for the return it provides, representing a less than 3-year payback. This will be funded through operating cash flow, but at a high level represents a strategic reallocation of capital from mortgages to the acceleration of core growth strategies. The potential sale of mortgages is likely to far exceed this level of investment. Needless to say, this medium-term target far exceeds current levels of market consensus. Iress is pursuing large addressable markets in addition to strong foundations. The next operating horizon for Iress leverages our existing functionality and brings a single technology platform, which unlocks scale and accelerates revenue. This is summarized by our medium-term target of more than twice net profit and twice earnings per share with enhanced capital management. Before I hand over to Andrew and Joydip to take you through at the next level of detail. I'll leave you with a few words from one of our clients in the U.K., Close Brothers Asset Management, a leading business in the U.K. to whom we've successfully delivered our private wealth solution.

A lot of wealth managers, particularly our size and scale. You can't do this on your own, right? You've got to pick the right strategic vendors to be an augmentation, to give you the scale of your organization. And I think that, that is really key picking the right party. It's like if you're building a house and you get the wrong builder, I've got to start again. Better knock it down and start again. So picking the third party is a really key, certainly for our scale. I think there might be some bigger players out there who think that they can build it themselves, for example. But certainly our scale is really critical to success. Fundamentally, one of the things that we've learned from previous relationships, one of the things we actually did with Andrew Walsh and Simon New when we started on this relationship was write down what are the 10 things that are important to both of us, and are we aligned? Because contracts are interesting, but you never need to get the contract out if there's some level of alignment there. So I think we started it in the right way, which is your goals equal our goals and our goals equal your goals. So there was an alignment from a revenue, a cultural and a strategy perspective. So I think that we founded our relationship of that and everything else has been, yes, there's ups and downs, right, it's a relationship. But ultimately, it all comes back to have we got that culture and strategic alignment? Are we still working towards the same outcomes? And the answer is always yes.

Thank you, Andrew. Good morning, everyone. I'm Joydip Das, and as Andrew mentioned, [ hello ]. Andrew spoke about a single technology platform that underpins our vision of a simpler and faster Iress, which is defined by increasing products and propositions for our clients and markedly greater returns. Now Andrew Todd and I would like to provide more details about what that means from a product and technology perspective. We'll share some insights into the opportunities we are seeing and why a single platform allows us to realize even more revenue while driving efficiency and scale in our operating model. Andrew will then go into some details about how we're doing this and how far we have progressed already. We'll also show you how we are accelerating the platform transition through our investment infrastructure road map. A single Iress technology platform is a natural evolution of the very rich set of capabilities that we already have in our software applications today. Now historically, we have built these capabilities to meet the needs for specific industry segments or our clients' requirements. And the traditional, client server delivery model with point-to-point integrations were ideally suited for this. We have excelled in optimizing and serving our clients and users within this operating model. It's been done efficiently and has been leveraged. But the future requires us to evolve this towards scale and growth, so we're unlocking these capabilities from the applications and clients over constraints. We're adapting them to cloud architectures that are highly scalable, highly available, can be flexibly assembled into new products and are really easy to deploy. This is all about delivering value at scale. And I want to be very clear about that. Scale here means leveraging the economics of building once, deploying once and accessing as many times and in as many ways as needed at minimal incremental cost. And that's possible today with the cloud architectures and modern software practices. This type of platform transition has been happening for at least over a decade across industries. It's been driven by the massive growth of public cloud infrastructures like Amazon AWS and all the supporting technology and ecosystem around it. Now many new platform companies you are very familiar with, like LinkedIn, Airbnb, Uber and Stripe, which is a highly scaled financial services business, are built on this model. Now many other successful enterprise software companies have gone through this transition. In my personal experience in the Silicon Valley over the past couple of decades, I've been part of this transition in SAP, across human services and ERP platforms, in sourcing and procurement platforms with Ariba, in the marketing and advertising industry and data platforms, which got acquired by Salesforce. Salesforce in itself a perfect example of a highly successful platform-based company. Now with the breadth and depth of product capabilities that we have at Iress and our market reach, and frankly, our technology DNA, accelerating this transition today is imperative for us. Now those of you who follow us closely will observe that we've already started this journey. We've made notable progress towards migrating a number of our current products to a cloud-based infrastructure. Many of our functional software building blocks have been redesigned to be used across the portfolio. We've been making steady progress. But as Andrew mentioned, we are impatient. We recognize that our industry is rapidly evolving, and we have an opportunity to accelerate and lead that change and grow our financial returns. Now this urgency to our platform vision is based on the growth opportunities we are seeing in the industry across regions and through our direct client engagements. We've seen multiple examples of convergence across advice, funds management, broking and investment. In fact, the business models of our clients are evolving rapidly in response to this. Now this requires them to shift from their existing technology landscapes with lots of disparate systems to run and maintain. Typically, they try point-to-point integrations and changing the manual workflows. These are temporary time-consuming solutions, which leads to a lot of duplication and rigidity. And today, that is wasteful. It creates compliance risk, and it inflates the cost to transact and hold assets. Our clients demand greater efficiency and agility from technology. They want trusted, scalable technology at the core with optionality at the edges. And we have seen over the past 18 months, digitization is now an imperative to not just operate, but to drive scale and experience across the industry. And this has been spreading across industries over the past decade, and financial services is no exception. And the pace of this is accelerating, driven by demographic shift of millennials and now early Gen Z-ers. So of course, we are seeing demand to be able to reach more users, and we see an increased demand to put technology in their hands. We see the demand to drive new opportunities by giving people ownership of their financial goals and outcomes. And underlying this is the demand for transparency and margin pressure, that's been in motion already. So for advice to become accessible and affordable, fees have to come down and pricing needs to become more transparent. And we see the similar demands being driven in other industries, and they're all being delivered through technology. And now from a product perspective, when we see these trends and our clients' challenges, frankly, I see a gold mine of opportunities for innovation and revenue growth. Digitization, when it's done well, means a fundamental redesign of the system and value chain. It creates new product needs and drives new business models. So this is much more than an opportunity to change technology for the sake of it. It provides opportunities for us to deliver new categories of products to our clients and design modern consumer-grade digital experiences. And related to this is one of our big opportunities with data. Data is driving the next industrial revolution in the product technology world. But if data remains locked in numerous silos, it's of little value. So at Iress, we're unifying data in a secure and trusted platform. We have this at Iress already, and it's enabling new product opportunities across wealth and financial markets. We're applying machine learning and AI tools to it to bring new data-driven capabilities into our products today. Now this vision is ambitious, but it's very pragmatic because we've anticipated these trends and client needs for a while. We are already underway on this journey, and Andrew Todd has been pursuing a transformation of the way that Iress builds and deploys software to operate a single technology platform. So I'll pause and I'll let Andrew speak more about the technology approach and how we are delivering this platform.

Thanks, Joydip. So Iress has and continues to build and operate market-leading software in all the segments it operates, such as financial advice and portfolio management. We lead those segments with software that's rich in the breadth and depth of its features and the value that it provides. The fundamental and very necessary technical building blocks of software engineering exist and are evident in our software today. Of course, when originally designing and building that software, it was optimized to take advantage of the technologies, tooling and techniques at the time, and this has enabled Iress to grow and effectively operate in a way that now lets us support over 0.5 million users globally. But as Joydip has highlighted, businesses are changing and expectations are changing. And of course, technology is also changing, and it's changing rapidly. So we intend on leveraging our rich software functionality in a new way and one that's optimized for the tools, technologies and techniques of the future and one that's optimized to support the increasing flexibility required for those changing business and consumer needs. So today, our software delivers its functionality, predominantly through what we might refer to as traditional monolithic software applications, where essentially the functional capabilities are locked or contained within those applications. Where broader functionality has been required or where we've pursued opportunities such as in the changing profit wealth landscape, the approach to deliver and enable that functionality is achieved by integrating those separate software applications. One of the side effects of this design and approach is that over time, it's possible for functional duplication to emerge. And for Iress, this often occurs across client segments. When engineers require speedy and easy access to the functionality and it's difficult to obtain, they'll often build or adjust their own software application. And of course, that leads to that functional duplication. Now it may be appropriate. It's not wrong, but over time, it can impede speed and scale, especially in a bigger, broader organization such as Iress. For example, portfolio calculations are a common need across various client segments. They exist within our portfolio management software, they exist within our superannuation administration software and they exist within position management components within trading software. These capabilities are then deployed for each client to use. And when this model grows, scale barriers start to emerge. From a technology perspective, these barriers are particularly evident when operating that software especially in relation to the underlying infrastructure environment. Iress now operates 53 data centers and over 3,000 servers globally, and they're connected through our complex network infrastructure. While we do an excellent job of managing it, our primary focus must be on building and delivering great software that creates value for clients and not running infrastructure. So with a single platform approach, the level of duplication is significantly reduced as are the barriers to accessing software quickly and easily. Importantly, the change simplifies our technology environment. This means that our people can spend more time on delivering the valuable software functionality that clients need. People who were spending time managing some of the infrastructure are now building automation, and we know that automation is a good thing. So broadly, and for many companies that build software, the monolithic software architecture approach is right and valid, and for Iress historically, it's also been the case. But we now need to move away from that model. So we're transforming our software so that functional capabilities will be extracted from the applications and delivered once from a single technology platform. This approach enables a quicker and easier access to the valuable software capabilities in an increasingly in restricted way. It provides more scale, flexibility and speed as Joydip explained. So extracting these functional capabilities from the existing software applications and enabling them on a platform opens up many more opportunities. But from a pure technology perspective, it's a pathway to real scale and true operating leverage. We do not need to maintain similar or the same functionality across software products, we drive consistency globally, and we do that within a simplified technology architecture. And this is supported by consistent and common technical capabilities globally. To put it in context, if we consider the current distributed design obligations, the DDO regulatory change in Australia. Traditionally, it's likely that a stand-alone software application would have been designed and built. It would hold all functionality required to deliver those DDO requirements. And of course, other systems, both internally or externally, would need access to those capabilities. And so work is then required to integrate that application into the other software. Very quickly, this would bring duplication of functionality, such as searching for and accessing of products' Target Market Determination. It's likely those TMDs would also be stored in other software, for example, a fund data system or even Xplan, thereby attaching extra ongoing support and cost into the future. But today and moving forward with this platform approach and change technology architecture, the DDO capabilities are built once, they're accessible through APIs and can be combined together to form part of any new proposition. And so while it's a simple example, when considered at a global level for all of our rich functionality, such as record keeping, tax calculations, portfolio calculations, revenue calculations or even client onboarding, there's clearly an opportunity to achieve significant scale benefits and drive new value. So we've got great functionality. And now with this strategy, we really get to unlock it. And we've been both anticipating and responding to changing demands and expectations of consumers and the changing technology environment, and work on this strategy is not starting today. We've actually started executing it already. Strategy itself isn't new, rather this work extends and provides a way to accelerate our execution speed. Significant technical and execution has been underway for several years, perhaps best identified through our planning, design and execution of our cloud transition program. More recently, we see the increased potential of the cloud and a different technical architecture and believe the potential that provides far exceeds the original thesis. So delivering this platform vision and executing against the strategy requires us to leverage those plan foundations that we've already built at Iress. A lot of hard work and very positive technical outcomes have already been delivered in relation to the cloud. Our technology team has adopted excellently to the cloud. Our people understand how it works and what's required to effectively deliver and operate software in the cloud. This understanding and capability is clearly demonstrated through the migration of thousands of existing services. Andrew has previously reported that. Many of these services already adhere to the target platform architecture. And across teams, we're already seeing more benefits and are taking further steps, moving deeper into the cloud and yielding more. It's faster. The time it takes to deliver a new piece of software functionality is significantly reduced. The results are achievable and they really excite the teams. In one recent example, the ability to deliver performance calculation in the cloud was 90% faster than in a non-cloud environment, and to be able to deploy that once for no incremental effort also demonstrates the scale the technology platform brings. When combined with easy access to new technologies such as AI and machine learning for data, advanced data storage types and aggregation tooling, it's easy and exciting to think of what's possible. So to reiterate, due to our prior work, we're leveraging and executing against the strategy today. It's not something that delivers benefits only in the future. It is happening today, and it's happening within our advice software, our portfolio software and our trading software. Within our market data software, a number of new functional capabilities have also been built that can form this platform architecture and operate in the cloud. Initially, due to performance characteristics of the market data segment, we didn't consider the market data software to be an early candidate. However, that changed technology architecture combined with cloud technologies has resulted in improved software performance, and that is directly benefiting users today. We're already using -- utilizing this work to bring an increased level of scale to our traditional applications. I referred to earlier, our people focusing on automation rather than a dedicated focus on managing core infrastructure, and that's really important. So because of the changes I've spoken to, we can now perform an upgrade of a key market data application globally on a weekly basis. Compared with the previous approach, it was best performed quarterly and with a magnitude more effort. Pleasingly, adding more clients to that solution no longer generates increased people costs, which is the exact outcome we've designed and built for. So now we're going to apply this approach to investment infrastructure, which Joydip will shortly speak to. So as I've noted, our clients are already benefiting from accessing new features, improved performance and enhance resiliency, and they're getting it more quickly. The extension and acceleration of the strategy enables us to deliver more value more quickly, and that value can be delivered at scale. It opens new opportunities. There's more to do, and we've got a clear and executable plan, which Joydip will now talk to.

Thank you, Andrew. I'll now share some more details about the program of work we have planned on the road map. Now the scope of work that Andrew just described, to be clear, it's not unbounded, and it's not an all-or-nothing [ proposition ] or a big bank delivery approach. It's actually very clearly defined. And we're ensuring that meaningful incremental outcomes are delivered and that there are measurable milestones. Now to do this purposefully, we are touching our near-and mid-term initiatives to the acceleration of our OneVue transition, and that is to accelerate our investment infrastructure strategy. Now our goal for investment infrastructure is to drive growth in the registry and to create end-to-end efficiencies and value for advisers and investors in accessing retail investments in superannuation and non-super. And Michael will elaborate on the considerable commercial drivers and revenue impact [ to us ]. But from a product and technology perspective, this target actually provides the ideal scope to define the product and service capabilities that we need to assemble in the technology platform. As Andrew mentioned, several of these initiatives are already underway. And today, you will see the integration between Iress software and OneVue, which is an initial investment infrastructure step that brings immediate meaningful benefit to advisers. The Xplan registry integration rollout will be in Q3 of this year. In parallel, of course, we are focusing on the delivery of the other functions required for investment infrastructure. It's in a phased approach with incremental availability through FY '22 and '23. We have a very clear road map for the methodical transformation of a cross-section of capabilities from portal, advice portfolios, APIs, trading and registry. And this is helping us to define our requirements for unified identity, permissioning and access to investment assets. What our clients will experience as a result of this is adviser and investor workflows that are simpler and quite differentiated from the way things work today. For example, sign-up and approval of investor accounts will be quick, easy and seamless. Advisers on Xplan will have equally seamless access at a fee that is decoupled from the level of FUM. By FY '24, new software clients and not only those seeking investment services will be able to access software and services that fully leverage the single technology platform. The same technology infrastructure will now allow clients and users to buy and sell and hold investments in Iress provision retail custody or when needed on third-party brokers or platforms. The platform capabilities can also be used selectively without execution or custody services. That's an incredible amount of flexibility we'll bring to this. This plan takes us to a state where clients are no longer needing to distinguish between separate applications by domains and segments. It unleashes their capability to focus on the end-to-end strategic outcomes with a trusted technology platform at the core. So with that road map in mind, I'd like to summarize with a view of our destination state. We are accelerating that journey to a single technology platform at Iress, and the most impact fit of this acceleration will be in the transitioning from an application bounded architecture to a technology platform operating world. Along the way, with the unlocked functionality, we are pursuing new and emerging revenue opportunities. We're able to do this at pace because we are operating on a highly scalable and cloud-native software. And to reiterate, we can build once, deploy once, use as many times as needed in as many different ways as needed, where technology cost is no longer directly correlated to revenue, and this is already working. As Andrew mentioned, we're applying it to the delivering our products like DDO and other products. So the benefit of our platform project extends beyond just some coupling and reuse. We're also taking the opportunity to redesign and future proof and uplift these capabilities. We are eliminating future overheads and ensuring speed and efficiency and quality. We are making these components easy to run, support and by taking advantage of all the tools available in our modern cloud environment, getting even greater efficiencies. And this is a new form of agility and efficiency for our clients, particularly in the way we can rapidly respond to the convergence and digitization opportunities by assembling the right solutions at the right time. We are making it easy to compose end-to-end digital experiences that traverse across advice and trade execution. We are eliminating time-consuming manual processes and any need for [ re-key ]. Workflows that might take days and weeks today might take seconds and minutes. And beyond that, we're also creating optionality at the edges of the platform. And with a productized API approach, we can let clients and partners have the option to build their own unique workflows and custom niche solutions because not -- one size doesn't fit all, but they can all be powered by our platform. And this is another way we can realize additional revenue at minimal incremental cost to Iress. And this is, of course, the key to successful scale. With the platform model, we deliver new and greater value to clients. We do this at increasing margins, while technology costs trend lower on a per unit basis. We are very confident that this is the right operating model for a modern technology business like Iress. We are uniquely positioned for this. It is aligned to the opportunities for digitization across financial service industry, and it establishes Iress at the center of a financial services marketplace, where today's and future propositions can be composed and monetized at scale. So it's a destination state that not only maintains, but significantly strengthens our ability to consistently generate strong financial rewards for shareholders. So with that, I will now hand over to Michael Blomfield, who will speak more about the commercial opportunities and outcomes ahead.

Thanks, Joydip, and thanks, Andrew, and thanks, Andrew. There are way too many Andrews in this firm. Good morning, everyone. Look, I'll just up-front set the scene for you. I'm going to spend a bit of time today talking through each of the strategic priorities that Andrew Walsh set out upfront. I'll say a bit about the global context, and then I'll work my way through the Australian opportunities, to the U.K. to global market data, and I'll finish by updating you on the way in which we're evolving the sales and service capabilities of the firm to enable us to confidently chase down and exceed the targets that we're setting for ourselves. But let me start with an observation that's been fundamental to our way forward. While technology, data and industrial scale have fundamentally disrupted numerous industries across the globe, we are only on that journey in financial services, and there's a very long way to go. Iress is ideally placed to lead the industry's required surge to genuine efficiency. We have the core capabilities and products and we have sufficient market penetration in the majority of our markets, both to accelerate our own growth and to drive a better outcome for our clients and their clients. And when you start from this starting point, the approach that Andrew Walsh, Joydip and Andrew Todd described today sets us up to deliver on a range of key issues. First, faster speed to market. And by that, I mean faster speed of products to market and faster monetization of those products. Second, new product and service offerings that create additional revenue pools. And third, disruptive pricing that recognizes the industrial scale that we're deploying. Of course, that's all in many ways, proposition and prod tech capability. So as I've said, I'll also say a bit later on today about how we're focusing, upskilling and reorganizing our sales and service capabilities globally to give further confidence we can hit and exceed the targets that we're outlining today. When you examine the environment that Iress operates in globally, there's a number of factors that combine to give us a substantial tailwind. The first is that the pursuit of scale through size alone has all but run its course. In numerous cases, M&A has certainly delivered examples of bigger that have created some benefits, but there's been little in the way of transformational cost efficiency. Across a wide spectrum of the industry globally, there's opportunity to redefine operating models and, in doing so, to expand both profitability and access. In fact, the so-called democratization of investing over the past few years is a great case in point. A combination of data and modern tech have created the opportunity for new business models to emerge, all of which are increasing the pressure on the incumbent industry to respond. The demands on data and on interconnected systems have never been higher, and those demands have stretched the complexity of the best-of-breed tech stack beyond its limits. If all that wasn't enough, regulation is clearly adding to complexity and adding to cost. Globally, regulators are recognizing the industry's interconnectedness through consumer-led regulation, you think of MiFID II, GDPR, privacy law globally, and through evidence-based rules that require new levels of record keeping. You think of advice fee consent and DDO. For any business to be successful now, risk management and compliance simply have to be proactive and preemptive. And this requires technology solutions that are engineered for this reality. As the players in different geographies face into these challenges, we're seeing a real bifurcation of models. On the one side, we see markets that are actively embracing technology as a driver of efficiency and a creator of market opportunity where technology is embraced and investment is deepening. Now on the other side, we see markets that are stuck in stasis and will need technology providers to demonstrate how scale can be achieved and delivered and how this can benefit all parties in the equation. Meeting this challenge from a position of incumbency is the name of the game for us. Across all our markets and all our products, Iress is bringing technology solutions to market that unlock scale, that drive down costs and that materially increase value. So let's look for a few minutes at which side of the bifurcation split the Australian market sits. Here, there's essentially a national agreement that the cost of giving and getting advice is too high. And that for the average Aussie, the cost of owning assets and getting reporting on those assets is too high as well. The whole industry of advice, whether you call yourself a financial planner or a wealth manager, agrees that the cost of producing compliant advice has to be reduced even as it's continuing to climb. Advice providers struggle to be profitable, and the challenge of increased regulation has seen them shrink in number and narrow further and further who they advise. Meaning in this country now, in the shadow of the largest early drawdown on superannuation in history, only half the number of people are getting advice as was the case when FOFA came to town. The independent research firm, Investment Trends, their data will tell us that year in, year out, around 10 million Australians have a financial advice need that goes unmet. Demographic and economic trends tell us that this will get worse as the population ages, and it will get worse as housing affordability goes from terrible to impossible. But as wrong as it is that we find ourselves here, the great news is that just about every part of the value chain agrees that we need to expand the availability of advice, both by driving down the cost of giving and receiving it and by driving down the cost of owning the assets that, that advice sees us invest in. Today, Iress are far and away the largest financial advice technology provider in the country. The technology products we provide to our clients go well beyond advice to market data and connectivity, order management and execution, portfolio management, CRM, document management, payment and practice management, compliance, risk management. All of these capabilities generate data. And our data strategy is accelerating our ability to deliver back to our clients by capturing, analyzing, value-adding and systematizing that data. As we move more and more to platform-based deployment of those services, we're allowing our clients to operate in ways that make them able to operate on a model of scale that vastly exceeds their own size as a business. I'm confident that the journey we're taking for and with our clients will deliver not just more value to them, but more values and more revenues to both us and them as we collaborate to bring scale to the industry. Look, perhaps the easiest sector to observe the efficiency problem I've talked about this morning is super. Now I'm not going to labor this chart, but I just wanted to show it because it's a very clear descriptor of our opportunity. It shows that over the last 10 years, as the industry of super funds, excluding SMSFs, has grown from $782 billion to almost $1.7 trillion. The median operating expense per member has actually grown in almost lockstep. This has to change, and it absolutely can change. At Iress, we currently provide superannuation software and services to more than 50 funds in Australia, which have more than $380 billion of funds under management. We administer around 2 million member accounts. Across the TAM of $1.4 billion, our market share is currently 2%. And the base case today sees us growing this to a very achievable 6% by 2025. Without doubt, the central opportunity in super is to work with funds to transform their cost base, and we've already implemented solutions here delivering 30% to 50% cost savings. I'll say that a bit more about that in a minute, but I also want to make the point that beyond cost savings, there is substantial value that we're bringing to the sector. By removing the obligation of administration, we're allowing funds to shift their focus from the burden of operations to the value-adding area of member engagement. Here, a digital-first approach is vital. But outside the few really massive names, funds struggle to have sufficient technology budget and capability to transition member services to digital, and digital where engagement, education and really importantly, advice simply have to live. And that's not to say that the massive names aren't wanting those capabilities delivered as a service either. There are well-publicized examples of where that's the case to do. The Iress capability allows us to deploy to clients across the full spectrum of models from SaaS, to manage technology service, to full administration outsource. This allows Trustee Boards to select the model that best services them and their members based on the fund's wider strategy, including where M&A is a pathway that they prefer to keep open. Our 2025 base case requires a modest achievement that translate to one major new fund or one small and two medium funds [ booked ] by 2025. And based on our current pipeline, there's substantial upside from there. Alongside our core admin capabilities, we also recently launched SuperConnector, which is the Iress SuperStream Gateway. It allows employers to make super contributions to multiple funds for their employees from one central portal. Our solution is substantially more data and tech-driven than our competitors. And even though our revenue assumptions for the 2025 case are conservative, our current sales pipeline gives us a lot of confidence that SuperConnector will represent a solid annuity revenue stream by 2025. Look, I'll say 2 final things on super. Firstly, to acknowledge that because of the efficiencies that we're looking to bring to the market, this TAM of $1.4 billion will actually come down as we have more and more success. And secondly, I'd note that the size of deals in this space and the time to implement those deals means our revenue growth won't be an elegant straight line. Revenue will step up in increments from time to time as we bring new implementations online. Now much as we have and as we continue to do in super, there's an enormous opportunity to drive down costs while increasing utility and value in the space that we at Iress define as investment infrastructure. Here, we see a marketplace with a TAM of $3 billion on an as-is basis, and that's a basis we believe is currently narrower than the opportunity that we're pursuing. Where via the OneVue acquisition, we have a market share around 1% at the moment, and our base case conservative target for 2025 is 3%. I'm going to use some video to explain both the nature of the capability we're talking about here and the latent demand that exists for it. But before I do that, I just want to reiterate where we start in this area. Iress, through Xplan and through a range of our other technology products that we provide to the advice, wealth and broking markets, is already relied on in business operating model of significantly more than 50% of advisers and more than 150,000 advice manufacturer relationships today. So it's in that context that I'll play a video for you to show what we're doing and why it matters. [Presentation]

I hope that video helps you start to get a sense of the possibilities of a more direct approach to execution and the demand that already exists for the service. I want to be clear here, too. This is investment in infrastructure because the sort of capability you've just seen is being made available to all parts of the value chain, not just for ourselves. The platforms in the industry can benefit from this infrastructure in the same way that we benefit from it. Just as any organization can that wants to produce digital, robo or scale advice, they can hook into components of the infrastructure to make delivery and execution of those services achievable. Straight through processing from consumer, through adviser, to product manufacture, to investment structure in a way that gives transparency of data to all parties along the way makes it easier and cheaper for the adviser and the dealer group. It lowers operational risk and provides a lower cost alternative to the end consumer, many of whom are not able to participate in advice today. This will allow more Australians to get advice, and it will allow them to hold and monitor their assets in a way that will be delivered at less than half the cost of the prevailing alternatives. As Joydip outlined, we're rolling out the Xplan execution integration pilot now, and it will be live in Q3. We'll then make our investment infrastructure service available on a per account subscription basis in the first half of 2022. Look, we're bullish about the upside revenue potential above and beyond the business case here. And beyond that business case we've outlined today. So let's turn our attention to the U.K. Now unlike Australia, the U.K. market sits on the positive side of the bifurcation fault line. Here, retail and private wealth is dominated by tech embracing horizontally and vertically integrated players like Close Brothers, Tilney, Sanlam and Quilter that deliver an end-to-end proposition to their clients at very low prices. This integrated approach is a strong match for the way in which Iress constructs solutions. We now have a seamlessly integrated wealth offering and our continued investment in the Xplan product is driving more and more connectivity to the U.K. market. Today, we partner with clients in the U.K. to deliver high-value, efficient operating models, managing and advising on large pools of investment assets, representing a 9% market share of a TAM of AUD 700 million. In the U.K., our base case sees us growing that modestly but consistently year-on-year to 14% market share in 2025. We're also deeply embedded as sell-side trading infrastructure in the U.K. As you may be aware, the custodial nature of the U.K. market means retail order flow is executed through market makers or retail service providers. Iress holds a 70% to 80% market share in the RSP space, and our build-out of market-making tech solutions is progressing at pace. We're consistently winning sell-side trading tech clients, and the team has a very strong sales pipeline in front of us that we expect to comfortably deliver the continued 9% growth in trading tech revenues that are assumed in the 2025 base case. Now, all that said, the core reason that I'm here at Iress is to increase our focus on delivery of revenue, both revenue that comes from service and revenue that comes from sales. My job is to improve on the solid foundations that got us this far. I'll say more about our new global sales and service methodology shortly as that's fundamental to our improvement pathway, but we have also refreshed the sales leadership in the U.K., restructured for significantly greater focus and taken a number of important steps that increased sales discipline and increased our win rate. Our competitive position combined with all these changes, most of which is evolutionary, not revolutionary, give me good confidence we can meet and exceed the base case we set out today in the U.K. Now as you've heard from Andrew and Joydip, there are also significant opportunities from data. So I want to focus now on market data, which is an important data business for us. Here, we see almost legendary large TAM of USD 33 billion. So there's plenty of room for us to grow. Accelerating digitization is only possible with data. So while data has historically been primarily delivered to screen, we're seeing more and more data consumed through non-screen implementations like APIs, and this is set to continue and, in fact, accelerate. Decoupling data from the application it served is important to us, and it's important to our clients. And it's a capability we can confidently deliver today in part because of our QuantHouse acquisition. As you note, QuantHouse wasn't profitable when we acquired it in 2019, and our focus has been to change this. I'm pleased to be able to report that from the second half of 2020, we've achieved consistent profitability whilst consolidating costs and the business continues to perform well through integration with our wider commercial business. Our aim here is to compete head on as an international market data vendor. We're beating business case, we've restructured our sales team and we had excellent growth, particularly in Asia. And because market data itself is global, we have excellent opportunities to expand data sales into additional international markets where we don't have to be geographically or physically present. Our 2025 base case requires 6% ongoing growth in this business, and we're very confident that we'll hit and exceed that. So finally, today, I want to say a little bit about how we're improving the ways in which we sell and serve because how we're organized and the ways of working with which we service our clients and sell products and services is central to our way forward. In recognition of the need for us to be better at this and recognizing that every business should always seek to be better at this no matter how good they are today with 3 months into a 9-month program to implement a unified revenue generation methodology that supports growth. This program is embedding a more disciplined, repeatable set of processes that focus us on the core sales and service success requirements of skills, process, measurement and monitoring. We've partnered with a leading sales -- our global sales methodology company to deliver this program. Simultaneously, we're making a fundamental shift to a client-led strategic framework that integrates tightly with all of the supporting Iress teams to deliver client outcomes that will deepen long-term, trusted and strategic client partnerships across the value chain. We operate today with one of the largest relationship management workforces in the Financial Services Technology segment. Powering and scaling data up and out will deliver revenues simpler, faster and more flexibly and ensure we work with our clients, not just as a vendor but as a real strategic value-adding partner. So look, I've summarized here some key data that I think you'll find useful on a single page. Let me finish by saying that the range of opportunities I've set out today, combined with our sales and service evolution, give me great confidence that we can hit and exceed the base case that we've set out for you today. So I'll now hand over to our CFO, John Harris, to talk you through those numbers in detail. Over to you, John.

Thank you, Michael, and good morning, everyone. Turning to Slide 37. We have announced today a clear and unambiguous target to more than double NPAT by FY '25. This is a target we announced with confidence based on the significant addressable markets that we are pursuing in the U.K., superannuation and investment infrastructure in Australia. This target should be read as a confident statement of what we can achieve over the next 5 years. and not as a limit on the potential returns from our strategy. We see potential beyond the doubling NPAT target and beyond the time horizon of 2025. I will cover both of these topics on the next slide. The EPS outcome over the next 5 years will be enhanced by $100 million buyback that we announced today as well as the distribution of the net proceeds of the potential sale of the MSO mortgages business in the U.K. and our bias towards realizing the dilutive impact of share-based remuneration in the DRP. It is also worth reflecting on Iress' long history of paying significant dividends to shareholders and the potential dividend distributions implied by this target. I will cover this in more detail also in a later slide. The slide that you have in front of you now provides a bridge between the 2020 NPAT of $59 million and the '25 target of $120 million. The first point to note is that the 2020 included approximately $6 million of NPAT from the MSO mortgages business that is being assessed for sale. Normalizing for this potential sale of MSO shows that NPAT from the remaining businesses will more double to hit the 2025 target. Growth in continuing businesses implied by this target is, in fact, around 130%. The second key message from this slide is that the main drivers of growth over the next 5 years will be UK Wealth, super and investment infrastructure. Michael has already spoken at some length about each of these opportunities and why we are confident and excited about the competitiveness of our offering in these significant addressable markets. The point I want to make here is that the market shares inherent in our '25 target remain relatively modest, 6% in super, 3% in investment infrastructure and 14% in UK Wealth, as you can see from this slide. The other point to call out on this slide is the important contribution to Iress' financial performance that we are expecting from the scale benefits in product and tech that Joydip and Andrew Todd talked about earlier today. These scale benefits are underpinned by the $30 million of investment over '22 and '23 that Andrew announced earlier and [indiscernible] disconnect of cost growth from revenue growth over time. This will allow product intake costs as a proportion of revenue to decrease from the historic levels of 24% to 21% in 2025. I would note, however, the group margins that underpin the '25 target remain modest at just over 30%, and I would expect margin accretion to be an ongoing feature of our financial performance. Finally, on this slide, I would make the point that this '25 target represents organic growth only. We remain open to EPS accretive M&A as levers to accelerate growth or to expand the addressable markets in which we compete, but the NPAT target of $120 million is not dependent on M&A. Turning to Slide 38. As I said earlier, our FY '25 target is not the [ upper limit ] of our potential financial performance. The bridge on this slide shows a path to an outcome that triples NPAT by FY '25 through further market share gains in UK Wealth, super and investment infrastructure. An additional 1% of market share would represent $7 million of revenue in the U.K., $14 million of revenue in super and $30 million of revenue in investment infrastructure. I would also note that even under this scenario, market shares remain modest, and we see significant opportunity to continue growing beyond the FY '25 time horizon. The [ present ] technology upside you see on this slide reflects a further dislocation of cost and revenue growth, with product and tech costs representing 17% of FY '25 revenue under this scenario. Our ability to achieve this outcome will be directly linked to our execution of the technology as a platform strategy that Joydip and Andrew Todd presented today, underpinned by the investments over the next 2 years. Slide 39 shows the anticipated progression of NPAT over the next few years. Key points to note on this slide are: firstly, 2021 NPAT guidance includes $15 million of nonrecurring benefit from the finalization of QuantHouse earnout as we announced earlier this year. Normalizing for this and for the nonrecurring technology investments in '22 and '23, the underlying organic performance of the business is expected to deliver strong NPAT growth in each year through to FY '25. The $30 million of nonrecurring investment will be funded from operating cash flows, and we do not expect this to impact our capacity to pay dividends. The other point to call out on this slide is that the NPAT projections do not include the potential gain on the sale of the MSO mortgages business. As we said previously, we are well progressed with our execution of this potential transaction. We have appointed advisers, including investment bankers, accountants and lawyers, and we will be talking to potential buyers in the next few weeks as the European summer holidays come to an end. It is our expectation that if successful, the sale would complete in early 2022. Again, as previously stated, it is our intention to distribute proceeds to shareholders if and when a sale is finalized. We would also expect a significant gain on sale relative to the carrying value of this business on our balance sheet. Slides 40 and 41 show the revenue and market share forecast that underpin the '25 targets. I won't dwell on these slides as I have already discussed the key drivers of revenue growth, but I will make the point that we expect the highly recurring nature of our revenue to continue and for recurring [ SaaS ] revenue to remain at 90-plus percent. This, in turn, will lead to continuing strong cash conversion and the generation of significant operating cash flows. And finally, turning to Slide 42. The first 2 charts on this slide show the potential dividends implied by our FY '25 target, assuming that our dividend policy remains unchanged. As you can see from the chart in the middle of this slide, cumulative potential dividends are in excess of $3 per share. The third chart on this slide is the point that we expect to remain below our neutral leverage setting at 31 December this year and through to 2025. This provides capacity for M&A or other capital management activity as we progress towards that target. There are a number of slides at the end of this deck that show the unaudited half year results. I do not propose to talk through these now, but I'm happy to take any questions in Q&A. We will, of course, be presenting our half year results in detail on 10th of August. I'll now hand over to Michael Brown, who will moderate the Q&A session.

Very good. Thank you, John. [Operator Instructions] Once the queue is forming, I might start the Q&A with a question to Andrew Walsh. Andrew, this is clearly a much bolder and more bullish Iress with arguably more emphasis on commercial growth and EPS. What's changed? What's new? Why today?

Certainly bolder in the statements that we're making, but not bolder with the hunger that we hold internally. We have made several strategic acquisitions. We have a clear strategy and a plan to execute on that. We have a high-quality leadership team, and we've seen more potential than our original thesis for what is possible through this product and technology and commercialization strategy, and that's what we're presenting. We've been reviewing this in detail for some time and have inferred when we'd be talking about it and that's today.

Thank you, Andrew. Perhaps one for John Harris. John, as CFO and having gone through these projections, obviously, in great detail, how much conviction do you have in these 5-year targets? Are they realistic? Or are they really a stretch?

My conviction in these 5-year targets is very high, Michael, as is the conviction of the entire Iress leadership team. I think as we've said clearly, both in the presentation material and in the way we've talked about it today, we see this as a confident statement about potential over the next 5 years. Indeed, we see potential for financial returns beyond that target. So as I said, my conviction is high.

Thank you, John. Andrew, back to you. A question from Jonathan at Greencape. How has the executive team been aligned to these new goals?

A few years ago, we changed the remuneration model that many investors will be aware of. And in that, we increased the equity exposure of remuneration packages. So very, very aligned with the shareholder outcomes. We also introduced new forms of that equity to make it very real. There are some measures in the way that performance rights are considered in that model, but we will take the opportunity to review against what these targets are. But overall, the heavy alignment to equity and shareholder outcomes is incentivizing for these goals.

Thank you, Andrew. Question from Bob Chen at JPMorgan. One for you, Andrew. Do customers want a full turnkey solution, or do they want to pick best of breed across different modules? And what does that mean for Iress?

Clients want functionality and outcomes. And they -- there are a range of those, their functionality that will come turnkey. What we're not presenting here something that is exclusively turnkey. We're expecting -- we are talking about functionality that has speed to market. And some of that will come out of the box, but it also provides flexibility for how things are put together. My view is that clients don't want the burden of putting things together. And Michael spoke about the end of the journey of many of this best-of-breed strategy, but that doesn't exclusively mean that people will use all software functionality from us. We will do the platform services in software applications like we do today, but we will also expose that capability selectively through rich and first-class citizen APIs.

Thank you, Andrew. A couple from Bob Chen. What gives Iress comfort you can achieve these market share gains?

Is that for me, Michael?

Yes, please.

As Michael set out in terms of what it will take to achieve these modest shares and John has also explained, that they are modest. And our view of this is that if we're to achieve anything, then we should be achieving these kinds of market share gains. And when we've looked at that in a bottom-up sense, we think they're more than achievable. And so we have great confidence in what that represents and what we're doing toward it.

Very good. A question from Brendan Carrig at Macquarie Bank, one for Michael Blomfield. With all the changes to the sales team structure, how are salespeople going to be incentivized? Will it be a commission-based model? Michael, one for you.

Just unmute myself, that would be helpful. The -- I think Andrew Walsh has talked about the remuneration model here at Iress that I think there are a lot of people in the world who think that commission is the only way to motivate salespeople and but equally, there's a long history of that not working and it working perversely. At Iress, I think we have a really good, really intelligently designed remuneration model that says that if you are amongst the higher-performing people in the organization, you participate in equity. There are also performance-based benefits when the organization as a whole hits them. I think that, that being tied to the performance of the organization for which all commercial people are responsible for as much as anyone else and essentially being forced to back the organization is absolutely the right model to be operating, both in the commercial space and for the whole team.

Thanks, Michael. A question for John Harris here from Peter from Motive Partners. How much of the goal of doubling NPAT in 5 years comes from revenue growth versus cost reduction?

I look at the primary driver of our target is clearly revenue growth. When we talk about costs, we're talking about dislocating the rate of cost growth from the rate of revenue growth. We're not talking about cost reductions. We're talking about achieving scale where we can hit those revenue growth targets without having to have a commensurate increase in our cost base as well. And so in short, our principal focus is on revenue growth.

A question here for Andrew Walsh from Bob Chen. How does the revenue model work for the integrated Xplan OneVue offering? Typically, platforms charge a percentage fee on [ FUM ]. What happens in the new Iress model?

We will be bringing a service to market that provides access to retail investments for investors and advisers on a fixed dollar per investment account basis. That is a subscription model and is [ invoiced ]. It is existing in addition to what is already a highly recurring subscription model for software. It is fundamentally different to the way that business models work in the marketplace today. And we think that's differentiated and we think it's appealing. It provides opportunity for businesses to build upon, build margin upon. It is a software solution.

Thanks, Andrew. [Operator Instructions] Andrew, I might just jump in here as well. When you look at the 5-year targets, what are the greatest risks to achieving them?

So the goals that we have there are certainly conservative in the measures that we've spoken about. There's no doubt that they take execution. We have broken down the product and technology strategy such that it is incremental, and the benefits will be delivered incrementally, we don't have to wait. And I think that, that's probably the most important basis of what we're entering into. There are many, many large technology projects that are so big that they failed before they've started. And so we are not doing that. What is most important for us is thinking about where to prioritize and how to sequence these projects and how they can be broken down and delivered and completed in time with measurable outcomes, of course. There is no doubt that we will need capability and expanded capability and new squads to be able to deliver on those things. And I think that the blend of IP and capacity in forming those squads to get this work done is the most present time focus area. And so at this time, I think that's the greatest area of execution focus we have.

Thanks, Andrew. [Operator Instructions] But in the meantime, Andrew, I might just ask another one. In terms of the platform, how confident are you that it can drive operational gearing and decouple cost growth from revenue growth?

I might make a few comments and pass to Andrew Todd for some additional comments. We know how we operate today. And we've already been on a transition to cloud deployment and cloud optimization for a couple of years now. And we've seen not only the benefits that, that has delivered to decoupling those costs from further cost growth or from revenue growth, but the opportunity that has presented to us far exceeds what their that original thesis was. And like the example Andrew used around market data that we didn't expect that it would be a first contender, but it has been. And so we're seeing that opportunity is much greater. And if we can deliver to this bounded context of investment infrastructure like we've seen in the many examples of cloud transitions that we've already done, then we will far exceed what this opportunity looks like. So it is a key driver of not only decoupling that, but increasing throughput, pace and expanding, multiplying the product propositions that are possible for the future. Andrew, a few comments from your perspective in engineering and operations.

Yes. So as I mentioned when I spoke, there are a couple of examples which perhaps aren't really visible outside of Iress, and that is when trenches and functionality is built, there is a level of duplication. And when you build software, then you have to maintain it and look after it for the life of -- for its life. And so incrementally, that keeps building and incrementally adds more cost. And so our design technology platform lets us get to a point where we have one of those things. And so then we're maintaining and looking after one and that significantly reduces the spread of the cost growth over time. The second probably key aspect is, historically, technology didn't exist to solve some problems that we need to solve for our clients, very complicated problems, and we've had to build and maintain that. Now with the advent of the cloud and the technologies that have been brought in and are more commoditized, we don't need to build that anymore. We can leverage that. That has helped us automate and automation helps with scale. And so we can now operate more broadly through high levels of automation that we don't need to look after and maintain. We can focus on operating it. and focus on building the features, ones that clients need. And so that helps us detach from client growth and operate more clients without always adding more people.

Thanks, Andrew. There's a follow-up question on a similar topic from JK at Greencape and perhaps Joydip, you can comment as well. Do you have the capability within the team to execute on the platform, the technology and the goals? Or will there be the need for additional FTEs with certain skill sets?

The short answer is yes. And Andrew Todd's been building up those capabilities within the organization over the last few years. So we're actually in a very fortunate position where we have a lot of the skills at work today. That, of course, doesn't preclude that as we scale and grow, we'll selectively, when needed, look for more FTEs who are skilled in certain things, but that's not something that blocks us today.

Thank you, Joydip. Question here for Michael Blomfield. Michael, you mentioned 3 months into the sales and service journey, you're changing the way the sales team operates. Can you talk about how significant these changes are?

Yes, sure. I mean I think that -- as I said, this is about an uplift. It's about an evolution, not a revolution. So I think across the organization globally, what we've not done is observed the places where we do really well and copy them. We haven't had a method for leveraging our own best practice or our own best confidence. And a methodology is really a way of working that looks to start with the process that's high-quality and find ways to embed the improvement of that constantly year in, year out, quarter in, quarter out. And so I don't think that in any sense sort of this radical transition for people and they have to sort of move their heads 180 to a whole new model. I think what we're doing actually is narrowing the work in many ways. And so I think that our people who are good and have got us all the way to where we are today, and that's pretty substantial. By helping them with a better process and some more training and support and some more clarity of what to do each day and why that matters, I think that they will come on that journey with us. And the overall feedback is they're pretty excited to come on that journey.

Very good. Thank you, Michael. A question perhaps for John Harris for Bob Chen. On the MSO sale, any thoughts on what might be achievable for this business?

Look, I'm very confident that we have got that business to a position where it's an attractive asset and that we'll do well out of that sale. We've seen the U.K. market for software businesses such as this is very buoyant at the moment. The positioning or the timing of the sale in terms of the evolution of our business model and our technology from an old school revenue model to a SaaS recurring revenue model and the extent to which we've achieved that, as well as the pipeline progression that we've had over the last couple of years in MSO positions as well. I'm not going to make any firm predictions on the outcome, but we go into that with a high degree of confidence.

A follow-up question here from [ Nicholas ]. What will the $30 million be spent on specifically? And can you give us some more detail, please?

I might make a few comments on that first and then others can chip in. The investment capacity representing a $30 million has a range of areas. We are firstly very focused on accelerating applications that are already on their pathway to our cloud platform, and we want to accelerate that. There is opportunity for direct savings that come from the acceleration of a range of activity there, but we will be using that to take the thin slice through all of our functionality so that the investment infrastructure opportunity stands up as a platform service. And what that will do is provide business context around how the whole Iress will work. So in some -- the simple way to think about it is that we will be taking the functionality that is in our applications and deploying those on the platform for the applications that clients use to use them. And out of that, we will build platform. So that will see capability now known as Xplan and Acurity and Iress order system and portfolio systems are all transitioned to a cloud-deployed, cloud-native state. I think it's probably the best way to describe it now. We obviously are working through the order of things after the initial phase and as Joydip and Andrew said, that, that is delivered with benefit incrementally.

Thanks, Andrew. A follow-up question for you from Kieran. How should we think about business disruption risk as you go through the process of integration to OnTech platform? Does it impact your ability to grow in any way as the work is undertaken?

No, it doesn't. It's why the investment capacity is so important that we can impact this transformation as we are progressing. So it is in addition to, in fact, I think that it may, in fact, and we expect that it will assist as opposed to disrupt.

Okay. Michael Blomfield, a couple of questions here coming through for you. On the investment infrastructure piece, first of all, what is the distribution strategy? And second, can you talk about the level of interest you're seeing at the moment for your integrated infrastructure offer? Or is it still early days?

Yes. So I think in terms of distribution strategy, we have a model that sees us interacting with more advice givers in Australia than any other organization in the country. We're looking to leverage that out. In terms of interest, I think we've been selective in who we've been talking to about this, but you can see from that video that there is -- once people get their head to it, we spend some time with them that they get it and they see a lot of value. What we know in the background is all of this. And this isn't sort of some invention off in a disconnected place. We know that for years, planners have said, "I need to lower my costs and in lowering my costs, I want to find a way to make more profit, but I also want to find a way to serve more people." And to serve more people, the cost of advice has got to go down. And so the cost of advice is one part of the cost of having an adviser and investing. And it's the sum of all of that, that in the end proves too expensive for many Australians. So I think there is a very strong appetite in the marketplace for this, the solution that we're delivering, and the solution being lower cost, advising lower-cost owning of assets. We -- I think we're in an exceptionally good shape to be taking that to the marketplace and to show value. The integration is out of pilot and available from Q3. We go to the ability to offer that on a per account subscription basis in the first half of next year. So we're essentially winding up as we speak to talk to all of our clients about that right now.

When we show this integration to our colleagues in the U.K., it risks not being a lot different to what they already experienced. And there are clients there that are benefiting from account opening and part execution directly from the advice platform and portfolio platform today, but it is in stark contrast from what exists in Australia today. And together with the fundamentally differentiated pricing model, it is what intermediary businesses will rely upon for how they think about servicing their clients, delivering value and scaling. And the model that has hoped to deliver to unmet advice in Australia, has to be digital, has to be straight through and it has to be of scale. When we've considered the integration, firstly, I should note that the integration is the first step. It's not the end of the opportunity that we see with [ OneVue ]. But when we thought about the number of investor accounts on a subscription basis per adviser in Australia and per adviser on Xplan, we see that as a modest metric to attain these revenue goals.

Thank you, Andrew. A question for John from Naveen. Do your 5-year growth targets include M&A? And if so, how should we think about the mix of organic versus M&A-driven growth?

So these targets are not inclusive of any M&A. So this is an organic target for our business. As I said in my presentation, that's not to say that we're not open to M&A, but these targets are organic growth only.

John, thank you, and a follow-up question for you from Brendan Carrig, Can you talk more to the second half SKU to provide more details on the makeup of organic growth expected in the second half, e.g., U.K. recovery, Guild, super, et cetera.

Yes. So clearly, if you take our first half and multiply it by 2, you don't get to the guidance range that we have referred today, but that's consistent with the messaging that we had in February when we released the guidance statement and when we reaffirmed it in April after the Q1 results. We clearly see a skew to the second half, and that has been a feature for a number of years in our U.K. business. The reference in that question to Guild is relevant, which went live in the first half of this year. It's also worth noting that in these times of lockdown and COVID, we have seen a whole lot of variability in the amount of leave being taken, and that was a feature in our result last year as well. If I look at the amount of leave that was taken first half and the amount that we would expect to be taking in the second half, then that alone could be a skew of around $8 million in segment profit. So there are a number of moving parts there, project momentum in key growth businesses as well as annual leave.

Thank you, John. A question here for Andrew Walsh. Andrew, what will drive the accelerated revenue growth under the base case and upside cases versus the growth that is being delivered historically? Regarding market share growth assumptions, what is it from the clients' perspectives that we'll see them choose Iress more so than previous history suggests?

The -- we've owned OneVue for just over 7 months, 8 months now. And as we've been integrating and combining that with the cloud transition that we have been on, we see a significant pathway to change the way that we deliver software and respond to clients. And one of the challenges that Andrew and Joydip spoke about is this convergence. And we have lots of functionality, and some of it is duplicated between nations. But if client A wants functionality from application B, often, we'll need to either integrate that or deliver it in other means. And what this platform technology allows us to do is to not be bounded by client context and functionality. We have -- probably the biggest and most classic example of that will be private wealth, and private wealth clients use all of our stack. And what we're saying is that in the investment infrastructure example, that again. And so we are unlocking that functionality that delivers more product potential and paths to faster revenue in response to what clients are demanding and anticipating. There is a direct link between what we are doing here, the way that we deliver it and revenue.

Thank you, Andrew. A question for Joydip and Andrew Todd from [ Colin Whitehead ]. Please confirm whether the single tech platform is initially APAC only and the timing of the global rollout, if applicable.

I'll start first. Andrew, you can chime in. But we don't think of anything as local in the way we build and plan things. The concept of a platform extends beyond boundaries. We -- the same technology is much more scalable when it's applied globally across regions. There's, of course, application layer differences in particular regions, and the idea of a platform actually makes that even easier because the underlying core technology is to sign everywhere. Now given local regulatory requirements, you might have a local installation of a cloud infrastructure because of data provenance, but those are -- that's just a natural way platforms work. But everything we build is around global deployment and not local. Andrew, you want to add more about that?

And then to the extent that the cloud transition what we've done today has been designed globally. It is deployed globally today, and we are operating our software globally. And so this is leveraging and layering on that model.

Exactly Yes.

Question that adds that from Scott Hudson, perhaps for Andrew Walsh. Andrew, does the shift to a single operating platform change the company's revenue model?

It doesn't. Our revenue model is highly recurring and subscription based, and this strategy doesn't change that. It may change the shape of it and the way that we commercialize or monetize different capabilities that we have, but the fundamental characteristics of subscription recurring do not change. There are many, many potentials, potential opportunities for us to monetize more functionality, Michael. And where we have functionality that is exclusively delivered within software applications will be unleashed for us to decide how we deliver that and deliver calculatory performance or methods that can be used by other businesses. And there was an announcement in Australia where Super Hero is now using our investment infrastructure to launch a super product. That is a great example of someone that wants to leverage the infrastructure we provide but provide their own brand and own user interface out to the client base. We expect more clients like that.

Thanks, Andrew. We have a final question here from [ Winston Chong ]. What do you see as the greatest risk to the 5-year targets, securing incremental revenue or accelerating the technology transition? And will management incentives be directly tied to the 5-year targets?

Look, I think they both go hand in hand. We're not serializing the work that we have to perform in the platform and then what happens commercially. As we've said a few times that the benefits are incremental, and that will release capability to deliver on the commercial aspects of this strategy over time, not at the end. And so I think that they're both entwined. We're not talking about something that is exclusively in product tech and separately in commercial. This is, as I've said earlier, a whole of Iress approach. As it relates to incentives, I spoke earlier about our tilt to equity-based remuneration, particularly for the leadership team, and we'll revert to take a look at what the measurements are around that and ensure that there's no misalignment, but the remuneration is aligned to shareholder outcomes, the strategy is aligned to shareholder outcomes and therefore, I think that they're in stead.

Thanks, Andrew. We'll close the Q&A session there, seeing there are no more questions. And I'll now hand over to Andrew for closing remarks.

Thanks, Michael, and thanks, everyone, for joining us this morning, and we've been pleased to be able to provide a level of insight to our plans and the opportunities that we see, and we hope you've found that particularly useful. We are pursuing large addressable markets, and they are in addition to really strong business foundations and capabilities that we have at Iress. The -- those opportunities aren't new. Clearly, we've spoken about them before, but this strategy is about our accelerating the revenue and accelerating the operational leverage that we see in those that will add and enhance returns. The next operating horizon for Iress takes those foundations and brings the single technology platform that we've spoken about this morning, and that starts with the investment infrastructure but is a whole Iress approach. And it is fundamentally different to where we have been to date. The level of transparency that we've brought today is bold as has been asked, and it is rare in the said markets. But there is an insight into what we see for the future, what we see is exciting, and we hope that, that has served to align what you think about that potential with what we see going on inside the business and the opportunity ahead of us. Thanks again for joining and I look forward to talking to you in a follow-up.