The Integrated Research Limited (ASX: IRI) share price is currently up 5% after the giving a market update.
It’s a global provider of user experience and performance management solutions for payment transactions and collaboration systems.
What did Integrated Research announce?
The company anticipated a significant improvement in performance for the second half of FY21 compared to the first half. However, revenue and reported net profit after tax for the current half are expected to be below the prior corresponding period.
Second half revenue for FY21 is expected to be in the range of $40 million to $45 million. This compares to $34.1 million in the first half of FY21 and $57.7 million in the second half of FY20.
Reported profit after tax for the second half of this financial year is anticipated to be in the range of $4 million to $7 million. This compares to $0.1 million in the first half of FY21 and $12.2 million in the second half of FY20.
In total, FY21 revenue is expected to be in the range of $74.1 million to $79.1 million (up from $110.9 million in FY20). Reported profit after tax is expected to be in a range of between $$4.1 million to $7.1 million, down from $24.1 million.
What’s going on?
The company explained that recent sales momentum provides a level of confidence that recovery is underway and that the second half performance will be stronger than the first half. License fee revenue recognised in the second half to date already exceed the first half with June being the strongest revenue month for the company.
A number of new contract signing and renewals typically close on or around the end of the reporting period which places pressure on short term forecasting accuracy.
However, several factors are impacting the company’s short-term performance compared to last year. There are customers requiring shorter term contracts to provide future flexibility, tighter budget conditions and approval processes, and some delays due to indecision on future environments.
Outlook for Integrated Research and the share price
The company said that it continues its transformation with the launch of new products to drive long term growth and recurring subscription revenues. The company has recently added new customers with these new solutions including support for the Microsoft Teams and Zoom environments.
The release of a new solution for Webex is scheduled for June. Further growth in the customer base is expected in FY22.
Integrated Research is going through a recovery, which is good to see. It’s near its 52-week low, so it could be an opportunistic time to buy shares if the recovery keeps going. But I don’t know enough about the company to have a strong conviction about it.
There are other ASX growth shares that could also be opportunities.
