The opportunity in IRESS

The opportunity in IRESS. Iress Market Technology's result in February exceeded high expectations however the guidance of 3-5% earnings growth was below market expectations and saw the stock correct 10%. This provides investors with an excellent entry point into a high quality, software technology company with 80% recurring revenue. Its core wealth management software XPLAN (80% market share in Australia) is being rolled out in the UK and will underpin earnings growth, albeit in a sustainable and measured way. A number of Australian software companies are attempting to follow the lead from US companies such as Adobe in transitioning their client base to subscription/recurring revenue models. Iress has already made this transition and has a long track record of sound execution, yet trades at a discount to software peers, therein lies the opportunity. The company tends to issue conservative guidance. Indeed they have upgraded earnings guidance in each of the last three years, and 2015 is unlikely to be different. Yielding close to 5% and with earnings leverage to a lower AUD Iress is well positioned.