Integrated Research (ASX:IRI) executives told investors the company’s first-half FY2026 performance reflected a softer renewals book and the impact of a material expected credit loss, while management continued to emphasize “product-led growth” as the central strategy to return the business to sustainable growth.
Half-year financial performance
CFO Christian Shaw said the company’s results landed at the upper end of the guidance range previously provided to the market, citing a strong sales close in December 2025. Statutory revenue for the first half was AUD 28.3 million, down 2% from the prior comparable period (PCP), which management attributed to renewals being “slightly down” on a softer renewals book.
Profitability was heavily affected by expected credit losses. EBITDA for the half was an AUD 3.1 million loss, compared with an AUD 4.6 million profit in the PCP. Net loss after tax was AUD 1.5 million, also down against the PCP’s profit result.
Expected credit loss and cost trends
Shaw reported an AUD 4.8 million expected credit loss (ECL) charge in the half, recorded within general and administrative expenses. He said the charge was “principally associated with a single client,” a product reseller, and reflected an increase in credit risk that was signaled by the client. Shaw added the issue “was not related to software performance.”
In response to an investor question about preventing a repeat, Shaw said the contract was “an anomalous or an unusual client contract” and that management and the board had implemented “incremental guardrails” so that the structure and nature of that contract and counterparty “won’t be repeated” in the near future. He also said the risk was contained to that client and that there was no similar risk “in quantum or in nature” elsewhere in the book.
On expenses, Shaw said operating expenses excluding expected credit losses were down 4% versus the PCP to AUD 26.5 million, reflecting “a disciplined approach to cost management” even as the company pursues a growth agenda. Within that, product and technology expenses increased 14%, sales and marketing decreased 9%, and general and administrative expenses (excluding ECL) were flat. He also noted that no R&D was capitalized during the period, and he cautioned expenses are expected to increase in the second half as IR accelerates investment in product-led growth.
Revenue views: pro forma and product performance
Shaw also discussed pro forma revenue, which he described as an underlying measure that smooths term-based license fee revenue over contract life to better observe performance through renewal cycles. For the first half, pro forma revenue was AUD 34.4 million, down 6% versus the PCP. Term-based contracts revenue was down 4%, and services revenue was down 2%.
By geography, the Americas represented about 70% of pro forma revenue and was down 6% versus the PCP. Shaw said the Americas comparison was affected by the prior sale of the testing business and by new client deals closing late in the period, while noting that new business growth “is not yet a complete mitigant to churn.” APAC was down 7% in what he described as a “quieter period,” and Europe was down 6%.
By product, Shaw said:
- Collaborate pro forma revenue declined 9%, including an impact from lower services revenue and less testing revenue following the testing business sale. He said churn, though “relatively stable,” continued to impede growth acceleration.
- Infrastructure pro forma revenue also decreased 9%, driven by churn.
- Transact pro forma revenue increased 6%, which he said was driven by expansion business.
On statutory revenue composition, Shaw highlighted a 4% increase in license fee revenue, supported by new client contracts and expansion activity across territories and products, despite the softer renewals book.
Cash position and balance sheet
Shaw said cash rose AUD 3 million over the half to AUD 43.6 million. Operating cash flow increased to AUD 5.5 million, compared with AUD 0.5 million in the PCP, which he attributed primarily to timing of receipts and payments and some non-recurring prior-period payments.
Net assets were reported at AUD 95.7 million, with total assets of AUD 115.3 million and total liabilities of AUD 19.7 million. Shaw emphasized the company has no debt.
Asked about a potential share buyback given the cash balance, CEO Ian Lowe said management has reviewed the idea “closely and repeatedly” but prefers to preserve capital due to uncertainty as the company pursues its product-led growth strategy. He added the company would continue to review the position and could change its stance if circumstances warrant.
Product-led growth, new releases, and AI roadmap
Lowe said the company’s historical revenue has been overly reliant on contract renewals and that underinvestment in new products has limited new business growth. He framed product-led growth as increased investment to build and commercialize products aligned to customer needs, with a focus on new clients and expansion revenue from existing customers.
In the first half, Lowe highlighted several product developments:
- Iris, described as IR’s first AI-powered product, launched as a natural language interface to help clients discover insights in observability data. Lowe said it is being rolled out for Collaborate and that work is underway to enable Iris for Transact and Infrastructure, with development expected to complete toward the end of FY2026.
- Prognosis Elevate, described as Prognosis-as-a-service, offering a cloud-based option for clients who do not want to run Prognosis on-premises. Lowe said this is particularly relevant in new client discussions.
- High Value Payments, which Lowe said has been fully implemented for a foundation client (a top-10 U.S. bank). He said the deployment was “complicated, but very important,” and that IR is engaging other major global banks on the same product.
Lowe said IR Labs is on track to deliver a new standalone AI-powered product in calendar 2026 as a minimum viable product release, but he declined to provide further details, saying the initiative is operating “somewhat in stealth mode.” He said more information would be shared closer to launch, including the value proposition and commercialization plans.
In the Q&A, Lowe addressed concerns about generative AI disrupting SaaS businesses by arguing IR’s opportunity is to leverage AI—particularly “agentic” capabilities—to operationalize observability data through workflows and remediation. He also said capturing telemetry in on-prem environments presents challenges that AI “can’t really address elegantly” today, while noting AI could make faster inroads in assembling and analyzing data.
Looking ahead, Lowe reiterated that the transition to product-led growth will take time, and that softer renewals and increased investment can pressure profits in the short to medium term. He said confidence in execution is supported by IR’s established client base and brand trust, internal talent, and a balance sheet capable of funding the strategy. He added the company remains open to “right-sized” M&A opportunities that accelerate product-led growth, but said IR is not determined to pursue a transaction.
About Integrated Research (ASX:IRI)
Integrated Research Limited designs, develops, implements, and sells systems and applications management computer software for business-critical computing, and unified communication and payment networks. The company offers Prognosis, an integrated suite of monitoring and management software designed to give an organization’s management and technical personnel operational insight into the HP NonStop platform, distributed system servers, unified communications, payment environments, and the business applications.
