Computershare (CPU) H2 2024 earnings summary

Executive summary

• FY24 Management EPS rose 8.9% year-over-year, slightly ahead of guidance, driven by growth in core fees, event and transaction revenues, and margin income.

• Strategic simplification and divestment of US Mortgage Services reduced complexity and increased returns.

• All core revenue lines grew, with Issuer Services up 11% and Corporate Actions revenue up over 23%, driven by larger transaction sizes.

• Employee Share Plans saw strong performance, with transaction fees up over 35% and high asset levels maintained.

• Strengthened balance sheet and robust free cash flow support ongoing investment and shareholder returns.

Financial highlights

• Management revenue reached $3.3bn, up 2.1% year-over-year; adjusted for disposals, revenue was up 8.6%.

• Margin Income rose 7.3% to $832.1m, supported by higher rates and improved balances.

• EBIT increased 10.7% to $1.143bn, with EBIT margin up 270bps to 34.8%.

• Management NPAT grew 8% to $704.2m; Management EPS up 8.9% to $1.176 per share.

• Statutory NPAT fell 21% to $352.6m, mainly due to a $129m impairment from the U.S. Mortgage Services disposal and other one-off costs.

Outlook and guidance

• FY25 Management EPS expected to increase 7.5% to around 126cps; EBIT ex Margin Income to rise ~15%.

• Margin Income forecasted at $745m for FY25, assuming four U.S. rate cuts and lower yields.

• Guidance excludes additional buyback purchases and the BNY Mellon Canada Corporate Trust acquisition, which is expected to close by year-end.

• Cost growth expected to be modest, between 0%-3% in FY25, with cost out programs targeting $45-$60m in savings over three years.

• Tax rate expected to be sustainable at 26%-27% due to a simpler business structure post-disposals.