How Is Integrated Research’s AI Pivot Shaping Its FY25 Recovery?
Integrated Research reports a softer FY25 with declines in contract value and earnings, yet steady underlying revenue and promising AI-driven product launches signal a strategic pivot.
- Total Contract Value and statutory revenue down 17-21% year-on-year
- Pro-forma revenue remains steady, reflecting stable underlying performance
- EBITDA declines sharply by up to 39%, despite robust cash conversion
- Strong second half performance driven by Asia-Pacific and key renewals
- New CEO leads shift to product-led growth with AI-powered offerings planned for FY26
A Year of Transition and Challenge
Integrated Research (ASX – IRI), a specialist in observability solutions for critical IT systems, has released a trading update for the fiscal year ended June 30, 2025, revealing a mixed financial performance amid a strategic transformation. The company faced a softer renewals book that weighed on Total Contract Value (TCV) and statutory revenue, both declining by nearly a fifth compared to the previous year. EBITDA also took a significant hit, falling by up to 39%, underscoring the challenges faced during this transitional period.
Despite these setbacks, the company’s pro-forma revenue; a key metric that smooths revenue recognition over contract periods; remained largely stable, suggesting that the core business fundamentals held firm even as headline figures softened. Cash reserves improved notably, rising 27% to $40.6 million, reflecting disciplined cash management amid market uncertainties.
Regional Performance and Strategic Wins
Geographically, Asia-Pacific outperformed expectations, buoyed by stronger new business generation, while Europe lagged behind on both renewals and new sales. The Americas region experienced delays in new business growth, attributed to broader market uncertainty, though it secured a landmark five-year contract with JP Morgan Chase, a top 10 US bank. This deal not only provides a solid revenue foundation but also serves as a valuable reference client for Integrated Research’s evolving product portfolio.
Pivot to Product-Led Growth and AI Innovation
FY25 marked a pivotal year with the appointment of a new CEO, Ian Lowe, who brings a strong product development background. Under his leadership, Integrated Research is shifting towards a product-led growth strategy, focusing on innovation and client-centric development. The company successfully launched its High Value Payments (HVP) product, securing its first major client in the US banking sector, and introduced IR Hosted Prognosis, a SaaS-based offering that aligns with the industry’s cloud migration trends.
Looking ahead, Integrated Research plans to roll out its first AI-powered product capabilities in the first half of FY26. This move is central to the company’s innovation roadmap and is being developed in close consultation with key global clients, signaling a commitment to staying at the forefront of technology in the observability space.
Outlook and Market Implications
While FY25 results reflect the growing pains of transformation, the company’s strategic initiatives and early product successes suggest a foundation for sustainable growth. The stronger second half performance and robust cash position provide some reassurance as Integrated Research navigates a competitive and evolving market landscape. Investors will be keenly awaiting the full audited results due on August 21, 2025, for a clearer picture of the company’s trajectory.
Bottom Line?
Integrated Research’s FY25 underscores the challenges of transformation but sets the stage for AI-driven growth in FY26.
Questions in the middle?
- How will the AI-powered product launch impact revenue and client acquisition in FY26?
- Can Integrated Research sustain growth momentum in the Americas amid market uncertainties?
- What strategies will the company deploy to improve EBITDA margins going forward?
