Modern Third Party Platforms Will Advance Efficiency Despite Client Exits

Key Takeaways

• Regulatory shifts and demographic trends are increasing demand for Bravura's platforms, driving recurring revenues and expanding margins through higher transaction volumes.
  
• Decentralized management, operational efficiency, and organic growth investments are improving margins, earnings, and enabling flexible capital returns.
  
• Heavy dependence on existing clients amid persistent attrition and limited new business threatens revenue stability and constrains long-term growth opportunities in a highly competitive, slow-growth market.

Catalysts

Develops, licenses, and maintains administration and management software applications for the wealth management and funds administration sectors in Australia, the United Kingdom, New Zealand, and internationally.

• Growing regulatory requirements for transparency and compliance in financial services are pushing institutions to adopt modern, third-party platforms, and Bravura's continued investment in product relevance and partnerships (e.g., with administration providers) positions it to benefit from this trend, supporting stable to growing revenue streams and improved client stickiness.
  
• Demographics in developed markets, particularly aging populations investing more in retirement and pension products, are driving underlying growth in scale and transaction volumes for Bravura's core wealth management and superannuation offerings, which is likely to result in higher recurring revenues and volume-driven margin expansion over time.
  
• The company's shift to a more decentralized structure with business unit accountability and incentive alignment is expected to boost operational efficiency and customer engagement, leading to sustainable margin improvements and stronger cash EBITDA.
  
• Bravura is actively investing in organic growth, focusing on advancing its platforms and enhancing cross-sell with existing clients, increasing the likelihood of higher revenue per client and supporting future earnings growth.
  
• Ongoing operational efficiency gains and cost reductions-while maintaining product R&D-continue to drive incremental operating margin improvement, which, combined with no debt and strong cash balances, supports higher net margins and flexibility for capital returns to shareholders.

Bravura Solutions Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Bravura Solutions's revenue will decrease by 4.7% annually over the next 3 years.
• Analysts assume that profit margins will shrink from 23.4% today to 15.7% in 3 years time.
• Analysts expect earnings to reach A$43.3 million (and earnings per share of A$0.1) by about August 2028, down from A$74.2 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 35.9x on those 2028 earnings, up from 12.2x today. This future PE is lower than the current PE for the AU Software industry at 77.4x.
• Analysts expect the number of shares outstanding to decline by 0.53% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.04%, as per the Simply Wall St company report.

Bravura Solutions Future Earnings Per Share Growth

Risks

• Recurring revenue growth is largely flat, with customer attrition in fiscal 2025 totaling $8 million and further anticipated impact of $6.5 million in fiscal 2026, while a major client responsible for $10 million annually is set to complete its exit by January 2026, increasing risk of revenue stagnation or decline as growth is primarily reliant on existing clients rather than new customer acquisition.
  
• Large replatforming decisions by potential clients are described as infrequent and rare, with limited new logo wins in the pipeline, suggesting that Bravura faces a slow-growing or saturated market and may struggle to diversify and expand its client base, further constraining long-term revenue growth and increasing concentration risk.
  
• Ongoing customer exits (with no comment provided on the timeline for the remaining two flagged clients) and changes in recurring revenue definitions which make historical growth trend comparisons challenging, point to underlying client churn risk and potential instability in future revenue visibility.
  
• The company's guidance for fiscal 2026 expects revenue to be only in line with 2025, heavily dependent on FX rates and existing client expansions, indicating limited organic growth or pricing power and exposing margins and earnings to FX volatility and competitive market pressures.
  
• While Bravura is investing in efficiency and cost control to support margin improvement, such cost reductions may not be sustainable long-term if product investments or service quality are compromised, potentially eroding competitive positioning and risking future earnings growth if operational efficiency gains cannot offset topline softness.

Valuation

• The analysts have a consensus price target of A$2.797 for Bravura Solutions based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of A$3.17, and the most bearish reporting a price target of just A$1.85.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be A$275.3 million, earnings will come to A$43.3 million, and it would be trading on a PE ratio of 35.9x, assuming you use a discount rate of 8.0%.
  
• Given the current share price of A$2.02, the analyst price target of A$2.8 is 27.8% higher. Despite analysts expecting the underlying buisness to decline, they seem to believe it's more valuable than what the market thinks.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.