Last close As at 05/08/2026
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CAD956m
Research: Industrials
Information Services Corporation (ISC) delivered another quarter of robust growth in Q324, with revenue advancing 12% y-o-y to C$60.9m and adjusted EBITDA rising 18% to C$22.7m. Net income remained relatively flat at C$4.2m (translating to C$0.23 basic and diluted EPS) as ISC’s strong operational performance was offset by increases in share-based compensation expenses, increased investment in project delivery within its Technology Solutions segment and elevated amortisation costs related to the Master Service Agreement (MSA) extension. Management reiterated its revenue (C$240–250m) and adjusted EBITDA (C$83–91m) guidance for FY24, with our estimates remaining aligned at C$242m and C$85.5m, respectively.
Information Services Corporation |
Q324 results |
Industrials |
7 November 2024 |
Share price performance
Business description
Next events
Analysts
Information Services Corporation is a research client of Edison Investment Research Limited |
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Information Services Corporation (ISC) delivered another quarter of robust growth in Q324, with revenue advancing 12% y-o-y to C$60.9m and adjusted EBITDA rising 18% to C$22.7m. Net income remained relatively flat at C$4.2m (translating to C$0.23 basic and diluted EPS) as ISC’s strong operational performance was offset by increases in share-based compensation expenses, increased investment in project delivery within its Technology Solutions segment and elevated amortisation costs related to the Master Service Agreement (MSA) extension. Management reiterated its revenue (C$240–250m) and adjusted EBITDA (C$83–91m) guidance for FY24, with our estimates remaining aligned at C$242m and C$85.5m, respectively.
Year end |
Revenue (C$m) |
EBITDA |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/22 |
189.9 |
64.4 |
46.5 |
1.95 |
0.92 |
14.0 |
3.2 |
12/23 |
214.5 |
72.9 |
39.2 |
1.65 |
0.92 |
16.5 |
3.2 |
12/24e |
242.0 |
85.5 |
46.5 |
1.89 |
0.92 |
15.3 |
3.2 |
12/25e |
258.1 |
90.4 |
51.7 |
2.10 |
0.92 |
13.8 |
3.4 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Realisation of enhanced fee adjustments
ISC’s Registry Operations segment delivered robust adjusted EBITDA of C$20.5m, representing 23% y-o-y growth, primarily attributed to the full-quarter impact of fee adjustments implemented through the MSA extension, compared to only two months in the prior year period. The Services segment maintained stable revenue at C$25.6m y-o-y, though adjusted EBITDA declined marginally by 4% to C$4.8m. This contraction in profitability reflects strategic investments into personnel to support future growth initiatives, coupled with elevated client security compliance expenditures. ISC’s Technology Solutions segment exhibited exceptional performance with revenue surging 70% y-o-y to C$8.3m. This substantial growth was driven by accelerated progress in solutions definition and implementation contracts within third-party revenue, and the ongoing delivery of registry enhancements for the Saskatchewan registry division, and development work related to the Bank Act Security Registry system in related party revenue.
Capitalising on the enhanced market environment
The Bank of Canada has lowered key interest rates three times so far in 2024, with the market expecting further cuts into next year. This should aid in bolstering market confidence and management expects strong activity in the Saskatchewan real estate market to continue in the near term despite inventory challenges in lower-value homes. The current trend of enhanced due diligence in the environment of increased regulatory oversight should continue to have a positive impact on ISC’s Regulatory Solutions division, enabling significant growth.
Valuation: DCF valuation unchanged at C$40/share
Our discounted cash flow valuation remains unchanged at C$40 per share, indicating c 40% upside to the current share price of C$29.0 per share.
Exhibit 1: Financial summary
C$m |
2020 |
2021 |
2022 |
2023 |
2024e |
2025e |
2026e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
|||||||||
Revenue |
|
|
136.7 |
169.4 |
189.9 |
214.5 |
242.0 |
258.1 |
272.0 |
Cost of Sales |
31.3 |
40.4 |
49.2 |
55.4 |
62.6 |
69.5 |
75.7 |
||
Gross Profit |
105.5 |
129.0 |
140.7 |
159.1 |
179.4 |
188.6 |
196.3 |
||
EBITDA |
|
|
49.2 |
67.8 |
64.4 |
72.9 |
85.5 |
90.4 |
93.8 |
Normalised operating profit |
|
|
36.5 |
54.0 |
49.7 |
52.4 |
59.5 |
63.6 |
66.4 |
Amortisation of acquired intangibles |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Exceptionals |
(2.6) |
(1.2) |
(2.0) |
(4.1) |
(2.0) |
(2.0) |
(2.0) |
||
Share-based payments |
(3.0) |
(6.0) |
(1.5) |
(0.3) |
(0.3) |
(0.3) |
(0.3) |
||
Impairment |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
(0.2) |
(0.1) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Reported operating profit |
30.7 |
46.8 |
46.2 |
48.0 |
57.2 |
61.4 |
64.1 |
||
Net Interest |
(2.0) |
(2.7) |
(3.2) |
(13.2) |
(13.0) |
(12.0) |
(10.7) |
||
Joint ventures & associates (post tax) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Exceptionals |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Profit Before Tax (norm) |
|
|
34.4 |
51.4 |
46.5 |
39.2 |
46.5 |
51.7 |
55.7 |
Profit Before Tax (reported) |
|
|
28.6 |
44.1 |
43.0 |
34.8 |
44.2 |
49.4 |
53.4 |
Reported tax |
(7.8) |
(12.0) |
(12.2) |
(9.7) |
(12.4) |
(13.8) |
(15.0) |
||
Profit After Tax (norm) |
26.6 |
39.4 |
34.2 |
29.4 |
34.1 |
37.8 |
40.7 |
||
Profit After Tax (reported) |
20.8 |
32.1 |
30.8 |
25.0 |
31.8 |
35.6 |
38.5 |
||
Minority interests |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Discontinued operations |
0.7 |
(1.0) |
(0.0) |
0.2 |
0.2 |
0.2 |
0.2 |
||
Net income (normalised) |
26.6 |
39.4 |
34.2 |
29.4 |
34.1 |
37.8 |
40.7 |
||
Net income (reported) |
20.8 |
32.1 |
30.8 |
25.0 |
31.8 |
35.6 |
38.5 |
||
Average Number of Shares Outstanding (m) |
18 |
18 |
18 |
18 |
18 |
18 |
18 |
||
EPS - basic normalised (C$) |
|
|
1.52 |
2.25 |
1.95 |
1.65 |
1.89 |
2.10 |
2.26 |
EPS - normalised fully diluted (C$) |
|
|
1.51 |
2.18 |
1.91 |
1.63 |
1.89 |
2.10 |
2.26 |
EPS - basic reported (C$) |
|
|
1.19 |
1.83 |
1.75 |
1.41 |
1.77 |
1.98 |
2.14 |
DPS (C$) |
0.80 |
0.83 |
0.92 |
0.92 |
0.92 |
0.92 |
0.92 |
||
Revenue growth (%) |
2.8 |
23.9 |
12.1 |
13.0 |
12.8 |
6.6 |
5.4 |
||
Gross Margin (%) |
77.1 |
76.2 |
74.1 |
74.2 |
74.1 |
73.1 |
72.2 |
||
EBITDA Margin (%) |
36.0 |
40.0 |
33.9 |
34.0 |
35.3 |
35.0 |
34.5 |
||
BALANCE SHEET |
|||||||||
Fixed Assets |
|
|
186.0 |
176.1 |
226.2 |
488.0 |
464.4 |
440.2 |
415.3 |
Intangible Assets |
70.0 |
61.1 |
89.0 |
351.8 |
328.5 |
304.6 |
280.0 |
||
Tangible Assets |
2.2 |
1.4 |
1.8 |
2.1 |
1.8 |
1.5 |
1.2 |
||
Investments & other |
113.9 |
113.6 |
135.4 |
134.1 |
134.1 |
134.1 |
134.1 |
||
Current Assets |
|
|
55.4 |
56.4 |
57.2 |
48.3 |
52.0 |
53.3 |
54.4 |
Stocks |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Debtors |
17.0 |
12.8 |
14.9 |
15.7 |
19.4 |
20.6 |
21.8 |
||
Cash & cash equivalents |
33.9 |
40.1 |
34.5 |
24.2 |
24.2 |
24.2 |
24.2 |
||
Other |
4.4 |
3.6 |
7.8 |
8.5 |
8.5 |
8.5 |
8.5 |
||
Current Liabilities |
|
|
27.3 |
36.9 |
39.6 |
63.5 |
70.9 |
73.8 |
76.3 |
Creditors |
21.9 |
26.5 |
33.9 |
36.1 |
43.6 |
46.5 |
49.0 |
||
Tax and social security |
1.2 |
7.0 |
0.7 |
1.0 |
1.0 |
1.0 |
1.0 |
||
Short term borrowings |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
4.2 |
3.4 |
5.0 |
26.4 |
26.3 |
26.3 |
26.3 |
||
Long Term Liabilities |
|
|
93.0 |
57.9 |
88.2 |
304.0 |
261.3 |
216.3 |
167.8 |
Long term borrowings |
76.3 |
41.0 |
66.0 |
177.3 |
164.0 |
149.5 |
131.5 |
||
Other long term liabilities |
16.6 |
16.9 |
22.2 |
126.7 |
97.3 |
66.8 |
36.3 |
||
Net Assets |
|
|
121.1 |
137.7 |
155.6 |
168.8 |
184.3 |
203.4 |
225.6 |
Minority interests |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Shareholders' equity |
|
|
121.1 |
137.7 |
155.6 |
168.8 |
184.3 |
203.4 |
225.6 |
CASH FLOW |
|||||||||
Op Cash Flow before WC and tax |
49.2 |
67.8 |
64.4 |
72.9 |
85.5 |
90.4 |
93.8 |
||
Working capital |
3.5 |
14.2 |
(3.8) |
(1.2) |
3.7 |
1.6 |
1.4 |
||
Exceptional & other |
(5.6) |
(7.2) |
(3.5) |
(4.4) |
(2.3) |
(2.3) |
(2.3) |
||
Tax |
(7.8) |
(12.0) |
(12.2) |
(9.7) |
(12.4) |
(13.8) |
(15.0) |
||
Other |
1.6 |
(1.6) |
(1.3) |
(0.7) |
(0.6) |
(0.6) |
(0.6) |
||
Net operating cash flow |
|
|
41.0 |
61.2 |
43.5 |
56.8 |
74.0 |
75.3 |
77.4 |
Capex |
(1.2) |
(2.2) |
(1.5) |
(155.8) |
(30.9) |
(30.9) |
(30.9) |
||
Acquisitions/disposals |
(70.2) |
1.7 |
(54.7) |
(0.2) |
0.0 |
0.0 |
0.0 |
||
Net interest |
(1.6) |
(2.8) |
(2.8) |
(7.4) |
(11.0) |
(11.2) |
(9.8) |
||
Equity financing |
(1.9) |
(2.0) |
(2.1) |
(2.4) |
(2.4) |
(2.4) |
(2.4) |
||
Dividends |
(14.0) |
(14.0) |
(16.2) |
(16.4) |
(16.4) |
(16.4) |
(16.4) |
||
Other |
0.0 |
(0.4) |
3.4 |
5.0 |
0.0 |
0.0 |
0.0 |
||
Net Cash Flow |
(47.9) |
41.6 |
(30.3) |
(120.4) |
13.3 |
14.5 |
18.0 |
||
Opening net debt/(cash) |
|
|
(5.7) |
42.4 |
0.9 |
31.6 |
153.1 |
139.8 |
125.3 |
FX |
(0.2) |
(0.4) |
0.2 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other non-cash movements |
0.0 |
0.3 |
(0.6) |
(1.1) |
(0.1) |
0.0 |
0.1 |
||
Closing net debt/(cash) |
|
|
42.4 |
0.9 |
31.6 |
153.1 |
139.8 |
125.3 |
107.3 |
Source: Company accounts, Edison Investment Research
|
|
Research: Industrials
Management’s strategy is to increase Solid State’s internal capabilities, enabling greater product differentiation and value added, particularly in the Systems business. This is expected to increase the addressable market and growth along with offering higher returns, key to the margin target of 12% (FY25 expectation c 8%). Achieving this through organic and inorganic means underpins management’s 20% CAGR target for shareholder returns.