Information Services Corporation (TSX:ISV) reported that its revenue in the third quarter ended September 30 reached $48.8 million, an 18% rise from the corresponding period in 2021, thanks to the strength of its services business.
The company said transaction and customer growth in Services continued to grow in 3Q, specifically in the Corporate Solutions division, adding that the UPLevel business, acquired in February this year, helped by contributing $1.6 million in revenue. The company expects Services to continue delivering transaction and customer growth for the remainder of 2022.
Within its Registry Operations, Property Tax Services, acquired through the Reamined acquisition in June this year contributed $3.8 million. This was, however, offset by a $1.0 million decline in Land Registry revenue.
READ: Information Services Corporation reports improved 2Q results; raises full-year revenue and net income guidance
ISC also said that its board has declared a quarterly dividend of $0.23 per Class A Limited Voting Share, which will be paid to shareholders of record as of December 31, 2022.
“The third quarter of 2022 performed largely as expected, and our business remains robust even in current economic conditions,” Shawn Peters, company President and CEO said in a statement.
He pointed to bright spots within the business with Registry Operations returning to normal as the Saskatchewan real estate levels stabilized from more normalized demand and higher interest rates, adding that the services business continues to grow slightly faster than expected while the company continues to complete active solution implementation projects in its Technology Solutions business.
"In consideration of these factors, we are reiterating our annual guidance for revenue to be between $188.0 million and $193.0 million, net income to be between $29.0 million and $33.0 million, and EBITDA to be between $59.0 million and $64.0 million in 2022 and anticipate that we will finish the year around the middle of these ranges.”
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was $17.0 million for the quarter compared to $17.3 million in 2021. Adjustments consist primarily of merger and acquisition and share-based compensation expenses, which when removed, show a stable quarter year-over-year, as the increases in revenue were offset by increased investments in people and technology as we scale the business for further growth and to maintain our customer service standard, the company said, adding that as a result, the adjusted EBITDA margin was 34.9% compared to 41.8% in 2021, with the change coming from increased Services revenue at a lower margin and lower revenue overall in the Land Registry during the quarter.
Free cash flow for the quarter was $11.6 million, a decrease of 13% compared to the third quarter of 2021 due to lower results of operations after the increased investments in people and technology, and an increase in share-based compensation expense.
ISC will hold an investor conference call on Thursday, November 3, 2022, at 11:00am ET to discuss the results.
The live audio webcast will be available on the website. Participants who wish to ask a question on the live call may do so through the ISC website or by registering through the following live call URL.
Contact the author at jon.hopkins@proactiveinvestors.com