A valuation which still discounts a cautious scenario

IRI share price has decreased by 90 % since its pick in 2020.
This is mainly explained by the fact that the company went ex-growth from that period.

Today, IRI is valued at a free cash flow yield of 13 % if we annualise their H1 24 results.
Quite rare for a software company.
So, it probably means that the market remains sceptical about their ability to keep such a level of free cash flow.

The company has struggled for some time to get back to its growth mode.
What's new is that it seems to have now accepted that its main division, Collaborate (44 % of its revenues) may be in a structural decline.
As a result, IRI has adjusted its cost basis to this situation.
During H1 24 %, it has decreased its cost basis by 21 %, cutting all its main expenses (development expenses, sales and marketing, general expenses).

The other interesting element about IRI is that their 2 other divisions (Transact and Infrastructure) show a much more stable profile for their revenues.

Last element which shows some element of stabilization for their business : their net revenue retention went from 92 % to 95 %, on constant currency, during H1 24. Apparently due to a good level of contracts renewals during H1 24.
So, the company seems better able to keep existing customers. Their problem, at this stage, is more to gain new business : they are behind expectations in term of new business, with only 13 new customers during H1 24 (around 2 % of their total number of customers).

One surprising element about this company : the low conversion of their EBITDA into cash flow from operation.
During H1 24, they had a statutory EBITDA of 11 m$ and a proforma EBITDA of 7.7 m$, which converted in only 3.4 m$ of cash flow from operation.
This is mainly due to a large working capital effect (only 1.3 m$ due to tax paid). Surprising for a company which is not growing.