Why fund managers say Iress's AI sell-off misjudges its competitive moat
Wealth and trading technology provider Iress has fallen alongside AI-exposed software peers, but managers point to sticky, high-switching-cost client relationships.
31 May 2026 · 5 min read
In short
Iress fell 10.4% in May 2026 amid a broader software sell-off driven by AI disruption concerns, according to Perpetual Asset Management.
Over 90% of Iress's top 20 clients have stayed with the company for more than a decade, with churn below 2% and recurring revenue above 94%.
Perpetual Asset Management increased its position materially in mid-May 2026, taking Iress to one of its largest active weights.
Wealth and trading technology provider Iress has been caught up in a broader AI-disruption sell-off affecting software companies, even as several managers argue the market isn't distinguishing between genuinely exposed businesses and those with durable moats. Perpetual Asset Management's May 2026 Monthly Report described the stock declining 10.4% that month, calling the sell-off indiscriminate given Iress holds significant market share in complex, high-switching-cost products such as its core APAC financial advice platform XPlan.
A private equity approach, a new CEO, and now an AI scare
The past year has brought significant change at the top. Longwave Capital's August 2025 Monthly Report noted a potential takeover offer from Blackstone and Thoma Bravo overshadowed the company's result, alongside the stepping down of long-serving CEO Marcus Price. Tamim Funds Management's detailed August 2025 Article laid out the fuller turnaround case: over 90% of Iress's top 20 clients had stayed with the company for more than a decade, churn sat below 2%, and more than 94% of revenue was recurring, with management targeting cash EBITDA margin expansion to around 25% by the end of FY26 from about 19% in FY25. Spheria Asset Management's December 2025 Monthly Report welcomed incoming CEO Andrew Russell, pointing to his track record turning around Bravura Solutions.
We view this selloff as indiscriminate, with the market failing to distinguish between businesses with genuine competitive moats and those more structurally exposed to AI displacement.
— Perpetual Asset Management, Monthly Report, May 2026
Ellerston Capital has kept the position as one of its only technology exposures through the period, noting in both February and March 2026 that its portfolio owns virtually no other Tech/IT names given the sector's typically high revenue multiples and thin dividend yields, with Iress the exception after delivering solid earnings beats. Lennox Capital Partners' May 2026 commentary described the roughly 10% monthly decline as occurring in the absence of significant company news, with market leadership concentrated instead in AI-linked and resources names.
What managers are watching next
Perpetual Asset Management increased its position materially in mid-May 2026 at the lows, taking Iress to one of its largest active weights, encouraged by the share price recovering from that point to finish the month back above $6.00. With the new management team focused on harnessing AI-driven efficiency gains to reinvest in product and expand margins, managers including Perpetual expect that path to translate into strong earnings growth over time as the simplification program matures.
Questions
Why has Iress's share price fallen recently?
Iress has been caught up in a broader market sell-off of software companies driven by fears of AI disruption, though Perpetual Asset Management describes the sell-off as indiscriminate given the company's high client retention and switching costs.
Was Iress a takeover target?
In August 2025, private equity firms Blackstone and Thoma Bravo were reported to have shown interest in acquiring Iress, coinciding with the departure of long-serving CEO Marcus Price, according to Longwave Capital and Tamim Funds Management.
How sticky is Iress's client base?
According to Tamim Funds Management, over 90% of Iress's top 20 clients have been with the company for more than a decade, churn sits below 2%, and more than 94% of revenue is recurring.
12 managers, 20 comments, with each manager's latest recorded position.
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