IPH (ASX:IPH) reported a “solid” result for the half year ended 31 December 2025, with management pointing to improved earnings in Canada, a return to growth in Asia, and ongoing cost discipline offsetting continued weakness in Australia and New Zealand tied to lower U.S. patent filings.
Chief Executive Officer and Managing Director Dr. Andrew Blattman said the group’s expanding global footprint continues to provide resilience, noting IPH now operates seven brands with more than 1,700 employees servicing around 26 intellectual property (IP) jurisdictions. He highlighted that nearly 60% of group earnings now come from outside Australia and New Zealand, and said Canada now accounts for more than a third of earnings.
Financial performance and capital management
Underlying EBITDA increased 6.6% to AUD 107.1 million, which York attributed to improved Canadian earnings (including acquisition impacts), the return to growth in Asia, reduced corporate costs, and cost discipline across the business. The underlying EBITDA margin increased by 0.1 percentage points, helped by Canada and Asia, but “tempered” by margin pressure in ANZ.
Underlying NPAT-A (NPAT adjusted to exclude the income tax-affected non-cash amortization of acquired intangible assets) increased 2.6% to AUD 62.6 million, while underlying basic EPSA increased 3.9%, supported by improved performance and a 1.5% reduction in weighted average shares following a FY2025 share buyback.
Statutory net profit after tax rose 10.5%, driven by higher underlying earnings and lower non-underlying costs compared to the prior period, partially offset by a higher effective tax rate. York said the effective tax rate (excluding non-underlying items) increased from 20.4% to 26.2% as the company normalized following Canadian acquisition activity, and he said the company expects this rate “going forward” based on geographic earnings mix.
IPH also emphasized cash generation. York said the company delivered gross operating cash flow to EBITDA conversion of 101%, with free cash flow up 32% for the half. The group’s interim dividend was lifted 11.8% to AUD 0.19 per share, payable on 24 March, with the dividend franked at 20% and representing a payout ratio of 81% of cash-adjusted NPAT.
In capital management, IPH reported net debt at 31 December 2025 was down 6.5% (AUD 27 million) versus 30 June 2025, with leverage at 1.8x (down from 1.9x). The company refinanced AUD 210 million of syndicated debt in December 2025 on improved pricing terms, with maturities now in FY2028 and FY2029, and had AUD 111 million in undrawn facilities.
York also announced an on-market buyback program of up to 12.2 million shares, set to begin 9 March 2026 and run for 12 months. He said the buyback will not change the company’s existing dividend policy.
Canada: turnaround despite continued CIPO backlog
Management described a “very strong turnaround” in Canada, even as workflow backlog issues at the Canadian Intellectual Property Office (CIPO) persisted following a systems upgrade in July 2024. Blattman said the disruption “eased somewhat” during the half, and that service levels for current processing have stabilized after prior volatility, but there has been “no meaningful recovery” in the backlog.
On a like-for-like basis (excluding acquisitions and foreign exchange), Canadian revenue rose 7.3% and like-for-like underlying EBITDA increased 18.9%, with the like-for-like EBITDA margin up 2.6 percentage points. Blattman credited organic growth, synergies from the Bereskin & Parr integration alongside Smart & Biggar, and cost discipline. He described the CIPO backlog as “stored value” or delayed revenue and said the business is positioned to benefit when it clears, noting Smart & Biggar is the number one patent filer in Canada.
Asia: filings growth outside Singapore and case transfer momentum
Blattman said he was “personally very pleased” to see Asia return to growth. Like-for-like revenue increased 3.5% and underlying EBITDA rose 1.5% for the segment. He said IPH’s Asian filings excluding Singapore increased 7.3% for the half, with double-digit growth in four countries, including:
- Hong Kong: patent filings up 37%
- Vietnam: up 21%
- Philippines: up 26% (following what he said was an 82% increase in the second half of 2025)
- Brunei: up 57% (off a low base)
Blattman also said the company secured more than 2,200 case transfers into the Asian business, including over 1,500 trademarks, more than 500 patents, and 200 designs. He said these transfers help consolidate client portfolios within IPH and support future revenue.
Singapore was a weaker spot. Blattman said the overall Singapore patent filing market declined 8.6% in the half, with IPH filings down 13.9% year to date to November. He attributed some of the decline to one large filer reducing activity, and said that normalizing for that one client, the market fell 7.4% and IPH was down 10%. He said IPH maintained its number one patent market position in Singapore and had been informed it is now the number one filer in Indonesia.
Australia and New Zealand: U.S. PCT decline still weighing on activity
In ANZ, management reiterated that IPH member firms have been “disproportionately affected” by the decline in U.S. PCT filings due to larger exposure to U.S. clients than the broader market. Like-for-like revenue fell 6.1% and underlying EBITDA declined 10.6% for the half. The company said it continued to “right-size” costs, including a 1.4% reduction in employee expenses during the period.
Blattman said IPH secured more than 2,700 case transfers in ANZ, including over 2,400 trademarks, more than 190 patents, and over 50 designs, and noted additional portfolio transfer wins early in calendar 2026, including an approximately 500-patent case transfer into one domestic business.
He also addressed distortions in market filing statistics, saying overall Australian patent filings fell 12.9% for the half while IPH’s filings were down 5.4%. However, he said the market increase included a large proportion of self-filed, “AI-generated” provisional patent applications. Excluding those self-filed applications, he said the market increased 1.9% while IPH declined 4.8%, which he described as an improvement versus the July-to-October update provided at the AGM.
Outlook priorities: organic growth, AI and operational efficiency
While declining U.S. PCTs remain a headwind for ANZ, executives said they are broadening business development beyond the U.S. into Western Europe, Japan, South Korea, and “in particular” China. In Q&A, Blattman said IPH is not “walking right after the US” given it remains the largest source market, but said the group is increasing activity in China and leveraging its Asian network.
Blattman also said the company is “further embedding AI into our core operations,” including patent drafting and prosecution and administrative functions, with a focus on more automation, including “agent-based” AI to triage instructions, analyze documents, and streamline docketing and renewals.
In a discussion about the rise of self-filers, Blattman said original drafting is a “small part” of what IPH does as a secondary markets-focused firm and emphasized AI’s potential benefits in IPH’s internal workflows and prosecution processes. On translation, he said IPH uses third-party providers and performs internal quality control in certain countries, adding that translation is not a significant part of group revenue or earnings and that AI will likely have a role over time.
Management said the company had “good momentum into the second half,” though it did not provide formal earnings guidance. Executives reiterated focus areas for the remainder of FY2026, including organic growth, operational efficiencies, cost discipline, working capital management, and flexible capital management including the newly announced buyback.
About IPH (ASX:IPH)
IPH Limited, together with its subsidiaries, provides intellectual property (IP) services and products. It operates through three segments: Australian and New Zealand IP, Canadian IP, and Asian IP. The company offers IP services related to the provision of filing, prosecution, enforcement, and management of patents, designs, trade marks, legal services, and other IP. It also engages in patent attorney, lawyers, support, and data analysis and software businesses. The company serves Fortune Global 500 companies, multinationals, public sector research organizations, SMEs, professional services firms, universities, foreign associates, and other corporate and individual clients.
