IPH Limited

The Business

IPH is the largest patent and trademark filing agent across Australia, Canada and parts of Asia, managing intellectual property portfolios for corporate clients rather than owning any IP itself. Revenue splits roughly 40% Australia and New Zealand ($285.6 million), 45% Canada ($318.5 million) and 17% Asia ($120.4 million) in FY26. Fees recur because patents need multi-year prosecution and renewal, work clients rarely switch mid-cycle. Scale built through a decade of acquisitions is what separates IPH from smaller, single-market IP boutiques.

Recent Performance

Group revenue was essentially flat in FY26, up just 0.4% to $712.8 million, as strong Canadian growth offset an Australian business that lost roughly five percentage points of patent filing market share in a single year. The stock has derated sharply over recent years, from around 10 times operating earnings to roughly 6.5 times today, as the market has treated the Australian decline as permanent rather than cyclical. That derating in the trading multiple accounts for most of the share price decline over the period.

Outlook

Revenue growth is set to accelerate in FY27 as Canadian backlog processing normalises and Australian filings stabilise off a low base, before easing back toward a steadier, lower-growth rate over the following two years, consistent with a mature intellectual property market. EBITDA margin, 28.9% in FY26, should recover over the next two years as cost discipline and operating leverage on largely fixed employee costs take hold, before drifting down again as Canada, a lower-margin business than Australia, becomes a larger share of the group. Earnings per share are expected to recover over the next three years, with the improvement driven more by margin recovery and lower amortisation than by top-line growth.

Key Risks

The clearest risk is that Australian market share losses prove structural rather than cyclical. Self-filing platforms and AI drafting tools increasingly handle simple, high-volume filings that used to require a patent attorney, and IPH has been slow to respond with pricing or service changes; if this trend continues, the recurring-revenue characteristic underpinning the investment case weakens considerably. Second, how the market prices IPH's future cash flows matters as much as the cash flows themselves.

Third, around 37% of group revenue is denominated in US dollars with no hedging in place, so a stronger Australian dollar directly erodes reported earnings. A sustained appreciation could reduce group EBITDA by a meaningful high-single-digit to low-double-digit percentage, and the Australian dollar has been trading toward the stronger end of its recent range while the Reserve Bank holds rates elevated, a headwind rather than a tailwind at present.

What to Watch

The thesis-defining event is IPH's half-year result in February 2027, which will show whether Australian market share has shown genuine signs of stabilising or has continued to fall.

• 6-18 months US PCT filing recovery — a rebound in US-origin patent filings, tracked through WIPO data, would validate the cyclical thesis and support a re-rating of the stock.
• 6-12 months Canadian backlog clearance — clearing a government processing backlog would lift revenue and reinforce Canada's role as the group's growth engine.

Latest Developments

IPH appointed a new group chief executive in mid-2026, promoted from the Canadian regional role where he delivered strong like-for-like earnings growth. He has under two months in the top job, so his ability to arrest the Australian share slide at group level remains unproven.

Company Description

IPH is the largest listed intellectual property services group in Australia, managing patent and trademark filings for corporate clients across three regions. The Australia and New Zealand division, roughly 40% of FY26 revenue, holds the number one filing position domestically but has been losing share to competitors and self-filing platforms. Canada, now 45% of revenue after a run of acquisitions, is the largest and fastest-growing division, and IPH holds the top filing position there too. The remaining 17% comes from Asian markets including Singapore, where IPH also holds a leading position. The group does not own intellectual property; it earns recurring fees prosecuting and renewing client patents, work that typically spans a decade or more per filing.

Where the Growth Is

Canada is the growth engine, now 45% of group revenue after IPH built the largest patent filing platform in the country through acquisition. Like-for-like EBITDA there grew 11.8% in FY26, comfortably outpacing the group average, as integration synergies matured. A processing backlog at the Canadian Intellectual Property Office has delayed some filing revenue; as it clears over the next six to twelve months, we expect it to lift Canadian revenue growth further. This is the one segment where the growth narrative and the numbers currently agree.

Competitive Position

IPH's advantage rests on switching costs: once a patent attorney firm is engaged on a portfolio, moving files to a competitor is costly and risky, which is why roughly 70% of group revenue recurs each year. That advantage is real but narrowing. Australian market share fell from around 29% to 24% over the past year, the clearest evidence that switching costs are lower than the recurring revenue figure implies, particularly for simpler, high-volume filings that self-service platforms and AI drafting tools can now handle. Canada and the Asian businesses show no equivalent erosion, suggesting the pressure is specific to the Australian market rather than the model as a whole. We expect the competitive advantages IPH holds today to persist for five to seven years before further erosion, not indefinitely, which is a key input into how much credit the business deserves for future margin expansion.

Management & Capital Discipline

Capital allocation has been mixed. Buybacks executed at an average price of around $3.50 a share

, but the acquisition track record that built the Canadian business generated a return on invested capital of around 10.8%, only modestly above what the business costs to fund if the market's more cautious view of risk proves closer to the truth. The new group chief executive has fewer than two months in the role, promoted from running the Canadian business where results were strong. Whether that translates to fixing the Australian franchise, a different market with different competitive dynamics, is untested. The payout ratio has run at 80-82% of earnings, signalling a business managed for cash return rather than reinvestment.

Financial Position

IPH carries net debt of around 1.8 times EBITDA, a comfortable level for a business generating free cash flow in excess of net profit each year. Undrawn facilities of roughly $105 million provide headroom against refinancing risk as debt facilities mature. The balance sheet's main blemish is goodwill: acquisitions have left tangible net asset value negative, meaning shareholder equity is largely a function of the price paid for past deals rather than hard assets. That is not a liquidity risk today, but it does leave the balance sheet more exposed if any division's earnings deteriorate enough to trigger a write-down.