The Hub24 Ltd (ASX: HUB) share price is up 4% in reaction to the fintech company’s FY19 result.
Hub24 is an Australian financial technology business that creates portfolio management and Superannuation software. Founded in 2007, you can think of Hub24’s software as a way to better manage investments in shares and other assets. HUB24 has a management team with decades of experience within the wealth management industry and in the development of platforms.
Hub24’s Impressive FY19 Result
Hub24 reported that its funds under administration (FUA) increased by 54% to $12.9 billion over the year. At 23 August 2019 it had risen to $13.6 billion, a further 5.4% in just under two months.
During the year Hub24’s distribution footprint increased with 84 new agreements signed with licensees, 398 new advisers introduced to the platform and record annual net inflows of $3.9 billion during FY19.
Platform revenue rose by 36% to $54.1 million and the company maintained its position as the fastest growing platform provider in percentage terms.
‘Underlying’ platform EBITDA (click here to learn what EBITDA means) rose by 52% to to $18 million. Underlying total EBITDA grew by 30% to $14.8 million.
Underlying net profit increased by 27% to $6.8 million, however reported profit slightly declined 3% because FY18 included a material non-cash fair value gain, which made the result seem better last year.
Hub24 Dividend
The Hub24 Board decided to declare a second half dividend of 2.6 cents per share, bringing the full year dividend to 4.6 cents per share, which is an increase of 31%.
Hub24 Outlook
Hub24 expects more financial advisers to move away from institutions and increase demand for choice, value and market-leading platforms. Management said the opportunity is growing, so it will hire more staff to maximise its chances of winning against competitors.
As a result of the investments, Hub24 is now targeting a range of FUA of $22 billion to $26 billion by the end of FY21, which is an increase of $3 billion from the previous FUA target range.
But for me, Hub24 is now trading on an expensive earnings multiple. It has a positive future, but I’m not sure I’m willing to pay that high of a price. The growth shares in the free report below could be even better growth ideas.
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