Hub24 Ltd (ASX: HUB) has reported its FY20 result to investors. The Hub24 share price has dropped 6% in early trading.
Hub24 is a fintech business that offers a platform that connects advisors and investors.
Hub24 FY20 report
HUB24 announced that in FY20 it saw FY20 platform revenue growth of 37% to $74.3 million.
This revenue growth was driven by a 34% increase of funds under administration (FUA) to $17.4 billion. The company disclosed it had $18.5 billion of FUA at 21 August 2020. The annual net inflow of almost $5 billion was a record.
This year it added another 108 new managed portfolios to its platform. It also signed 105 new licensee agreements during FY20 with 441 advisors starting to use the platform (up 27.1%).
Underlying EBITDA (click here to learn what EBITDA means) jumped by 60% to $24.7 million with underlying platform EBITDA rising by 59% to $28.7 million. The underlying margin has been steadily rising over the previous periods, the FY20 second half EBITDA margin was 38% – up from 35% in the prior corresponding period.
Underlying net profit after tax (NPAT) jumped by 49% to $10.1 million and statutory profit rose by 15% to $8.2 million. The statutory result includes AASB 16 lease accounting changes, a $1 million impairment and $1.8 million of restructuring costs to position the business better for future growth.
Hub24 dividend
The board of Hub24 decided to declare a fully franked final dividend of 3.5 cents, bringing the full year dividend to 7 cents per share, up 52% compared to FY19.
Management comments
Hub24 Managing Director Andrew Alcock said about the result: “We’ve achieved this in the context of COVID-19 without receiving any government or third-party concessions. Our business is well-positioned for further growth and we would like to thank our customers, team and shareholders for their continued support.”
Outlook
The company is targeting FUA of between $28 billion to $32 billion by FY22. Management is expecting strong growth and increasing profitability going forwards, subject to no detrimental COVID-19 or market effects.
I’m not too surprised that the Hub24 share price has dropped in response to this report – it was a good report but it was trading on a high price/earnings ratio (and it still is). I’m not sure how much the company can grow beyond the next few years, which is why an ASX growth share like Pushpay Holdings Ltd
(ASX: PPH) has more appeal to me.
