The Hub24 Ltd (ASX: HUB) share price traded 5% lower on Tuesday after reporting its financial results.
Did you know you can read more about the company and now use Rask Media’s interactive HUB share price chart?
Here’s my quick-take on Hub’s report…
Record result for platform Hub24
Hub24 followed the script set by Praemium Ltd (ASX: PPS) and Netwealth Ltd (ASX: NWL), delivering a record annual inflows to their platform of $4.9 billion. This includes its independent investment and superannuation platform.
The flood of financial advisers leaving the major banks, along with a substantial investment in innovation, has meant Hub24’s market share continues to grow.
As evidenced by NWL, once platform businesses hit cash flow break-even, revenue and profits begin to fly as overheads as a percentage of revenue reduce.
In this case, Hub24’s revenue increased 37% to $74.3 million as group assets under management (AUM) reached $17.2 billion, a 34% increase. This resulted in a 60% increase in profit to $24.7 million and margin expansion from 33.3% to 38.6% due to the benefits of scale.
Hub24’s management team are now targeting total AUM of between $28 billion and $32 billion despite the pandemic and saw fit to increase the dividend by 35% to 3.5 cents per share.
As highlighted in Praemium’s result, financial advisers are increasingly drawn to Hub’s ‘Managed Portfolios’. These allow discretion over individual investment decisions and provide huge efficiencies of scale for advisers.
My take: Solid result, albeit with AUM growth behind expectations.
