The Hub24 Ltd (ASX: HUB) share price has fallen in reaction to the fintech’s quarterly update, despite the strong growth.
What did Hub24 reveal?
It reported record platform quarterly net inflows of $1.9 billion, an increase of 41% compared to the prior corresponding period. That’s $0.2 billion higher than the last quarter.
Total funds under administration (FUA) is now $51.4 billion including Xplore Wealth, which contributed $17.2 billion at 31 March 2021. Platform FUA has grown to $35.6 billion at March 2021. Portfolio, administration and reporting services (PARS) FUA was $15.8 billion.
There was strong net inflows across all client segments.
Further growth incoming
Hub24 said its new business pipeline continues to grow with 28 licensee agreements signed during the March quarter, with large boutique licensees, self-licensed practices and a new distribution agreement with an existing Xplore client where additional Hub24 products will be offered alongside the current Xplore solutions.
According to the latest available ‘Strategic Insights’ data for the Australian platform market Hub24’s market share has increased to 2.5% from 1.75% at December 2019. Xplore’s market share (1.85%) as at December 2020, increases Hub24’s combined market share to approximately 4.3%.
Hub24 said the development of the private label investment and superannuation offer for IOOF Holdings Limited (ASX: IFL) is progressing well, according to Hub24. It’s expected to be launched in the last quarter of FY21, subject to the negotiation of final agreements and trustee and board approvals. Teams from IIOF and Hub24 are working together to prepare for the rollout.
Hub24 is working with Aberdeen Standard Investments to support broader access to financial advice and new customer agreements for a “bionic advice solution”. A pilot rollout has started for Hub24 Access. That’s the new product designed to support the digital customer engagement and advice.
The company completed the proportional takeover offer for one in every three shares in Easton Investments Ltd (ASX: EAS) and now owns 31.5% of Easton. As part of the technology partnership and distribution agreement with Easton, HUBconnect Insight, which includes compliance monitoring functionality, will be rolled out to Easton during the fourth quarter of FY21 and data is now being sourced from new providers to support the rollout.
Summary thoughts
The Hub24 share price has drifted lower, despite this strong update. It does have a very high price/earnings ratio, so there is a lot of growth and success built into the the current valuation.
I’d be happy to hold if I were already a shareholder, but I wouldn’t want to buy at these levels. There may be some ASX growth shares that might be attractive to investors.
