Investment platform HUB24 [ASX:HUB] has seen its shares rise by 2%, trading at $33.79 after revealing substantial Funds Under Administration (FUA) growth for the September quarter of FY24.
The company also saw a marked improvement in capital inflows to the platform after a rocky last quarter. Despite improving, net inflows were $2.8 billion, down 6.3% on the prior corresponding period (pcp) but up 34.7% from the previous quarter.
Despite the concern within the macroeconomic environment for investments, HUB has moved from strength to strength this year. The share price is up 53% in the past 12 months, outcompeting most of the finance sector and placing it in the top three finance company share price gains this year.
Can HUB24 continue this pace after a strong Q1 performance, and what are the company’s projections for the remainder of the fiscal year?
A closer look at the numbers
HUB24’s Platform FUA experienced a substantial increase, reaching $65.1 billion, marking a remarkable growth of 24.3% compared to the previous year.
While its Portfolio Administration and Reporting Services funds grew 10.3%, to total $17.6 billion.
Despite concerns in the investing landscape for many Australians, HUB24 achieved $2.8B net inflows, up 34.7% from the previous quarter despite only a 0.26% increase in the ASX 200 for 2023.
Source: HUB24 Q1 Report
HUB24 has a market cap of $2.8 billion and has spent much of its energy in the past two years attempting to gain more market share.
In February last year, the company acquired cloud-based superannuation software platform Class in a deal valued at approximately $386 million as the company targeted super and trust accounts.
HUB24’s market share has increased to 6.3% — up from 5.4% last year— and is ranked in 8th place overall. HUB24 is ranked 2nd for quarterly and annual net inflows and has the fastest growth rate as a percentage of FUA based on annual net inflows.
The total number of advisers using the platform is up nearly 11% to 4,026.
HUB24 is also expanding its scope with a new cost-effective platform option called Discover and the addition of the AGILE service by super company Allianz Retire+.
These services will assist advisors and clients in tailoring their retirement portfolios and integrating financial advice into the platform.
The changes come after the government called on the financial services industry to ‘meet the increasing demand for more innovative retirement income longevity solutions‘.
These new features will be launched sometime in November.
HUB24’s CEO, Andrew Alcock, said today:
‘We are pleased with our strong start to FY24, with solid FUA growth and net inflows. This is a testament to the strength of our Platform proposition and the value we offer to our clients and advisers. We are also excited about the launch of our new features in November, which will further expand our Platform proposition and make it even more attractive to clients and advisers.’
Outlook for HUB24
HUB24’s quarterly results showed a company on track for further expansion, with solid FUA growth and net inflows.
The company’s expanding features on its platform and has done well to attract new advisors throughout the year. With the integration of an advice platform, I could see these numbers grow as the regulatory pain points around providing financial advice could be streamlined.
The company also holds some of the highest customer satisfaction in the industry as its platform continues to innovate.
HUB24 CEO Andrew Alcock says the company is now targeting $92–100 billion in FUA by FY25, something that looks achievable with their current trajectory.
Unfortunately, many investors have already bought into the belief of the company’s growth, with HUB’s price-to-earnings ratio at 71.4x — well above the industry average of 19.4x.
While its shares may appear on paper overpriced, this is undoubtedly one to watch as the company outshines its rivals and becomes a formidable player in the financial services sector.
However, competition in the space is heating up, as major rival Colonial First State (CFS) recently released its competing platform, Edge.
As further platforms and upgrades enter the space, seeing if HUB can maintain its growth will be interesting.
Notwithstanding competition, HUB24’s stellar performance in the first quarter of FY24 put it on track to meet its lofty goals. With a focus on innovation, strategic expansion, and client satisfaction, HUB24 continues to set new standards in the financial services industry.
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For Money Morning