HUB FY25 result--top 10 holding--Attempting to become the REA of investment advice

 HUB FY25 RESULT

Strong result with revenue up 24% and NPAT up 44%, ahead of my numbers 5% on revenues and 10% on NPAT. The reason was strong markets from the start of the year, but more importantly, strong net flows, records and also revenue margins doing a bit better, not declining as expected. Class, the tech solutions business also had its best year in a long while-SMSF administration. EBITDA margin from 32% to 36% (on my measure), all indicators pointing up.

As per below, HUB is now at 8.7% market share, about the same as NWL, with both of these gathering 98% of net flows in the industry. Market share will go much higher, imo.

The industry is growing, HUB is adding advisors (+572 to 5072), and those advisors are adding FUM. Some comments to add colour here. About 33% of advisors use HUB, but at lowish FUM at this stage. The industry average advisor manages $76m in FUM, the average HUB advisor manages $22m on the platform, but 11% are above $50m. The implication here is that it takes time for advisors to move clients onto the platform; 6-7 years was mentioned, so there is built-in growth. See the chart below. Most of the growth is coming from existing advisors moving FUM across.

Profit growth rates can be lumpy because of the fast growth, but also investment can come in fits and starts, so margin grows through operating leverage but can be muted by further investment. HUB continue to launch new features to improve the efficiency and compliance of advisors. The investment spend is aggressive, and HUB does not want to lose the lead here. HUB strategy is to ingrain itself into the advisor businesses, much like REA with real estate agents. Adding more services and more fees, Hub is building an advice ecosystem through several aligned initiatives. They held an investor day earlier in the year, which showed they have their eye on a much larger slice of advisor activity. However, HUB are not in a position to increase fees like REA, not yet anyway.

HUB guided to platform FUA of between $148-162B for 2027, currently $113B (+34% FY25). Needs good markets and good flows to hit that.

Risks are that IFA is driven by incentives, changes behaviour and doesn’t move or the competitive landscape changes, and Hub offerings become dated or do not offer enough value. No sign of that at this stage, but the SP does incorporate a rosy outlook.

Happy to add around $60ps, which we will only see on a serious market pullback.

 

 

 

 

Transcript : HUB24 Limited, 2025 Earnings Call, Aug 19, 2025

Andrew Alcock   MD & Executive Director

For FY '25, we actually hit an entity record with $19.8 billion worth of net inflows. We've been #1 for net inflows or platforms for 6 consecutive quarters.

We turn on some of our results highlights and moving straight into the financial results on a great year, $136.4 billion of FUA up 30% on last year with Platforms were up 34% to $112.7 billion.

On a revenue basis, the numbers are equally healthy with the total group revenue at $406.6 million, which is up 24%, Platform up 28%; and Tech Solutions, pleasingly, up 9% to $77.1 million. So all our operating segments up with healthy percentages in terms of revenue, of course, translating into underlying EBITDA gains as well for the total group being at $162.4 which is 38% up Platform up 39% as well; and Tech Solutions, up 23% year-on-year at $27.2 million, a pleasing result there.

On the NPAT front, the underlying and statutory NPAT up 68% to $79.5 million. underlying EPS for the year diluted is also up 45%.

another 572 advisers choosing to start using HUB24 in the last year. And that's the largest increase in advisers we've had since FY '21. $5.3 billion of transitions finished for EQT over this year and the year before and another for ClearView $1.3 million. So to complete those large migrations at the same time as having record-breaking organic flows for us, a great result.

Discovery is up at $1.9 billion, which is great having launched only just over 1.5 years ago. And we have the leading platform according to investment trends across multiple client segments, including the High-Net-Wealth segment, Mass Affluent and mass market segments. Class is also growing at the highest level it has since FY '20.

In terms of executing our strategy at the same time, I've spent some time later talking about Engage, which we've launched, which is leveraging our HUBconnect technology. We now have 7 myproperity enterprise agreements on full with large national licensees. We'll talk about the High-Net-Wealth and the reach piece a little bit later in the pack. And of course, we're doing lots of enhancements to both Class, NowInfinity and the platform.

growth translates into changes in market share, where rates #7 in market share, but we're at the same level, give or take to our nearest competitor. And in the marketplace, HUB24 has once again had the #1 market share gain over 12 months, having gained 1.4% overall market share with the next participant gaining only 1.1%. And the market itself is growing, having had $36 billion of net inflows into the market. It's the highest industry annual net inflow since 2008.

And having a deeper look at some of the trends in advisers, 33% of advisers in Australia now use HUB24, and that's a full-year CAGR of 14%. In June '21, there was 16% of advisers, now 33% at the end of FY '25. The average balance for those advisers has gone up from round about $14 million to about $21 million, $22 million per adviser in that period of time as well. So we have more advisers using the platform and the penetration of the share of their book and their clients has increased over that time as well, translating that to overall market share. We've grown from 4% to 9% over the last 4 years.

Having said that our growth continues to arise from existing and new advisers. For this year, 81% of our flows have come from existing relationships. And we talk about how existing relationships typically give us positive net flows perhaps after 6 years or being on the platform that is reliable ongoing flows to existing clients. 16% of flows in FY '25 came from new advisers with existing licensees and 3% from new relationships.

HUB24 has access through relationships to more than 70% of the adviser market, even though only 33% actively use us. So we have an opportunity to garner support from more and more advisers as we continue to execute. But with an industry average of $76 million per adviser, you can see there's a runway to go in terms of extending our reach and servicing more of the advisers book of clients with an average of $22m at an industry average of $76m. 11% of the advisers on our platform have more than $50 million of FUA in HUB24, illustrating the levels of penetration we can get to and the long runway we have with those existing relationships as well. So still a great opportunity for us to continue to grow our existing and new advisers moving forward.

Having a quick look at our Technology Solutions and [indiscernible] businesses. Class is maintaining its market share at about 30.5%. The system itself is growing on an accelerated basis, and Class has had the largest increase of accounts in FY '25 since FY '20. The corporate passenger part of the NowInfinity business is growing at 1.4x system. So great results there in terms of growth moving forward.

And also in myprosperity, we're seeing results there as well with increased customer engagement. You can see the number of log-ins per firm, logins per customer. So people are using the tool more and more for its rich capability. We've got 7 enterprise agreements signed with large licensees. Those licensees have 1,700 practices across the industry, which we hope to, over time, have quite a few of those signed up to using the service.

And interestingly, since we bought myprosperity practices or customers have become HUB24 customers. And those customers have delivered over $1 billion of FUA to the platform. So you've seen the reciprocity and the sales synergies, if you like, from us building an ecosystem with Platform, Class, NowInfinity and myprosperity starting to play out in our results.

Kitrina Shanahan   CFO & Joint Company Secretary

Platform segment. And here, we have custody FUA growth of 34% with a platform of just under $112.7 billion for the year. and noncustody FUA up 16% year-on-year at $23.7 billion. This brings the total FUA at the 30th of June to $136.4 billion, up 30% year-on-year. we had record net inflows for this year, record for HUB24 of $19.8 billion which also included $4 billion of large migrate funds, and it was a record for us, including and excluding the large migrations.

the platform underlying EBITDA margin of 44.2%, which was up 3.5%. You can see on the right-hand side in the graph on the right, you can also see the $8.5 billion of positive market movements into the custody FUA.

So moving on to the next slide. We have the platform custody revenue and margin. And on the graph on the right-hand side, you can see the revenue margin was consistent throughout the year at 32 bps first half, second half and full year '25. This was down 1 bp on second half '24 and down 2 bps on full year '24. This is driven by positive markets, average balances increasing and accounts moving into higher tiers or reaching a fee cap. And there were 1 bp margin compression during the year with cash balances reducing as a percentage of FUA.

For full year '25, the average cash balance was 6.9%. And for full year '24, the average cash balance was 7.4%.

the platform composition of FUA and revenue and the revenue margins, you can see the retail has increased as a percentage of our total custody FUA, and it's up to 87% of the portfolio is now sitting in the retail portfolio. It was 84% in full year '24. This is due to a hard proportion of the net flows coming into the retail portfolio. And in the chart on the bottom right-hand side, you can see the mix of the custody revenue margin, with the retail revenue margin coming down year-on-year, 2 bps consistent with my previous commentary on the previous page, and the institutional revenue margin coming down last year full year '24 at 13 bps coming down to 10 bps average across the year.

you can see that the second half '25 institutional margin was down to 7 bps. And this is due to a mix of the portfolio. We completed the $5 billion of migrations from EQT in the year. And so now, EQT and private bank clients are the largest component of the institutional FUA and their wholesale rates reflecting the scale and the lower cost to serve for these portfolios.

the Tech Solutions part of the business. Class has had 1 of the best years in, I think, since full year '20, Class number of accounts grew 4% to over 215,000 accounts. NowInfinity business is growing incredibly well. We've got 12% growth in the in there NowInfinity, talking about orders. just over 214,000 documents produced in the year and companies on Class Corporate Messenger, over 862,000, up 7% year-on-year.

The Class underlying EBITDA grew 23% to $27.2 million with an increase in the underlying EBITDA margin of 4% to 35.3%.

Then we do a walk down to the underlying NPAT with share-based payments of just under $14 million, which is consistent with last year, which was $13.5 million. Depreciation and amortization has ticked up year-on-year and is now $19.4 million. which is tracking and aligning with the CapEx levels. Capitalization across both the platform and the Tech Solutions business was $19.1 million in full year '25. And so you can see depreciation and amortization are just in line with that.

And we've called out a couple of the uses of the cash on this slide, with an increased loan with the super fund trustee, the loans up to $100 million with $5 million drawn up of 30 of June, but you can expect to see that increase in the first quarter. There will be a drawdown at the 30th of September to align with the new APRA HPS 114 standard.

Another use of the group's cash is the staff share scheme, purchasing treasury shares on market to service those employee share gains.

Andrew Alcock   MD & Executive Director

Our strategy has 2 main focus areas: growing our market leadership at the same time as continuing to transform our industry and look for opportunities to create value in new ways. continuing to lead in our chosen businesses for HUB24 Platform, Class and NowInfinity, certainly well positioned to increase our market share from the current 9% in the platform and to continue to benefit from industry transformation and be a leader in that space.

The industry is undergoing transformation continuing to undergo transformation in terms of participants in the platform space, but also in the adviser space. 90% Advisers now privately owned or privately owned licensees. 36% of advisers saying that they intend to, over time, use a single platform, up from 13% 4 years ago. And so the business models of advice practices start thinking about how do they lock in with a model that helps them with their business and productivity, and particularly in the business like ours where we offer solutions across all customer segments and all different life status.

With efficiency and compliance still being the 2 top challenges rated by advice firms and certainly a focus area of our technology in our business in terms of how we help with efficiency, productivity and compliance management. And the market opportunity, 98% of the industry net inflows by the last captured by 2 platforms over the last year with HUB24 having 54% of that specialist platforms over the last 4 years, gaining 10% market share with HUB gaining 5% of that. So the trends are there our strategy, our technology position, our footprint and our capability has a significant position to continue to benefit from these trends in the market and the industry.

So some examples of how we bring our strategy life, and we've got some innovative solutions behind the HNW clients. We launched HUB24 Private Invest, which is an innovative product with a unique design, easier access for wholesale investments for wholesale clients. with different or streamlined disclosure documentation and onboarding processes, accessing a broader range of investments, including some alternatives. We do the administration of custody and non-custody assets in that product and flexibility for adviser and their fees a whole of wealth reporting through Engage. But it is about expanding our addressable market.

As we said earlier investment trends rates us is having the best offer in the High-Net-Wealth space. There's $3.4 trillion worth of assets in High-Net-Wealth. 28% of advisers are focused on High-Net-Wealth and wholesale clients, and the 690,000 investors and growing. Only 22% of those investors are advised that we can build products and solutions and work with Advice businesses to increase that penetration. It will certainly expand our addressable market so and our key customers. And improving productivity is the goal as well with these tools and solutions we're launching.

Another example on the next page is Engage, which is an evolution of our present market-leading reporting capability. We've launched that recently. It is -- it's a transformation in technology that advisers can use to have engaging discussions with their clients using their own terminology to build reports real-time that change based on different cuts of data so to bring advisers efficiency and advocacy. It allows them to tailor this reporting for their own business. And the future will allow them to publish these reports and also extract data for these reports for their clients, and it leverages our HUBConnect capability, which is integrated data that sits outside of the platform that allows performance reporting and reporting from multiple sources.

Hence, you can get the universe for your investments, even if it's on another platform, over time, that's the plan here. Engage will run currently runs inside the HUB Platform, but it will also be a cornerstone of myprosperity for customers to use myprosperity to see Engage running across all of the assets they feed into myprosperity,; regardless of what the held by HUB24 or not by HUB24. We've had some great feedback from that, also being recognized in some surveys about Engage before we even launched it to the marketplace.

So that's just some examples of bringing to life our strategy and what we're doing in the market. There's many more. We're certainly focused on extending that lead in our current marketplace and continuing to reshape how the industry works. And so moving forward, we've updated our FUA guidance for FY '27. You might remember that at the end of FY '24, had guidance at $115 million to $123 billion of FUA at the end of FY '26, rolling out 1 year ahead of that or 1 and beyond that, there's a $33 billion increase in the lower end of that to $148 billion by FY '27.

And a $39 billion increase at the top end of the range of $162 billion. That's based on continuing net flow momentum and market movements and a range of growth assumptions. It is a broad range as the business gets bigger. And we certainly aspire to hit towards the top end of that or to exceed that as we have in the past.

Q&A  

Strong start to FY26 FUM

It is a seasonally strong period, but it's great to have a good strong July and August heading off, but we've been pleased by that. Net flows and market movements.

You're saying it's around that $2.6 billion of net inflows to start off up to the 14th. when you're looking at the increase in the FUA of $4.3 billion for the first 6 weeks, yes, the net inflows was about 50% of that.

 

FY26 opex, op leverage

So OpEx could be in that sort of mid-teens range growth as we move into full year '26.

So there's still operating leverage though in the fixed cost areas of the business. Absolutely, there has been hence, you've seen the expanding margin. At the same time, we've been increasing headcount. We've got a 3.8% margin improvement. Not that we're saying we'll do that again and again

Large migrations

So the large migrations, we had obviously an excellent year in full year '25 with 2 migrations coming through. We've said in the past that you can expect to see a large migration come through every couple of years. There's always a couple that are in the pipeline. That's probably -- when you can see the momentum in our underlying net flows, that's going to be less of a factor moving forward is how I would think about it.

Extent of platform growth

But certainly, there are other platform examples in this industry in industry with more participants where some platforms actually have far more advisers using -- 7,000 to 8,000 advisers using those particular platforms that have had in their heyday. So that's an example of a proxy of where this market has been before.

Acquisitions

But our focus would be if we can actually extend our ecosystem, provide more efficient access, more accessible and affordable access to advice for Australians and actually help advisers and accountants do that job we're are ready to go. So it makes sense and there's a good value case there for our shareholders, we won't be shy.

Rate compression into fy26

At the moment, what we're seeing, I mean it's a competitive market, but we're again, not seeing irrational pricing. And so you can expect to see the normal sort of up to 0.5 bp maybe 1 bp of revenue margin compression. But again, I guess it does all depend on what happens in the competitive pricing in the industry. But at the moment, it's looking like 0.5 bp to 1 bp.

Xplore sale FUm impact

I think there's an expectation that we'll retain more of that than perhaps we thought originally. And so I'm not sure it would be the full $2 billion. It depends on advisers and customers. So of course, they have a choice here. But I think we've got a compelling offer that would perhaps retain more than we thought originally when we decided we closed down that business. But we also have a great opportunity to work with evidential and GDG? , with the technology and interfaces, we're be willing to extend that arrangement and potentially grow further.

FUA Guidance

I think the way to probably think about it is the net flow range is probably in the $14 billion to $17 billion over '26 and '27. if you had very normal markets compared to the long-term average, so let's assume 5%, then yes, you do need to be more up at that $18 billion range. But as Andrew said, we have a range of scenarios. And if you have the markets in '25 have been really strong. You would have seen we had $8.5 billion and 10% market growth. if you have a really strong market in the '26 or '27 plus high net flows and you're up in the top end of that range.

If you look at the run rate and the adviser indicators, it's possible that we could achieve that. And so that's 1 assumption. We also have different assumptions where you've got a lower amount and you do have large transitions in there. So -- and it's not that we know the shape of that in the time, but that's possible.

 

Ability to grow advisor FUM

there's some other hints there as well, it does take 6 years for you to get to a point where you might be saturated in terms of what you're going to get from an advice business. That's an average figure, just a but figure. Advisers don't move money overnight. If they're going to change platforms, they're going to do it in the best interest to clients at the right time, at the right life stage. And so it does take time for them to signal that.

In terms of historically, yes, we published each year what our average FUA per adviser is what's become, but I think the stat in the pack is $14 million at $21 million and $22 million this year, which shows you that we've increased that by $8 million over 4 years, at the same time as dramatically increasing the number of advisers. So mathematically, you're getting new advices in who start off with much lower than that average to start with, you're still increasing the average over a growing book.

Operating margin

It depends on how we invest. And so we're not shy in saying that we will continue to invest if there's larger opportunities. So have we not been investing at the rate we are, the margin will be far higher currently.

And so -- and that's quite dynamic based on opportunities. So we will pivot based on opportunity in front of us based on what our competitors are doing in the market and ships. So what we have said previously is -- there's no reason why you can't get up to the high 40s. Some people say, can you get to 50% because 1 of your peers was doing that? Well, that's also possible. But it's a function of us using an accelerator in a break in a disciplined way.

And so having said that, it's conceivable, and we had a great opportunity. We'd actually slow that down based on getting greater market share over time. So it is about how we run the business dynamically. But as a proxy, you can say high 40s, is where we could end up. But who knows.