Hub24 share price slumps despite dividend doubling on record growth

The Hub24 Ltd (ASX: HUB) share price is struggling to catch a bid on Tuesday morning.

At the time of writing, shares in the investment platform company are down 1.08% to $24.69 after the company released its full-year report for FY22.

Let’s check the details.

Hub24 share price falls despite record year

• Total group revenue up 76% year on year to $192.5 million
• Platform revenue up 59% to $160.5 million
• Group underlying EBITDA up 92% to $70.4 million
• Statutory net profit after tax (NPAT) up 50% to $14.7 million
• Full-year dividends of 20 cents per share fully franked, up 100%
• Earnings per share (EPS) (diluted) up 37% to 19.5 cents per share

Investors are reacting negatively after Hub24 demonstrated resilience during a difficult period for markets. Furthermore, today’s result continues a streak of record inflows for the financial technology business.

The company’s success will be passed on to shareholders with a fully franked final dividend of 12.5 cents per share. This brings the full-year total to 20 cents, doubling from the prior corresponding period.

What else happened in FY22?

It was an impressive year for the company’s platform division, with funds under administration (FUA) rising 20% to $49.7 billion. However, its Portfolio, Administration and Reporting Services (PARS) segment experienced an 8% fall to $15.9 billion.

Nonetheless, Hub24 witnessed record net inflows to its platform in FY22. Part of this was fuelled by the acquisition of SMSF administration software company Class Limited. In turn, the company now holds a considerable 5.1% market share — increasing from 3.9%.

However, the Hub24 share price has retracted 5% since the Class acquisition became legally effective.

What did management say?

Commenting on the record result, Hub24 managing director Andrew Alcock said:

HUB24 has achieved record levels of organic growth, whilst also completing the acquisition of Class. The HUB24 platform has continued to be recognised by the industry and our customers including most recently being awarded 1st place for Value for Money by Investment Trends and for our Platform and Managed Portfolio market leadership.

The integration of Class has brought an additional 7,000 customers under the Hub24 banner. As a result, the company now touts more than 300,000 total customers.

What’s next?

As you might expect, ongoing market volatility has meant a lack of specific earnings guidance looking forward. However, shareholders can now expect platform FUA to be between $80 billion and $89 billion by 30 June 2024.

Additionally, management stated it was committed to collaborating with the government and regulators. Hub24 management believes the company is well-positioned and will continue to pursue growth.

Hub24 share price snapshot

The Hub24 share price has had a rather uninspiring past 12 months. Shares in the financial platform provider are down 3.9% compared to a year ago. Although, the S&P/ASX 200 Index (ASX: XJO) is in even worse shape, down 5.9%.

However, the high rate of growth appears to have sustained the company’s high price-to-earnings (P/E) ratio. Based on the current Hub24 share price, the business trades at around 150 times its earnings.

The post Hub24 share price slumps despite dividend doubling on record growth appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Hub24 Ltd. The Motley Fool Australia has positions in and has recommended Hub24 Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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