The HUB24 Ltd (ASX: HUB) share price is edging higher on Monday after the release of its fourth quarter update.
At the time of writing the investment platform provider’s shares are up almost 1% to $12.88.
How did HUB24 perform in the fourth quarter?
HUB24 continued to experience strong net inflows during the June quarter. It recorded a net inflow of $1.1 billion, which together with favourable market movements, lifted its funds under administration (FUA) by 14% or $2.1 billion to $17.2 billion.
This means that its average monthly net inflows during FY 2020 was $412 million, up 26% from $326 million per month in FY 2019.
Management notes that net inflows were at record levels for a June quarter despite a soft start to the period.
It advised that momentum built following a softer month in April as advisers adjusted to the COVID-19 environment. Once again, this was driven by client transitions from incumbent platforms, including strong inflows from both key accounts and broker clients.
The good news is that further inflows look very likely. HUB24 revealed that its new business pipeline is growing with 34 new licensee agreements signed during the quarter. This includes a new large national licensee, a large national broker, boutique licensees, and self-licensed advisers.
Flows have already commenced from some of these new licensees and it is also gaining momentum from opportunities secured earlier in the year.
As a result, data by Strategic Insights shows that HUB24 has maintained second place ranking for both quarterly and annual net inflows in the Australian platform market behind only Netwealth Group Ltd (ASX: NWL).
HUB24’s market share has increased from 1.3% to 1.94% since March 2019.
Happy customers.
As well as ranking second in both quarterly and annual net inflows, HUB24 ranked second in the Trends Planner Technology report for adviser satisfaction and adviser advocacy.
This means HUB24 has now ranked in the top two platforms for the past five years.
In addition to this, the company notes that its focus on supporting advisers during the COVID-19 pandemic has been well-received. HUB24 was rated the top platform in terms of primary users perceiving they received good support.
It was ranked first place in five categories including the range of investments, client portal, integration with planning software, client reporting, and tax optimisation tools. Overall HUB24 was ranked in the top 2 in 17 out of 25 categories.
Andrew Alcock, Managing Director, commented: ‘’We remain committed to delivering the highest levels of service to support advisers and their clients as they seek to meet their objectives. We would like to thank our customers and our staff for their continued support during this challenging environment.’’
No commentary on its margins.
One thing missing from the update was any commentary regarding its margins.
There have been concerns that the cash rate cuts could weigh heavily on its revenue margins and ultimately its profits. However, investors will have to wait until the release of its full year results in August to see what the damage is (if there is any).
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Hub24 Ltd. The Motley Fool Australia owns shares of Netwealth. The Motley Fool Australia has recommended Hub24 Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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