Netwealth NPAT up 24% amid market share growth

In an ASX announcement on Tuesday morning, Netwealth announced its full-year results for FY2023-24, with the headline numbers in line with those it reported in its June quarter results last month.

Netwealth posted strong growth in net profit after tax for the financial year, growing 24.1 per cent on the previous year to $83.4 million. Earnings per share increased by 24.4 per cent to 34.2 cents per share.

On the back of the numbers, the board declared a final fully franked dividend of 14.0 cents per share resulting in total fully franked dividends of 28.0 cents per share for FY23–24, which the firm said is a 16.7 per cent increase from the FY22–23.

In a joint statement from independent non-executive chair Timothy Antonie and chief executive and managing director Matthew Heine, the pair said a steady decline in global inflation and a rebounding equity market have driven strong growth across the Australian wealth management platform market.

Citing Plan For Life numbers, the market increased by 11.5 per cent in 12 months to March 2024, growing from $982 billion to $1,095 billion.

Also looking at data from Plan For Life, Netwealth said its market share grew 0.9 per cent to 7.7 per cent as at March 2024.

Netwealth itself saw funds under administration (FUA) grow by 25.2 per cent or $17.7 billion to reach a record high of $88.0 billion as at 30 June 2024. It also boasted record FUA gross inflows of $22.0 billion and FUA net inflows of $11.2 billion.

Total income increased by 18.9 per cent for FY23–24 to $255.2 million, which Heine and Antonie attributed largely to the growth in FUA from existing and new clients.

“Our EBITDA margin increased by 1.9 per cent to 48.8 per cent due to strong income growth and moderate expense growth of 14.5 per cent. This resulted in an impressive 23.8 per cent increase of EBITDA to $124.7 million,” the pair said.

“Our continued high cash conversion ratio resulted in a 19.8 per cent increase in Operating net cashflow (before tax) to $127.3 million.”

Heine and Antonie added that the firm has continued to “expand and strengthen many new and important licensee and adviser relationships” throughout FY23–24, with client accounts increasing by over 12 per cent.

“Our new business pipeline, including conversion rates, remains strong across all market segments. We enter FY2025 well positioned to continue to increase market share,” they said.

Looking ahead, Netwealth said it is confident in its outlook and future growth opportunities, “which we believe are very significant”.

“We have expanded and strengthened our new adviser and licensee relationships, plus our new business pipeline, including conversion rates, remains very strong across all segments. Several significant new client wins have begun transitioning flows onto the platform in early FY2025 with $1.2 billion of FUA net inflows successfully transitioned in July,” Heine and Antonie said.

“We plan to continue our significant investment in our people, product, security, and technology capabilities to ensure we capture the substantial number of existing and emerging opportunities in the market which will drive our ongoing and sustainable profit growth. We expect this investment will result in a small percentage increase in the rate of expense growth in FY2025 compared to FY2024.”

They also noted that Netwealth is reducing its reliance on third-party systems as it broadens the functionality of its platform.

“Our advice enablement strategy multiplies the efforts of our advisers, allowing them to serve more clients as demand continues to outstrip supply. Netwealth will provide greater practice management, business management tools, and access to data for advisers and licensees,” they said.

“Netwealth recognises and innovatively embraces the significant opportunities of emerging technologies including generative artificial intelligence (AI) and machine learning to improve efficiency, productivity and reporting, and to support advisers and clients in new ways.”