HUB24 Limited

Thank you for standing by and welcome to the Hub 24 Limited FY24 results briefing. All participants are in a listen only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Andrew Alcock, Managing Director and CEO. Please go ahead.

Good morning everyone and welcome. To our FY24 full year results briefing, it's great to have you all with us and thank you for your interest. We're very, very pleased to update you on what's been a remarkable year in many respects for FAP24 in terms of our performance, our strong prospects for our ongoing future and our strategy to continue to transform and change this great industry. We're looking forward to briefing you. And today with me, I've got Katrina Shanahan as always, our CFO. We'd like to try and maximise our time. We always say this, but trying to keep as much time as possible for questions. So we'll fly through some of the slides and pause where we need to. But absolutely keen to maximise the opportunity for those to ask questions. In terms of our highlights and operating view, Before we turn to the financial highlights, I thought it'd be good to talk about how focused we are at Hub24 on empowering better financial futures together. It's our purpose. It underpins how we operate. It underpins how we deal with our products and our strategies. It really is about us aligning with building a better wealth system for Australians. And with our vision of leading the wealth industry as the best provider of integrated platform, tech and data solutions, on this particular side, underpinning that vision is a summary of our current position in terms of achieving that. We are recognised as Australia's best platform. We are number one for annual and quarterly flows into retail superannuation. In fact, we're number one for platform flows and retail super within platform. We're number two, if you like, in Australia across all superannuation funds, including industry funds, where members choose to switch to a new fund. So we're number two behind Aussie Super there. We obviously have our managed accounts capability, which again has been number one across the industry. Our SMSF space, provider of the year for the platform and in our class business, number two for market share and number two for corporate compliance software as well. And we have the leading portfolio solution. When you look at those capabilities together and how we plan to integrate those, With others and other manufacturers and providers and tech players across the industry, we're certainly well on the way to playing that leadership role as having the best integrated platform data and tech solutions. Of course, we certainly aim to operate and grow our business with consistent and reliable shareholder outcomes. The charts on the screen now talk to our four-year compound annual growth rate for our funds under administration, and you can see that's at 57%. and our group revenue and group underlying EBITDA four-year CAGRs of 42% and 47%, respectively. They are consistent, reliable results. We certainly try to run and operate the business to get that growth, but also to balance that with the awards we win and also balance that with the emergence of profit and revenue for shareholders. And so it's a great accolade to us to be able to do that, I think. and we hopefully aspire to that in the future as well whilst balancing that customer service and execution strategy, delivering reliable results is key for us as well in our business. Onto our financial highlights for FY24 and Katrina will unpack some of these numbers with a bit more detail and some commentary a bit later on in the presentation. But looking at the highlights there from the revenue point of view for the group, and the platform up 17% for the group with $327 million of revenue, platforms up 21% and tech solutions up 5%. Similarly in our underlying EBITDA, there's a 15% growth in the group, total underlying EBITDA to $118 million and the platform to $103 million up 21% and tech solutions up a little bit as well, 22.1%. On the right-hand side, absolutely delighted to talk about statutory NPAT which is up 24% to $47 million but underlying NPAT up 15% to $67 million. we've got a fully franked final dividend that we've determined at 19.5 cents per share, and that's up 5% as well. And the underlying EPS on a diluted basis is 81 cents per share, up 14%. Taking a look at where we finish the year with platform FUA and FUA overall, we're at 84.4 bill at 30th of June, but now as we speak, as of Wednesday last week on the 14th of August, 87.1 bill and we can talk about the composition of that market movement and so forth a bit later on but really that's a 20 billion dollar increase or greater than a 20 billion dollar increase than where we were this time last year and our past who was also up in totals who are up to 104.7 billion dollars as i said katrina will unpack some of these later in the presentation Looking to the business highlights and some of the achievements for the year, on the left-hand side of this slide, once again, record inflows of $15.8 billion for the business, including some large transitions, but also if you normalise those out from the result, the organic flows or the normal net flows are also in line with our record in 22. Number one, across major advisory and platform industry surveys, we've got a slide on that a bit later on, We're very delighted to have completed those large migrations this year with more to come, sorry, last year in 24, with more to come in 25 and the completion of the integration program for Explore Wealth having delivered the synergies that we talked to the market about as well. There's been really strong growth and exciting news coming out of class and now Infinity. Now Infinity having really strong growth. We've got some great enhancements coming out in the class business to help customers, accountants and so forth with their products. and really hopefully a step change in some of the features that help the efficient administration of super funds and other products of class. Our My Prosperity offer, we've launched a national offer through licensees. We're having, as we speak, some great workshops with lots of advisors coming to demonstrations of My Prosperity and seeing some great results starting to come to pass there in terms of take up My Prosperity. And of course, we always continue to invest in our business for the future. We've certainly spent some time investing on data infrastructure, security and privacy to enable our strategy and support our customers moving ahead. On the right-hand side of the slide, some product stuff there in terms of initiatives we've done for our customers. New products to meet evolving needs with Discover, our cost-effective offer on the Hub24 platform designed for clients with less complex needs. That's been out in the market. It's going really well in terms of flows and support. We have a pilot out there for high net wealth segment with integrated non-custody admin reporting attached to our platform and we certainly intend to extend that over time as well. Our reporting feature continues to lead the market and we've enhanced that during the year with Hub 24% now enabling even more personalised client reports and of course we added the Agile products being the retirement product from Allianz Retire Plus onto the platform as well. So some great highlights there about what we've done in our business and some great highlights there about us continuing to innovate and meet the needs of clients, certainly as they go through the life cycle and changing needs of Australians. Taking a look at some of the recognition here, and I didn't want to gloss over this, it's an amazing accolade for us and something that we're very proud of and we know that it comes with hard work. It also comes with some humility as well that you've got to keep working at awards and customer service. But we've pretty well had a great year in terms of being best overall platform, two years running from Investment Trends and the subcategories are there on the slide. When we look at the technology needs report as well, number one overall satisfaction for WRAP platforms with some subcategories there. Advisor ratings, we pretty much won all categories and wealth insights as well with the advisor sentiment on the platform and SMSF platform of the year. These are great accolades for us and whilst we don't strive to win the awards, we strive to delight our customers and it's a testament to our strategy that and our focus that we're getting the customer service right but we're also building the right features to support the future of this industry and what our clients and advisors need. It puts us in a great position to continue our ongoing growth and to transform the industry and hopefully extend our market leadership ahead of competitors. If we take a look at the advisor base and the financial advisor base supporting the platform, our access to that advisor base and the FUA growth to date on this particular slide, You can see that since FY20, we've had almost triple the amount or percentage of advisors in the market using Hub24 to today, so 10% to 29%. And that's a four-year CAG of about 22%. So as we speak today, 29% of advisors use Hub24. On the right-hand side, once again, the market share of the business has grown from 2% to over three times that in a four-year period to 7.3% at June 24th. And we've had the number one for organic market share gains over the last 12 months as well. So a great foundation and a great scorecard in terms of our success. We hope to continue to do moving ahead. Taking a deeper look at that though and looking forward from that baseline performance and success, we can definitely see a remarkably strong pipeline to continue that growth as well. And so on the left-hand side of this slide, You can see the recurring flows or revenue we get from existing clients in the bar chart and the flows we get from existing licensees but new advisors and from new licensee relationships. You'll notice in FY24 that the dark blue section is at 17% compared to 9% last year. It does move around. That's largely from the EQT transition with those EQT licensees being new in that period of time. It doesn't actually diminish the ongoing flows that we get from advisors, which typically come in over about six years from joining Hub24 onwards. On the right-hand side of the chart, the 15,583 licensed financial advisors in the country, as we said, we've got access or we have 29% of the market using Hub24. However, there's an additional 47%, or add that together, 76% of the total market that we've got access to, but 47% of advisors, they're covered by a distribution agreement we have with their licensee and we're yet to have them use the platform but there's an opportunity to access more advisors as we grow. And in FY24 I think we had four to five hundred new advisors during the year and that's been pretty well in line with our growth, our average every year despite the market shrinking a little bit over that time. Our fewer per advisor is up to 19 million from 8 million in FY20 so again a large growth over a period of time giving evidence that we're actually increasing our penetration or share of advisors book over time. The average advisor having $70 million in the industry but us having 10% of advisors using our platform now having more than $50 million on HUB. So if our average is 19 and we have the potential to get to 50, hopefully you can see there's a very strong pipeline over time and it does take some time to get that share of fork. But the market share growth we saw in the previous slide, if we execute well and we continue to deliver, there's no reason why we can't continue to have that market share growth moving forward and we're certainly focused on delivering that for shareholders. and delighting our customers in that way. Quickly going to touch briefly on MyProsperity. It's in the pack if you want more details. It's certainly covered in Q&A. But we did during the year launch an enterprise offer for large licensees or large national advice networks. Two of them signed up. There's several others in the pipeline about to do that. Those two represent 1,800 advisors in the market for which we can now approach and promote MyProsperity as a cyber-secure and great featured portal that will help them with their clients and help them with efficiency of delivering advice. So we're very excited about that. We're also working on the MyProsperity front end or it becoming the client portal for Class. The pilot was demonstrated in February and that's certainly underway as well. Similarly, I'll just quickly touch on Class and now Infinity. which is going really well from our perspective as well. The class business growing at 1.5 times system. Market share pretty stable. It is a mature business, but now more than 200,000 total class accounts. And the now infinity business growing at two times system with corporate compliance tools, a great result there. Inside class, as I said earlier, we've got some great enhancements that will make it easier for auditors and self-managed super fund administrators and really change... the feature set that the market has on hand for fulfilling that role for customers in terms of creating more efficiency and reducing friction on how you do those year-end activities. For an SMSF, you can do it along the way and for beyond the class super products as well. I talked about the MyProsperity interface as well. We've had some great customer service excellence there in class and now Infinity as well. As always, our people at Hub24 are fundamental in our culture to our success. We really have a great team of people who believe in what they're doing, who believe in our role and our purpose and certainly how we operate. On the right-hand side, we've refreshed our hub values during the year, which we certainly talked about at the half, but that was about us bringing together our group of businesses because we've had some acquisition over time and aligning them with a set of values that represent us as a group and our enterprise strategy as well. Our employee engagement went up during the year. It's now at 76% in the top quartile of businesses Australian companies and that's through CultureAmp. We are in the top 10 best places to work for banking and financial services according to the Financial Review Survey. We've been endorsed as an employer of choice by Work 180 for women and we're certainly focused on all of the normal initiatives with development, recruitment, talent and so forth but also expanding our graduate and intern programs and increasing our focus on early career professionals. to supplement our workforce and also give people opportunities to work in a great environment and make a difference in the industry in which we work. So some great results here in our people slider. Thank you to the team as always for your continuing passion and commitment to our customers and our business. We also published this morning our sustainability report and before I pass on to Katrina I just wanted to say we've made some great progress with our focus areas, the seven focus areas here on the slide in front of you here. The report's out with full details. If you'd like to see that, it's on the ASX portal. It will be on our website as well. Notably, we've committed to the United Nations Global Compact for Sustainable Development Goals. We'll talk more about that as we go ahead. We've certainly got our emissions roadmap and targets for net zero by 2030. We're continuing to invest in data and privacy and cyber initiatives to build a sustainable business and absolutely working towards and continuing to contribute to our community in the broader sense in terms of having the right products on our platform for sustainable investing but also contributing to worthy causes about wealth and financial advice and helping people empower a better financial future through philanthropy as well. So thank you very much. I'll be back a bit later on to talk about our outlook and strategy briefly but I'll hand over to Katrina Shanahan, our CFO, to give us a breakdown of the financial performance and commentary.

Excellent. Thank you. So, thank you, Andrew. I'll run through the financial results, so if we could just roll forward to the group snapshot slide. Here we have the group, the platform, and tech solutions for the revenue mix, underlying EBITDA, and customer numbers. As Andrew called out, group revenue grew to $327 million and underlying EBITDA of $118 million. From the revenue composition, 77% of that is driven by the platform and 22% comes from tech solutions. On the platform side, we have just under $253 million worth of revenue and underlying EBITDA of 103 mil. And again, as Andrew called out, we've got 4,525 active advisors using the platform, which is up 13% year-on-year. And as Andrew mentioned, represents 29% of the total licensed financial advisors within Australia. Tech Solutions has had a good year with revenue of just under 71 million and underlying EBITDA of 22.1 mil. The customer base has grown from 6,000 in full year 23 to around about 6,500 in full year 24. So a good result across all the businesses and all the segments for full year 24. So if we can just move to the next slide, we've got the group financial results with operating revenue up 17%, operating expenses up 18%, and underlying EBITDA up 15%. I'll talk a little bit more as we get into the segment slides as to the mix of the revenue and the expenses. From a group perspective, the underlying EBITDA margin was down year-on-year half a percent, down to 36.1%.