HUB24 (ASX: HUB) $79.94

HUB -7.25%: fell today despite HUB delivering another year of strong growth, with FUA, revenue, EBITDA and profit all materially higher. However, the recent softer momentum we saw at the quarterly led to a weaker than hoped second half, particularly within the core Platform business.

Key results:

• Revenue of A$501.1 million, broadly in line with the A$500.2 million expected.
• Underlying NPAT of A$137.3 million, around 3% ahead of the A$133.6 million expected.
• Underlying EBITDA of A$211.4 million, around 2% ahead of the A$206.6 million expected.
• Adjusted EPS of A$1.67, around 4% ahead of the A$1.61 expected.
• Free cash flow of A$171.8 million, well ahead of the A$128.5 million expected.
• Final dividend of 42c per share, up from 32c.

The operating numbers remain impressive. Total FUA reached A$164.3 billion, while Platform FUA increased 24% to A$139.5 billion. Platform revenue rose 26% to A$406.9 million, highlighting the continued benefit of strong net inflows and operating leverage.

The disappointment came in the second half. Normalised 2H EBITDA of A$106.5 million fell ~4% below expectations, while Platform EBITDA of A$93.4 million missed by ~6%.

While it’s easy to conclude the longer-term growth story remains intact, slowing growth in their core platform business is certainty something we need to watch carefully. The other aspect we are thinking about is competition putting pressure on margins, with new entrants likely into the platform space (we think).

For now, the metrics still look good; Around 37% of financial advisers now use HUB24, providing a substantial distribution footprint, while demographic trends, growing demand for advice and the continued shift toward independent platforms remain powerful structural tailwinds. Management expects strong net inflows to continue and has set a new FY28 Platform FUA target of A$186–200 billion, implying another substantial leg of growth from current levels.

MM’s view: The headline FY26 numbers were strong and, in several areas, ahead of consensus. The problem was that the second-half Platform result did not quite live up to elevated expectations.

We continue to own HUB and todays update does not change the medium-term story, though, important to note, we are not wedded to the position. Things can change quickly in this space, and we would not be at all surprised to see increasing competition.