HUB24 Ltd (ASX: HUB) $78.17

We discussed last week’s FY26 report here; Overall, the headline FY26 numbers were strong and, in several areas, ahead of expectations. However, 2H fund flows were lower than the 1H which creates some concern over the velocity of growth. If we believe CEO Andrew Alcock, his assessment is macro volatility and regulatory changes in the budget were to blame. – that it’s just a typical period where consumers were more uncertain, a little but more reticent to invest, but these trends naturally reverse.

That’s the positive spin and supporting Andrew’s view is slightly softer FUA growth across all platforms. The counter to that, and this has been raised by UBS, is growth rates have been slowing for a while, and we could be seeing an inflexion around the rate of growth. If that was proven to be true, then HUB (and NWL for that matter) look expensive.

The stock has subsequently slipped ~9%, leaving us considering whether HUB, priced for growth, which is down ~19% YTD in a rising market could be losing its shine.

Firstly, let’s consider how HUB makes money:

1. HUB24 has two main businesses. Platform Services is the major earnings driver, charging fees to administer investments and superannuation on its platform; as more money flows onto the platform and markets rise, FUA increases, and revenue follows.
2. Tech Solutions includes Class, NowInfinity and HUBconnect, which provide accounting, compliance and data software to advisers and accountants, generating recurring subscription revenue.

In simple terms, HUB24 makes more money as advisers bring more clients and assets onto its platform, while its software businesses provide an additional stream of recurring revenue. The stock hit a 13-month low in June on concern around the potential impact of AI on software stocks, and the subsequent broad-based contraction of sector wide valuations.

When we think about valuation, we always need to anchor it to expected growth and predictability of earnings. HUB is growing strongly, and their earnings trajectory is predictable, and that’s why they have held a high multiple. HUB entered 2026 trading around 56x forward earnings, and that multiple has subsequently compressed to ~39x, partly because other similar stocks have also gotten cheaper, but partly because there is concern around the velocity of growth. Lower growth = lower multiple, all else equal. For comparison, its 5-year average PE is 48.5x.

• The upcoming quarterly flows will be pivotal in determining whether Andrew’s view proves on point, or that there is a broader slowing of fund flows onto these platforms, which in the case of HUB and NWL, are quite expensive for the end consumer.

HUB remains the quality leader in the space, reflected in its ~38.5x forward P/E versus ~29.1x for Netwealth and 14.3x for Praemium, supported by its scale, strong historical growth and diversified Tech Solutions earnings. Importantly, the entire sector has de-rated materially from its 2021 highs, with all three now trading below their five-year average multiples.

However, we still think HUB’s model exhibits genuine operating leverage; costs do not scale 1:1 with FUA, although the business is not fully fixed-cost, i.e. a 10% increase in FUA adds a ~14% uplift to EBITDA. The key sensitivities are fee margin, cost growth and mix of accounts, where higher value accounts attract lower fee tiers, i.e. not all FUA is equal.

Consensus expects HUB24’s FUA growth to remain strong but gradually moderate, rising ~56% from A$164.3bn in FY26 to A$256.2bn by FY29, equivalent to around 16% annual growth. Annual FUA additions of A$28–33bn remain healthy, although growth is forecast to ease from 21% in FY26 to 15% by FY29, consistent with management’s caution that higher rates, tax changes and geopolitical uncertainty could temper near-term flows. If HUB24 can maintain FY26-like incremental economics, the additional ~A$92bn of FUA by FY29 would likely mean HUBs earnings (EBITDA) increase by ~60% in that time frame.

• HUB is a $6.4bn company which produced revenue of ~$500m in FY26; forecasts have this jumping to ~$730mn by FY29, and this is expected to drive 15-20% growth in earnings YoY.

Assuming HUB can achieve this FUA growth, the other key swing factor is fee compression: HUB24’s custody margin has already eased from ~26bps in FY23 to ~24.8bps in FY26 as larger account balances move into lower fee tiers, with every additional 1bp of compression potentially reducing FY29 Platform revenue by ~A$26m. There is also upside to this relatively conservative scenario. Tech Solutions growth is assumed to be flat, despite continued expansion across Class and NowInfinity, while stronger equity markets could further lift FUA and associated fee revenue. Hence, the path toward ~A$729m of revenue looks achievable if flows remain healthy, but protecting margins as the platform scales will be just as important as headline FUA growth.

For MM, the issue isn’t that HUB24’s structural growth story has broken; rather, a cyclical slowdown in flows is colliding with a still-demanding valuation, meaning the market may need to reset near-term expectations before the risk/reward becomes more attractive. HUB is no longer “priced for perfection”, but after its FY26 result it could easily take 1 or 2 quarters to convince investors that growth is reaccelerating.

  We can see HUB regaining a degree of strength in the coming months, but we are questioning if it’s the best place for our funds as we move toward Christmas.