HUB24's phenomenal growth showing no signs of slowing down

Please note: this interview was filmed on Tuesday, 18 February 2025.

By any objective measure, HUB24's recent results were strong. Revenue was up 24.6% and 2.5% ahead of consensus, EBITDA grew north of 40% - good for a 5.4% beat - and adjusted NPAT also jumped 40%. 

The most important metric for investors, however, according to CEO Andrew Alcock, was the jump in the divided. 

"From an investor point of view, probably the most exciting number is the dividend up 30 odd percent, to 24 cents, fully franked.

The profit, the financials, revenue, and so forth are all great results and testament to the hard work we've been doing", said Alcock.

All of this is to say nothing of perhaps the most impart metric of all - funds under administration (FUA). Last time Livewire spoke to Alcock, six months ago, the company had a target of $11 billion in FUA growth each year, for the next two years, and an overall target range of $112-$123 billion. 

With $9.5 billion added in the first six months of that two year period, those numbers have been left in the dust and Alcock rightly points out that the business wouldn't be backing itself if that range was not updated. 

"In getting $8 billion in the first half and then another $1.5 billion of institutional migrations, if you do the maths, it would seem that we would not have conviction in our business if we kept the statement where it was.

"So hence the upper bound of $123 billion has become the lower bound of our guidance for the same period, and the upper bound is now $135 billion, dependent on market movement. 

So we're really excited about it, and humbled by it at the same time, but we'll work hard and try as best as we can to get there", said Alcock. 

I was fortunate to sit down with Alcock just hours after the results release to talk through the numbers, risks and opportunities, and the outlook from here. 

Edited Transcript

Chris Conway: Hello and welcome to Livewire Markets. My name is Chris Conway. HUB24. Has enjoyed an exceptional period of growth over the last six months, and today I'm speaking with CEO Andrew Alcock to discuss the latest numbers and the outlook for the company from here. Andrew, thanks so much for sitting down with Livewire today.

Andrew Alcock: Thank you for having us. Great to be here.

Chris Conway: It's been six months since we last spoke to you. A lot has happened in those six months. We're here to talk about your results, though it is, of course, results release day. What are the most important numbers that investors need to be aware of?

Andrew Alcock: Look, from an investor point of view, probably the most exciting number is the dividend up 30 odd percent, to 24 cents, fully franked. Underlying EBITDA is up to 77 million. So from an investor point of view, the profit, the financials, revenue and so forth are all great results - testament to the hard work we've been doing. But from my perspective, the best numbers are the fact that we had $9.5 billion of net flows into our business in the six months, which is really us looking after people's retirement, their futures, which is really what Hub24 is about - helping advisors and clients empower a better financial future.

Chris Conway: Just on the funds under management: grown 35% in the prior 12 months, and when we sat down last time, the target at the time was for $11 billion per year over the next two years to hit $115 -$123. Now you've blown that out of the water and the needle has moved.

Andrew Alcock: Thank you for doing the homework. Well, we set the guidance in August when we did our end of financial year for FY24. We always typically say, “Hey, over the next two years we expect this sort of level of flows”. We can never really predict it because the market is choppy, but we also have tended to overshoot it. And so we think judiciously about if you're giving market guidance, you don't want to have to be correcting it, but we are always aspirational there. So we had a great first half. We didn't expect that. We welcome it. We think it is the result of just having a great product and great service, which wins awards. So in getting $8 billion in the first half and then another $1.5 billion of institutional migrations, if you do the maths, it would seem that we would not have conviction in our business if we kept the statement where it was. So hence the upper bound of $123 billion has become the lower bound of our guidance for the same period; $123-$135 billion, dependent on market movement. So we're really excited about it, and humbled by it at the same time, but we'll work hard and try as best as we can to get there.

Chris Conway: Fantastic result. Well done. Andrew, aside from the fund growth, the other thing investors and analysts are always keen to learn about is product and technology developments. Has there been anything exciting happen over the last six months?

Andrew Alcock: There's lots going on. I'll be cheeky and start with the award because on Friday last week - Valentine's Day - Investment Trends awarded us best overall platform again, and we already were ranked number one, but they also awarded us most improved, which sounds a bit weird. It sounds like Best and Fairest. But most improved when you are already number one. So their view is that we've actually extended our lead by more than others. In that there's quite a few things. So in our platform we've got some pay anyone functionality where you can use a platform for a cash account, pay different parties as opposed just to your bank account. We've done a whole lot of work on advice fee consents, which has been a pain point for advisors in terms of meeting the regulations, where now you can load a fee template up in Hub and we can apply that to your customers, automatically generate the forms for you, send them back, send them to your clients with you, but we can also interpret them when they come back using AI and robotics to make that faster. So it's a better solution than the industry has at the moment.

There's lots of stuff we've done in Class, making self-managed superfund admin easier with direct feeds from share registers, property registers and so forth, so that if you’ve got a self-managed fund and you lodge accounts with the ATO, they need to be audited. The auditors and the administrators need to see those source documents that the investments actually exist. We've got those certified coming through and that's just a smattering of them. And on the reporting sense, we're doing a whole of work building better reporting with what we call Engage, which is a tool which we have on the platform, which brings in data not just from Hub24, but from other data sources as well and leads the market in terms of advice review reporting tools.

Chris Conway: Andrew, I might jump ahead here just because you mentioned AI - AI and cybersecurity are closely linked, but one is an opportunity, and one is a risk, if you will. How are you navigating those?

Andrew Alcock: Look, it's fascinating. I learn every day. I spend time with people from our innovation lab and I get blown away by some of the things that interns and tech students and our innovation lab are looking at. And then I talk about what's going on around the world. There's lots of opportunity here and yes, there's lots of risks there with AI and there's lots of risk with cybersecurity. I think it's really exciting. It has the potential to change the shape of our industry and the productivity of how we deliver to clients. So the implementation delivery of advice, and the compliance monitoring, and the processing and admin - AI has endless opportunities. So we do quite a bit. For years now, we've been consuming or digesting statements of advice for licensees and turning those text documents into data sets so the licensee can check for compliance factors and see if the advisor of the client is straying outside the flags upfront rather than by doing random audits separately.

So there are things like that we've been doing for some time, which are commercial solutions, and there's lots more to come. From the cyber point of view, hey, we're all focused on that all the time in terms of meeting the requirements. The government has moved the goalposts in terms of that as well with the ASD8, which has strengthened that, which is good for the nation. It's important we all play our role there. We have a huge team investing in that with multifactor authentication, all the right things, and thinking about fraud prevention and detection of personal information theft and those sorts of things. Lots going on. We take it seriously, we invest in it, but hey everyone, be careful, everyone be conscious of what's out there.

Chris Conway: It's good advice. Andrew, one of the other risks is around integration risk as it pertains to acquisitions…

Andrew Alcock: We're all about risk today, aren't we?

Chris Conway: Well we, the results are so good, I've got to talk about some of the risks…

Andrew Alcock: Hey, there are risks in everything we do. We take risks to innovate and create new opportunities.

Chris Conway: No, of course. The acquisitions though, anything that investors need to know on that front?

Andrew Alcock: Hey, look, we are fine. We are finishing up the Explore piece. We’ve largely finished it. We announced that last year. There's one product that we've decided to discontinue, which is unfortunate, but it doesn't seem to work for us. And the tech gap on the Explore systems versus ours is too big. So we are looking to work with those clients to migrate them. There's not really a risk there other than we're discontinuing that part of the business. We flagged that in our results. There's always more to do when you buy other businesses and you want to integrate them together. So it always takes longer than you think, but you always come up with more ideas after you've done the acquisition. So we're very happy with what we've got, but as I said, more to do with My Prosperity on the front of Class and Hub24, but as an ecosystem, having four market-leading businesses that are complimentary and you can leverage to unlock value for customers and shareholders, we are really excited. So no risks there, but there's lots of opportunity there.

Chris Conway: Sounds good. Andrew, last one, a few years ago there was a real race to the bottom in terms of margins and a land grab for market share, with a lot of competitors in your space. What does that look like now? It seems like things have stabilised. What's it looking like for Hub24?

Andrew Alcock: We're in a privileged and unique position. I think that the future is great for us if we stick to our knitting and continue to deliver to our clients. That means customer service. It means working with regulatory change. It means innovation, enhancements, broadening out the list of available investments and choice that consumers and advisors have, and dealing with different demographic needs or different client trends. So we've got people moving to retirement, we've got people passing on their wealth to their children. We've got people starting out. So from our perspective, we're trying to cater to that whole spectrum of client needs, which is great for us to do. In other words, you've got one kitchen, and many restaurants in terms of how you service out. So the future is good in the broader landscape. We're yet to see in Australia the resurgence of the traditional platforms.

There are still ownership challenges with some platforms. There are JVs. Some of the banks are still to sell. They indicate they’ll sell those platforms. There is clearly a lack of investment, in our view, in terms of building products for the future, hence us having crept ahead with some of those awards. So I think from our perspective, if you do the right thing and you're trying to find value for customers, then all those things about race to the bottom, and fee pressure, and those sorts of things, disappear. People are looking for value. People are looking for sustainable product options and business partners. If you're not investing, you're going to have outflows. If you are investing and the fees are fine, people are happy to pay the fees because they're there for the future. That's what we believe in. So it's working well for us and, at this stage, it would appear that the trajectory is there for us to take if we keep delivering.

Chris Conway: Well, Andrew, the proof is in the pudding. Congratulations on your fantastic results. And again, thank you for sitting down with Livewire.

Andrew Alcock: Thanks for having us. Great to be here.

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