Fintech star Praemium Ltd is still growing nicely

This morning Melbourne-based software solutions business Praemium Ltd (ASX: PPS) reported a full year profit of $1.4 million on revenue of $43.2 million and another strong year of operational performance as its online wealth administration platforms continue to rise in popularity.

The revenue was up 22% on the prior year with underlying EBITDA (operating income) clocking in 40% higher at $8.8 million.

In total it grew funds under administration 35% to a record $8.3 billion with gross asset inflows (excluding outflows) of $3 billion as Praemium continues to sign up significant clients in Australia such as JB Were and stockbroker CMC Markets. In total it has more than 800 financial institutions reportedly using its software platforms.

Its Australian business remains the core growth driver with EBITDA landing at $12.4 million at a healthy 45% revenue margin. The group still has a significant growth opportunity in Australia thanks to the ever-growing superannuation sector and the increased compliance and administrative burdens being placed on financial advisors.

Praemium’s CEO also noted how wealth management operators are soon likely to have to choose between offering product or advice in managing perceived or actual conflicts of interest.

Praemium is also investing to grow in the large UK pension market with revenue growth of 27% in the UK “resulting in a 22% reduction in EBITDA losses to $1.7 million.”

While Asia’s “EBITDA loss decreased by 14 % to $ 1.0 million with revenue up 36% from growth in recurring WealthCraft licences.”

Overall, the picture overseas for Praemium is of a business continuing to invest in a strategy that may pay off nicely for shareholders if it succeeds thanks to the recurring revenues provided and total gross margins above 80%.


The group’s CEO stated the commitment to “drive the international business toward profitability in the coming year”, which suggests investors can expect a year of narrowing losses in this segment, with the already profitable Australian business expected to benefit from recent investments.

The stock is down 2% to 88 cents in morning trade, but has still more than doubled in value over the past year.

Praemium is one of a number of well credentialed players in the ASX fintech space servicing the financial services industry including Iress Ltd (ASX: IRE), Class Ltd (ASX: CL1) Hub24 Ltd (ASX: HUB)), but none of these are as hot as The Motley Fool’s number one dividend pick to buy now…

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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia owns shares of Class Limited. The Motley Fool Australia has recommended IRESS Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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