The Praemium Ltd (ASX: PPS) share price has had a disappointing start to the week.
In morning trade the investment administration provider's shares are down 2.5% to 93.5 cents following the release of its quarterly update.
What was in the update?
According to the release, in the September quarter Praemium's funds under administration (FUA) reached $8.6 billion. This was a 3.6% increase on the end of FY 2018 and driven by combined quarterly gross inflows of $645 million, which was the fifth highest on record.
Australian gross inflows were $466 million, while International gross inflows were $179 million.
Other highlights during the quarter included its growing superannuation footprint and progress with two signature development projects.
The former included FUA in the Australian retail superannuation offering surpassing $1 billion for the first time. Whereas the latter includes the evolution of Praemium's leading SMA platform to a Unified Managed Account platform.
Why have its shares dropped lower?
Investors may be slightly disappointed by the modest quarter-on-quarter growth in FUA. Although FUA is up 29% from this time last year, it is only up 3.6% quarter-on-quarter.
If we were to annualise that growth rate it would come to 14.4%, which is significantly lower than the FUA growth of 35% it achieved in FY 2018.
Any slowdown in its growth rate could be a worry due to the lofty premium its shares trade at. At present its shares are changing hands at 134x earnings.
Should you invest?
I'm a big fan of Praemium but this quarterly update was a touch softer than I had expected.
Because of this, I would suggest investors hold fire on an investment for now and wait to see how the next quarter goes. In the meantime, fellow fintech shares Bravura Solutions Ltd (ASX: BVS) and Hub24 Ltd (ASX: HUB) might be worth a closer look.
