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Why the Praemium (ASX:PPS) share price is surging 9% higher today

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The Praemium Ltd (ASX: PPS) share price is storming higher on Wednesday following the release of its first quarter update.

At the time of writing, the investment platform provider’s shares are up a sizeable 9% to 61 cents.

How did Praemium perform in the first quarter?

It was a busy first quarter for Praemium, with the company not only delivering strong growth, but undertaking an off-market takeover of Powerwrap Limited (ASX: PWL).

And while the Powerwrap takeover didn’t complete until after the end of the quarter, its funds under administration (FUA) have been included in Praemium’s numbers today.

According to the release, at the end of the first quarter, Praemium’s Global FUA reached $31.2 billion. This was a 54% increase on the end of FY 2020 and driven predominantly by the inclusion of Powerwrap’s FUA.

However, it was supported also by $733 million in net inflows and $377 million in positive market movements, offset slightly by outflows from an ongoing client transition of $269 million.

Praemium’s Global FUA comprises Australia platform FUA of $15 billion, International platform FUA of $3.5 billion, and Virtual Managed Accounts and Administration Service (VMAAS) FUA of $12.8 billion. The latter two were up 7% and 12%, respectively, over the prior quarter.

Management commentary.

The company’s CEO, Michael Ohanessian, was pleased with the quarter and particularly the acquisition of Powerwrap.

He commented: “The addition of Powerwrap is Praemium’s most important acquisition in our 20-year history. We are delighted to welcome the Powerwrap team to Praemium and to work together to further enhance our market-leading solutions for all segments of the advice market and their clients. Leveraging the strengths of both groups will allow Praemium to be one of the few platforms to deliver a holistic wealth management solution on a single platform.”

“We are well advanced in the planning phase for the integration of both businesses. Given a common underlying technology, we see considerable opportunities for a more efficient operating environment as well as a better client experience,” he added.

No guidance has been given for the remainder of the financial year, but the CEO appears confident in the company’s trajectory.

He explained: “This quarter has seen good underlying growth for our global managed account platforms, as key industry themes continue to drive advisers to seek more efficient ways to meet client needs. We continue to see growth across the global markets in which operate and a solid pipeline for both platform and software services.”

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Praemium Limited. The Motley Fool Australia has recommended Praemium 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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