The Praemium (ASX:PPS) share price crashes 15% on FY21 earnings

Profits plummeted 68% over the financial year.

| More on:
An old rusted car has nose dived from the sky to crash in the barren desert.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Praemium Ltd (ASX: PPS) share price is in the red on Monday morning as the financial software company reports its FY21 earnings.

At the time of writing, shares in the company are trading for $1.14 – down 9.52%. The S&P/ASX 200 Index (ASX: XJO), meanwhile, is 0.41% lower.

Let's take a closer look at today's news.

Praemium share price slumps on 68% drop in net profit

What happened in FY21 to Praemium?

In October, the Praemium share price fell on the news the software company would be acquiring 100% of the shares in Powerwrap Ltd. Powerwrap provides wealth management platform technology to advisors, wealth managers and brokers.

For the quarter ended in December, Praemium announced $1.1 billion of inflows – a gain of 128% on the prior December quarter. This saw Praemium shares rise 11% on the day to 68 cents.

Finally, the CEO of Praemium announced his resignation in June. The company announced his replacement only 4 days ago.

What did management say?

Praemium CEO, Anthony Wamsteker, gave an upbeat assessment of the results:

I am pleased to report that the 2021 financial year was an excellent year for Praemium. The highlights included the successful acquisition of Powerwrap and the outstanding growth achieved in each of our major operating segments. The financial and operating results achieved reflect the tremendous foundation that has been built over many years. That foundation includes our proprietary technology, a client base of market leading financial advisors and our highly skilled and passionate staff.

He added:

Whilst the growth rate was encouraging, the profitability achieved in this transitional year was also pleasing. Underlying EBITDA was very similar to last year in both the Australian and international segments. This result was achieved despite a significant increase in the expense base of the company. Some of this growth in expense was due to bringing in Powerwrap, with the balance attributable to an investment in the capacity needed not only to manage a larger business, but also to facilitate the faster growth rate that we are now starting to see.

Praemium share price snapshot

Over the past 12 months, the Praemium share price has increased 147%. Year to date it has risen 72%.

Praemium has a market capitalisation of around $632 million.

Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Praemium Limited. The Motley Fool Australia has recommended Praemium Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Technology Shares

A businessman waers armour and holds a shield and sword.
Technology Shares

'Unique and defensive': Why this ASX tech ETF is a buy

This ETF provides exposure to a growing global services industry that is becoming a 'critical need' in today's society, says…

Read more »

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
Technology Shares

DroneShield shares hit record high on major new AI order

The tech stock just can't stop rising. What's getting investors excited today?

Read more »

A corporate female wearing glasses looks intently at a virtual reality screen with shapes and lights representing Block shares going up today
Technology Shares

The ASX tech stock with 'a significant growth opportunity ahead'

This tech stock has been flying in recent times and a fund manager remains very positive.

Read more »

A man in a blue collared shirt sits at his desk doing a single fist pump as he watches the Appen share price rise on his laptop
Technology Shares

Surely DroneShield shares can't just keep rising?

The gains continue for this counter-drone player.

Read more »

A young woman holds her hand to her mouth in surprise as she reads something on her laptop.
Technology Shares

Should you buy Life360 shares after its latest stunning milestone?

This high flying tech stock could keep rising according to Bell Potter.

Read more »

A young well-dressed couple at a luxury resort celebrate successful life choices.
Technology Shares

Why the 'opportunity is immense' for DroneShield shares: fundie

DroneShield’s 480% one-year share price gains may be just the beginning, according to this top fundie.

Read more »

A man in trendy clothing sits on a bench in a shopping mall looking at his phone with interest and a surprised look on his face.
Technology Shares

3 explosive ASX tech stocks to buy and hold forever

Analysts think very highly of these rapidly growing companies.

Read more »

A group of businesspeople clapping.
Technology Shares

Why Xero could be one the best shares to buy in the Asia-Pacific

Goldman Sachs thinks very highly of this tech stock.

Read more »