HUB24 (ASX:HUB) share price gains on 43% bump to dividend

Here's how HUB24 performed over financial year 2021.

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The HUB24 Ltd (ASX: HUB) share price is in the green after the company released its results for financial year 2021 (FY21).

Right now, the HUB24 share price is $26.22, 0.96% higher than its previous closing price.

HUB24 share price jumps on 237% increase to funds under administration

Here's how the investment-focused fintech company performed in FY21:

  • Underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) of $36.2 million, a 47% increase on that of FY20
  • $58.6 billion funds under administration (FUA), up 237%
  • Net profit after tax of $9.8 million, after $7.5 million was spent on strategic transactions
  • $110 million revenue – 34.4% more than FY20's
  • 5.5 cent fully franked final dividend. That brings HUB24's full year dividends to 10 cents per share, 43% more than its FY20 dividends

The HUB24 platform – which houses the company's investment and superannuation offerings – also reported significant growth.

HUB24 reported $8.9 billion of platform net inflows, 82% more than in FY20.

Additionally, HUB24's platform's FUA reached $41.4 billion, a 141% increase on that of the previous period. 51% of that was in HUB24's Investor Directed Portfolio Service while the other 49% was in its super offering.

Finally, HUB24's platform revenue was $101.1 million for FY21, a 36% improvement.

HUB24 saw its expenses increase 49% in FY21. The higher costs were mostly due to the company hiring more staff.

HUB24's cost to income ratio improved from 69.5% in FY20 to 67.1% in FY21. This was partially offset by the Reserve Bank of Australia's rate cuts which lessened its revenue by around $9 million.

HUB24 completed a $50 million placement to institutional and sophisticated investors in October 2020. It also issued 1 million shares at $20 per share as part of a share purchase plan in November.

During FY21, the company secured a new Australia and New Zealand Banking Group Ltd (ASX: ANZ) loan facility for $12.5 million. The new facility is on top of the company's $5 million undrawn overdraft it has with ANZ.

What happened in FY21 for HUB24?

FY21 was a productive time for HUB24 and its share price.

The company's platform market share grew to 3.9%, up from 2.5% in FY20.

HUB24's footprint in financial services also grew through FY21, driven by numerous strategic transactions.

Throughout FY21, HUB24 completed three strategic transactions and the sale of its licensee business.

HUB24 acquired Ord Minnett PARS in November 2020. The company is currently working to transition PARS from Ord Minnett systems to HUB24, which is expected to be completed next quarter.

Then, in February 2021, it completed a proportional takeover of Easton. HUB24 also completed the acquisition of Xplore in March 2021.

According to HUB24, the Xplore Wealth and Ord Minnett teams' integration is going well.

It also sold its licensee business, Paragem, to Easton Investments Ltd (ASX: EAS) in February 2021. The transaction saw a capital return of $3.2 million and 3,333,333 shares in Easton Investments Limited as consideration.

Finally, HUB24 launched its first private label offerings in FY21. In May, the bulk transition of $1.4 billion in FUA was completed from ClearView Wealth Ltd (ASX: CVW) across to the new ClearView Wealth private label solution on HUB24. Then, in December, HUB24 made an agreement with IOOF Holdings Limited (ASX: IFL) to develop a private label offering for its customers.

The financial year just gone saw HUB24 achieve record organic growth. During FY21, the number of advisers using HUB24's platforms increased by 48.3% and 117 new distribution agreements were signed.

HUB24 also launched a digital onboarding experience as well as a 'cobrowse' solution that allows its customer service representatives to train advisers.

What did management say?

HUB24's managing director Andrew Alcock spoke of the results driving the company's share price today:

FY21 has been an extremely successful year for HUB24, delivering record platform net inflows of $8.9 billion, a 47% increase in Group Underlying EBITDA to $36.2 million, and fully franked dividends totalling 10 cents per share for the year. I am proud that HUB24 has been recognised as Australia's Best Platform Overall with the highest level of adviser satisfaction. We have tripled our platform market share to 3.9% over the last two years, and the current market dynamics provide significant opportunities for further growth. HUB24 is well-positioned for ongoing success.

What's next for HUB24?

Here's what might be driving the HUB24 share price in FY22:

HUB24 stated market conditions are positive and it's well placed to continue its growth.

The company is targeting a platform FUA range of between $63 billion and $73 billion by the end of FY22.

HUB24 plans to continue investing and building its platform, as well as working with licensees, advisers, and other wealth industry providers.

HUB24 share price snapshot

The HUB24 share price has gained 21% year to date. It's also 67% higher than it was this time last year.

Motley Fool contributor Brooke Cooper 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 Hub24 Ltd. The Motley Fool Australia has recommended Hub24 Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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