The Netwealth Group Ltd (ASX: NWL) share price is climbing on Wednesday after posting its financials for three months ending December 2024.
Shares in the financial services company are currently fetching $30.75 apiece, up more than 4.4%, as investors digest the update.
Let's take a closer look.
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Netwealth share price rises on record-breaking FUA growth
Netwealth produced solid numbers during the quarter. Here are the highlights:
- Funds under administration (FUA) net inflows reached a record $4.5 billion for the quarter.
- This is a 69.8% increase compared to the prior corresponding period (PCP).
- Total FUA climbed to $101.6 billion, up $6.2 billion for the quarter and 30% higher year over year.
- Funds under management (FUM) rose by $1.5 billion during the quarter to $24.0 billion.
- Accounts under administration increased by 14% year over year to 151,437.
What else happened during the quarter?
The Netwealth share price had a good quarter on the chart and in the business with its fund flows. This marks the second consecutive quarter of record-breaking inflows for the company in FUA and FUM.
FUA net inflows for the first half of FY25 were $8.5 billion alone, driven by "consistently high transition rates from existing financial intermediaries" and "strong conversion rates" from its pipeline.
The company also reported $517 million in institutional FUA net inflows.
According to the latest Plan for Life industry analysis, Netwealth had the second-highest fund flows for any platform in the 12 months ending September 30, 2024.
It also holds up to 8.2% share of the market, ranking it sixth on the list. However, it says "legacy platforms" lost some market share during this period.
Management didn't comment on the release, but there are some business updates to consider.
First, changes to product disclosures take effect on March 1 this year. These include a cap on risk requirements for Super Accelerator accounts and a reduction in interest paid on these accounts.
At the end of last year, it also included a number of new features, such as a 're-design' of the portfolio page and an "expanded suite of managed models." Time will tell if these affect the Netwealth share price.
What's next for Netwealth?
Looking ahead, Netwealth expects slightly lower inflows during Q3 FY25, the result of "seasonal factors" that come at this time of the year.
The company also has a "strong" operating profit margin, which produces "strong cash generation" as well. Consequently, it is constructive for the year but sees higher costs:
In light of a favourable revenue and market outlook we have advanced several planned initiatives and continue to invest in our people, product, security and technology capabilities. These investments aim to capitalise on both existing and emerging market opportunities, to drive sustainable profit growth and benefits to our customers and members.
Consequently, we expect this investment will result in a modest percentage increase in the rate of expense growth in FY2025 compared to FY2024, in addition to the operational costs of the Xeppo and Flux acquisitions.
Netwealth share price snapshot
The Netwealth share price has gained 77% in the past year. This is a more than 65% advantage over the broader market.
It currently trades on a price-to-earnings (P/E) ratio of 78x with a trailing dividend yield of 1.05%.
