Netwealth Group Limited, a financial services company, engages in the wealth management business in Australia.
Netwealth Group (ASX:NWL) delivered a strong first-half FY25 result, with net income rising 47% year-on-year to $57.6 million, significantly outperforming the prior year’s $39.3 million.
Earnings per share increased to $0.235, exceeding analyst expectations of $0.206. The firm declared an interim dividend of $0.175 per share, up from $0.14 a year ago, reflecting strong profitability and continued growth in platform revenue.
Total income for the period rose 26% to $155.4 million, surpassing consensus estimates of $149.9 million. EBITDA grew 33% to $78.0 million, driven by a 25% increase in platform revenue to $150.8 million. A key highlight was Netwealth’s record net inflows, which surged 80% to $8.3 billion, bringing total funds under administration (FUA) to $100.88 billion at the end of the half-year, a 30% increase from the prior period.
The positive momentum has continued into the second half, with total FUA reaching $105.4 billion as of February 18 and net inflows of $1.5 billion recorded for the third quarter to date. Management expects FUA growth to remain strong for the remainder of FY25, supported by a robust pipeline of recent new client wins.
Operationally, Netwealth is investing in its expansion, with headcount expected to increase in the second half. As a result, operating expenses are projected to rise by approximately 5% compared to the first half. Additionally, the company anticipates a $17 million reduction in required regulatory capital from July 1, which may provide further flexibility for growth initiatives or shareholder returns.
Netwealth’s impressive growth in net inflows and platform revenue positions it well in the competitive investment platform sector. While rising operational expenses are a consideration, strong inflows and an expanding client base underpin its positive outlook for the remainder of FY25.
As a reminder, NWL is included in the ASX Growth portfolio as a value stock, which uses fundamentals such as profitability and valuation to determine selection. Following this mornings strong figures, we do not see NWL being removed from the portfolio in the next rebalance, and remains an active buy/hold recommendation.
