Earnings call transcript: Praemium Ltd sees growth in FUA, launches Spectrum platform

Praemium Ltd reported a solid performance with significant growth in its Funds Under Administration (FUA) and the successful launch of its Spectrum platform. The company’s FUA reached $64.3 billion, marking a 12% increase for the year. According to InvestingPro data, the company has demonstrated impressive revenue growth of 23.52% over the last twelve months, with a market capitalization of $241.74 million. The stock showed a modest increase, with a 1.31% rise to $0.785, reflecting positive investor sentiment. InvestingPro analysis suggests the stock is currently trading below its Fair Value, presenting a potential opportunity for investors.

Key Takeaways

• Praemium’s total FUA grew by 12% year-over-year to $64.3 billion.
• The Spectrum platform saw net inflows of $339 million in the quarter.
• The company is focusing on technology integration and productivity improvements.
• Praemium targets the high net worth market, emphasizing superannuation growth.

Company Performance

Praemium Ltd demonstrated robust performance with significant growth in its Funds Under Administration (FUA), which rose by 12% to $64.3 billion over the year. The company’s platform FUA increased by 9% year-on-year, indicating strong demand for its financial services. Praemium’s strategic focus on technology integration and product innovation, including the launch of the Spectrum platform, has been instrumental in driving this growth. The company is targeting the high net worth market segment, with superannuation representing 20% of its current portfolio.

Financial Highlights

• Total FUA: $64.3 billion, up 12% year-on-year
• Platform FUA: $30.7 billion, up 9% year-on-year
• Spectrum platform net inflows: $339 million for the quarter
• Power Wrap FUA: $13.4 billion, up 6% for the year
• SMA product FUA: $900 million, up 14% for the year

Outlook & Guidance

Praemium is optimistic about its future growth prospects, with plans to complete the OneView transition and focus on onboarding new clients such as Euros and Morgans. The company anticipates continued growth in the Spectrum platform and aims to enhance service quality and technological capabilities. While trading at a P/E ratio of 35.69, InvestingPro data shows the company maintains strong profitability metrics and cash flow generation. For detailed analysis of Praemium’s growth trajectory and comprehensive financial metrics, investors can access the full Pro Research Report, available exclusively to InvestingPro subscribers.

Executive Commentary

Anthony, a key executive at Praemium, expressed confidence in the company’s performance, stating, "We’re very confident that we’ve seen a tailing off of the flows." He also highlighted the positive impact of the Spectrum platform, saying, "Spectrum is closing the gap and now getting us to a positive gross inflow story." Looking ahead, Anthony emphasized the importance of client onboarding, remarking, "Our number one priority now is onboarding those big wins and giving them an experience to remember."

Risks and Challenges

• Potential outflows from Power Wrap may impact overall FUA growth.
• The competitive landscape in financial advice technology could pressure margins.
• Economic uncertainties and market volatility may affect investor sentiment.
• Execution risks associated with the OneView transition and client onboarding.

Praemium Ltd’s strategic focus on technology and product innovation, coupled with its robust FUA growth, positions the company well for future success. However, it must navigate potential risks and challenges to sustain its momentum in the competitive financial services industry.

Full transcript - Praemium Ltd (PPS) Q4 2025:

Anthony, CEO or Senior Executive, Premium: Welcome, everyone, to the premium fourth quarterly financial twenty five update. It’s good to see so many people on the call. So many people registered, and now a lot having joined the call. So thank you very much for your interest. I’m joined today by Simon Moore, the interim CFO at Premium, and we’ll be taking you through the slide deck, which has been published on the ASX already.

We’ll begin by acknowledging the traditional custodians of country and pay our respects to their elders past and present. We also, before we start, just draw your attention to the usual disclaimer about the material that we’re presenting. As I said, I’m joined by Simon. As we often do, we’ll talk about strategy. We’ll then get into the detail on the FUA and the flows, including the detailed tables, and then there’ll be plenty of time for questions.

For those who haven’t joined before or even those who have, just a reminder that you can type your questions into the q and a section, and we will answer all the questions that come in except where there’s multiple questions on the same topic or the same basic theme, and we’ll curate those ones. On the strategy, you’ve all seen this slide before. What I want to do, first of all, is just a reminder that this is what we focus on. And I have said for those people tuning in, particularly shareholders who are most of the audience, If you think that we’re missing something in the strategy, you’re more than welcome to reach out and say, I see your strategy. I I see the progress you’re making on it, but I think the business would be in better shape if this was a particular area of focus.

So we’re always open. We have very good conversations with shareholders, and it may be that you see some opportunities that we’re missing. So that’s the first thing to say about the slide. Second thing is we have made two very subtle changes. The first is we’ve talked about inorganic in the fifth column, but now we’re just talking about growth because our strategic focus is actually growth, and more of our growth is coming organically than inorganically at the moment and probably for the foreseeable future.

So growth is the objective rather than necessarily acquisitions, although we don’t rule out acquisitions and we continue to have some files open. The second thing is service. We’ve just simplified. We used to say customer service. We’re just calling it service just for ease of the the look of the slide, but the service is to our clients who are financial advisers and to their clients, the investors.

And those are the five areas that we feel if we get those right, the business will produce good results, both growth, which we talk about four times a year, including today, and then financially, which we talk about twice a year and a half year and full year results. So these are the levers we’ve got to work on that we believe will deliver results that ultimately lead to appropriate shareholder returns. The biggest area that we’re focused on over the last year or two has been on the product side. We’ve said in the five areas or the five levers that we’ve got, the gap that we’ve got, the most glaring gap has been product, and and the launch of Spectrum was our attempt to close what we saw as a glaring gap in our business model. And so with Spectrum now launched, we turn our attention to fine tuning the product suite for the time being, and that consists of work that we’re doing on the two interfaces that our clients have with us, which is investor portal, which the end investors use, and adviser portal.

And then the other thing is our technology works very well with other technology that’s available to advisers, but the thing that makes it work well is the integration. So we continue to do what I I believe is very good work and on the integration suite or the API suite and integrating to more and more software. Each time we win a new client, it introduces new integrations that they would like because they have a different desktop than other clients. So there’s been a bit of work on some of our wins to develop new integrations. But we we do do a lot of work on that, and and we score number one on integrations in the investment trend server.

So we think we’re doing a good job, but, again, as I often say, we don’t wanna be complacent because how well your technology interfaces with the other technology that advice use is a critical point of difference in the market. In terms of I I’ll finish by saying, as I said at the start, we regard it more as fine tuning on the product side than wholesale new development, which is good because it gives us time to focus on the other four areas, which are also just as important in terms of what we’re doing strategically. On in operations, which includes not just administration staff and operational people, but includes our technology, you’ll see that a lot of the issue now is around how we’re integrating AI and the early developments we’re doing there, and we’re very pleased with the initial progress that we’re seeing there, as well as continuing our Lean Six Sigma program, which has been going for a while now and which has developed some outstanding wins within our business driving. And these things are usually driven by two high priorities. One is productivity improvement or efficiency gains, and the second is improved quality of what we do.

The third area is service, and and and this is now a major area of focus for us. We’ve said that we’re gonna improve our service. We we are not happy with where we are on service. We think we’re satisfactory on service, but satisfactory is not good enough for what we wanna do because we appeal to the high net worth market, and the high net worth market expects that we will deliver a very high level of service, a level of service that they’re used to in the other products and services that they use as high net worth advisers and high net worth people. So we’ve talked a bit there about what we’re doing on service.

And as I said earlier, AI or the the advancements that we’ve seen recently in technology don’t just drive productivity gains for us, but they drive service improvements. On superannuation, we’ve continued to say, you know, superannuation is the vehicle the large amount of the wealth industry uses to accumulate their wealth. We we benefit from the fact that our high net worth cohort often have self managed super funds, but we’re confident that we can deliver a substantial improvement in our retail super offering. And at the moment, we’ve got about 20% of our portfolio is held in retail superannuation. And for the platform market as a whole, it’s much higher.

So we feel that even as we grow our platform offering and the amount of FUA on the platform, we we can grow the superannuation even faster, and it can become a greater share. But to do that, we’re we’re making those improvements. And, again, we’re very confident. We’ve we’ve had a provider develop some new technology capability for us. That’s been delivered, and we’re just going through final UAT on that.

And when we launch that into the market, that will be a substantial improvement in the functionality of our retail superannuation offering. And finally, on growth, which is critical to what we’re trying to achieve that we do continue to grow, The inorganic growth was, of course, OneView, and that transition is now well underway with a substantial part of the funds on the OneView technology and product suite now transitioned to the premium technology and product suite, which is tremendous. And and we’ve had some major client partnerships. I talk a lot about the pipeline is full of big opportunities, middle sized opportunities, and smaller opportunities, and they’re all important. Advisers are spread across firms in all three categories, but, obviously, it’s the bigger ones that people say, oh, well, if you win a big financial advice group, that’s a a good sign about the merits of what you’ve got to offer.

And the encouraging thing is that some of our recent major wins, including Euros, Bell Potter and Morgan’s, are spread across the offering that we’ve got, Spectrum, Scope Plus, and the SMA product. So when we talk to Advise now, we’re we’re definitely in the position where we can say, we need to understand your business. We obviously understand quite a lot about how financial advice works in Australia, but we wanna understand the unique capabilities and features that you bring to your client base, and we will inevitably have a product in our suite now that will meet your needs probably better than anyone else in the market can meet. And that shows itself in success across all of the product offerings that we’ve got in the major client segment as well as in the middle size and smaller segment. So that’s what drives the results, but now I’m going to hand over to Simon, and he’s gonna talk about the quarterly flows and FUA in a bit more detail.

Simon Moore, Interim CFO, Premium: Over to you, Simon. Great. Thanks. We’ll move to the next slide. Our headline FOA, as you know, at $64,300,000,000 for the year, so up 12% for the year.

Breaking that down, this slide deals with the platform FOA, which finished 30,700,000,000 which is up $2,600,000,000 or 9% on the year. Net funds inflow in the quarter, excluding OneView, so keeping that focus on the organic growth, was net inflows of 152. The first call out is Spectrum, which is our key front book platform product. Spectrum ended at £2,400,000,000 at thirty June. In that number is net inflows for the quarter of $339,000,000 which is on top of the $440,000,000 in the March.

The $2,400,000,000 also includes $1,500,000,000 transfer, which is coming from OneView on the integration. Internal transfers are excluded from the inflow statistics for spectrum and outflow statistics for OneView to ensure that reported movements that we put in these figures are purely external. Although I should note that the 1,500,000,000.0 comes from internal transfers that only come about because the customers of OneView have elected to go to Spectrum. They had other choices. Understandably, we get a lot of questions from people who are trying to calibrate the future take up of this new product spectrum, and it’s an important part of our future, and I can understand the interest.

We were happy picking up close to $800,000,000 in the last two quarters. In the next half, we’ll be focusing on on onboarding Euros Hartley, as Anthony mentioned, which will help build that momentum. That said, we think it will probably take a couple more quarters under the belt to get a better sense of the longer term growth trajectory and be able to calibrate that growth. Power Wrap finished at $13,400,000,000 up 6% for the year, 1% for the quarter. The June had net outflows of $51,000,000 which was disappointing.

The frustration is that the flows do not relate to customer satisfaction or the strength of the proposition. We will look carefully at the outflows. We understand that the outflows are associated with the departed advisers and other changes at Ascala. And we are hoping that with the ownership of Ascala resolve that this becomes more settled in the future. That said, we expect that Power Wrap will be impacted by the fact that our primary wrap product is now Spectrum, and we expect IDP growth to be more focused in Spectrum, which sounds a bit of an oxymoron to have a focus in a spectrum.

But anyway, there we go. Putting this together, once one view is complete, it will make more sense to simply report the investment platform flows in the aggregate as our competitors do. I think this was signaled by Anthony in the last March. One view had net outflows of 189,000,000, which is a result of an acquired business undergoing business change. From our perspective, we are keeping good clients for the right reasons, which was always our objective.

As Anthony noted, we are well progressed on the integration. Finally, the SMA product ended 14% up for the year, 5% for the quarter at $900,000,000 Net flows of $64,000,000 in part reflect elevated outflows that occur in the June, which is a function of tax planning and pension payments at the year end. The SMA is a good product with strong future potential. Anthony has referred to the recent sign up of Morgans for the SMA product. The onboarding of Morgans will be our key priority for the first half of twenty twenty six.

Now move to the next slide. On the non custodial side, our full was up 4% for the quarter or 15% for the year, ending at AUD33.6 billion. This is a key strength of premium, and it’s a strength that’s particularly relevant to the high net worth segment and the broker market, which we are focused on. Our recent announcement of the Bells Potawin will add a further 2,220 accounts and $6,000,000,000 of FUA in the first half of twenty twenty six, creating a good step up for the business on top of the five new advice groups that we added last quarter. I move to the detailed slides and rather than read a telephone book to you, we’ll leave that open for questions and leave that in public domain.

But to set the expectations for the future discussions, consistent with our peers, I expect that we’ll be providing our custodial, non custodial split of funds flows, and we’ll be reporting platform in the aggregate in the future once we’re through the OneView transition, although we can still talk in the narrative about what are the movements within Power App and OneView. So, Anthony, we move to the questions.

Anthony, CEO or Senior Executive, Premium: Right. Thanks, Simon. Now bear with me because we’ve had a lot of questions come in. So I’m going to group them in the in the sort of categories they come. The first one is power power up outflows.

Can we get a bit more color about that? And do you think it’s coming to an end? The reality is, yes, we can see that it’s coming to an end. There’s been a dramatic drop off in the outflows, which doesn’t automatically appear when you say, oh, but the previous quarter, it was $88,000,000 I think. I can’t get the slides to move, but here we go.

Yes. So when people see that, I get the confusion because outflows 188,000,000 outflow from departed adviser. In the previous quarter, we had I from memory, it was about 88,000,000. But what we see behind the scenes, and we’re not gonna give away confidentiality, more than half of that outflow was a single client, and it was related to the changes that Focus made in the ownership of the business. So it’s not unusual.

It’s money that was probably gonna stay until the changes. So I won’t say any more about it. It wouldn’t be fair for me to say more, but what it does mean is that we are very confident that we’ve seen a tailing off of the flows, and it’s consistent with our expectation that about this time, two years down the track, that would be about it. And the last two quarters give us high confidence. So we’re tailing off before.

You know, the the outflows in FY ’25 are significantly lower than ’24, and the last two quarters have really tailed off a lot to give us some confidence, so that’s coming to an end. The thing I would encourage people to do is we said in the note, you know, a lot of people, when they go into the details, say, look. We we look at your gross inflows. We look at your outflows, and and we know the difference between the two gives net inflows. And we just wanna understand if these outflows are coming to an end and whether the outflows, you know, are elevated forever.

And if you just you know, we’ve we’ve talked about, you know, if one view is some unusual behavior because we just bought it, and you you lose some clients. We expected to lose some clients, and and then we had the departed buzz. And all that, if you say that’s about 2,000,000,000 over the last two years and you add that back, our gross outflows are not dissimilar from the market as a whole, and that’s what we expect in the long run. We don’t expect our outflows to be significantly higher than the market as a whole. And then the lever that we’ve got to pull is the inflows, and the inflows are picking up, albeit early shoots or early green shoots, but they’re picking up, and spectrum’s been the key thing.

Now other products were declining in terms of gross inflows, and Spectrum is closing the gap and now getting us to a positive gross inflow story. So we’re very confident, as we say, in our growth trajectory and our growth outlook. I have had some questions about OneView. There’s been two types of questions about OneView in in the questions. One is, are we surprised at the rate of outflow from Spectrum?

And now it’s consistent with the business case when we bought that business. You don’t expect to keep all of the money. You expect you’ll keep most of the money, but we’re we’re not this we’re not uncomfortable with the amount of outflow and and the rate of transition. And the second question is, are we comfortable with the rate of transition from OneView to Spectrum and the other products, which we’ve gone into a bit detail about which products it’s switching to in this release, which I think is transparent and good information about where the OneView money is transitioning to within our business. And it’s transitioning to our growth products, the products that we’re actively promoting.

And and we’re very happy with the rate, and we’re confident about the trajectory of the of the transition onto the premium tech. I have had a question around the cash holdings. It’s still early days for Spectrum, and the cash holdings were higher than the other products. We do earn that same sort of margin on cash in Spectrum as we do on the other products, so that was part of the question. And where it lands, as we’ve said for a while, you’ve got to give Spectrum two or three years to really understand where it finishes up in terms of cash holdings, in terms of the asset allocation, the investors in there, in terms of what the consistent rate of fill will be.

And so we we would expect that to to, you know, even out over time and see where that where that goes when it’s a more mature product. The early days of the product are the early adopters, if you like, and not necessarily representative of where the product lands in the long run. But, clearly, we think we’ve hit the market with Spectrum, and we’re very happy with how it’s going on all fronts, asset allocation, rate of growth, and the like. Now there’s been a couple of questions about Bell Potter. We sort of said what we would say about Bell Potter, but the obviously, people wanna know what sort of revenue we get out of the business.

I’ve seen speculation in the market. All we’ve said is that it was priced competitively and consistent with the the balance of our scope plus clientele. And so a very good win for us, and congratulations to many of the distribution team who are on the call who have worked tirelessly to build out our sales pipeline and seeing some fruits of that. So thank you to them. The question around will we expect to see some churn in scope?

We we have, you know, we have got some, you know, at least one big account in scope that will transition off scope in the not too distant future, which I think is in the public domain. We’ll let that business talk more about their opportunities out of respect for them. But we’re very confident that on balance, the revenue and opportunity and scope and scope plus business is it’s more of a tailwind than a headwind for us, so we’re very confident about it and continue to invest a lot of that development and CapEx that you see in our businesses to to develop that keeping Scope as a leading proposition in that market. As you all know, sometimes your investment is in catching up where you’re behind, and that’s what Spectrum was all about. But some of your investment is in staying ahead of the game, and that’s what a lot of our investment in scope and scope plus is all about.

I think that having covered Power App Advisors, OneView, Bell Potter, track the the onboarding there there’s a couple of questions about onboarding. That’s a very good question. And one of the things about having got to the tail end of the having got to the tail end of the spectrum and OneView transitions, which were two of the big investments on that strategy slide, they were two of the big things that we were investing a lot in, having launched spectrum and now fine tuning it rather than building any new functionality and having basically migrated most of the OneView business onto premium tech, that allows us to focus on those other areas. And the the two areas that make the most difference to the pace of onboarding and what we do on the operations and the service, there’s a little bit of that the investment in product is about saying, okay. A new whenever you win a new client, they say we we want this.

As I said earlier, there’s a fair bit of stuff in the API. Every client that you win has got their own CRM that they’re using, got their own advice software that they’re using and want a seamless experience for their advisers and their clients, so you invest a bit more in the API. And because we’ve finished the two big initiatives or largely finished the two big initiatives, that’s giving us plenty of time to invest our time in building out the API that that our new clients want, and so we’re very happy with that. Bit question I’ve had some questions in the past as well about you know, we know that you won Morgan’s. There hasn’t been an ASX release about it.

There was an ASX release about Bells. That goes to the fact Bells is an existing book, and Morgan’s are building their their book. So Bells, we expect that transition will take place over the next six months, as Simon said, first half of FY twenty five. Euros, we expect that, as we’ve said before, probably eighteen month to two year transition when it really gets going in earnest, and and we’re confident that that’s all on track. And as I say, some of the development work we’ve got time to do now is building out what they would like.

Morgan’s are building a new business within Morgan’s, and so we’re working with them on that. But what we don’t know how long that will take, but we’ve, you know, had the experience of doing that with other clients. And, again, I don’t really wanna talk about our other clients on on a public ASX call, but we’ve had some experience of helping advice firms build out their SMA offering. And so we’re we’re very confident that that’s a a good initiative with Morgans and but we’re in their hands. We you know, it’s their business.

It’s their product. We think it’ll be a a dynamic and great product for them, and we’ll do whatever we can to make that work. And should that be successful, it will be a very significant win, but not because it’s starting from scratch. It’s not an ASX announcement. The one view transition that’s happened what we’ve announced today is what has transitioned in the in before the June 30.

There’s been some additional funds of transition since the June 30, which we haven’t put in this announcement, but that’s what that is. I think the the questions are around the rate of onboard. Look. I I get there’s quite a few questions about the rate of onboarding now that we’ve got these big wins like Euros, Morgans. They’ll put up we’ve said what we can about it.

We know some of the questions are just curious. You know? We’d just love to know. We’ve gotta put in a model how quick it’ll happen, and it’s hard. You know?

You just don’t know exactly. We’ve said they’ll put it, we think, at around six month journey, Euros, eighteen months to two years. Morgan’s just but builds over time. That’s what we know. Some of the questions about how you’re doing all you can, and and that’s my answer.

If you ask me what was the number one priority twelve months ago with launching Spectrum, what was the number one priority six months ago? It was, you know, transitioning OneView. What’s the number one priority now is onboarding those big wins and giving them an experience to remember as part of their onboarding experience.

Simon Moore, Interim CFO, Premium: Yeah.

Anthony, CEO or Senior Executive, Premium: Alright. Well, I think there are some more questions. Some of them are touching a bit about what we’ve already covered. I’m going to close it there because I, you know, I I could wait a long time, and we’re all busy and got things to do. And I know I’ll have the opportunity of talking to people over the next little while at at various forums and the like, and then we’ve got the financial results coming out in about a month’s time.

So thank you very much for the interest. If there are things that, you know, we haven’t dealt with, you’ve got my number and Simon’s number, so feel free to reach out. But I think that’s probably a good place to bring it to an end, except to say once again, good to have so many people on the call and really appreciate your interest. And thank you in particular to all the shareholders on the call for the support that you give us. Enjoy the rest of the day.

Simon Moore, Interim CFO, Premium: Thank you.

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