Discl: Held IRL

Adding my notes after a closer look at the FY25 results:

SUMMARY

The Positives

• FUA/FUM continued to grow at good clip - continued neck to neck competition with Hub 24 for market share, but nothing new as this was already reported on a Q-on-Q basis 
• FY25 results were impressive on every metric
• Very impressive Rule of 40 outcome, and history - see chart
• Increasing operating leverage came through clearly in FY25, as did continued cash conversion ratio of 103%
• Reiterated the high quality diversified, recurring and highly sticky earnings - getting onboard any new technology platform is always a very painful affair for both advisor and clients, the change management effort is huge - once onboard, the only real incentive to exit is if NWL stuffs things up badly to the point that the platform is so painful to use, so this revenue looks to be extremely sticky 
• Relentless focus on continued innovation to evolve and add products
• Long runway of growth to chase ahead - as of Mar 25, 67.9% market share from the “old wealth platforms” is up from grabs, both NWL and HUB only have 8.7% each, 17.4% of total market share ... 

Areas to Watch, Rather than Concerns

• Growth in FY25 was exceptional, likely to not be fully sustainable, so I expect FY26 will moderate slightly to more normal, but still very high trajectory outcomes
• Need to have a closer look at HUB24 results to put NWL’s results in better context - it is a neck-to-neck dogfight and a cursory glance of HUB’s FY25 show similar momentum

OVERALL RESULTS

FY25 results were impressive, whichever way you turn - revenue noticeably outpaced the rise in expenses, resulting in nice YoY jumps in EBITDA +31.1% and in NPAT +39.8% - operating leverage is increasing, always nice to see

FUA and FUM statistics were already released as part of NWL’s quarterly business updates, so nothing new

NWL’s EBITDA is highly correlated to operating cash flow before tax - conversion ratio was 103% in FY25

Very nice Rule of 40 result!

Which prompted me to go back and see what the Rule of 40 trend is. Those are pretty huge numbers in itself, never mind the trend going back to FY20.

The increasing adviser base looks impressive in absolute terms - 212, 5,6% new financial intermediaries leading to the number of accounts jumping 13.3%, leading to an 18,983 or 13.3% jump in new accounts.

• The chart on the right shows that the FUA new flows continues to grow in subsequent years, not only in the initial year of onboarding
• 15-20% organic growth from existing customers
• New cohort takes 2-3 years to transfer over in full

What I am cautious about though, is that HUB24’s headline FY25 results were also impressive - a quick glance shows that in FY25, 527 advisors were added (NWL: 212), Platform FUA reached $112.7b (NWL: $112.8b), net inflows $19.8b, up 25% (NWL: $15.8b, up 40.4%) - I need to dig deeper into HUB24 and compare side-by-side to put NWL’s results in better context

This was a good slide to show the products across the different client bases and as “sophistication of needs” rises

Am never going to have enough zero’s to my own net worth to experience much of these products in this lifetime, but this slide does help crystallise how NWL’s numbers can continue to grow going forward.

There is a nice balance of FUA across the 3 client types - roughly 1/3 a piece

NWL continues to build capabilities for each of these 3 client types

This was another good slide that shows what’s still out in the wild in terms of financial management needs - long runway still, but it is an absolute dogfight all the way to win each $1 and each client.

Huge demand for financial services as financial management becomes increasingly complex and more important - impact of a full generation of adults with super contributions from the start of working life, now filtering through.

Absolutely love the diversified recurring revenue - this cuts across the client types.

Operating leverage breakdown - not sure this will continue to drive downwards as it will stabilise, while revenue grows, but this feels comfortable now

Incremental income is flowing nicely through to NPAT

Net fund flows up 40%, NPAT up 40%, dividend up 50%, share price virtually static.

Expectations, dear boy, expectations.