June Quarter: Hub24 Outgrows Netwealth

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Recent June quarter FY25 updates by fast-growing challenger digital wealth platform providers revealed Hub24 has formally overtaken key competitor Netwealth Group in funds under administration.

-Netwealth Group's June quarter market update slightly underwhelmed
-Competitor Hub24's update revealed stronger momentum, beating expectations
-Hub24 has surged past its closest competitor in terms of market share
-HUB24 more highly valued but continues to have (most) broker's preference
-Both platform operators continue to enjoy structural growth trajectory

By Mark Woodruff

This month’s June quarter market updates revealed Hub24’s ((HUB)) custodial balance of $112.7bn has edged ahead of Netwealth’s ((NWL)) $111.9bn for the first time with strong momentum continuing in favour of the former.

UBS expects Hub24’s stronger net inflow momentum will drive further market share gains over the medium term, reinforcing this broker’s ongoing relative preference for Hub24 over Netwealth.

Morgan Stanley also suggests Hub24’s strong net revenue retention (NRR) metric (which is highly correlated with a premium multiple for software stocks) will provide a foundation for years of durable growth.

Beyond expanding the adviser base, management drives growth through three key levers: advisers onboarding more clients, rising customer balances, and greater adoption of additional features and services, explains the broker.

Although heightened market volatility during the quarter led to an increase in gross outflows for both companies, the negative impact was more pronounced for Netwealth, largely due to elevated redemptions from larger accounts. Hub24 benefited from a smaller number of large accounts in combination with a higher skew to superannuation.

Moelis attributes Hub24’s premium valuation to three key factors: the compounding earnings impact from consistent market share gains in a structurally growing and evolving industry; strong innovation, with new product development effectively leveraging an established adviser base; and earnings leverage to positive market returns, benefiting both platform funds under administration (FUA) and net flows.

Unlike Netwealth, Hub24’s June quarter surprised analysts at Citi, with a larger-than-expected migration from Equity Trustees the key driver for the ‘beat’. But even without taking this into account, underlying flows were still 4% ahead of the broker’s forecast as net flows continue to grow at 30%.

Underpinning UBS’ confidence in the sustainability of adviser engagement and net flow traction, Hub24 enters FY26 with strong adviser growth momentum (up 13% in the fourth quarter) and leading adviser satisfaction, having been ranked No 1 in Net Promoter Score in the 2025 Adviser Technology Needs Report.

Moelis also notes Hub24 recorded the largest quarterly and annual market share gains among all platform providers, with the latest Plan for Life data in March showing its share had improved to 8.7%, up from 7.2% in March 2024.

This broker highlights adviser growth remains strong at 12.6% year-on-year, which is a key leading indicator of future net flows.

Rising Markets Provide Tailwinds

Market movements for the June quarter provided a tailwind for both Hub24 and Netwealth.

According to management at Hub24, “operating in structurally growing markets driven by demographic trends and compulsory superannuation, the company is well positioned for continued growth, supported by a strong pipeline of opportunities from new and existing relationships.”

Funds under administration (FUA) for Hub24 were in line with Citi’s forecast as the stronger flows were offset by lower-than-expected market movement. Custodial FUA of $112.7bn came in 2% ahead of the consensus estimate.

For Netwealth, a miss in net flows versus Citi’s forecast was driven by weaker inflows, possibly reflecting market volatility throughout the quarter. Custody FUA met the broker’s forecast, while total FUA was stronger than the consensus estimate.

Management at Netwealth also “remains confident in our net flows outlook for FY26 and beyond, across a broad range of client groups and customer tiers”.

No Positive Surprise From Netwealth

Netwealth Group offers a wealth management platform tailored to financial intermediaries and their clients, supporting both superannuation through Netwealth Super Accelerator and non-super investments via Netwealth Wealth Accelerator, enabling streamlined portfolio administration in a single interface.

In the fourth quarter, Netwealth reported custodial net inflows of $3.7bn, falling approximately -8% short of consensus expectations. Macquarie attributes this miss to slightly elevated outflows amid increased market volatility.

The minor disappointment doesn’t stop Bell Potter from expressing confidence in Netwealth’s structural growth trajectory, noting adjusted inflows of $7.6bn reflect a 7% acceleration in the monthly run-rate, while net account additions rose 4.2%; a record high. For the full year, Netwealth achieved record inflows of $29.2bn, lifting custodial FUA by $24.8bn.

Bell Potter urges caution, however, citing weaker Rule of 40 metrics over the forecast period and questioning the company’s valuation multiple relative to high consensus net flow expectations. Still, account growth and inflow performance remain strong and aligned with management’s guidance.

Jarden expects the solid pace of account growth, up 4% quarter-on-quarter to 162,200 and the strongest since 3QFY21, to support sustainable earnings momentum into FY26.

On the funds under management (FUM) side, net flows were $1.1bn for the quarter, up 16% year-on-year, bringing total FUM to $27bn. Management noted 96% of FUM flows were into managed accounts, with the managed account FUM-to-total FUA ratio rising to 20.8%, up from 20.6% in the prior quarter and 20.0% a year ago.

Wilsons believes higher pooled cash balances and increased trading activity likely helped offset margin pressure from temporarily lower administration fee revenues in the half.

Hub24 Triggers Forecast Upgrades

Hub24’s Portfolio Administration and Reporting Service (PARS) delivers end-to-end administration and reporting solutions for financial advisers and their clients.

Separately, Hub24 operates the Class business, acquired in February 2022, which provides cloud-based accounting, compliance, and administration software for SMSFs, trusts, and portfolios, with a primary focus on accountants and SMSF administrators.

Hub24 and Class continue to operate as distinct business units, retaining their own brands and core offerings.

For FY25, Hub24 reported record total platform net flows of $19.8bn, up 25% year-on-year, with fourth-quarter flows of $5.3bn beating consensus by 4.1%. Excluding large transitions, UBS notes net flows of $4.1bn, a 33% increase on the prior year, and broadly in line with its own forecast.

Total FUA reached a record $136.4bn as of June 30, up 30% on the prior year. This comprised $112.7bn in platform FUA and $23.7bn in PARS FUA. While platform FUA reflects assets under Hub24’s custodial administration, PARS FUA refers to client assets being administered and reported on but not held in custody.

Management reaffirmed FY26 platform FUA guidance of $123-135bn, stating the business is well positioned for continued growth, supported by a strong pipeline from both new and existing relationships.

Jarden expects Hub24 to exceed the upper end of guidance, forecasting around $137bn in platform FUA, though this broker also anticipates increased revenue margin compression due to tiering and fee caps.

Morgan Stanley highlights Netwealth’s revenue margins remain resilient, underpinned by strong recurring revenue and diversification across portfolios, clients, and revenue streams.

Jarden believes the group’s greater-than-50% earnings margin and robust cash generation support continued reinvestment; particularly as legacy competitors ramp up their efforts.

With management reaffirming its commitment to invest through FY26, Jarden lifts its cost forecasts, moderating expectations for EBITDA margin expansion to 52.1% in FY27.

For Hub24, Citi notes a favourable shift in FUA mix, with Retail rising to 87% in the fourth quarter from 86% in the third, which supports revenue margin.

While Jarden remains constructive on Hub24’s total FUA growth, this broker expects some revenue margin compression due to tiered fees and caps, where larger balances attract lower fees, and some account types have maximum fee thresholds.

Expectations And Valuations

Following the fourth quarter update, the average target of seven daily monitored brokers in the FNArena database covering Hub24 jumped to $92.43 from $83.61, with Morgans and Ord Minnett yet to refresh their research.

This average target implies around -11.4% downside to the $104.37 share price at the time of writing, but this negates the fact both Morgan Stanley and Bell Potter raised their upgraded target to $115 each. This no doubt has underpinned the strong share price rally post this week’s release.

Excluding the two laggards mentioned, price targets have reset between $89.80 and $115, while Ord Minnett’s bottom-of-the-market target of $43.20 –cum update– has a depressing impact on the average for all seven brokers monitored daily by FNArena.

The ratings of the seven brokers are: three Buys and three Hold (or equivalents), while Ord Minnett has a Lighten rating, the only logical choice with such a low-marker target.

Outside of daily coverage, Moelis, Wilsons and Canaccord Genuity (yet to update) have Hold ratings.

Jarden rates Hub24 Underweight  but this doesn’t stop this broker from growing increasingly optimistic about the platform’s FY26 net flow outlook, citing strong support from its Managed Account offering, proven ability to secure and transition large client mandates, and ongoing investment in adjacent technology solutions.

For Netwealth Group, the seven daily monitored brokers provide an average target of $30.38 (up from $29.67), but again Morgans and Ord Minnett are yet to update their research, and Ord Minnett’s $15.40 target weighs heavily on the average.

Excluding the two laggards, price targets range between $29.75 and $35. The shares were trading around $36.75 at the time of writing.

There is only one Buy rating among the seven, against five Holds and a Lighten rating by Ord Minnett (same outcome as for Hub24).

Outside of daily coverage, Wilsons and Canaccord Genuity have Hold ratings, while Jarden is Underweight.

Final Observations

The financial platform industry in Australia is dominated by the likes of (in order of market share) Insignia Financial ((IFL)), Macquarie Group ((MQG)), Colonial ((CBA)), BT Panorama ((WBC)) and AMP ((AMP)) but key challengers Hub24 and Netwealth are much faster growing and have been increasing their market share steadily throughout the years past.

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