Throughout 2024, sophisticated wealth management platform provider Praemium (ASX: PPS) continued to successfully execute its three-year growth strategy focused on service excellence and the provision of unique solutions for high-net worth (HNW) investors.
Large and expanding market
The company delivered a convincing performance during the year as it looks to carve out a growing slice of what it estimates to be a $3.2 trillion private wealth market that also includes more than one million Australian HNW investors.
According to management, Praemium’s target market is swelling at a healthy clip and is accompanied by strong demand for sophisticated wealth advice from a shrinking pool of advisers. In turn, specialist platforms like Praemium have a key role to play in meeting the challenges facing the investment community.
New organic growth projects
On an operational level, the company’s highlights from 2024 included the implementation of multiple organic and accretive growth projects as exemplified by the launch of its next generation wealth management solution known as Spectrum.
Unveiled in October, Spectrum is specifically designed for financial advisers who serve HNW clients and is tailored to meet the complex and advanced needs of these investors.
More specifically, this innovative solution offers unparalleled access to a comprehensive range of assets, tools, and capabilities required to deliver a truly holistic wealth management experience. It helps to provide seamless onboarding, trading, and execution processes within a single scalable and integrated platform, and facilitates the digitisation of investment advice.
Other growth initiatives
Praemium also sealed the acquisition of the Iress OneVue Platform business in April last year, obtaining a vast group of clients and a team of customer-focused professionals which is now driving a material increase in scale for the company.
OneVue boasts more than $4 billion in funds under administration and is projected to deliver an earnings uplift of $3 million per year for Praemium.
Elsewhere, the company strengthened its partnership with diversified financial services business Euroz Hartleys in mid-November.
Here, Euroz Hartleys intends to onboard more than 1,000 portfolios to the Praemium non-custody solution named Scope, and transition some $2 billion in funds under administration across Praemium’s private wealth solutions, including Spectrum.
By integrating Praemium’s comprehensive suite of products, Euroz Hartleys plans to streamline its processes, enhance efficiency, and elevate its customer experience to new heights.
Strong financial performance
On a financial level, Praemium generated a robust set of numbers for the full 2024 financial year (FY24), headlined by strong growth during the second half of the year.
In FY24, operating earnings (EBITDA) came in at $21.5 million, with revenue and other income reaching close to $85 million after rising by 12 per cent from twelve months prior. Statutory net profit after tax (NPAT) clocked in at $8.8 million.
This solid performance paved the way for the declaration of a maiden 1c per share fully franked dividend, bringing to light the group’s profitable and simplified business model.
The company also held more than $57 billion in funds under administration at the end of June last year.
Furthermore, Praemium ended the period with a robust balance sheet consisting of about $109 million in net assets – including more than $50 million in cash and receivables – despite returning some $14.7 million to shareholders through dividends and share buybacks.
Growing Momentum
Notably, the second half of FY24 was particularly fruitful as showcased by a record $12.5 million in EBITDA. This represents a 39 per cent increase form $9 million in the first half-year of FY24. Revenue during this period also jumped by 15 per cent.
Most recently, the company delivered a solid update for the second quarter of FY25 as its integration of OneVue and Spectrum continued to gain traction. The company now holds more than $62 billion in funds under administration.
Net inflows of $371 million increased by $546 million when compared to the same time last year, with Spectrum contributing a healthy $69 million to this amount.
The group’s SMA platform also performed admirably with net inflows of $261 million rising by $96 million in the quarter. Similarly, the Powerwrap platform also saw a surge in net inflows to reach $78 million in the December quarter.
Moving forward, Praemium appears well placed to capitalise on its strong pipeline of wealth management solutions including the addition of Euroz Hartley clients in future reporting periods.