HUB24 (ASX: HUB) Drives Strong Growth and Dividends; Elevated Valuation Suggests Partial Profit-Taking

Key Takeaways: HUB24 stands out as a core name in Australia’s wealth tech sector, powered by a two-engine model: its flagship investment and superannuation platform for advisers and a rapidly expanding tech solutions arm, strengthened by the acquisition of Class Limited. Together, they’ve built an ecosystem that’s deeply embedded in client workflows—making it tough to switch and even tougher for rivals to compete. FY25 results back the story: record platform net inflows of A$19.8 billion pushed Funds Under Administration to A$136.4 billion, with EBITDA margins nearing 40% and dividends forecast to rise nearly 40%. With a rock-solid balance sheet—net cash and just 5.7% debt-to-equity—HUB24 has room to reinvest and reward shareholders. That said, with the stock trading at a forward P/E above 60x and RSI indicators flashing overbought, it’s a good time to consider trimming. We’re still long-term positive, but some profit-taking makes sense here. --- A Market Leader in Wealth Tech with a Two-Engine Model HUB24 has cemented itself as a standout in Australia’s wealth management space, not just by offering a platform but by becoming a fully integrated provider of platform, technology, and data solutions. The business runs on two synergistic engines: its flagship Platform division, which offers financial advisers a highly rated investment and superannuation platform, and its Tech Solutions arm, significantly expanded through the acquisition of Class Limited. This acquisition brought in powerful cloud-based tools used by accountants and legal professionals, deepening HUB24’s reach across the financial services value chain. A Sticky, Adviser-Centric Platform with High Switching Costs What truly sets HUB24 apart is its adviser-first technology—solutions so embedded in client workflows that switching becomes difficult. This 'stickiness' gives HUB24 a durable competitive edge. The company has built an ecosystem, not just a product, strategically layering value through acquisitions. This positions it not only as a service provider but as critical infrastructure for advisers and professional services firms alike, allowing HUB24 to chip away steadily at the market share of older, slower-moving incumbents. FY25 Results Reinforce the Growth Story and Operational Strength The company’s full-year results for FY25 confirm the strength of the investment case. HUB24 reported record platform net inflows of A$19.8 billion, pushing total Funds Under Administration up to A$136.4 billion. That growth is translating into meaningful financial leverage, with underlying profit margins expanding to about 40%. Notably, this profitability is fueling both continued tech investment and a sharply rising dividend—forecast to grow nearly 40% this year. A dividend payout ratio of 40–60% of underlying net profit marks a shift into a more mature, cash-generative phase for the business, underlining management’s confidence in sustained future earnings. A Core Holding Worth Keeping—But Time for Some Profit-Taking HUB24’s strong competitive position and excellent execution justify holding it as a core portfolio name. Its leading technology, expanding ecosystem, and ability to win share from legacy players make for a compelling long-term growth story. However, much of this future potential is now reflected in its valuation. For investors who’ve ridden the wave of strong operational momentum, it makes sense to partially take profits—locking in gains while retaining meaningful exposure to what remains one of the most impressive structural growth stories in Australian financial services.

HUB24 has carved out a leadership position in Australia’s wealth management landscape by offering integrated platform, technology, and data services tailored to financial advisers and professional service firms. The business is structured around two complementary segments. First, its flagship Platform division delivers a highly regarded investment and superannuation platform, central to many advisers’ day-to-day operations. Second, its Tech Solutions arm—strengthened by the acquisition of Class Limited—provides vital cloud-based software to accountants and legal professionals. What truly differentiates HUB24 is its adviser-first technology, which integrates seamlessly into client workflows and creates high switching costs. Supported by strategic acquisitions, this evolving ecosystem has turned the company from a product provider into a critical infrastructure partner—making it increasingly hard for competitors to dislodge. Industry Tailwinds Driving Adviser Adoption and Structural Share Gains The Australian wealth management industry is in the midst of a major structural reset, and HUB24 is well-positioned to benefit. The shift away from large, vertically integrated institutions toward independent advice models is accelerating, creating a natural and growing client base for best-of-breed technology platforms. Independent advisers—who are central to industry flows—are prioritising platform functionality, integration, and efficiency. This trend directly benefits high-quality operators like HUB24. Added to that is the rising popularity of managed accounts and the broader “flight to quality,” as advisers seek scalable tools to serve growing client books. With over A$1.2 trillion in market size and modern platforms steadily taking share, the macro backdrop remains a strong tailwind. Scalable Business Model Delivering Strong and Profitable Growth Financially, HUB24’s growth story is compelling. Group revenue continues to rise meaningfully, underpinned by surging Funds Under Administration (FUA), which hit A$136.4 billion in FY25. But what’s particularly powerful is the model’s scalability—EBITDA margins expanded to 39.8% in 1H FY25, reflecting strong operating leverage. This has supported a robust dividend profile, with fully franked dividends forecast to grow by nearly 40% in FY25. The company maintains a disciplined capital return policy, aiming to distribute 40–60% of underlying profits, rewarding shareholders directly for its operating success. HUB24 pairs its operational strength with a rock-solid balance sheet. A minimal debt-to-equity ratio of just 5.7% and a strong net cash position give it room to manoeuvre—whether that means investing in technology or returning capital to shareholders. Operating cash flow hit a record A$88.2 million last fiscal year, more than enough to fund both reinvestment and generous shareholder returns. Over A$42 million has already been returned through dividends and buybacks. This financial discipline gives HUB24 a strategic edge in an industry where not all competitors can keep up. Valuation Reflects Market Recognition but Limits Near-Term Upside Our multi-year discounted cash flow model supports a fair value estimate of A$115.00 per share. At current levels, HUB24 trades at a premium, with a forward P/E ratio north of 60x—well above peers. While this premium is underpinned by strong fundamentals, it does highlight a more balanced risk-reward profile going forward. Expectations are high, and the current valuation reflects a significant portion of future growth. That doesn’t diminish the long-term story—but it does call for thoughtful positioning. From a technical standpoint, the long-term trend remains very much intact. However, the recent rally has pushed momentum indicators into overbought territory, with the 14-day RSI exceeding 70. This points to a likely period of consolidation in the short term. Key support lies in the A$95–A$100 range, the site of the most recent breakout. While we remain structurally constructive, now may not be the best moment to initiate or add aggressively. Maintain a Core Position, But Consider Partial Profit-Taking We continue to view HUB24 as a high-quality business with long-term upside, thanks to its leading technology, embedded client relationships, and disciplined execution. It is gaining share in a growing market, and its platform remains one of the strongest in the industry. However, much of that success is now reflected in the price. For investors who have benefited from HUB24’s strong run, locking in some gains through partial profit-taking makes sense. This allows to de-risk tactically without stepping away from the long-term growth story.