Netwealth Earnings: Growth Comes At a Cost

No-moat Netwealth's fiscal 2024 results fell short of our expectations, with underlying net profit after tax of AUD 83 million increasing 24% from the prior year but still 9% below our forecast of AUD 92 million. While underlying EBITDA margin improved to 49% from 47% last year, this missed our 52% forecast. Lower fee margins and higher operating expenses drove this underperformance. We retain our AUD 10.80 per share fair value estimate, with a deterioration in our fee margin and expense growth forecasts being offset by higher portfolio return assumptions for Netwealth’s managed accounts and managed funds, which are faring better than we had anticipated.