Thank you very much. Good morning everyone and thank you for dialing into this morning's results call for the FY25 year. My name is Matt Heine. I'm the CEO and Managing Director of Netwealth and I'm joined this morning by Hayden Stockdale, Chief Financial Officer. Before I start, I'd like to acknowledge the traditional owners of the lands that we work and live on as a business. We celebrate the stories, culture, and traditions of the Aboriginal and Torres Strait Islander people of all nations and pay our respects to elders past and present. If we could please just jump ahead now to page seven. As you can see from the numbers that we loaded up this morning, financial year 2025 really was an exceptional year. We saw strong growth across all of our key metrics, including net flows, income, and profit.
Net flows for the financial year were $15.8 billion, a 40.4% increase on the prior corresponding period. Our FUA grew to a record $112.8 billion, a 28.2% increase. From that, we generated a total income of $324.4 million, representing a 27.1% increase on the prior corresponding period. Importantly, we were able to convert that income to a strong EBITDA line of $163.5 million, resulting in an EBITDA margin of 50.4%, a 3.2% increase on the previous year, and NPAT of $116.5 million, a 39.8% increase. Obviously, an exceptional result and reflects a lot of hard work from the team. If you move to slide eight, please.
One of the key points here is really that in addition to seeing very strong growth across all of our key revenue drivers, which we'll move to in a moment, we've got a very strong track record of actually converting not only our full growth, but converting our full growth to income and ultimately to EBITDA as well. You can see the trend is obviously very positive on that slide on page nine. A bit more of a deep dive into some of these key revenue drivers. Clearly, FUA is a key driver of our ongoing growth, but it's actually how we then convert that FUA growth and the net inflows into revenue across the whole range of different parts of our business.
Our far more funds under management, which consists largely of the managed account, but also managed funds, saw very strong growth from FY24 to FY25, with the managed account growing 33.5%. Our managed funds grew by 21.9% and managed accounts, which continues to be a key driver of not only our growth but also new client acquisition, saw an increase in the number of models on offer of 123 new models, taking the total to 799. Another area of the business that saw considerable growth throughout the course of the 12 months was our trading, and this reflects not only the introduction of a number of new services but also the launch of a number of new features and capabilities across the platforms that were delivered and launched to our clients both in the established appointment and also high net worth space.
Our domestic trade volume over the course of the year increased by 28.5%. We saw a very large increase in our international trading volumes, which was an increase of 121.9%. Underpinning all of that was really strong growth in our FX and trading margins as well. In part, this was also a result of the move to T+1 settlement for international U.S. equity settlements, which resulted in a lot of additional trading being done on platform where historically it may have been done off platform and also was able to then increase the FX that was generated off the back of that. The other area where we saw a fairly significant step up was in the average cash balance. Whilst the percentage of FUA stays very flat, in absolute dollars given the growth in the FUA on the platform, we saw that increase from $4.8 billion- $6 billion.
In March, earlier in the year, we also increased our margin by 15 basis points. As you can see from the headlines at the bottom, we also grew ancillary fee income by 32.8%. Hayden will go into that in a bit more detail shortly. Moving on to slide 10. The other key driver of our business and what gives us a very high level of confidence about our future growth is the increasing number of new financial intermediaries that were added to the platform over the course of the 12 months leading to June FY25. We increased adviser numbers from 3,759 to 3,971 advisers and also saw a very large increase in the number of accounts, which grew by 13.3%.
As some of you would be aware that have followed the story for some time, the chart on the right-hand side just shows the impact of the business as it comes in throughout those various cohorts. What this shows is the vintage, if you like, or the time in which financial intermediaries have been on the platform and using the platform and how those cohorts grow over time. Our installed client base, so those that have been with us since prior to 2022, grew by 43% and continues to ensure that every year we have significant growth from those existing customers. The more recent ones, we're also seeing great growth as they start to not only transition their back books and their existing business across to Netwealth, but also write good strong organic business, and we would expect to see that continue for many years to come.
If we move a cross to slide 12 and focus on strategy and products for a moment. Our strategy remains the same as in previous years and we see this as a major advantage and a major point of differentiation to our competitors and to our peers. We believe that there's a number of really important parts to our business and we'll continue to keep investing into them and that includes our wealth solutions. That is the financial products that we offer, our WealthTech , which enables advisers to do more on the platform outside of just buying and selling assets, but includes things such as improving workflows and connectivity with their clients, insights and analytics.
The power of data continues to become incredibly important and really will sit at the center of everything that we do and our growing listed partners and integrations that allow us to really embed ourselves into the broader wealth management ecosystem. Looking at a few of these key points, the strategic focus on our financial product on page 13 really just shows how our product range from a financial perspective has evolved over the years and how it now provides a very diverse range of solutions for the key market segments that we operate in. Looking at the vertical axis, you'll notice that it reflects the sophistication or the needs of the individual client segments. That is those that operate within the affluent advice space and also those operating across private wealth and broking.
On the far left, you see a very simple range of financial solutions for lower balance clients with less sophisticated needs, which include our global specialist funds and also the core menus for both super and wealth, all the way through to the top right, which is our institutional high net worth and ultra-high-net-worth offering, which was really focused on providing exclusive investment options in and over above what we do through our Wealth Accelerated product. You'll also notice that for the first time there's a couple of additional items in there and we will talk a little bit more about those in the Outlook and also the Strategy section.
We are in the process of building out and delivering an individual HIN reporting and administration solution as well as a new offering, Network Private, specifically tailored and focused on the high net worth and ultra-high-net-worth part of the market off the back of multiple inputs from clients that are operating in that particular segment. That diversity of product we think is really important. What's really pleasing about the way that the products evolved is there's a lot of core capability that applies to both parts of the market, and then we're able to stretch and invest over time into different parts, depending on where we see the opportunities and where we're seeing client feedback. Equally, on page 14 and 15, given those just some screenshots, this is our new interface.
We recognize that not only do you have to have fantastic financial products that provide a high level of flexibility and capability, but the service and support need to also be first class, as does the digital experience. Over the last 12 months we've done a major upgrade to our user interface. We're constantly improving the user experience, making it really easy for advisers and also clients to navigate around the site, get the information they need as quickly as possible, and also make it very accessible, whether that's through data, charting, or other means. Equally, we continue to invest heavily into our mobile offering, recognizing this is a key part of the broader platform and assisting advisers to deliver a digital-first experience to their customers. All of our website and also mobile can be fully white labelled, reflecting each firm's individual branding and colors.
Some of the new features that are in the process of being rolled out in early release include things such as document vaults and also in-app chat, which are tightly integrated with the Microsoft suite of products, including Teams and SharePoint. We see that as really innovative and also differentiated compared to what else we're seeing in the market and an area that we'll continue to invest into. While this matters, and hopefully you start to understand the story here, there is absolutely no doubt in our minds, and I think the evidence supports it, the platform quality is a strong driver of FUA net flows. Not surprisingly, the platforms that are seen to have the best technology, the best service, and the best overall investment for the future are the ones that are growing.
You can see that as our FUA increases, so does our percentage of net flows. On the right-hand side, this is really driven by the fact that we are rated number one for ease of business, overall quality of offering, overall admin service quality, and the digital service that we offer as per NMG results. We also won a number of awards in this year's Adviser Technology Needs report from Investment Trends. This graph, I think, really does highlight just that need to not only keep investing, but to make sure that all parts of our platform are best in class in the key segments that we do operate. It has been successful. From the earlier results, you would have seen the ongoing trend of growth. If you look at the individual segments as well that we're looking to attract, we are increasingly focused on the affluent adviser.
That is advisers that are operating and looking after clients with account balances typically between 500 and 750, as well as the emerging affluent, which is your younger or young adults that are coming through into the system, as well as the high-net-worth and ultra-high-net-worth segment. Pleasingly, off the back of our strategy, which we can continue to deliver on, we've seen really strong growth across all of these key segments and you can see that on the left-hand chart. It is also really important to understand that we are not biased or sort of leaning towards one or the other. We are making sure that we build solutions for the affluent adviser and also the high-net-worth and ultra-high-net-worth.
You can see in that middle chart that our business continues to be roughly split a third, a third, a third, which we think is appropriate and also reflects where we're spending. On page 18, a chart again that many of you will be familiar with, our market share continues to grow and we currently, at the end of March, had a market share of 8.7%, an increase of 1.1%. That does not tell the whole story and I'll come back to some key trends in a moment. What this really does show is that our market share within the direct platform market continues to grow and is really reflective of that affluent advice and high-net-worth.
The trends that matter w here we see the future, though, and where our market share has a very long way to go is the fact that the platform market, which is growing at $1.2 trillion, has a two-year CAGR of 10.2%, which we're the benefactor of. We're increasingly moving into and being very successful in the markets that sit outside of the direct platform space. We believe there's a huge opportunity still to capitalize on, which is in the excellent ultra-high-net-worth space, which is around $3.3 trillion sitting off platform, and also the superannuation system, $3.9 trillion. There is plenty of room to grow and plenty of runway left ahead of us. I think the other really interesting stat that's worth focusing on and certainly that we are building capability for is the fact that by 2050 there are 7.2 million Australians with more complex financial circumstances that will be looking for advice.
Currently, as it stands, there is somewhere in the vicinity of 10,000 to 11,000 advisers that are available to service that number of clients. That means that advisers need to be more efficient, they need to leverage technology better. The opportunity for us as well as the challenge is to make sure that we can work with our customers and partner with advice firms, make them as efficient as possible so that they can continue to onboard and manage more and more clients at scale. Really, that's where we see the big benefit and that's where we're investing heavily into the future. Just to recap on many of the things that we've or I've talked about today, our strategy this year is very clear.
We want to be able to create c apacity both internally and externally. Internally, that's around reducing reliance on third-party systems for core platform functionality. We'll continue to lift that capability and build it in-house as and when it makes sense. As we scale rapidly, we'll be investing in our technology infrastructure and we'll also be investing in the capability to grow new and existing revenue streams, which we think still provide ample opportunity. Importantly, we'll also be leveraging data AI, generative AI to drive efficiency, new services, and scale our support. We're seeing some fantastic wins across the business driven largely by not only generative AI, but also agentic AI, which will lead to not only better customer service, but better efficiency internally. To manage the scale that we're seeing and the growth, we are very focused on accelerating our share of the affluent advice.
We recognize that the winners in this space will be the platforms that are investing into the efficiency and the workflows that support advice and helping advisers bring on more customers and onboard more customers. We believe that over the next few years we can help advisers go from an average of 110 customers per adviser to 120 to 130 to 140 and beyond. That's where the team is spending a lot of time and thinking. We see key areas of the platform that will continue to uplift. We will keep investing in enhancing our client portal capabilities. I touched on some of the earlier points before around document sharing and in-app chat. We want to make sure that we can really support advisers to give them the best digital capability and experience for their customers in the industry.
The managed account continues to deliver very significant growth and efficiency and we will be enhancing that. We'll be enhancing our customer service and support with a range of new services and service offerings. Throughout everything that we do, we'll be embedding best practice user experience. Equally, we see a huge opportunity in private wealth and broking. I mentioned some numbers before, the $3.3 trillion, and really excited this year to be launching our first real products into the broking space with the introduction of an individual HIN reporting and administration solution and working with a number of very large brokers across the market to make sure that this is again a market-leading proposition.
We'll be packaging combinations of our product, services, and functionality for this specific segment, allowing you to really leverage a lot of the work and experience that we have in the high net worth and ultra-high-net-worth space. With the addition of these further services, we'll also be launching in the second quarter of financial year a new product, Netwealth Private, which will be specifically designed for the ultra-high-net-worth and high net worth and allow us to operate slightly differently to what we are able to in the retail space. We also think there's some really interesting new distribution models, which we've been partnering with very large institutions on, that we see very significant growth and already experiencing that, and we'll continue to build out and work with those institutions to refine those offerings.
As always, we'll be continuing to expand our range of investments and structures and are seeing great growth in areas such as our direct bond offering, international equity, structured products, and managed accounts across all of those segments. There is plenty to do, but it really has been an exceptional year of growth across all the metrics that I've talked about, as well as converting that into a great financial result. On that note, I will hand over shortly to Hayden Stockdale who will t alk to those.
Thanks Matt and welcome everyone to the financial part of another couple slides 24. Welcome everyone to the financial side of the presentation. As Matt pointed out, this has been a truly standout year, an exceptional year and I'm actually really very excited to share some fantastic numbers with you all today. If we just jump straight in starting on slide 24. Now Matt hit the high notes of these earlier, but I do want to really reinforce these because they are truly stunning. To begin with, you'll see that we delivered a record $15.8 billion in FUA net inflows. That's a 40% increase year-on-year that drove total FUA past the $100 billion milestone to $113 billion, which is up 28% and generated a similar 27% rise in revenue to more than $324 million.
That's an almost $70 million improvement in revenue and most importantly, all of this growth that's coming through has actually flowed straight through to the bottom line, where our NPAT surged by 40% to $117 million. On the next slide, we can dive into this revenue a little bit more. Here you'll see our various key revenue components and how the base of that revenue has been broadening over time. The one thing I want to point out on this slide is the growing strength and importance of our emerging revenue streams being in transaction fees and management fees, which were up 48% and 31% respectively. That was following some targeted investment we made in both those product offerings. Also, as Matt pointed out a little earlier, we were also the beneficiary of some strong market tailwinds as well, in particular in transactions.
It's one thing to diversify a revenue base like this, and it's actually another to ensure that that diversification is actually profitable. That's exactly what we've done. As shown on slide 26, here you'll see the earn rates on our growing cash ancillary and transaction revenue streams has actually been expanded. Our overall earn rate has been maintained fairly steadily at 31.5 basis points. We did see a 1.5 basis point contraction in our admin fee earn rate, which is about 10%. If you also consider the market movement in our average FUA between FY24 and FY25, that was also around about 10%. Given the impact of caps and tiers and the like, you can see that the underlying admin fee earn rate was reasonably robust. I think we've actually been very successful in maintaining and broadening the profitability of our revenue base. This is important, right?
As we're not just getting bigger, we're actually also getting better. As Matt pointed out earlier too, we've improved our market share, we've improved our recurring revenue base, the level of our diversification, the resilience of that diversification, but also the number of accounts and the number of advisers. As you'll see here on this slide, the average fuller account and the average revenue per account, we've also increased. That means that our customers are growing too. Critically, if we want to turn to slide 27, we've also been improving our operating leverage. Here in the year just gone, while we grew revenue by 27%, expenses only increased by 23%. That's $70 million of higher revenue on $30 million of additional costs or an incremental EBITDA margin of 56%.
Okay.
Proving that we're actually generating very high returns on our investments. Now, that operational efficiency enabled us to expand our EBITDA margin, as Matt pointed out, by 150 basis points. We did that with efficiencies achieved literally across the whole business. We got 60 basis points of efficiency in our product and tech function, where we're actually. The high revenue in FY25 was spread across the fixed investment that we had budgeted for at the start of the year. We got 40 basis points of gains from the way we deliver our product to our customers. That was despite seeing some higher regulatory burden as well. During the year, we got 30 basis points from our G&A, even though we invested here to help us scale even more efficiently in the future. We also got 20 basis points from revenue outperforming ourselves and marketing costs.
The net impact of this is shown on slide 28 with EBITDA jumping 31% to $164 million and a truly world class EBITDA margin of 50.4%. Also, in a sign of how consistently clean our accounts are, just like last year, over 100% of our EBITDA converted into pre-tax cash, this time of about $168 million. We've been very prudent with our costs. We are investing, but we're investing very smartly. All the while we're actually getting more efficient too. This means we're actually delivering strong returns to our shareholders, as you'll see on slide 29. In line with NPAT, EPS is up 40%. Today we declared a final dividend that is 50% higher than a year ago at $0.21 a share. That equates to about a 90% payout ratio.
I also want to draw your attention on this slide to probably my absolute favorite metric, and that's our Rule of 40 score. The combination of 27% growth and 50% margins gives us a rule of 40 score of more than 77, which is amazingly strong. It's clearly best of breed in our peer group. It actually does underscore the sustainability of our high growth, high margin and also highly cash generative business model. All up, I think a great set of numbers and something we're extremely excited to be announcing today. The final point I wanted to make today is on the following slide, slide 30. That's the underlying flavor of the investment that we've been making for the future. Here we added just over 80 employees in the year just gone. That excludes acquisitions with about 55% of those being in what I classify as growth forward initiatives.
This includes technology, distribution, product, and marketing. Now, if you compare this to FY24, where that growth forward percentage was 28%, being 17 out of the 60 new heads that we had that year. What that means is we've actually had an effective doubling of our growth increment in new headcount from 28%- 55%. That's actually focused on generating growth itself rather than headcount costs that are just growing proportionally as we scale. That really underscores not only the opportunities that we see that Matt pointed out, but also the confidence that we have in the future. Thank you. I might go through slides 31 and 32, but I'll just close off on slide 33 if I may, which is a summary. That is we're in an excellent financial position. We're growing rapidly. Momentum is strong. We've got structural tailwinds, an installed base of customers that continues to expand.
We've got opportunities in existing and new markets. We've got high quality recurring revenue, strong operational leverage. We're actually generating very high returns on our investments. A P&L that's very clean, with cash conversion above 100% and also a rising dividend. That's all showing through in our sellable of 40 score. That's north of 77. I think, most importantly, as I said, we're confident in the future and I think we're investing really well to match that confidence. On that note, I'll pass to Matt Heine.
Thanks, Hayden . Just to wrap up the call before we go to Q and A, from an outlook perspective, you may have noted that the year has started off very well. Total FUA at the moment is $118.5 billion, which is up from the $112 billion that I mentioned earlier. We're seeing good flows, we're seeing great conversion across all of our customer segments that I've touched on earlier. We're seeing new adviser and licensee relationships being secured and continue to see good, strong account growth. Our pipeline also remains very full and, as always, it is very well diversified across not only geographic regions, but also across the segments that we're focused on. We're excited about our new offerings. We're excited about the investments that we're making into our key market segments, including individual HIN and our new Netwealth Private product.
We believe that it's going to be another very good year. From an outlook perspective, we think that the full net flows will be similar to what we've experienced throughout the course of the last 12 months, which were obviously very strong. Total operating expenses in absolute dollar terms, as opposed to percentages, we would expect to be similar and there is a very small increase to our CapEx of $1 million on the second half 2025 run rate. As for the previous year, we remain slightly profitable with very strong EBITDA margins. There is a very strong correlation, as Hayden mentioned, between our EBITDA and operating cash flow, which results in strong cash generation. We've got very high levels of predictable recurring revenues, which we'll continue to diversify and enhance, and we've got significant cash reserves and have no debt.
Before we throw to questions, I'd also like to thank Tim Antonie, our outgoing Chair, for his incredible guidance and leadership over the last decade. Tim's been a fantastic mentor to me and really has guided the business through not only our IPO but to ensuring that we are a very well established and also respected ASX-listed organization. Thank you, Tim, and really appreciate all of your efforts over the last decade. I'm also extremely excited to welcome Michael Wachtel as our incoming Chair from the 1st of September. Michael brings considerable global experience in organizational leadership, M& A, finance, risk management, and governance, which he's gained over the last 35 years, but also through the various board roles that he has. Again, welcome Michael and thank you, Tim. On that note, we will hand over to Question and Answers if anyone would like to ask one.
Thank you, sir. If you wish to ask a question, please press star then one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then two. If you are on a speakerphone, please pick up your handset to ask a question at this time. We will just pause momentarily to assemble our roster. The first question we have will come from Nick McGarrigle of Barrenjoey.
Hi team, thanks for that. That was a good run through.
Just to. I'm not sure if you wanted to give us the actual number of the flows just given. Sometimes that market move can be a bit erratic. I guess on our assumption, looks like maybe $2.5 billion across custody and non-custody.
Probably won't give you the exact number, but it was in the vicinity of about 45%.
That's helpful to have that integer.
I guess. The other element there, I guess on the revenue side around the trading fees that were elevated, was that predominantly around April? On the international side, do you think that that indicates maybe a b it of a boost in activity as people kind of get set in different p roducts and does that taper off? Because that was obviously a pretty big increase in the revenue on the international trading.
Yeah, there's actually a whole lot of reasons for it. Hayden, do you want to.
There's a whole lot sitting behind it. There is some natural growth there in the percentage of FUA that is in international equities. That's growing steadily over time, which has been positive. We did get some very significant tailwinds. As Matt pointed out, the shift of U.S. equity trading to T+1 drove a lot of trading and associated FX onto platform that was otherwise off platform. Without doubt there was very significant elevated volatility, which is a natural driver of transaction volumes in any period. We saw very elevated levels that we benefited from in particular in the second half.
Okay, great. Maybe just the last one for me, around the client cohorts. Obviously, the bulk of your flows came from those pre-FY22 clients, which is great that there's such a strong base of flow. Do you kind of have a view on the BAU flow rate from those clients and maybe the point at which those flows mature once they've decided to move on to Netwealth? I think on a call early this week, there was someone that speculated six years. Just how you think about that cohorting and the kind of natural organic growth inflows from the older clients that you've got, just on them adding new business?
Yeah. This again is probably similar to the last question and quite a few responses to that. I think as a general comment, having spent a lot of time over the last month speaking to practices across Australia in excess of probably 40- 50 clients, the general feeling out there is that most firms are riding between 15% and 20% organic growth at the moment. That's from our existing customers. As far as the newer cohort, as you know, when an adviser gets set up on the platform, it then takes sort of two to three years for them to migrate the bulk of their business or their back book, and then it moves into the organic. We're seeing great organic growth.
This really reflects, I guess, that earlier stat as well w ith the 7.3 million Australians looking to retire by 2050, there is this huge demand for complex financial advice at the moment. Advisers have never been busier and we're seeing that reflected in the cohorts over the last couple of years, plus the benefit of feedback, book consolidation, and transitions that flow through from sort.
Of the one, two, and three and overlay on that is just the efficiencies as well that we're delivering. As Matt pointed out, if we can have an adviser grow from handling 100 customers to 110, 120, et cetera, we're investing in our tool set to enable our customers to be more efficient. That relationship is very symbiotic. We're finding that the customers we're attracting are those that are wanting to drive their own businesses bigger and drive those efficiencies. It's a bit stronger for longer there.
Great, thanks.
Next we have Simon Fitzgerald of Jefferies.
Great, thanks for taking my questions, Matt. Just when we look at the operating leverage, 150 basis points expansion there is obviously very good. We can see that total income grew at 27% versus expense growth at 23%. I'm just interested to know, or at least explore with you how you look at the intersection of growth and margin versus investment? I'm just interested to know you could have done even better with that EBITDA margin expansion by timing some of those costs. Therefore, as Hayden pointed out earlier, there w as a bit of a pull forward there.
I'm interested to know your sort of thoughts on how you manage that?
Yeah, look, I think strategically you'd be well aware and hopefully we've explained it pretty well in the last hour. There's just huge opportunity across the market, across all segments. We want to make sure that we're investing the appropriate amount to not only maximize our internal efficiencies and scaling the business, but also making sure that we optimize our ability to win new opportunities and to move into the segments that I've talked about. That's probably where we start from a financial perspective. As you know, we are very prudent and we make sure that we manage the business so that we get great financial outcomes as well as great growth and great client outcomes.
Yeah.
Okay.
When you've had the chance to probably digest some of the guidance that we've given for next year as well, I think you'll realize, Simon, that we will be investing further in FY26. We've also, as Matt pointed out in that Outlook section, very clearly stated that that additional investment is going to be in product and technology. Very, very focused on driving growth into the future.
Yep. Growth doesn't come for free, to state the obvious. When you look at that chart from earlier in the package, we know that flows follow quality and we want to make sure that we've got the best product in the market.
If you look at the 2025 year and we deliver $70 million of revenue on $30 million of costs, as I pointed out, that's an incremental 56% EBITDA margin. Now, that's not to say we're going.
To be delivering that every year. In fact, if we are incrementing up this year on our growth investment.
That m ight not be the case. Long term, medium term, this will all be value accretive very significantly and generating those types of returns or even close to it. They're astonishing numbers.
I just want to explore a little bit about the revenue composition on slide 25. Obviously those admin fees are coming down, but particularly the ancillary fees, including the cash charges on the cash accounts and transaction fees. Presumably that type of revenue just falls straight through to EBITDA. It doesn't have a margin attached to it and cost attached to it like, say, the admin fee does. Could you sort of talk to me about that?
Yeah, you're very right there. You know, there are some revenue streams that we have that have a gross margin effectively of 100%. That doesn't mean that there aren't operational costs that sit underneath that, that do need to be taken into account. If you're thinking in a strict gross margin perspective, that's true. I think we don't look at it necessarily as we want to drive cash or transactions or whatever. We are trying to deliver a whole solution to our customers, right? It comes with a mixture of all of that.
It really is a high yield cash transaction account that is fully featured. We've just launched regular payments in the last week or two. I believe we do BPAY pay anyone? There's actually a lot of functionality that sits around the cash transaction product. Equally with the trading, we continue to enhance and add new services. Part of that growth did actually come from the addition of a trade desk, which is basically offering a white label service to investors and groups that have got high volume trading and are looking for more specific outcomes.
Yep. Just one more question here. Matt, you talked about reducing reliance on third party systems and building an internal core system. Is this going to be a replacement of what was previously the [occuring] system?
There's certainly parts of it over time that we'll continue to list out. We talked about this probably for the last year or so. Things like the master client record, transactional databases. As we continue to scale, if there's parts of the security that won't scale with us, we will look to lift and shift.
Yeah, good. All right, thank you.
Next we have Cameron Halkett of Wilsons Advisory.
Thank you. Morning, Matt. Morning, Hayden. Do you mind if I just reconfirm your reply to Nick earlier? That was 45% of the uplift is flows or market?
Flows.
Thank you. Moving on to the reinvestment around the guidance. Hayden, that looks around about $190 million expected for OpEx this year if I'm right? Maybe a bit better if super chugs along, I think.
Yeah, if you take $160 million and add $30 million to it, you get your $190 milllion thereabouts.
Hold on. Good. The other bit around, I suppose the outlook, you've called out, you k now, obviously, what OpEx is expected to.
In absence of any potential impact from Sheridan First Guardian. Now I know ASIC is doing the investigation to yourselves on the trustee side and obviously don't want to put you in any hot water there, but there's various layers of the situation from the RE to certain licensees and adviser groups and trustee and platforms. I suppose it'd be helpful, can you provide us your view on the situation and any help potentially around probability of any liability impact to Netwealth? Thanks.
Look, from a numbers perspective, probably not much more to share, as we've seen from the pack, the impact or the cost to date has been immaterial. We're fully resourced and obviously working very closely with the regulator and the industry to resolve the matter. It is a devastating situation for those that have been investors and we're working very closely with the regulator but also the industry to make sure that these events in the future don't happen. That's going to require, as you touched on before, collaboration across the industry between platforms, trustees, regulators, adviser groups and licensees. I think there's definitely more to play out and we'll continue to make sure that we work closely with everyone for the best outcome.
Yeah. Perhaps lastly, just on the flow environment, since you've obviously started the year extremely well, you know you've got another major incumbent peer looking to do a forced migration in the next six to 12 months from one platform to another. There are events like this as well as the sort of healthy backlog and the organic market activity you're seeing underpinning the flow outlook that you've provided, I think, for the first time in a few years at least anyway, where guidance is concerned.
I'm scratching my head as to who you're referring to. Maybe we should take that offline. Yeah, we obviously had a fantastic year. Gross flows continue to improve and are very meaningful, and net flows at the sort of levels that we've received this year, we think would be a great outcome.
All right, thanks, Matt.
Thanks, Hayden.
Drop me a note with the name afterwards.
Yeah, will do.
Thanks, Cam.
Next we have Siraj Ahmed of Citig roup.
Morning. Can you hear me okay?
We can. Good morning.
Hi, Siraj.
Hi. Hi, Matt. I have three questions. This first one, Matt, I'm a bit confused. To the flow guidance, right, you think similar to FY25. I mean, you had a pretty strong start, which seems like it's like double what you had last year. I think last year the same time was $1.2 million. So can you maybe give some color on why you think it'll be similar to FY25? Thanks.
Yeah, definitely been a good, strong start to the year. As you know, those things tend to be cyclical. The guidance to a similar level as this year is based on our internal analysis and where we believe we're going to end up towards the end of the year. Obviously, if that changes, we will keep the market informed, but that's where we believe we'll land.
looked at it. There are swings and roundabouts with this, too. If we reflect on the last quarter of FY25, it was perhaps not as strong as we had originally sort of expected, while the first quarter actually started stronger. There are probably some timing differences in all of that, but what we have said, and we've said it very explicitly, is what our expectations are for flows in FY26. You rightly pointed out that's not something that we have done in recent years. We put a lot of thought into that, and there's a lot of thought that sits behind that number, too.
That said, I hope you're right. If it does look like it's going to continue at the pace that it is now, we'll certainly let you know.
Okay, so. You're not. There's no, like, big outflow or something that you're concerned about? It's just that. Yeah. Giving a bit of conservatism. Who knows what yesterday does.
We shouldn't underestimate what a good result this year was. To achieve that, again, quite a lot of effort.
Got it. Second one just on the court guidance. Right. It's just following up on fast Cardi and Matt and Hayden, just, I mean what sort of costs, I mean you're saying excluding that, what sort of costs are you sort of could come through because it does look like you are investing in governance and that's not meaningful. Just want to be clear on what you think it could, could come through. Right. Is there some penalty or something that potentially could happen or is there something else in there? Thanks.
Yeah. Look, Siraj, this has been an investigation that's been happening behind the scenes for quite some time now. Probably, you know, had a tail associated with it before some of the press speculation, and as Matt pointed out, we have been working very closely with the regulator and the industry on it. The costs in FY25 were not material in terms of the additional staffing up and external legal, whatever it might have been. If it does become material, we will call that out. Standing here today trying to forecast the future on that, it's not something w e could really do.
Yeah, that's helpful. Just last one in terms of, I mean, very strong adviser additions for the second half, r ight? You had pretty good client growth in the fourth quarter as well. I think, Matt, you had mentioned this. Is that sort of the mid market offering or, you know, mass market offering is actually starting to resonate? Is that what's driving it? In your similar flow outlook, et cetera, you're launching the new Netwealth Private offering. You have the new broker offering. I'm guessing that's not based into your flow outlook. That's, you know, potential upside if that comes through.
No, it's all part of it.
Yeah, as I said, sure w e've put a lot of thought into that guidance that we provided on the flows, and that includes all of the initiatives that we have in front of us that we're planning to undertake.
Okay. Just the adviser ads and stuff, is that the traction that you're getting in that sort of mass? Excellent. Excuse me.
It just reminds me, very, very dynamic market, and we're seeing really good wins across the country as I touched on. That ranges from advisers servicing the emerging affluent and the affluent style of client as well as the high net worth. We're seeing a lot of M&A activity, which we've been the benefactor of, and there's plenty of transition opportunities. It's just been a really good year that we obviously expect to continue.
Okay, very helpful. Thank you.
Thanks, Raj.
Once again, if you would like to ask a question, please press star then one on a Touchstone phone. The next question we have will come from Tharan Jeyathasan of JP Morgan. Please go ahead.
Hey guys, thanks very much for taking my questions. Firstly, just on revenue margins, you only saw about 50 basis points of revenue margin compression year-on-year. I think you described there being some offset from transaction and ancillary fee contribution growing in the period from elevated volatility and things like that. Can you help us understand to what d egree you think these improvements will be continuing into FY26? Just want to form a view on how we should be thinking about revenue margins in FY26?
Yeah, look, good question. I think you'll probably see some continuing trends of the past. That said, we have called out in particular in transaction fees that we did benefit from what we believe were some one offs in the year just gone. So it's 48% growth that we saw there. We are not expecting to replicate that, but directionally we are expecting transactions to be good for us from a basis for an earn rate perspective. Likewise, cash and ancillaries in particular. With cash in the year just gone, we only had four months worth of the benefit of the higher margin. This year we'll have an additional eight months. We are also expecting there to be continued pressure on the admin fee. That's just a mixture of market pressures.
Also, to the extent that there's market movement and the impact of caps and tiers, that will have a compressing effect.
Yep, I understand that. That's helpful, thank you. Just maybe a second question on your EBITDA margin expectation. I think you quoted in your guidance that you're expecting that to be, or you're targeting for that to be, better than 50%. I just want to understand, on a longer term basis, how you guys are thinking about that trending over t he next 10 years? Can we expect that to, you know, p ush above 55% maybe? How are you guys thinking about that number over the medium term?
Not able to comment on that for obvious reasons. As we've sort of talked about, our investment program really reflects, I guess, the opportunities that we see in the market and where we feel the need to invest. At any given time we've got a number of strategic levers. We can let the EBITDA margin float up, we can pass it back as strategic pricing to large groups, or we can make additional investment into our technology to grow the business. At different times we'll pull on those different strategic levers.
Yeah, and just underline that. You know, don't forget that we have market share of less than 9% of the platform market. Of the platform market. There's enormous opportunity there. As Matt pointed out, capturing that growth doesn't come for free. The returns that we are getting on that investment are very, very significant. It is something that we need to balance as to where exactly that is in terms of EBITDA margin. We will guide the market as appropriate at the right time, I believe.
Understand. That's clear. Thank you for that. Just the last question, an easy one. Just on your net flows expectations, you say not to materially differ from 2025. I just want to understand, is that on a dollar basis or should we be thinking about that as a percentage of opening FUA?
No, I think we're very clear on that. It's a dollar basis.
Okay, yeah. Thanks very much.
Next, there is Lara Tufegdzic of Bank of America.
Hi, thanks for taking my question. I just had a question. Strategically, on retirement solutions, a lot of your peers have been investing.
Sorry, Lara, I think you've dropped out there.
Hello?
Hi. Sorry, are you able to hear me?
Yes, we're back again.
Great. Sorry, I'm not sure what happened. I was just wondering strategically on retirement solutions, if you have any plans here and how the focus is here, especially considering a lot of your peers are investing heavily in this area?
Yeah, great question. We constantly monitor what's happening in the market. We've got a very broad range of retirement solutions. Obviously, we run a pension and that's a key part of our offering. Our advisers generally like to manage the portfolios to meet longevity requirements. We also, a number of years ago, added Challenger annuities to the platform to assist with that sort of retirement income piece. There are some new offerings coming into the market. We continue to explore them. The demand to date has not been there. We're not seeing a huge take up across the industry of some of the newer products. We want to make sure that if we are going to invest into a retirement suite beyond what we currently do, that it is actually going to hit the mark and be what our customers and end customers are actually looking for.
Certainly a watching brief, but no plans to change what we're doing in that regard at the moment.
Okay, perfect. Thanks. That's all for me.
Thanks.
Thank you. That does conclude our conference for today. We thank you all for participating. At this time, you may disconnect your lines. Thank you. Take care and have a great day.