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One of the largest wealth managers on the ASX reported a $6.7 billion lift in funds under administration (FUA) for the March quarter this morning after its investments grew in value and its attraction of new funds was up by a substantial 62.2 per cent, yet its share price has plummeted.
Netwealth (ASX: NWL) has risen to prominence over recent years and is currently having its time in the sun with FUA sitting at $84.7 billion, following net inflows of $2.7 billion and positive market movement over the period of $4 billion.
But this strong performance, combined with the company reporting a strong earnings margin, operating cashflow and "very high" levels of recurring revenue, was overshadowed by a dot point on the final page of its quarterly business update - the planned departure of founder and executive director Michael Heine.
"Netwealth founder and major shareholder Michael Heine has advised that as he approaches his 75th birthday he intends to transition to non-executive director by 30 June 2024," the company reported.
The news sent NWL shares falling by 6.5 per cent down to $18.96, reflecting a fall of more than $300 million in its market cpaitalisation.
Heine founded the Melbourne-based company as a financial services industry challenger in 1999, managing the company jointly with his son Matt Heine from 2015.
The group listed on the Australian Securities Exchange in late 2017, and in October 2022 the founder resigned from the top executive position to let Matt run Netwealth, first as managing director and then as both managing director and CEO from June 2023.
In the first half of FY24, Netwealth reported total income of $123.3 million, representing a 20 per cent increase year-on-year, while statutory net profit after tax (NPAT) was up 28.3 per cent at $39.3 million.
Since these results were reported on 20 February, NWL shares rose from $18.60 to a 52-week high of $21.68. So whilst today's share price drop is significant, the value still sits within that band and is up almost 21 per cent in the year to date.
In today's update, Netwealth also reported an expansion and strengthening of new adviser and licensee relationships in the quarter, with a very strong business pipeline and conversion rates across all segments.
"We are expecting the June quarter FUA inflows to be very strong with several new large transitions commencing, in addition to higher seasonal flows and increased market activity," the company added.
"The technology environment is changing extremely quickly and innovations in generative artificial intelligence are being actively explored and implemented to improve efficiency, productivity, client engagement and service."
Later this month, Netwealth also expects that straight through processing and execution of international equities on 16 exchanges to support T+1 settlements will go live.
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