Full Year 2024 Netwealth Group Ltd Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Siraj Ahmed - Citigroup - Analyst : Good morning, Matt. Good morning, Grant. I'll ask three questions if that's okay. The first one, just on flows, and this got multiple parts. Just -- can you just confirm that July is seasonally a quiet month? Just wondering whether it's super strong because it's seasonally strong -- seasonally soft. And just in terms of the transitions, do you reckon this is -- it's front-end-weighted towards the first half of the first quarter? Just trying to understand whether this continues for the whole of the financial year. And lastly, on the flows as well, you saw the news from AMP. I've had a few questions on whether this could be another tailwind for you. I know it's a bit early, but just keen to understand how you're thinking about that. Thanks.

Question: Siraj Ahmed - Citigroup - Analyst : And Matt, just on AMP, the changes announced last week, whether that's -- yes, I mean, you had mentioned one of the other group's change was positive, whether this has any impact at all? I mean, I know it's a bit early, but still.

Question: Siraj Ahmed - Citigroup - Analyst : And just one quick one. The mention of practice management and advice management is pretty interesting. That seems new. So Matt, just keen to understand what you're trying to do there and what you see as the opportunity. And is this a new revenue stream or just more about supporting the platform business? Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 12, 2024 / 11:30PM, NWL.AX - Full Year 2024 Netwealth Group Ltd Earnings Call

Question: Siraj Ahmed - Citigroup - Analyst : Just advice management and practice management, the fact that you're heading into that area. Yeah, just keen to understand the strategic reason for that. And is that a new revenue stream for you? Thanks.

Question: Nicholas McGarrigle - Barrenjoey Capital Partners - Analyst : Hi, team. Can you just give us a sense of the type of advisor groups that are making up the $1.2 billion and maybe -- or just the kind of momentum in the pipeline? And if any of those types of groups maybe have changed in composition versus a year or two years ago, because it feels like you're making really great progress across a broader suite of clients now than you may be used to. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 12, 2024 / 11:30PM, NWL.AX - Full Year 2024 Netwealth Group Ltd Earnings Call

Question: Nicholas McGarrigle - Barrenjoey Capital Partners - Analyst : Thanks --

Question: Nicholas McGarrigle - Barrenjoey Capital Partners - Analyst : Thank you. No, my most passionate role is covering networks. So (multiple speakers)

Question: Nicholas McGarrigle - Barrenjoey Capital Partners - Analyst : Yeah. In terms of the OpEx growth you've guided to, I think, the wording is usually very considered. I think it's a slight percentage increase on the 15% rate. Can you just talk through the types of hires and maybe even a headcount number, if you've got that to hand, that feeds into that guidance?

Question: Nicholas McGarrigle - Barrenjoey Capital Partners - Analyst : And I think as far as roles go, the usual split, a couple of additional IT headcount and some small -- or some one-off IT costs as well. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 12, 2024 / 11:30PM, NWL.AX - Full Year 2024 Netwealth Group Ltd Earnings Call

Question: Nicholas McGarrigle - Barrenjoey Capital Partners - Analyst : And just the last one for me. There's obviously been a bit of revenue margin compression from cash coming down and I guess account balances growing. The composition of new flows, does that look different in terms of the size of opportunity and hence, the pricing that you're doing? Like how should we think about the revenue margin compression moving forward?

Question: Nicholas McGarrigle - Barrenjoey Capital Partners - Analyst : Thank you.

Question: Bob Chen - JPMorgan Chase & Co - Analyst : Hey, guys. Just a follow-up on the cost guidance question. Yeah, obviously a good step-up in second half EBITDA margins. Should we expect that EBITDA margins to maybe see a bit of pullback on this step- up in cost growth into next year?

Question: Bob Chen - JPMorgan Chase & Co - Analyst : Okay, cool. And then just looking at your cohort charts, it looks like the newer advisors contributed more this year compared to last year to your net inflows. Was that because they joined the platform earlier? Or are you seeing some new advisors accelerating their transitions onto the platform?

Question: Bob Chen - JPMorgan Chase & Co - Analyst : Okay. Perfect. And just a final one. Obviously, a fair bit of tech investment at the moment. I mean, how should we measure the success of this tech investment? Should we look at your full growth accelerating on the back of this tech investment? Or is it more the revenue side with additional non-platform revenues coming on as well?

Question: Bob Chen - JPMorgan Chase & Co - Analyst : Okay. Great. Thanks, guys.

Question: Olivier Coulon - E&P Financial Group - Analyst : Hi, gents. Can you hear me okay?

Question: Olivier Coulon - E&P Financial Group - Analyst : Perfect. Just a question on Xeppo. Apologies if I missed it somewhere in the disclosure, but what's the size of that business at revenue if you could? And then is the cost that will, I guess, get consolidated, is that included in the cost growth guidance or is that on a like-for-like basis?

Question: Olivier Coulon - E&P Financial Group - Analyst : Okay. Thanks. And then, I guess, on the cost growth, again, like longer term, do you expect -- do you expect to return to a significant degree of operating leverage? Or is the view that, well, as long as the revenue opportunities are there, you're going to continue to invest to maintain your gap between yourself and the other platforms?

Question: Olivier Coulon - E&P Financial Group - Analyst : Yeah. No. Perfect. And sorry, just to follow-up on maybe Siraj's questions where he asked about the shape of some of those transitions from that backlog that started flowing through in the fourth quarter and in the first quarter. Is there a view as to how much of that backlog delivers into first half versus second half? Or do you think it's going to be relatively even?

Question: Olivier Coulon - E&P Financial Group - Analyst : Okay. Good. Thanks, guys. Appreciate it.

Question: Siraj Ahmed - Citigroup - Analyst : Grant, can you give us an update on the cash balance? Just wondering whether that's picked up or staying steady.

Question: Siraj Ahmed - Citigroup - Analyst : Okay. And just one last one. In the outlook statement in the annual report, there's a mention about you're taking control or doing more in-house development of the key platform features. Can you just expand on that? I'm just wondering whether you're moving away from IRS or something like that. I'm just keen to understand that bit.

Question: Siraj Ahmed - Citigroup - Analyst : Thanks.