We recently researched HUB24 (ASX:HUB) in The Dynamic Investor after the Company reported results for the 12 months to 30 June 2026 (FY26). While the result was broadly in line with consensus expectations, the investment market’s focus was on the soft start to fund flows in FY27 and the new Funds Under Administration (FUA) target for FY28.

The key investor debate is whether the current softness in net fund flows represents a temporary, Budget-related disruption or an earlier-than-expected structural moderation in flow intensity. The former would support a recovery in flows and the FY28 FUA target. On the other hand, the latter raises the risk of a shortfall to management’s FUA expectations.

With the shares having weakened further since our report in mid-September, we assess whether current levels present a more attractive entry point.

About HUB24

HUB24 is a specialist investment platform provider, offering financial planners and wealth advisers a technology solution to administer and manage client investment portfolios. HUB’s platform caters for superannuation and non-superannuation products. It provides the ability to acquire, hold and administer a wide range of investments; and provides comprehensive reporting to advisers and their clients.

The majority of FUA are generated from Platform, with the remaining from Portfolio Administration and Reporting Services (PARS). PARS is a non-custodial portfolio service designed for financial advisers and their clients to manage and report on investments that are held outside of the main HUB24 custodial platform.

Within the Australian platform market, HUB holds a 9.7% share, which has grown in recent years as HUB has benefited from a structural shift away from legacy providers toward modern technology-driven platforms.

Key Fundamental Drivers

Near-Term Outlook for Fund Flows: The Biggest Investor Concern

Platform FUA for the first six weeks of FY27 (to mid-August 2026) have seen a continuation of softer trends in net inflows and implies a quarterly net flow run-rate well below expectations. The slowdown in fund flows was first observed in 3Q26, where the underlying pace of flows was beginning to moderate relative to the exceptionally strong trajectory HUB had established earlier in FY26. The slowdown is likely explained by two factors:

i. Uncertainty surrounding the Federal Budget’s proposed tax changes, particularly changes affecting higher-balance superannuation accounts.
ii. The natural maturation of the HUB24 platform. As the HUB24 platform becomes larger and more established, growth in net inflows increasingly depends on organic client additions, market growth and gaining share within existing practices,

The softer flow environment appears to have persisted beyond the initial six weeks of FY27, in light of continued equity-market volatility and the prospect of higher-for-longer interest rates. These factors are likely exacerbating client/adviser caution. More broadly, factors such as higher cash and term-deposit yields and cost-of-living pressures may also be constraining the pool of new money available to platforms.

Medium-Term FUA Growth Still Expected

Nothwithstanding the above-mentioned challenges, HUB has rolled forward its FUA target to $186-200b by the end of FY28, representing continued strong growth (+28-39% growth on FY26). The previous FY28 target was approximately $170-185b.

The revised target suggests management expects the maturation of the platform to result primarily in a moderation in the percentage growth rate of net inflows, rather than a material decline in gross flows. The growth in FUA towards the FY28 target is underpinned by:

i. HUB’s growing base of advisers, with 37% of Licensed Financial Advisers now using HUB vs 21% in FY22;
ii. Growing FUA per adviser of $24.7m, which is well below the industry average of $83m per adviser;
iii. HUB’s position as an industry leader in platform net inflows for 10 consecutive quarters (to March 2026),
iv. Growing market share, which reached 9.9% as at March 2026 (up from 8.6%). HUB24’s access to 79% of advisors, compared with active use by only 37%, provides a significant potential runway for further penetration. However, converting those advisors and winning a greater share of client assets will likely require continued fee concessions in a competitive market.
v. Several new technology offerings to continue to drive flows across the platform. In particular, the Company continues to spend on new retirement and high-net-worth solutions, as well as software enhancements.

Minimal Operating Leverage Expected

Group EBITDA margin of 42.3% grew by 2.3 percentage points vs FY25. In context, EBITDA margin for the Platform segment is higher than that for Technology Solutions. This is supported by its scalable, highly automated operating model and recurring, higher-margin revenue streams. Technology Solutions is more service-intensive and requires greater ongoing investment in R&D, integrations and specialised support.

HUB is expecting EBITDA margin for FY27 to be flat-to-slightly-positive. The key contributing factor is that elevated operating cost investment in FY26 (+18-20%) is expected to normalise towards the low-to-mid teens.

Fundamental View

HUB’s 1-year forward P/E multiple has declined from ~37x at the time of our report to ~33x currently. The multiple remains at a significant discount to the average of ~46x over the last five years. Notwithstanding the recent de-rating, the current multiple remains demanding in the context of an EPS growth profile of +15% over FY26-29 on a CAGR basis.

With the risk remaining that softness in net fund flows continues over the next few quarters, we therefore see limited scope for a re-rating.

Charting View

HUB continues to trend lower since peaking in October 2025. The risk for now is still to the downside where we would be targeting support closer to $60 as a possible level where it could bounce. However, there is no indication yet that it would stop falling at that level.

 

Michael Gable is managing director of Fairmont Equities.

 

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