Netwealth Group (ASX:NWL) reported record first-half FY2026 results, highlighting strong growth in funds under administration (FUA), net flows, and earnings, while also addressing a “very challenging regulatory environment” tied to the First Guardian collapse.
Chief Executive Officer and Managing Director Matt Heine said the company was “particularly pleased” to have settled the First Guardian matter late last year, providing clarity to impacted members and reaching agreement with regulators. Management emphasized that the financial numbers discussed on the call were adjusted to remove the impact of First Guardian-related compensation and one-off direct payments, and that this was the only adjustment made.
Record flows and FUA growth, strong start to the new year
Heine also provided an update on momentum after the half, saying FUA as of February 16 stood at AUD 127.3 billion, with calendar year-to-date net flows of AUD 1.6 billion.
Chief Financial Officer Hayden Stockdale reported total FUA of AUD 125.6 billion for the half (up 24%), with custodial FUA inflows of AUD 16.4 billion—also described as a record half year. Stockdale said the growth pushed market share to 2%, up 100 basis points.
Income, EBITDA, and dividend details
Stockdale said FUA growth translated into total income of AUD 190 million and EBITDA of AUD 96.7 million, up 24%. The EBITDA margin was about 50%, and Stockdale noted the company recorded AUD 1.5 million in extraordinary income during the half; adjusting for that, EBITDA margin was 49.5%.
On capital returns, Stockdale said EPS rose 22.2% and the board declared an interim dividend of 21 cents per share, up 20% year over year, representing a 75% payout ratio. He also said the company was “converting virtually every dollar of EBITDA to cash,” which he described as a key quality hallmark.
Revenue mix diversification and pricing dynamics
Stockdale pointed to a broadening revenue base, with platform revenue of AUD 189 million, up 25.3% year over year. He detailed the mix, saying transaction income represented 13.7% of platform revenue, management fees were up 30% and represented 6.3% of the mix, ancillary fees grew 36.5% to 41.2% of the total, and admin fees accounted for just under 39%.
On pricing, he said Netwealth contained revenue margin compression to 0.3 basis points, with revenue margins of 31.1 basis points versus 31.4 a year ago. He attributed an uplift in cash margins—from 1.35% to 1.5% in April—to adding 1.3 basis points to revenue margin, and said a 1.1 basis point contraction in admin fees was “virtually entirely due to market movement” interacting with pricing tiers and caps, rather than competitive pricing pressure. He said revenue per account increased 10.3% year over year.
Expenses, reinvestment, and operating leverage
Operating expenses were AUD 97.1 million for the half, up 19.7%. Stockdale said Netwealth deliberately reinvested operating leverage back into the business, calling the added costs “good costs” tied to strategic decisions supporting future growth. He cited investment into delivery activities to support the broker opportunity and process improvements, as well as additional investment in product and technology. He also noted Netwealth hired just over 80 employees in the half, and made some additional sales and marketing investment late in the period that had not yet flowed through the profit and loss statement.
In Q&A, management reiterated that cost growth includes a variable component as revenue grows, and said higher-than-expected revenue led the company to bring forward some investments. Heine said headcount additions tied to the regulatory response were captured within the company’s normal headcount growth and should not be viewed as a separate driver.
Product expansion, AI focus, and new addressable markets
Heine said growth is increasingly being supported by “ancillary” areas alongside core platform expansion. He highlighted:
- Managed accounts: Growth of 32.3% during the period, following a rebuild of managed account infrastructure to improve scalability and add capabilities requested in the market.
- FX and trading: The company has been investing in domestic and international trading, with international volumes up 40.8% over the period.
- Cash functionality: Cash balances increased to 6.2%, which Heine said was supported by new features such as additional payment facilities and regular payments.
Heine also discussed artificial intelligence as an extension of Netwealth’s technology-first strategy, saying the company has implemented AI for years and sees recent advances as supportive of its direction. He said Netwealth’s Unify acquisition provides an advantage through a large data set and integration across the platform, which management believes positions the company well to deliver “advisor efficiency” and intelligence in a heavily regulated market.
On product strategy, Heine said Netwealth is focused on the affluent and high net worth advice segments, pointing to the continued enhancement of Wealth and Super Accelerator products. He also said the company is launching Netwealth Private and preparing to release a new individual HIN service, which is already in a soft launch onboarding phase. Management described the individual HIN initiative as targeting a market of around AUD 600 billion across 55 brokers, using a partnership with FinClear and offering flexibility for clients to trade and settle back to Netwealth or hold in their own HIN registry.
In Q&A, Heine said the platform margins for the broker/private wealth segment are expected to be consistent with other segments, while the incremental individual HIN cost is still being finalized and may vary by scale, with a range discussed of roughly AUD 300 to AUD 800 per account.
Heine also described industry dynamics as favorable, citing demographic tailwinds and rising retirement-related advice needs that extend beyond superannuation, which management believes will drive continued flow opportunities from industry funds toward retail platforms.
Regulatory response and outlook
Management said it is progressing changes to ensure investment options meet members’ best financial interest, with strengthened onboarding and monitoring processes aimed at avoiding further issues like those seen in Shield and First Guardian. The company said it is working collaboratively with an independent expert and described a raised compliance “bar” across the industry.
On guidance, Heine said Netwealth reiterated its FY2026 outlook: FUA net flows are not expected to differ materially from FY2025. The company also guided to an EBITDA margin (excluding First Guardian expenses) of approximately 49%, and said the FY2026 final dividend will be based on FY2026 earnings excluding First Guardian expenses.
Asked about early-year flow seasonality, management said January is typically softer due to Christmas and New Year timing and indicated results were tracking in line with, and slightly ahead of, last year at that point. Heine also said the company did not believe the First Guardian issue created long-term reputational damage, noting that momentum and customer wins continued through the period and that advisors understand their own role in fund selection.
About Netwealth Group (ASX:NWL)
Netwealth Group Limited, a financial services company, engages in the wealth management business in Australia. The company operates a platform that offers superannuation, including accumulation and retirement income products; investor directed portfolio services for self-managed superannuation and non-superannuation investments; managed accounts and funds, self-managed superannuation funds administration; and non-custodial administration and reporting services. It also provides investment wrap products; investment options, such as listed and international securities, managed account models, managed funds, term deposits, premium services, and investor rewards; insurance products; forms and disclosure documents; and resources and tools, as well as advisory, licensee, and private wealth solutions.
