Praemium (ASX:PPS) executives highlighted an acquisition aimed at expanding product development capability and provided details on quarterly fund flows, with total funds under administration (FUA) rising despite largely flat market movements. Chief executive officer Anthony Wamsteker and chief financial officer Emma Stepchik delivered the company’s Q2 FY26 update in a webinar format.
Teqnosi Labs acquisition positioned to expand development and super capability
Wamsteker said the company’s “biggest initiative over the last quarter” was the announcement of its acquisition of Teqnosi Labs, which he described as a market leader in machine learning and “design-led development.” He said the relationship with Teqnosi had been in place for more than 18 months and would “greatly” expand Praemium’s development capacity and user-experience (UX) capabilities, with UX improvements expected to be rolled out progressively over the coming quarter.
In response to a question on how Teqnosi improves the super offering, Wamsteker said Praemium currently runs two systems for super: an investment system (its managed account engine) and a super administration system that he characterized as older than more modern alternatives. He said Praemium and Teqnosi have built a superannuation administration platform that can be combined with Praemium’s investment capability, enabling the company to control the platform “end to end.”
On the expected economics of the transaction, Wamsteker said the “business case” justified itself through automation opportunities alone, noting Praemium’s cash costs included roughly AUD 75 million to run the business and around AUD 10 million of capital expenditure in the last financial year. He also suggested UX improvements could support growth, though he emphasized the investment case was not predicated on higher growth.
Total FUA rose to AUD 70.5 billion; platform net inflows resilient
Stepchik reported total FUA of AUD 70.5 billion at quarter end, up 5% from the prior quarter and 14% year over year. She said the result was supported by continued adoption of Spectrum, strong Powerwrap inflows, and onboarding of new Scope+ portfolios, and noted the increase came despite “flat market movements” in the quarter.
Platform FUA increased 8% year over year to AUD 32.5 billion, supported by Spectrum growth. Platform net inflows were AUD 462 million, which Stepchik said held up despite gross outflows of AUD 361 million related to exiting advisers. She said the company expects that level of outflows to diminish over time.
Spectrum, Powerwrap, and SMA flows; OneVue transition completed
Spectrum FUA ended the quarter at AUD 3.6 billion, up from AUD 3.3 billion at the end of September, with net inflows of AUD 266 million. Stepchik said adjusted net inflows were AUD 312 million after accounting for one new adviser exit, representing 9% of opening FUA for the quarter. She added that Spectrum has generated more than AUD 1.4 billion of new business gross inflows since launching just over a year ago, and said the company has also retained some OneVue customers who chose to stay based on Spectrum’s offering. Stepchik described Spectrum’s pipeline as “encouraging,” with the company monitoring trends through the financial year to inform long-term expectations.
For SMA, Stepchik reported net inflows of AUD 24 million, but said results were impacted by belated outflows tied to a long-standing transition involving a former client group. SMA FUA rose to AUD 14.6 billion, up 18% year over year, including a transfer of AUD 933 million from OneVue. She said onboarding growth with Morgan’s remains a key business priority.
Powerwrap recorded net inflows of AUD 302 million, which Stepchik said was the highest since Q1 of FY22. She attributed elevated gross inflows to strong engagement and growth across existing advisers, while adviser exits were “minimal” and outflows normalized. Powerwrap FUA increased 6% year over year to AUD 14.3 billion. Stepchik noted Praemium expects new growth to flow to Spectrum, but said headwinds for Powerwrap have “subsided.”
Stepchik also said the OneVue transition was completed during the quarter, with final FUA transferred to SMA. She added that the final earnout for OneVue was closed, and because FUA was under the earnout threshold, no FUA payments were required.
Scope+ growth and onboarding updates
In the portfolio business, Stepchik said non-custodial Scope+ FUA rose 19% year over year to AUD 37.9 billion. She cited the addition of two new advice groups and an increase in portfolios to 10.7 thousand.
Management said Bell Potter’s previously announced Scope+ win contributed additional portfolios in the quarter. Wamsteker said onboarding is “well on the way,” with more to come, and he expects completion over the coming quarter. Stepchik said the initial onboarding phases are complete and the final phase is expected to finish by the end of Q3.
Outflows, product positioning, and leverage discussion
Addressing questions on outflows, Wamsteker said the AUD 361 million in outflows reflected several factors that he does not view as ongoing. He said the “lion’s share” of the outflows related to OneVue advisers who had previously notified the company they were leaving, with additional outflows tied to adviser departures and legacy firm exits, including one firm that left more than five years ago. He said the magnitude of these outflows is starting to reduce and that “there’s less to go.”
On product strategy, Wamsteker said Spectrum is the company’s leading product from a sales perspective, and Praemium would not place new advice firms into Powerwrap. However, he said Powerwrap clients can remain on that platform and still contribute organic growth, with the option to move to Spectrum if they choose. He also said SMA can still be the lead product for some clients depending on how advice firms are structured, and argued that Spectrum can broaden SMA adoption because firms can use Spectrum for assets not suited to managed accounts while allocating appropriate portions into SMA as an investment option.
Wamsteker also discussed operating leverage and automation, noting that larger platform peers have higher drop-through margins and lower cost-to-revenue ratios. He said Praemium’s higher costs reflect scale and manual processes tied to serving high-net-worth clients, but added that AI and broader technology advances create more automation opportunities than were available several years ago. He said the company expects scale and automation to reduce the cost-to-revenue ratio over time, but provided no formal guidance, indicating more detail would come with the upcoming financial results.
About Praemium (ASX:PPS)
Praemium Limited, together with its subsidiaries, provides advisors and wealth management solutions by seamless digital platform experience in Australia and internationally. The company offers technology solutions, such as reporting, online business management, digital engagement, tax and corporate actions, and investment governance. It also offers product solutions, which includes private wealth, investments and superannuation, software licensing, and third party administrations. In addition, it provides managed accounts platform that includes virtual managed accounts and virtual managed accounts administration service.
