Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Allfunds Group PLC (FRA:6UY, Financial) reported record financial performance for the first half of 2024, with revenues reaching EUR310 million, a 16.4% increase compared to the first half of 2023.
- The company achieved a strong adjusted EBITDA margin of 68%, reflecting a 22% growth in adjusted EBITDA compared to the previous year.
- Allfunds Group PLC (FRA:6UY) experienced a significant recovery in net flows, with EUR14.3 billion in positive net flows, marking the first inflows from existing clients since 2021.
- The subscription business grew by 18% in the first half of 2024, driven by improved commercial activity and successful integration of recent acquisitions.
- The company is expanding its platform offerings with the introduction of a new ETP platform, expected to launch in the first quarter of 2025, aiming to capture a growing market estimated at EUR2 trillion.
Negative Points
- Despite the positive financial performance, the company faces challenges with the ongoing shift from rebate-bearing AuA to non-rebate-bearing AuA, which may impact future revenue margins.
- The subscription revenue growth, although positive, has faced competition from fintechs and other digital service providers, which could affect future growth rates.
- The company anticipates a weaker second half of 2024 for net treasury income due to potential rate cuts and seasonal transaction activity declines in Q3.
- Allfunds Group PLC (FRA:6UY) continues to face pressure from a competitive market environment, particularly in the alternatives and ETP segments.
- The company has not yet achieved its target of 30% revenue from subscription services, indicating a need for further M&A activity to reach this goal.
Q & A Highlights
Q: Can you provide an update on the alternative platform and the expected inflows?
A: Juan Alcaraz, CEO, mentioned that regulatory changes are expected to boost alternative investments in Europe. There is significant interest from private banks and wealth managers, expanding beyond institutional investors. The platform is seeing demand from both large and mid-sized distributors.
Q: Will the new ETP platform address the B2C market?
A: Juan Alcaraz, CEO, clarified that Allfunds will remain a B2B platform. The ETP platform will focus on enhancing the B2B proposition, similar to their approach with other platforms.
Q: Can you comment on the migration trends and the retention rate?
A: Juan Alcaraz, CEO, stated that migrations are consistent across various regions, with no specific trend. The retention rate remains above 99%, and the company continues to gain market share from top competitors.
Q: What is the outlook for treasury income and subscription revenue in the second half of the year?
A: Alvaro Perera, CFO, expects treasury income to be weaker in the second half due to potential rate cuts and seasonal factors. Subscription revenue is anticipated to grow, supported by a strong sales pipeline and increased sales efforts.
Q: How does the company plan to achieve the 30% revenue target from subscription services?
A: Juan Alcaraz, CEO, emphasized the importance of M&A to reach the 30% target. The company is actively seeking opportunities, particularly in Europe, to enhance its digital services and value proposition.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
