Release Date: February 24, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Praemium Ltd (ASX:PPS) reported strong revenue growth, reflecting successful execution of their long-term strategy.
• The company launched a new core product, Spectrum, which has been well-received in the market.
• Praemium Ltd (ASX:PPS) maintained a high overall market rating, securing the number one position in two key categories.
• The company has been successful in retaining a high net promoter score, indicating strong customer satisfaction.
• Praemium Ltd (ASX:PPS) announced a $0.01 per share interim dividend, demonstrating a commitment to returning value to shareholders.

Negative Points

• The departure of CFO David Coulter after three years raises concerns about leadership stability.
• Increased IT costs have been noted, reflecting the need for significant investment to maintain technological capabilities.
• The company is experiencing a reduction in funds under administration from some clients, impacting revenue.
• There is a delay in realizing cost synergies from the OneView acquisition, with expected benefits not materializing until the first half of next year.
• Praemium Ltd (ASX:PPS) faces challenges in expanding its retail superannuation offering, which remains underweight compared to its potential.

Q & A Highlights

• Warning! GuruFocus has detected 4 Warning Sign with ASX:PPS.

Q: Can you provide an update on the anticipated synergies and cost reductions from the OneView acquisition? A: We expect to achieve $3 million in synergies, focusing on cost reductions from the normal run rate. The timing for these synergies is anticipated to be in the first half of next year, with minimal impact expected in the second half of 2025. The transition of clients to our technology will be a significant factor in realizing these synergies. - David Coulter, CFO

Q: Has there been any repricing for the SMA platform or the Scope product? A: Yes, we have implemented repricing for both the SMA platform and Scope. The repricing for Scope was executed with a big bang approach on January 1, 2025, due to the complexity of existing contracts. This was necessary in an inflationary environment where prices hadn't increased for about 10 years. - David Coulter, CFO

Q: Can you discuss the strategy behind the reduction in staff headcount in Armenia and the succession planning for the CEO role? A: We have reduced the staff in Armenia from 90 to around 50, focusing on technology development. Administrative functions have been moved to India for better outcomes. Regarding succession planning, I have a financial incentive to stay for another three years, but I am open to handing over the role if the board identifies a suitable successor from within the company. - Anthony Wansecker, CEO

Q: What is the current state of the pipeline for the custody side of the business, particularly for Spectrum? A: Our pipeline is healthier than it has been in a long time, with significant opportunities in our target market of high net worth advisors. We are confident in the flow of new leads and the potential for market share growth. - Anthony Wansecker, CEO

Q: How are you approaching cost management and investment in technology going forward? A: We anticipate expenses to grow due to inflation and business growth, with a focus on investing in technology rather than support staff. We are exploring AI initiatives to drive efficiencies and aim for revenue growth to outpace expense growth. - Anthony Wansecker, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.