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The Praemium (ASX:PPS) share price crashes 15% on FY21 earnings

Profits plummeted 68% over the financial year.
The post The Praemium (ASX:PPS) share price crashes 15% on FY21 earnings appeared first on The Motley Fool Australia. –

The Praemium Ltd (ASX: PPS) share price is in the red on Monday morning as the financial software company reports its FY21 earnings.

At the time of writing, shares in the company are trading for $1.14 – down 9.52%. The S&P/ASX 200 Index (ASX: XJO), meanwhile, is 0.41% lower.

Let’s take a closer look at today’s news.

Praemium share price slumps on 68% drop in net profit

Revenue up 14.9% on the prior corresponding period (pcp) but operating expenses increased 85.8%
Underlying earnings before interest, taxes, depreciation, and amortisation (EBITDA) fell 1.41% with a 7-percentage point drop in the EBITDA margin to 21%

Earnings per share (EPS) plummeted 73% to 0.3 cents
Unsurprisingly, the company paid no dividend for the year

What happened in FY21 to Praemium?

In October, the Praemium share price fell on the news the software company would be acquiring 100% of the shares in Powerwrap Ltd. Powerwrap provides wealth management platform technology to advisors, wealth managers and brokers.

For the quarter ended in December, Praemium announced $1.1 billion of inflows – a gain of 128% on the prior December quarter. This saw Praemium shares rise 11% on the day to 68 cents.

Finally, the CEO of Praemium announced his resignation in June. The company announced his replacement only 4 days ago.

What did management say?

Praemium CEO, Anthony Wamsteker, gave an upbeat assessment of the results:

I am pleased to report that the 2021 financial year was an excellent year for Praemium. The highlights included the successful acquisition of Powerwrap and the outstanding growth achieved in each of our major operating segments. The financial and operating results achieved reflect the tremendous foundation that has been built over many years. That foundation includes our proprietary technology, a client base of market leading financial advisors and our highly skilled and passionate staff.

He added:

Whilst the growth rate was encouraging, the profitability achieved in this transitional year was also pleasing. Underlying EBITDA was very similar to last year in both the Australian and international segments. This result was achieved despite a significant increase in the expense base of the company. Some of this growth in expense was due to bringing in Powerwrap, with the balance attributable to an investment in the capacity needed not only to manage a larger business, but also to facilitate the faster growth rate that we are now starting to see.

Praemium share price snapshot

Over the past 12 months, the Praemium share price has increased 147%. Year to date it has risen 72%.

Praemium has a market capitalisation of around $632 million.

The post The Praemium (ASX:PPS) share price crashes 15% on FY21 earnings appeared first on The Motley Fool Australia.

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More reading

New CEO announcement boosts Praemium (ASX:PPS) share price
Top brokers name 3 ASX shares to buy next week

Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Praemium Limited. The Motley Fool Australia has recommended Praemium Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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