Hargreaves Lansdown PLC (LSE:HL.) upgraded its revenue and cash guidance after first-half results came in stronger than expected.
The fund supermarket reported revenue of £350mln for the half year to 31 December 2022, up 20% year-on-year and beating average analyst forecasts of £322mln.
Net new business fell 30% to £1.6bn but was a touch better than City expectations, while 31,000 new clients joined to take total client numbers to 1.77mln with client retention increasing to 92.4% from 92.1%.
Profit before tax (PBT) jumped 31% to £197.6mln, with underlying PBT up 30% to £212mln and well ahead of the analyst consensus of £179mln.
A 3.6% increase of the interim dividend to 12.7p has been proposed.
For the full year, the company lifted its guidance for revenue margin and cash, primarily reflecting higher interest rates, but said underlying cost growth would be towards the top end of the range. It expects 3% ordinary dividend growth.
“Whilst challenging external conditions and low investor confidence impacted asset values and stockbroking volumes in the period, clients have benefitted from our diversified platform and we have progressed across all the strategic priorities that we set out a year ago,” said chief executive Chris Hill.
The shares leapt 8% higher in early trading but came off a bit to a 2% gain at 968.6p after just over an hour’s trading.
Analysts at broker Shore Capital said they expected consensus revenues to “rise significantly”.
They noted that net flows were “close to zero” and this was the second quarter of no platform growth, and when Active Savings are excluded the second quarter saw net outflows.
“The only net new money growth here now is in a cash product, low margin, while consensus net flow expectations for the full year, ex Active Savings are still too high, at £2.2bn consensus. That said, numbers are continuing to rise and could well do so again next quarter, again mostly driven by cash.”