AJ Bell PLC (LSE:AJB), the investment platform group, saw its shares surge 10% to 588p in early trading on Thursday after first-half results comfortably beat market expectations across every key metric.
Revenue for the six months to the end of March rose 19% year on year to £183 million, 6% ahead of the consensus forecast of £172.1 million, while underlying pre-tax profit came in at £79 million, a 12% beat against expectations of £70.6 million.
Underlying earnings per share of 14.61p were 11% above the 13.19p pencilled in by analysts.
Assets under administration stood at £110.2 billion with net inflows of £800 million, both of which had been pre-announced at a trading update earlier in the year.
The stronger-than-expected profits were supported by higher client fees and solid activity levels, with customer numbers up 22% year on year as AJ Bell's sustained investment in marketing and technology continues to deliver growth.
Underlying margins of 43.2% were roughly two percentage points ahead of consensus, though they slipped 1.7 percentage points compared with the same period last year, reflecting the ongoing cost of the group's customer acquisition drive.
Management raised guidance for the full year, saying it now expects revenue margin, pre-tax profit and pre-tax profit margin to come in ahead of previous expectations.
The board also announced a further share buyback of up to £15 million on top of the existing £50 million programme, a signal of confidence in the outlook.
Panmure Liberum noted that the key question remains how much of AJ Bell's elevated marketing and technology spending becomes a permanent feature of the cost base, and said the company needs to demonstrate operating leverage to justify its valuation.
The shares have risen 25% over the past three months and trade on 18 times two-year forward earnings, a premium to peers.