Hargreaves Lansdown PLC Trading Update

Date: Tuesday, following the Q1 2025 trading update.

Shares of Hargreaves Lansdown PLC (LON:HRGV) remained stable after announcing its trading performance for the first quarter of 2025.

Key Highlights

• Analyst Insight: RBC Capital Markets indicated resilience in the company’s revenue, but noted that net platform flows fell below expectations, suggesting upcoming challenges.
• Revenue Figures: The company reported total revenues of £196.5 million, exceeding consensus estimates by 3%, and marking a 7% year-on-year increase.
• The growth was attributed to higher assets under administration (AUA) and a rise in share dealing volumes, which countered a decrease in the net interest margin on client cash.
• Net New Business: Hargreaves Lansdown's net new business was £0.5 billion, falling short of the forecasted £1.3 billion, down 61% and a 69% decrease from the prior quarter.
• Outflows: The drop was largely due to unexpected net outflows of £0.3 billion from the investment platform, while flows from Active Savings met expectations.
• Asset Retention: The asset retention rate dropped to 88.6%, a fall of 90 basis points from last quarter, reflecting gross inflows of £5 billion, down 22% from Q4 2024.
• Closing AUA: The closing AUA stood at £157.3 billion, a 17% year-on-year increase, matching estimates, supported by a 1.0% market move in-quarter.
• Cash Balances: There was a surprising 2% increase in cash balances to £12.7 billion, above the expected £12.2 billion.
• Share Dealing Volumes: Monthly share dealing volumes reached 738,000, down 12% from last quarter but up 16% year-on-year.
• Client Growth: The firm added 18,000 clients, totaling 1.9 million active clients, a 5% year-on-year increase.
• Future Considerations: The CEO highlighted caution regarding the upcoming UK budget, with RBC analysts stressing its potential impact on investor sentiment.
• Acquisition News: The proposed acquisition by a private equity consortium remains on track for completion in Q1 2025.

Analyst Commentary: Despite weaker-than-expected flows, strong revenues and a growing customer base indicate that Hargreaves Lansdown is in a favorable position, especially as it approaches acquisition completion.