Netwealth Group reported a statutory net loss of $2.2 million for the half year ended December 2025, driven by a $100.7 million one-off compensation expense related to the First Guardian Master Fund. Excluding this, underlying profit rose nearly 20%, supported by robust revenue and asset growth.
- Statutory net loss of $2.2M due to $100.7M First Guardian compensation expense
- Underlying net profit up 19.9% to $69.0M excluding one-off costs
- Revenue increased 21.6% to $189M, driven by Funds Under Administration growth
- Funds Under Administration reached record $125.6B, up 23.6%
- Interim fully franked dividend of 21.0 cents per share declared
Statutory Loss Masks Underlying Strength
Netwealth Group Limited’s half year results for the period ending 31 December 2025 reveal a complex financial picture. The company reported a statutory net loss of $2.2 million, primarily due to a significant one-off compensation payment of $100.7 million related to the First Guardian Master Fund. This extraordinary expense, alongside associated legal and consulting fees, weighed heavily on the bottom line.
However, stripping out these exceptional costs, Netwealth’s underlying net profit rose by 19.9% to $69.0 million compared to the prior corresponding period. This robust performance underscores the resilience and growth momentum of the business despite regulatory headwinds.
Strong Revenue and Asset Growth
Revenue from ordinary activities climbed 21.6% to $189 million, fuelled by a 23.6% increase in Funds Under Administration (FUA) to a record $125.6 billion. This growth was supported by strong inflows of $16.6 billion, reflecting both ongoing contributions from existing financial intermediaries and successful new business conversions across client segments.
Funds Under Management (FUM) also saw a notable uplift, rising 30.6% to $31.4 billion. The company’s managed account balances grew by 32.3% to $27.5 billion, with net flows increasing 42.7%, highlighting advisers’ confidence in Netwealth’s platform and its expanding suite of managed account models.
Operational Investments and Financial Position
Netwealth continued to invest strategically in technology, product innovation, and governance, increasing employee headcount by 127 roles to 791 and boosting technology and communication expenses by $3.8 million. These investments aim to enhance system scalability, security, and automation, positioning the platform for sustained growth and regulatory compliance.
To fund the First Guardian compensation payment, the company drew down $70 million from a $100 million loan facility, reflecting prudent liquidity management. Despite the statutory loss, Netwealth declared a fully franked interim dividend of 21.0 cents per share, signalling confidence in its underlying profitability and cash generation capabilities.
Outlook Amid Regulatory and Market Dynamics
Looking ahead, Netwealth remains well positioned to capitalise on structural growth opportunities in the Australian wealth management sector, including platform consolidation and increasing demand for integrated technology solutions. The Board continues to monitor economic conditions and regulatory developments closely, maintaining a focus on operational efficiency and governance excellence.
While the First Guardian compensation expense represents a significant one-off cost, the company’s strong recurring revenue streams, diversified client base, and strategic investments provide a solid foundation for future growth.
Bottom Line?
Netwealth’s underlying growth story remains intact despite a costly regulatory setback, setting the stage for a pivotal second half.
Questions in the middle?
- What long-term impact will the First Guardian compensation have on Netwealth’s earnings and regulatory environment?
- How sustainable is the recent growth in Funds Under Administration and Management amid market volatility?
- What further technology and governance investments will Netwealth prioritise to maintain competitive advantage?