D2C investment platform operator AJ Bell published its interim results for the period ending the 31st of March 2022, this week.

Total customer numbers rose to just over 418,000 the firm added +35,555 new clients in the period and had a customer retention rate of 95.40%, which is just ahead of the comparable number for the same period last year.

Asset under administration or AUA rose by £2.80 billion to stand at £74.10 billion.

Revenue rose to £75.50 million compared to £73.90 billion, which the firm generated, in the same period in 2021.

However, profit before tax margins were considerably lower at 34.6% versus 2021’s 42.80%.

However, the half-yearly margin was ahead of prior forecasts, and that allowed the firm to raise its PBT margin guidance, for the full year 2022, to 35.0%.

The firm expects to be able to improve this figure, in 2023.

AJ Bell declared an interim dividend of 2.78p per share, which it said was in line with its stated dividend policy.

CEO Andy Bell said of the results:

I’m pleased to announce another solid set of results for the first half of the year. Our dual-channel platform continues to attract and retain long-term customers in both the advised and direct-to-consumer markets, with our platform retention rate of 95.4% evidencing the quality of our propositions and our high customer service levels.”

Looking at the earnings data we find that AJ Bell earned 20.3 basis points for each pound it has under administration.

However, in 2021 it was earning almost 20% more on each pound, that its customers had invested or deposited at the firm.

As a result profits before tax in the period fell by-17% to £26.10 million.

AJ Bell did not break down where exactly it had incurred higher costs, simply saying that the reduced margin was due to the increased investment in the brand and its technology.

Broker Shore Capital took a realistic stance on the earnings release saying that:

“Guidance is positive, but will be mostly erased by a further mark to a lower market since the end of March.”

The firm’s analysts have a 320p fair value for the stock and believe it will ultimately be the winner in the investment platform space, both in the adviser and the D2C markets.

Shore Capital views AJ Bell as a growth business and highlights that the shares now trade at 20 times earnings forecasts for the calendar year 2023.

AJ Bell shares are up by +3.25% over the last five days of trade, however, they are down by more than -36.0% in the last 52 weeks.

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