Less than 12 months since launching their latest product with a first mover advantage, wealth management software company Class Limited (ASX: CL1) has reported a 25% increase in revenue having delivered a product that the wealth administration industry had been screaming out for.
Long-time leaders in the superannuation sector courtesy of their Class SMSF software, Class launched the Class Trust product in October 2020, specifically developed to give accountants and financial advisors an alternative to Excel spreadsheets. Since its launch, users of Class Trust have reported time savings of up to 68%, praising its automation capabilities which have resulted in customer adoption.
Delivering Class Trust was part of Class’ wider Reimagination strategy launched in 2019 by CEO Andrew Russell to evolve Class beyond SMSF software, to become a full service wealth creation and administration platform.
As a mature market with limited growth, the addressable market for SMSF and portfolio services was just $140m but with their expansion into Trust administration and corporate compliance documents, Class’ addressable market has substantially increased to $365m.
Two years into their 3-year Reimagination strategy, Class is delivering impressive growth with the Company reporting in FY21 a 25% increase on last year’s revenue to $54.9m and a 21.9% increase in underlying EBITDA to $21.9m. Shareholders have also been rewarded with a fully franked 2.5 cent dividend per share.
Class Revenue and EBITDA Growth
While the revenue growth which had previously been flagged at 22%, further upswing is on the horizon for Class which has a range of new upgrades scheduled for their platforms over the next 12 months. Furthermore, Russell flagged the potential for international expansion for the Company which is currently only Australian-centric.
Making no secret of the SMSF software market reaching maturation where Class touts 99% customer retention, Class Trust is set for its biggest year of growth with rising awareness amongst its users. This will be further catalysed by a centralised salesforce that Class has been training over the past six months to be proficient in all Class products, driving cross-referral opportunities from more than 7,700 total unique customers using a Class product – 123% customer growth on last year.
“A key strategic requirement for the 3-year Reimagination Strategy was to ensure Class could grow the business outside of Super. It is pleasing to note that over the past two years, the Super business revenue continues to grow, however, the Super contribution of total revenue has rebalanced from over 95% of revenue in FY19 to approximately 70% of total revenue in FY21,” said Russell.
“We have redesigned and trained our internal customer management and sales teams to sell the multiproduct suite. Our operational strategy is to drive further product penetration across those segments and increase the Life Time Value of customers.”
Growth in the Trust administration market is highlighted by the $3.5 trillion of wealth to be transferred from the baby boomer generation to their beneficiaries over the next 20 years with Trusts acknowledged as the most effective vehicle.
Also included in Class’ results was the acquisition of legal documentation software provider, Topdocs for $13m. The acquisition is expected to contribute annual revenues around $3m and brings Class’ total market share in the compliance documents market to 18% with the TopDocs team and customers now joining the Class stable.
“With more customers, comes more opportunities – that’s a good challenge to have. Most importantly our intention is to ensure our customers are at the heart of how we design, build and deliver our products to market.,” said Russell.
Class Total Customer Growth
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