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Raiz’s quarterly numbers finally start to excite the market
In mid-2021, Raiz Invest (ASX:RZI), a pioneer in the micro-investing space, saw its share price break through $2. With funds under management (FUM) in Australia approaching $1 billion and fledging operations underway in Southeast Asia, it was finally justifying investor faith after listing at $1.80 in June 2018.
But this market rally, which began in early 2021, couldn’t be sustained. By the end of 2022 it was back below 50 cents and has mostly flatlined ever since before enjoying a sharp uptick over the past several days to close at 59 cents on Tuesday.
Yet the underlying performance suggests this improving share price might be sustained. In the first quarter of the 2024-25 financial year, Raiz achieved a 15.2 per cent year-over-year increase in revenue, totalling $5.66 million for the three months to September 30, 2024.
This growth was underpinned by a rising number of active customers, reaching 310,600 by September 30, 2024, reflecting a 4.9 per cent year-over-year rise. Notably, the quarterly addition of 3,824 new active customers signals an accelerating momentum in customer acquisition.
This growth reflects Raiz’s ability to attract a diverse range of customers, from first-time savers to seasoned professionals. The inclusion of Kids Portfolios, which recorded a remarkable 40 per cent year-on-year increase in the quarter, exemplifies the company’s commitment to fostering long-term investment habits among the younger generation.
The all-important funds under management (FUM) rose 31.8 per cent year on year to $1.512 billion, driven by strong inflows across all product categories. Among the standout performers were the Plus Portfolios, which grew 73.3 per cent, and Kids FUM, which more than doubled to $52 million.
Superannuation portfolios also showed robust growth, with FUM increasing 35.3 per cent to $314 million. The introduction of the customisable Plus Portfolio into the superannuation offering has resonated well with customers, allowing them to align their retirement investments with their individual goals and risk appetites.
Raiz has continually demonstrated its commitment to meeting investor needs through innovation. In July 2024, the company launched automated Raiz Rewards, a feature that automatically tracks and invests cashback rewards from everyday purchases. With more than 21,900 new rewards tracked in the first quarter, this feature represents an effortless way for customers to enhance their savings.
Additionally, Raiz is developing white-label solutions for financial institutions, including financial planners. These solutions, expected to be launched soon, will broaden the accessibility of Raiz’s investment platform, enabling more Australians to benefit from its expertise.
But Raiz’s overseas ambitions have ended. Earlier this year it finalised the exit from its Indonesian joint venture, and in the latest quarterly update announced it was in the process of divesting its Malaysian operations. As chief executive officer Brendan Malone said when announcing the Indonesian retreat, the focus was on scaling up the core Australian business.
An important element of this home-grown strategy is the strategic partnership with State Street Global Advisors announced in August 2024, a collaboration that has the potential to drive the development of new investment products, including retirement income portfolios, while enhancing financial literacy among customers.
Raiz’s strong cash flow and balance sheet highlight its operational efficiency and financial stability. The company reported a positive operating cash flow of $856,000 in the first quarter, with a closing cash balance of $12.3 million. Additionally, a successful $3 million share placement and a $938,000 share purchase plan provide ample resources for future growth initiatives, including artificial intelligence-driven marketing and potential mergers and acquisitions.
Malone was certainly upbeat about the first quarter numbers. “I am very pleased to deliver another strong quarter for Raiz with solid top-line growth, positive operating cash flow and a strengthened balance sheet.
“From an operational perspective, this has been another very productive quarter with the expansion of our Plus offering into superannuation, the launch of automated Raiz rewards, the establishment of various new partnerships as well as the successful completion of a placement and the share purchase plan.”
He is correct. They are a solid set of numbers – and heading in the right direction. A sceptical market has finally pushed the price up, but can it be sustained in 2025?
