Raiz a glass as micro investment platform reports 23.2% revenue uptick and edges closer to profit

If you recently spotted an ad for the investment app Raiz (ASX: RZI) on TV, know that it’s all part of the Company’s latest brand awareness campaign and you’ve joined its roster of potential customers. 

In December 2023, Raiz launched the ‘Raiz Your Game’ marketing campaign. By early January 2024, as a result of the campaign, active customer count rose to 295,725.

Overall, in Q2 FY24, Raiz saw a 23.2% increase in group revenue to $5.47m compared to the prior year, with Australian revenue rising by 6.7% quarter on quarter (QOQ) to $5.24m (Raiz is also present in Indonesia and Malaysia). The Annualised Average Revenue Per User (ARPU) saw a significant 21% increase to $69 in the first half of FY24. 

Marketing campaigns contributed to brand awareness, and the Company achieved a positive operating cash flow of $856K, marking a 198% improvement on Q1 FY24. 

Raiz Invest Managing Director and CEO, Brendan Malone, said, “We are very pleased to see that our refocus on the core Australian market is already delivering early results in terms of increased ARPU, higher revenue and improved unit economics and we have positive momentum heading into 2H FY24.”

Raiz’s active customers in Australia increased by 2.1% year on year (YOY) to 293,101. Customer numbers went down by 1% in the last quarter, but the decrease was less than expected after the fee increase. The marketing campaign effectively countered any negative sentiment related to the fee hike.

Another campaign with Seven West Media (SWM) for the AFL/AFLW season is in the works and will kick off in March 2024. These marketing initiatives use SWM advertising credit and represent a non-cash expense.

During the period, product innovation and expanded offerings led to a 5.8% increase in Australian Funds Under Management (FUM) to over $1.2bn. 

In the first half of FY24, Raiz introduced several new offerings catering to different customer groups. First off, Raiz Plus, launched in August 2023, lets customers add individual ASX listed stocks to their portfolios, empowering them to create personalised portfolios. Plus accounts have grown by 20.7% since July 2023, with over 4,000 new Plus customers adding $19 million in new FUM.

Secondly, Raiz Invest Super includes employer super guarantee contributions and automated recurring voluntary contributions, standing out as the only retail super offering investment exposure to residential properties in Australia. Australian superannuation FUM increased 24.6% year on year to $249 million, marking a 7.5% QOQ growth.

Lastly, Raiz Kids provides a straightforward way to save and invest small amounts regularly for children and dependents under 18. Kids accounts increased by 7% quarter on quarter to 33,818, and FUM increased by 23.2% quarter on quarter to $29.8 million.

Australian retail FUM rose by 15.4% year on year to $964.8 million, driven by a robust equities market in December, increased portfolios for Raiz Kids, and a rise in portfolio value from Raiz Plus accounts. Over $10 million in dividends will be reinvested into customers’ Raiz accounts in January 2024. 

With strong customer growth, disciplined cost control, and improved unit economics, the company is on track for positive EBITDA in the second half of FY24.