EasyEquities in trouble

EasyEquities swung from a profit of R72 million to a loss of R33 million over the last year, which explains why it launched its mandatory R25 per month Thrive program.

EasyEquities owner Purple Group published its consolidated results for the year ended 31 August 2023 after the market closed on Thursday.

It was clear why the company preferred to publish it after the market closed rather than in the morning, as many companies do.

Purple Group reported a loss before fair value impairment adjustments and tax of R49.0 million compared to a profit of R40.3 million in the prior year.

It resulted in a basic loss per share of 1.90 cents compared to earnings of 3.64 cents per share in the prior year.

The main driver behind the poor results was EasyEquities. The trading platform reported a 140% decline in profit – from a profit of R72 million to a loss of R33 million.

The loss before fair value adjustments and tax was even more striking. It declined from a profit of R31.4 million in 2022 to a loss R44.0 million – a 240% swing.

The main reason for EasyEquities’ and Purple Group’s poor performance is a rapid increase in expenses.

Group expenses before other income, fair value and impairment adjustments, interest, depreciation and amortisation increased by 31.9% to R280.2 million.

With a growing EasyEquities user base and more products coming on to the platform, it is challenging to cut expenses.

EasyEquities’ solution to turn the situation around was, therefore, to generate additional revenue through its mandatory Thrive subscription of R25 per month.

This can generate a large amount of revenue for Purple Group, especially with EasyEquities’ growing user base.

Registered EasyEquities clients increased by 18% to 2.06 million and active clients increased by 17.5% to 897,940.

Platform assets increased by 25.3% to R46.6 billion, compared to R37.2 billion in the prior year. EasyEquities revenue increased by 11.1% to R237.8 million.

It shows that the platform maintains its potential and continues to deliver on its promise of growth and making trading widely available.

The mandatory Thrive fee has the ability to unlock value and generate additional revenue for the EasyEquities group. If it fails, there is always the option of a platform fee.

The table below provides an overview of EasyEquities’ performance over the last year.

EasyEquities2022 (R’000)2023 (R’000)Change