R25 a month makes a big difference

Purple Group’s latest results showed that EasyEquities’ R25 per month Thrive membership fee greatly impacted the company’s performance.

On Tuesday, Purple Group released its audited consolidated annual financial results for the year ending 31 August 2024.

Group revenue increased by 45.1% to R400.4 million in the current year from R276.1 million in the prior year. Operating expenses increased by 7.6% to R301.4 million.

Profit before fair value and impairment adjustments and tax increased from a loss of R49.0 million to a profit of R51.8 million, an improvement of 205.7%.

Purple Group’s crown jewel is EasyEquities, the online trading and investment platform that forms part of Easy Group.

Easy Group revenue increased by 51.5% to R360.2 million in the current year from R237.8 million in the prior year.

Easy Group’s profit after tax increased by 234.9% to R45.0 million in the current year compared to a loss after tax of R33.4 million in the prior year.

A big driver of the improved performance is EasyEquities’ mandatory loyalty programme, Thrive, which has a monthly fee of R25.

Users can avoid the R25 monthly fee if they are active on the platform, which can include doing courses or depositing more money than they withdraw.

The company said Thrive has deepened its relationships with clients and increased long-term platform engagement.

The number of clients receiving the Thrive brokerage benefit has increased by 658% year over year, and the value of Thrive brokerage benefits has increased by 2,536%.

More importantly, client assets increased by 24.8% to R58.2 billion in the current year, compared to R46.6 billion in the prior year.

The monthly fee also helped to increase retail revenue by 67.2% to R240.6 and non-activity-based revenue by 65.7% to R206.4 million.

Purple Group CEO Charles Savage said they had set ambitious goals and exceeded them this year.

“By year-end, we achieved a profit before tax and fair value adjustments of R51.8 million, a dramatic turnaround from last year’s losses,” he said.

“Our client base has now surpassed the 1 million mark, signalling that we’re more than a platform – we’re a trusted partner in our clients’ financial journeys.”

EasyEquities and the Thrive fee

This was the first annual results since EasyEquities implemented its mandatory “Thrive” membership program.  

The membership saw all EasyEquities users having to pay a R25 monthly membership fee unless they attained a certain Thrive level every month.

The membership was in response to Purple Group’s struggling finances, as the group could not operate profitably.

In 2023, Purple Group reported a R35.2 million net loss, as its operating expenses outpaced revenue.

EasyEquities reported a R21 million loss before tax in H1 2023 and a R23 million loss before tax in H2 2023, resulting in a total loss before tax of R44 million in the 2023 financial year.

The R25 Thrive fee was instituted in November of 2023. In February 2024,  EasyEquities already reported a R16.7 million profit before tax.

For the second half of the 2024 financial year, EasyEquities reported a R35.2 million profit before tax.

Revenue was also positively impacted. EasyEquities reported a 51% increase in its revenue from R238 million to R360 million.

Purple Group reported that R154 million of EasyEquities’ revenue is generated from “non-activity” sources, a revenue category that includes the Thrive fees.

EasyEquities’ revenue experienced a significant slowdown in growth from 2022 to 2023 as activity on the platform decreased, lowering the platform’s activity-based revenue.

Since introducing the Thrive fee, EasyEquities’ revenue has increased on a strong upward trajectory.

The Thrive Fee was introduced to shift EasyEquities revenue to be less dependent on activity-based revenue and become more dependent on non-activity revenue.

EasyEquities’ CFO Gary van Dyk said, “We have shifted our business model to be less reliant on client activity to become a more cycle-agnostic business”.

The Thrive Fee means that EasyEquities can now capitalise on funded users who are inactive on the platform.

The market viewed the group’s results with positivity. Purple Group’s share price increased by 64% in 2024 year-to-date.