Raiz Invest Swings to $3.5M Profit as Revenue Climbs 24% and FUM Hits $2.1B

Raiz Invest achieves profitability milestone as revenue surges 24%

Raiz Invest Limited (ASX: RZI) has reported a Raiz Invest profitability milestone in its half-year results for the period ended 31 December 2025, marking a fundamental shift in its business trajectory. The fintech platform delivered revenue of $14.4 million (up 23.9%) and transitioned from a net loss of $1.1 million in 1H FY25 to a net profit after tax of $3.52 million in 1H FY26. The company reaffirmed its full-year underlying EBITDA guidance of $4.5 million to $5.5 million.

The transition to profitability represents a structural shift from growth-stage cash burn to a self-sustaining, scalable business model. Underlying EBITDA increased 270% to $2.6 million, demonstrating the company’s ability to convert top-line growth into bottom-line earnings while maintaining disciplined cost management.

Key metrics driving the growth story

The 1H FY26 results revealed growth across all core performance indicators, with Funds Under Management crossing $2.1 billion. The company’s active customer base expanded 5.7% to 336,048 users, while Average Revenue Per User (ARPU) increased 16.4% to $86.45, indicating successful monetisation of the existing customer base.

Operating cash flow increased 51.4% to $2.36 million, translating to a cash conversion rate of 90.5% of underlying EBITDA. The company generated free cash flow of $1.05 million during the period (1H FY25: $70,000), demonstrating improved capital efficiency.

Revenue composition and pricing power

Maintenance fees accounted for 63% of total revenue in 1H FY26, reaching $9 million (up 26.3%). The August 2025 price increase of $1 per month for both Regular and Plus Plans contributed to this growth, demonstrating pricing power in a competitive market.

The higher-margin Plus Plan continued to gain traction, with Plus Plan portfolios increasing 33.6% during the period. Over 38% of new users selected the Plus Plan as their first plan, indicating strong product-market fit for the premium offering.

The ability to raise prices while simultaneously growing customer numbers demonstrates pricing power and product stickiness, two critical attributes for subscription-based fintech businesses seeking to expand margins as they scale.

What is ARPU and why does it matter for fintech investors?

Average Revenue Per User (ARPU) measures how much revenue a company generates per customer over a specific period. For subscription-based fintech platforms like Raiz, ARPU is calculated by dividing annualised revenue by the average number of active customers.

ARPU growth indicates a company is successfully extracting more value from its existing customer base. This can occur through premium product adoption, pricing increases, or higher engagement driving additional revenue streams. For investors, ARPU growth that outpaces customer acquisition growth signals improving unit economics and operating leverage.

In Raiz’s case, ARPU growth of 16.4% significantly outpaced customer growth of 5.7%, indicating the company is successfully monetising its existing base through premium products and pricing rather than relying solely on volume-based expansion. This trend supports margin expansion and demonstrates the platform’s ability to deepen customer relationships over time.

Product mix driving ARPU expansion

The company’s product diversification strategy contributed materially to ARPU growth during the period:

• Super FUM increased 31.1% to $434.2 million
• Plus FUM increased 50% to $369.4 million
• Kids FUM increased 65% to $100.0 million
• Raiz Lite attracted over 3,150 new users since launch, primarily from new sign-ups
• Super customers increased 17.4%
• Kids portfolios increased 29.2%

The Kids and Super products functioned as growth engines, with both segments demonstrating above-average FUM growth rates. Account fees, which are directly linked to FUM, increased 26.3% supported by record FUM and net inflows of $138 million during the period.

Expense discipline and cash generation

Revenue increased 23.9% while operating expenses grew only 8% to $11.8 million, demonstrating positive operating leverage as the business scales. Employee benefits expense increased 21%, reflecting investment in product development, technology, compliance and data functions, while marketing expenses decreased 31.9% primarily due to the cessation of the Seven West Media non-cash advertising arrangement.

Cash conversion of 90.5% of underlying EBITDA indicates high earnings quality, with profitability translating into tangible cash generation. The company held cash of $14.0 million as at 31 December 2025, up 16% from $12.0 million in the prior corresponding period.

The combination of positive operating leverage and strong cash conversion demonstrates the business has reached a self-funding inflection point, capable of financing growth initiatives from operating cash flows rather than requiring external capital.

2026 product roadmap targets new revenue streams

Raiz outlined several strategic initiatives for launch during 2026, designed to expand its addressable market and introduce transaction-based revenue streams alongside the existing subscription model:

1. US-listed equities: Direct access to US market investing

2. Direct ASX trading: Infrastructure development underway to enable single HIN trading for direct ownership

3. Instant payments: Real-time trading capabilities to enhance user experience

These initiatives could expand the company’s total addressable market by attracting customers interested in direct equity ownership rather than purely ETF-based investing. Transaction-based fees from direct trading would diversify the revenue mix beyond subscription and FUM-linked fees.

Strategic partnerships extending reach

The company expanded its strategic partnership with State Street Investment Management through a joint marketing campaign promoting the ASX-listed SPY ETF. The partnership includes a combined product roadmap featuring retirement products, potentially enhancing the Super product offering.

Raiz established a partnership with KFC to deliver financial education to all KFC employees through the Raiz App. A separate partnership with Year13.com.au provides access to 2 million young Australians annually, with reach extending to 3.5 million per month across social media channels. These partnerships function as customer acquisition and engagement channels targeting specific demographics aligned with Raiz’s investor profile.

Management outlook

Brendan Malone, Managing Director and CEO

“Raiz has a highly scalable platform and the business has now transitioned into structural profitability, a major operating milestone. We now have multiple levers for growth, including new customer acquisition and as well as increasing ARPU through new product development, strong engagement, higher retention and deeper relationships across our existing customer base.”

The company reaffirmed its full-year guidance for FY26 underlying EBITDA of $4.5 million to $5.5 million, reflecting management’s confidence in the business trajectory. Management noted it remains active in assessing M&A opportunities that could unlock strategic synergies and deliver value for shareholders, indicating potential for inorganic growth initiatives alongside the organic product roadmap.

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