Raiz Invest Limited (5HK.F) Earnings Call Transcript & Summary

Good morning, and thank you for joining us today for our 2025 Annual General Meeting. My name is Kelly Humphreys, Chair of the Board and of today's meeting. I begin by acknowledging the traditional owners of the land on which we meet today, the Gadigal people of the Eora nation and of the other lands on which people are joining the meeting today. We pay our respects to their owners past and present. It's now just past 3:00 p.m. and with a quorum present, I declare the meeting open. I also confirm that the meeting has been properly constituted. I would like to introduce John Brett on my right, Non-Executive Director. Next to him is Paul Rogan, also our Non-Executive Director; Brendan Malone next to me, our Managing Director and CEO, we have Alex Gao at the table, our CFO, Ray Windlin, our General Counsel; and VahanaDesin, the Company Secretary and our Chief Risk Officer. We're also joined by Chesham Late from BDO, the company's auditors. We send our welcome to those shareholders who have joined the meeting in person and also those who are joining us online. This AGM is being held as a hybrid meeting. The virtual component is being held via the Computershare online meeting platform. This allows our shareholders, proxy holders and guests to attend the meeting vocally. All attendees can listen to an audio webcast of the meeting. In addition, shareholders and proxy holders have a that ask questions and same charts. Both shareholders and proxy holders participating online can submit written questions at any time. To ask a question, please select the Q&A icon on your screen. And to a selected topic from the drop-down menu to which your question rather relates answer your question into the text box and headend butter to submit. Please note that questions will be addressed at the relevant time in the meeting and may be moderated or if we receive multiple questions on 1 topic, amalgamated together. Due to time constraints, we may run out of time to answer all of your questions. If this happens, we'll answer them in due course via e-mail or by posting responses on our investor hub. For shareholders and proxy holders present in person today, you will also have the opportunity to ask questions on the matters being considered. All questions should be addressed to me as the Chair. I will deal with the question personally or ask someone who has been a place to respond. We will do our best to answer all rented questions raised. Voting on all resolutions today will be conducted by poll. To allow shareholders time to log in, I now declare the poll to be open. Online voting will remain open until I declare it closed at the end of all business. The ballots must be submitted prior to the portal being closed in order for them to be included in the results. Our meeting will start with the Chair's address, followed by a presentation from our Managing Director and CEO, Brendan Malone. We will then measure the formal business to be considered for decision and at the end of all business. But prior to closing the poll, we'll take your questions. Before we begin, I confirm that as announced earlier today, Julie 1 Newen has made the decision not to stand for election as a Non-Executive Director. In light of this update, Resolution 2, dealing with her election has been withdrawn. In addition, in light of this decision, Resolution 6 related to direct to Ram has also been with strong. I would like to acknowledge Julian's strong contribution to Raiz with an international executive career across a range of sectors, including high-growth tech and financial services. She brought a strong customer-centric lens and commercial acumen to our board room. The skill in expertise, particularly with respect to marketing and our brand strategy projects will degrade the East. Moving to my address. On behalf of the Board, I'm very pleased to report on a successful implementation of our growth strategies over the past year. We delivered strong financial results in FY '25, and positive momentum in the business is clearly evident across all of our key performance metrics. As chaired for the last 2 years now, I feel very fortunate to lead the Board and to work closely with the race team as we continue to drive advantages needed to position your company for a successful future. The Raiz team is committed to improving the financial well-being of all Australians. We all passionately believe that everyone deserves the opportunity to build a better financial future regardless of their age, income or experience. We are actively trying to reshape the way that people think about saving and investing, and we're doing everything we can to make building well simple and accessible for every day travels. Last year, we stated that the primary fanatics of the Board would need to oversee the successful delivery of the key pillars of our strategy, that being building brand awareness and strengthening our reputation, growing the customer base and delivering a leading customer experience, developing new products and services that our customers value, building and enhancing the capability of our team to deliver on our strategy and managing the efficient use of capital and preparing ourselves for future opportunities. I'm happy to confirm that we have successfully executed across all of these strategies during FY '25. We've undertaken important work to develop our brand strategy to create a compelling value and brand proposition that appeals to customers across their investment life cycle. This strategy will be progressed and rolled out in the year ahead. We've embedded new generative AI tools into our marketing strategies, which significantly improved customer conversion and retention rates. Along with the growing adoption of our higher-margin products, we released Raiz jars and released Raiz rewards, which each contribute to improving customer engagement at A major milestone for the business was the strategic partnership with State Street Investment Management, the fourth largest asset manager in the world. We were very happy to welcome State Street onto our register, which demonstrates their belief in the growth potential of our business model over the years ahead. Importantly, all of these initiatives taken together grew active customers by 7% this year -- year-on-year rather, delivered improved profitability and positive underlying EBITDA of $2.8 million. These consistently improving results have seen our share price lift and continuous with momentum into FY '26. The foundations of the business is strong. We recently published guidance for the first time, and we're on track to deliver financial year '26 underlying EBITDA in the range of $4.5 million to $5.5 million, and we continue to look for additional organic growth strategies along with M&A opportunities. Right now, we're focused on scaling the business and improving the operating leverage that exists in the model. Our strategic priorities for financial year '26 are to build and deliver customer advocacy by delivering exceptional customer experiences, innovative products that customers use and value across their investment life cycle and partnerships that deliver value at scale. Our strategic priorities are enabled by smart data and scalable technology, effective capital allocation and a capable and empowered team. Raiz is proud to have delivered strong financial results and improved outcomes for our shareholders. The start to this financial year has continued this trend, and we look forward to the coming year with confidence and commitment. I would like to acknowledge my fellow directors for their guidance and support in building this positive momentum and improved performance and I thank them for the contribution that they've made throughout the year. On behalf of the Board, I would also like to note our appreciation for the hard work and determination of our CEO and Managing Director, Brendan Malone and his team, who has worked tirelessly to implement the initiatives we've outlined to drive our top line growth and improved profitability. We would like to thank the shareholders who have been with us on this journey and also to our new shareholders who have joined us at this AGM. We're confident that SG is ahead of us. Thank you. And I will now ask Brendan to provide his CEO address.

Thank you, Kelly. It is very rewarding to present it is she's AGM and to share the significant progress that we've made across all aspects of our business in the last 12 months. in so many ways, it is an extremely successful and positive year for the team at Raiz. In FY '25, we benefited from the singular focus on our Australian core operations and has delivered positive results for our shareholders. Total revenue was up 15% to $24 million. Our active customers were up 7%, as Kelly mentioned, to nearly 330,000 and our average revenue per user or ARPU was up 9% to just over $75. Our funds under management business or FAM was up 30% to $1.8 billion with net inflows of $210 million. We have significantly improved our profitability with our underlying EBITDA up 147% to $2.8 million. All the core metrics of the business tracked in the right direction, and this has continued into the first half of FY '26. Next slide, please. The effective implementation of our product development road map has been a major highlight. We continue to expand the investment options in our premium Raiz plus product. We integrated the Raiz product into our super offering as well. We refreshed our Raiz rewards program and launched rated jars in January, as Kelly mentioned, which provides not only functionality for our customers, but it also helps set them up to manage separate savings goals at one time. We listen to our customers. We develop the products that make it easy for our customers to build not only financial confidence but financial wealth. This relentless product innovation has been recognized by the fintech industry, both in Australia and globally. We are pleased to be awarded the winner of the Canstar Innovation for Excellence Awards for the Raiz plus portfolios a finalist in the FinTech Australia's Fines Awards for excellence in wealth management, but we're also named in the CNBC World top fintech companies in 2025, and that's the second year we've been named in that. Next slide, please. this all comes within the improved marketing strategies. One of the biggest improvements in FY '25 was in the execution of our marketing strategies. We accelerated the development of our data analytics capabilities and adopted AI tools to generate deeper insights. These advances enabled us to deliver highly targeted and personalized marketing messages ensuring that customers receive information tailored to their individual goals and behaviors. And you would have heard me say before, we want to get the right message to the right customers at the right time. We are focused on 2 key strategies for customer growth. Next slide, please. These two strategies are winning new customers, but also the reengagement with the inactive customers together with the cross-promotion of our broader product offering within our ecosystem, which has helped driving the ARPU. Next slide, please. Another key change in our marketing approach for FY '25 was the increase in the focus on strategic partnerships to build value and minimize the overall cost of customer acquisition. The Regal game podcast has been very popular, and we are working closely with the Australian Shareholders' Association and other financial literacy communities to promote brand awareness and education. This targeted approach is working. Also by improving our products and our marketing, we were able to achieve a really important shift in behavior in our customer base as they transition from a transaction-based savings approach to a longer-term world focus. Next slide, please. We are building a product road map with products that that support customers at each stage of their life journey from raised kids through GenZ and millennials and PhoGenx and boomers in retirement in order to maximize the customer lifetime value. Our customers are increasingly adopting multiple raised products continuing to deposit funds through the ups and downs of the market cycle, growing their investments and staying on our platform for longer. -- slide, please. As Kelly mentioned, we're very happy to have State Street joined our register in August 2024 when we announced a strategic partnership with State Street Investment Management. The asset management business of the State Street Corporation listed on the NYSE. It's one of the world leading providers of financial services. The relationship provides an opportunity for new product development from ETFs through superannuation and retirement portfolios. We have also launched a joint campaign in September 25 to broaden market awareness and we continue to collaborate on new product developments, including retail and retirement investment products and consumer data analytics and insights. Next slide, please. Our commitment to product innovation has continued into FY '26. On the 1st of August this year, we launched a new major product offering and enhancements to our platform. Raiz light is the new low-cost entry plan signed specifically for first-time investors. We also launched Raiz Academy, which is a new online education program designed to boost financial literacy and consumer confidence, empowering Australians with practical financial knowledge. In addition, we revised the revised fee schedule took effect on this -- on the 1st of August, increasing the monthly maintenance fee by $1 per month for both our regular and plus plans as shown on the screens. In our Q1 business update released in October, we reported that positive momentum continues with the new contemporary plant structure and fee increase -- and the fee increase, which experienced lower churn compared to previous fee increases. Pleasingly, the early data indicates that the new Raiz life plan is attracting as an effective entry point for higher value offerings with a higher proportion of new customers actually selecting the premium Raiz plus option as their first choice. Next slide, please. to FY '26 in the outlook. In FY '26, we expect to see the benefits of operating leverage in our model as our top line grows faster than our cost base. Raiz is leading from the front due to our in-house technology and innovative capabilities coped with our direct relationships with our customers. We are continuing to innovate and remain focused on providing our customers with the best products to help them build wealth throughout their lifetime. I would like to thank the Raiz team for an outstanding year of delivery and execution. We strengthened our management team with new additions in risk and product and technology. The team is extremely energized and motivated to keep delivering for our customers. Thank you to the Board for your ongoing support and to our shareholders on -- existing and new shareholders that are joining us for the first time this year. Thanks for joining us on this exciting journey to help everyday Australians build financial confidence and wealth. Thank you, [indiscernible].

Thanks, Brendon. We'll now move to the formal business of the meeting. The Notice of the Annual General Meeting was provided to all registered shareholders. As previously advised, voting on all resolutions will be conducted by poll. For the purposes of the poll, I appoint Barry as a party of Computershare -- thank you, Barry. -- the company's share registry, you have examined and prepared summaries of the proxy forms received, Renters returning officer and to conduct the part. Please note that online voting will remain open until the poll is declared closed. Your vote must be submitted prior to the poll being closed audited accounts. Those attending in person who are entitled to vote on old or shareholders, representatives and journeys of shareholders and proxy numbers to hold green voting cards. If you're attending in 1 of those capacities, you may have been issued with as many voting cards as you have separate cities. If anyone believes they are entitled to vote on this poll in any capacity and doesn't have the green voting card, please raise your hand now and a member of our share registry team will assist you. For those shareholders attending in person, at the appropriate time, I will ask you mark your vote for the resolution on the green voting cards provided you are a shareholder and to cast all of your votes for a resolution means Bank of marketing in the for, against or abstain box next to that resolution. If you wish to split the votes, please write the number or partial votes you wish to cast in the corresponding for, against or abstain boxes. Please note that the sum of speckles must not be sad to our total holding. If your summary of votes does not have any discretionary votes, you do not need to mark your voting card, and we'll simply need to hand it into the returning officer at the end of the business of today's meeting. For those in attendance, after all resolutions have been considered and voted upon, please place voting cards in one of the ballot boxes that will be circulating the room. Are there any questions in relation to the voting process. Proxies have been inspected that Nova's validly launch have been accepted. Proxies have been received representing just over 37% of the issued capital of the company. All undirected proxies or open votes that have nominated the Chair of the meeting as their proxy will be cast in favor of each resolution being [indiscernible]. The first item of business is to receive and consider the company's annual financial report for the year ended 30 June 2025. The financial report and the reports of the directors and the auditors form part of the annual financial report. This item is for discussions, and there will be no vote on the item. The company's auditor for the 2025 financial year, Jes Valeo BDO Audit is present to take questions relevant to the conduct of the audit and the preparation and content of the independent auditor's report. Are there any questions or comments on the financial report or the reports of the director and auditors? Are there any questions relevant to the conduct of the audit and the preparation and content of the auditor's report to be put to the auditor? We'll now proceed to the resolutions set out in the notice of the Annual General Meeting solution on is to consider the adoption of the remuneration report as an ordinary resolution. The resolution and proxies received in relation to this resolution will be shown on the screen. For those physically in attendance, please mark your voting instructions on your voting card, online shareholders may vote on this resolution via the online voting portal. Once you submit your vote, you should see a green tick confirming that the vote has been received. Resolution 2 has been withdrawn, so we'll move to the Resolution 3. Resolution 3 is to consider the election of Paul Rogan as an ordinary resolution. Paul, would you like to address the meeting?

Thank you, Kelly, and good afternoon, everybody. Certainly, a pleasure to have the opportunity this afternoon speak to you as I seek election as a Director of your company. For those of you who have not yet had the privilege of meeting, I bring over 25 years experience, a senior executive and board member across major Australian financial institutions and by growth-focused businesses. I currently serve as the Chair of ASX 100 listed HUB24 Limited and nonbank reverse mortgage provider known as Household Capital Proprietary Limited and I've recently been appointed a Non-Executive Director of ASX 200 listed entity IDP Education. As Kelly and Brendan both mentioned in their addresses, Raiz plays a really important role in assisting all Australians, not just the wealthy to build good wealth and savings habits. Notwithstanding that the company has had to navigate some challenges in recent years. It's now got some clear air. It's got a sound strategy and it's built some solid growth momentum during FY '25, and that's carried forward into this year. I see enormous opportunity to leverage our strengths and further embrace digital and AI transformation to continue enhancing the experience we offer our customers and shareholders alike. My commitment to you is to provide strong oversight, strategic clarity and a culture of transparency and accountability. Thank you for your continued support of Raiz. If elected, I will serve with integrity and a clear focus on shareholder value delivery. Thank you very much.

Thank you, Paul. Those physically in attendance, please mark your voting instructions on voting card. Online shareholders converted on this resolution via the online voting portal. Once you submit your vote, you should see a green tick confirming that the vote is that received. Resolution 4 is to consider the approval of future issues of securities as a special resolution. The resolution and proxies received in relation to this resolution are shown on the screen now. Those physically in attendance, please mark your voting instructions on your voting card. Online shareholders convert on this resolution via the online voting portal. Once you've submitted your vote, you should see a green tea confirming that the vote has been saved. Resolution 5 is to consider the approval of the CEO and Managing Director's FY 2026 long-term incentive grant of performance for [indiscernible] ordinary resolution. The resolution and proxies received in relation to this resolution are shown on the screen. Those physically in attendance, please mark your voting instruction on your voting card. Online shareholders can vote on this resolution via the online voting portal. Once you submit your vote, you should see a green tick confirming that the vote has been received. That concludes the resolutions to be voted upon today. As noted, we are conducting a poll on all resolutions, and I confirm that the poll is already open.

We will now address shareholder questions. First from those in the room and telestenting line. Are there any questions from holders here in the room? Do we have any questions on.

First 1 is from Shar George Lucas. And the question is, what is the board succession plan for seeing SP-8 A succession plan for senior management -- with respect to our business operations at the Board, our aim with resources is to make sure that we have not only the capacity, but the capability to protect the business and to grow the business.

As a Board, we're keenly aware of the need for a stronger succession plan for all leadership roles. We have a great operational team, but we don't yet have full bench strength at the top. What we do have are very strong performance in our CFO and General Counsel. During 2025, we engaged our Chief Risk Officer. And for the first time, we have both a COO and CTO leading technology and systems. Along with that, we have brought on a new role in product management, and we have deepened the capability within the team around data analytics and AI. We've also very pleasingly engaged a HR manager for the first time, and he is working to develop the team with a particular focus on the leadership and the Board will continue to oversight and guide this work. We've made good progress. There's more to come, and that's something that we're very keenly focused on.

Next, there's a series of questions from the shareholder, Mr. Stephen Mayne. I'll go through these in order, Chair. The first 1 is in relation to proxies. Next year, could you please disclose the proxies early to the ASX along with formal addresses to allow more time for question preparation. Were there any material protest votes against the remuneration report or any other item business? So do you know what the issue was.

Okay. Well, firstly, in terms of proxy disclosure, we addressed this question last year, and we maintain our position that we are comfortable on providing disclosure of proxy voting results during the course of voting, on resolution at the AGM and also after the AGM through the ASX. We're aware there are some companies who elect to do that earlier. However, note that there's no requirement under the corporations act or the ASX listing rules to do that. The second part was the report whether any process -- we had quite a strong result on the rem report. We've been set on the screen to.

Mr. Mayne had a second question. This is in relation to approval of future issues or a 10% placement capacity. There will be many substantial protest votes against resolutions like this during the current AGM see not practice to allow Board to selectively place up to 25% of the company's shares to anyone they like over a 12-month period, diluting existing shareholders with our nation. What is our history of doing selective placements? Well, are we asking for this thoroughly and has there been a substantial protest vote against this transition. It's the second part, but that's the first part.

Okay. I'll address the the first part first. So I think it's important to note that the additional placement capacity is are only available to sub ASX 300 companies and that's where Raiz sits as a micro cap. It's designed to give smaller companies the opportunity to grow or range capital injections at short notice and without the time costs that are typically associated with the general meeting. As a growth company, actively looking for new opportunities, we thought it was appropriate for us to ask for that additional placement capacity right now to give us some additional firepower should a suitable opportunity arise or where it may be advantageous for us to use this group part of any potential acquisition or transaction. We don't have a history of doing a significant number of placements things in. We had 1 with State Street that we would not come at a premium. And as we've said and mentioned in our addresses, that's a very strong relationship that we're building and looking forward to delivering value for our shareholders as we progress with that.

Sure they've got an 89%.

Very strong satiates. The second part of the question, why don't you raise capital and offer pro rata way in future and commitment not to see this is hardly. I've already explained that.

Yes, I think I'll explain that in the question response Mr. Min then add another question, best practices to take questions on each item of business as they read out. to read out the agenda items at the Board meeting and then call for questions on any items at the end.

So please to do it at next year's AGM. That's more a statement I'll take that on board. Thank you.

Next question is how many full topics in relation to AI, how many full-time equivalent staff do we currently have? And is this likely to fall over the coming 12 months rapid rollout of a I Yes, it would be it's 34 full time before you see -- but no, I don't expect that to materially decrease with the use of AI and what we're doing around looking at AI, not only in the business for operational but also from a customer point of view.

I expect that to drop SP-13 Okay. There's a second part to the question, which parts of our business and operations are the most prospective for AI productivity gains. And how energetically are we embracing those opportunities. SP-14 I'd tell you that we're addressing it very energetically. This operations -- we see the main part, just to make the transaction as the product and the development grows out, but there's also an opportunity for AI in the customer support world to make sure that we can asks quicker and faster for our customers to make one.

Final 1 share. Ras Rewards is a prominent option under both the raise app and raise website and promotes over 100 retailers, many discretionary Sorry, this is from Mr. Deng Kegel. How does the Board consider promoting retail spending like alcohol entertainment and apparel, minor Raiz savings, kickbacks align with Raiz' mission of helping at the Australian side and invest entertainment and I'll take the question, if you do.

No, no, that's fine. Look, I think raise Rewards is an opt-in exercise for any of our customers. But the important part about it is people are going to spend. We can't force people to change their habits. But if they can get cash back on money that they're going to spend, whether it be on clothing, pet food or alcohol is an option there that's available for our customers and cash back One thing that we are proud of is that we had over close to $9 million worth of rewards, reinvested back into our customers' accounts very a lot of times, first time cash back. So that's how we're positioned.

That's the at all questions, Chair.

Would all shareholders voting online, please now ensure that they've submitted their notes. I will allow another minute before the poll is closed. If you have any questions in relation to the submission of online votes, please send me point function. Below shareholders attending physically, I now invite Barry as a party to collect your voting cards. [Voting]

Has everybody who intends to vote I now declare the poll closed. The results of the poll will be announced to the ASX as soon as they're available. That ends the follow part of our meeting, which I now declare closed. Thank you, everyone, for attending.