Why this small cap fintech share is on watch today

The RAIZ Invest Ltd (ASX:RZI) share price is trading flat on Wednesday following the release of its latest update…

The RAIZ Invest Ltd (ASX: RZI) share price will be on watch today following the release of its active customers and monthly funds under management (FUM) update.

At the time of writing the mobile-first financial services platform provider's shares are flat at 80 cents.

a woman

What did RAIZ Invest announce?

For the month ending February 29, RAIZ Invest had a total of 220,643 active customers and 384,877 investment accounts on its platform. This was an increase of 0.9% and 2.4%, respectively, month on month or 20.4% and 30.1%, respectively, over the prior corresponding period.

However, due to unfavourable market movements in February, the company's total FUM fell 3.5% month on month to $464.67 million. Despite this pullback in its FUM in February, it is still up a sizeable 60.5% over the last 12 months.

Raiz Invest's CEO, George Lucas, was pleased with its performance and notes that most of its revenue comes from monthly fees, rather than management fees.

He said: "Raiz is well placed to manage the volatile market conditions with 66% of revenue being generated from the $2.50 a month management fee from active customers, 14% of revenue coming from fees related to funds under management, and the rest from other income, advertising and netting. In a period of heightened market volatility, this revenue diversification ensures Raiz is in a stronger position compared with businesses that only generate income from fees related to FUM."

Mr Lucas was also pleased to see customers making use of its key features during the market volatility.

He explained: "The decline in total FUM in February was significantly less than the 8% decline in the ASX200. This was assisted by the increased propensity of customers to switch between portfolios, for example, from Aggressive to Conservative, instead of withdrawing their funds, reflecting the increasing maturity of those using the platform."

Outlook.

The chief executive appears positive on its future and notes that its balance sheet has the capacity to fund its plans.

He concluded: "The Company continues to be well funded to execute its strategy following the $7.5 million capital raising that was completed in November 2019. During the last quarter of calendar year 2019 Raiz generated positive operating cash flow and held $12.2 million in cash plus term deposits at 31 December 2019."

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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