Purple Group looks set for long-term growth

Purple Group will attract the attention of punters rapidly as the small-cap financial services group crosses the threshold where scale starts to make for profitability.

The long, hard slog in developing the EasyEquities investment platform has reached the point where revenue is accelerating much faster than operating expenses as assets invested on the platform and investment transactions surge.

For the six months to endFebruary, revenue from EasyEquities rose nearly 200% to R85m, generating taxed profit of R22.3m with a 25% margin. As with most investment management businesses, once the technology and platform are in place any extra revenue flows straight to the bottom line.

The platform, which enables investors to buy fractional ownership of shares listed on the JSE and the New York Stock Exchange, has demonstrated its worth. Further tie-ups with the likes of Capitec, which now offers the service on its banking app, indicate there is still much room for growth.

The offering, considered to be financially empowering for many people who have not participated in the stock market before, is at odds with Purple’s older business in the form of GT247.com, which in the past has had high client turnover on its contract-for-difference (CFD) trading platform.

What Purple decides to do with its trading platform remains to be seen, but it has reached a tipping point in other ways as investors evaluate it as a longterm growth stock.

COVID DEALS DEATH BLOW TO LIVE MUSIC EVENTS

Is technology a friend or foe to the music industry, artists especially? This week, a new service will let artists curate and perform online concerts, communicate with fans and manage ticket sales.

The service was founded by Swedish music industry veteran Joel Broms Brosjo, who cofounded Spotify-backed Soundtrack Your Brand and was part of the team that founded streaming platform Beats Music.

In a sign of the times, Broms Brosjo is hoping to cash in on the trend of online concerts, which have become popular during the pandemic. But at what cost? Technology has helped to drive much development in many sectors worldwide, but the music industry seems to have become a casualty along the way. With records, cassette tapes and CDs, recording companies and distributors have enjoyed high profit margins on the sale of music.

Even when Apple ushered in the legal sale of music online through iTunes, the status quo remained largely unchanged.

But with the advent of music streaming through Spotify, Apple Music, Deezer and others, margins have virtually disappeared.

According to music research firm Soundcharts, Spotify paid artists $0.0032 per stream, while those with content on Apple Music received an average $0.0056 in 2020.

When iTunes was launched in 2003, one song cost $1 to own and download. So artists must have their music streamed frequently to make the same return as in the past.

SA artists particularly rely heavily on live performances, the main reason for many hitting an economic brick wall in the past year. Looking at the trends, one wonders if the same margin destruction found in music sales is the future for live events.