Equity Story Growth Fund Delivers 33.4% Return, Membership Fees Up 40%

• 62% increase in funds under management (FUM) during the quarter
• 33.4% rolling 12-month return from Equity Story Growth Fund
• 40% growth in membership fees quarter-on-quarter
• 90% surge in Equity Capital Markets revenue
• Strategic cost reductions implemented, improving operational efficiency

Strong Fund Performance Drives Growth

Equity Story Group Ltd (ASX:EQS) has delivered a standout quarterly performance for the December 2024 period, underpinned by its proprietary Cincinnati Trading Method (CTM) strategy. The Equity Story Growth Fund posted a 33.4% net return over the rolling 12 months, significantly outperforming the Barclay Hedge Fund benchmark by 25.81%. This robust performance has been a key catalyst for attracting new capital, with funds under management swelling by 62% during the quarter.

Despite a challenging broader market environment, the fund maintained stability in December, delivering a 4.01% return for the quarter and outperforming the benchmark by 5.28%. The fund’s cash position increased to approximately 42%, positioning it well to capitalise on upcoming market opportunities. Equity Story expects to receive performance fees in the current quarter, further bolstering revenue streams.

Membership and Revenue Expansion

Membership fees grew by 40% quarter-on-quarter, reflecting successful strategic realignment towards core business priorities. Equity Story has also forged a strategic partnership with HELIOS Scale, a leader in sales performance solutions, to enhance sales efficiency and membership retention. This collaboration, alongside marketing efforts with Creative Dreams Agency, aims to accelerate membership growth in the coming quarters.

The company’s Wealth Advisory division saw a 90% increase in Equity Capital Markets (ECM) revenue, driven by distribution support for five ECM transactions. Additionally, a new AFSL licensing agreement with Baker Young expands Equity Story’s portfolio services, offering Individually Managed Portfolios and enhanced wealth management solutions to members.

Operational Efficiency and Financial Position

Equity Story has successfully implemented strategic cost reductions, halving staff, corporate, and administrative expenses. Cash receipts increased by 50% to $194,000 for the quarter, signaling a recovery in revenue following prior disruptions. The company also completed receipt of $226,000 from its September capital raise, strengthening its cash position to $400,000 at quarter-end.

While net operating cash flows were negative due to non-recurring payments and creditor settlements, management anticipates improved cash inflows in the March quarter, supported by performance fees and membership revenue growth. The company maintains access to a $1.03 million bond facility, providing additional financial flexibility.

Outlook and Strategic Focus

Looking ahead, Equity Story remains focused on expanding revenue streams, deepening strategic partnerships, and exploring capital market opportunities. The company is in the process of securing an SQM Research rating for its Growth Fund, which is expected to enhance fund credibility and open new distribution channels, particularly among financial advisers and investment platforms.

With a growing membership base and accelerating fund inflows, Equity Story is well-positioned for sustained growth in 2025. Management has indicated plans to raise additional capital in the near term to support expansion initiatives, underscoring confidence in the company’s strategic direction.

Bottom Line?

Equity Story’s strong quarter sets the stage for accelerated growth, but upcoming capital raises and market conditions will be critical to watch.

Questions in the middle?

• How will the SQM Research rating impact fund inflows and distribution channels?
• What are the specifics and timing of the anticipated capital raise in the March quarter?
• Can Equity Story sustain its cost-efficiency gains while scaling membership and advisory services?