HALO’s Heavy UK Investment Raises Cash Burn and Execution Risks Despite Strong Growth

Strong Financial Momentum

HALO Technologies Holdings Limited (ASX: HAL) has delivered a compelling financial update for the quarter and year ended 31 December 2024, showcasing significant growth across key revenue streams. Operating revenue surged 45.5% to $18.7 million year-to-date, underpinned by a near doubling of brokerage revenue, which climbed 89% to $15.21 million. This performance reflects the company’s successful strategy of expanding its Funds Under Management (FUM), which increased by 48.8% to $425.5 million compared to the prior corresponding period.

The growth in FUM and brokerage income signals strong client acquisition and engagement, validating HALO’s positioning as a provider of institutional-grade equity research and trade execution solutions tailored for retail and self-managed superannuation fund investors.

Capital Raise to Fuel Expansion

To support its growth ambitions, HALO initiated a $6.75 million capital raise in September 2024 through convertible notes offering 12% annual interest over a five-year maturity. The raise targets sophisticated and professional investors, with $3.6 million already secured by the end of January 2025. These funds are earmarked for working capital and to accelerate the development of HALO’s UK subsidiary, Halo Invest.

This capital injection is critical as the company invests heavily in offshore expansion, with $5.5 million of operating expenses attributed to UK operations during the period. The raise’s progress will be closely watched by investors given its importance in sustaining HALO’s international growth trajectory.

UK Market Entry and Product Launches

HALO’s UK expansion is advancing on schedule. Halo Invest was formally launched in December 2023, led by finance veteran Douglas Boyce. The company has rolled out a pilot of its HALO Global Equity Research platform in the UK, with marketing set to commence in February 2025. Additionally, the HALO Wealth Management Platform is slated for release soon, targeting advisors and direct-to-consumer investors with automated model portfolios spanning listed and unlisted securities.

Trading integrations and client account functionalities are well advanced, positioning HALO to onboard its first UK wealth management clients within six months. This international push represents a strategic diversification of revenue sources and a potential catalyst for future growth.

Operational and Financial Considerations

While revenue growth is encouraging, HALO’s total operating expenses rose to $16.3 million year-to-date, reflecting substantial investment in the UK business. Notably, intercompany payments of $3.7 million were made to entities related to company directors, primarily covering brokerage trading costs. Investors will want to monitor these related-party transactions for transparency and governance standards.

Cash flow from operations was negative $1.93 million for the quarter, with cash and equivalents standing at $4.35 million. The company estimates it has approximately 2.25 quarters of funding available at current burn rates, underscoring the importance of the ongoing capital raise and operational execution.

Looking Ahead

HALO’s outlook remains positive, with continued focus on expanding its Australian B2B network and subscriber base, alongside scaling its UK operations. The company’s ability to convert its UK platform pilots into paying clients and to successfully complete its capital raise will be pivotal in sustaining momentum.

Overall, HALO Technologies is navigating a critical growth phase, balancing rapid revenue expansion with strategic investments and capital management. The coming quarters will reveal how effectively the company can translate its operational initiatives into sustained profitability and shareholder value.