Purple Group: Where’s the Market Love?

When Currency interviews Purple Group CEO Charles Savage on Wednesday morning, world markets have succumbed to yet another tariff-induced savaging.

US 10-year treasury yields have just spiked to 4.45%, while Asian markets have hit the skids. Hedge funds are dumping stocks, the JSE is being mauled (it ends the day down 2.77%), the rand hits a new record low against the dollar, and a feeling of barely contained panic is making all the headlines.

This is all before the evening’s announcement that US President Donald Trump will pause tariffs on non-retaliatory countries for 90 days (save for a 10% basic levy), except for China, which has now been hit with a 125% tariff smack in the jaw. That news sends US markets dramatically higher: the S&P500 ends the day 9.5% up, an extraordinary about-turn; the Nasdaq gains more than 12%.

In a way, this is great for a business built on trading the market. 

“The expectation from the market is that these kinds of conditions are where retail investors run away and withdraw money – but this is not our first rodeo as EasyEquities,” says Savage, speaking of the retail trading platform owned by the Purple Group, citing the rollercoaster markets of Covid.

In fact, “the evidence is that customers are pitching up with more capital”, he says. A lot more. “On Monday at the height of all this Trump rhetoric, customers pitched up with R91m of retail money in one day. That’s an extraordinary number.” 

Savage singles out 10 customers who’ve never traded before on the platform piling in with more than R1m each. “In the short term this is very good for our business,” he says.

Over eight days this month, customers had deposited R400m into their accounts, says Purple. It continues a trend of rising customer advances: in the six months to end-February, deposit rates grew 49% to R5,201 per person of the now 1,021,620 active customers on Easy’s books. Breaking it down, the group enjoyed 13 consecutive months of record deposits, helping deliver a 25.8% rise in revenue, to R237.5m. Purple’s pre-tax profit surged 205% to R56.9m. Headline earnings came in at 2.36c a share – an increase of 204%. 

Asked if the averages over the past six months were skewed by a handful of really big market “whales”, Savage says: “You can’t skew the averages when you’ve got a million customers.” 

But the most important figure that the company is keen to highlight is this: that for every R100 rise in revenue, R70 is now flowing to the bottom line – or what Purple describes as “operating leverage in action”. 

A volatile market
So is it all going to come unstuck in the highly febrile and uncertain world of Trumpian tariffs and a government of national unity that’s going nowhere? Purple’s highly optimistic CEO’s message, after all, was signed off before the last days’ market onslaught unleashed what may become an out-of-control trade war.

For the moment, quite the opposite. For starters, market volatility such as what we’re seeing now is a godsend for activity-generated revenue. In the six months, this came to R99m, an increase of 40%. Non activity revenue – generated by fees like Thrive – rose a more modest 24%, but was higher at R117m.  

Surveying the market carnage, Savage says: “As long as there’s growing clarity around tariffs then it’s good for us, because people get confidence and they buy into a much weaker market. What is not good for us is long-term uncertainty because that destroys investor confidence. But having said that: we’ve launched bonds and money market funds, so investors have something to invest in regardless of market conditions, so I’m as optimistic as I was last week.” 

Part of this optimism is based on his expectation that interest rates are still likely to come down. For every cut in rates, Purple sees a commensurate increase in deposits – especially among higher-income customers, who have more debt and therefore experience more relief when rates fall. Purple’s experience is that these customers, far from spending the cash on consumables, plough more money into their trading accounts.  

“My personal view is that this is going to be a short-lived highly volatile experience, that America fundamentally wants to get back to business, and Trump will judge himself on where the S&P 500 closes on his tenure.” 

Disappointingly, Purple’s shares end the day more than 6% weaker, below R1 a share. It’s surely a frustrating outcome for a company that is making far more money from its various annuity businesses – like EasyProperties, EasyRetire and its R25 per month Thrive fee – than when the share scaled R3.37 in January 2022. 

Still, its customers are evidently keeping the faith. Asked whether EasyEquities is now no longer viewed as just a disruptive start-up, Savage says: “How do you measure trust? For me it’s the capital people leave with us, and if that’s increasing then fundamentally [they’re] trusting us more. If you think about it, we trust banks to look after our money for about five days a month and that’s it – it’s in and out. But we’re the place where the money goes to stay. So the trust factor is increasing, radically.” 

This is evident in higher value customers too. “Over January and February we were at 200% of the number of high-value customers arriving that we had last year,” he says. 

Purple believes it has won over customers from the establishment rivals – yet there are new contenders who are keen to muscle in on the retail investor market it has, in a way, single-handedly created. 

In this situation, has it priced its Thrive fee too cheaply – at R25 a month – given that increasing fees to lock in income will be less palatable when more competitors are on the scene?  

Asked about this, Savage says: “When do you know you’ve priced a product right? When there’s enough give and take that everybody felt they got a little bit of a shit deal.”  

EasyEquities isn’t increasing the Thrive fee this year but will look at it in 2026. But what about competitors who’ve seen the success of EasyEquities and want to get in on the action? 

“I’m insulted you don’t think we’re still the new hot thing,” quips Savage. “I love competition and I don’t say it trying to be arrogant – because competition sharpens your strategy. You’re forced to look around and see what they’re doing differently. I am a competitive animal – it’s in my DNA. I can’t even swim in a pool and have someone next to me and not race them,” he admits.  

“You don’t want to be at the top of the mountain that nobody else has bothered to climb.” 

A ‘massive advantage’
Why’s he so confident in Easy’s ability to compete? “It’s in these numbers: the most important [of which] is that for every R100 revenue, R70 flows to the bottom line. Just think about the power that creates: I immediately get R70 to invest in either further growth or diversification or profit to our shareholders. Anyone else who is competing now has R100 that delivers zero profit because they’re at that start-up phase. They have scarcity of capital, it’s focused on building stuff and acquiring customers, where our focus is on serving the customers we’ve got and the capital that’s released in profit we can invest in new products and services. So we’ve got a massive advantage.” 

Purple has two more strategies it’s about to implement: partnering advisers so they can bring their customers onto its platform, and Easy Subscriptions, a kind of loyalty programme where users get access to more products and services or lower brokerage fees. 

Asked whether the current leverage ratio will remain, Savage thinks so. 

“It’s not temporary in the sense that we’ve got more than enough capital to look after our growth aspirations as they’re defined today. We’re sitting on R170m in cash which is a nice asset to have – it yields a decent return – but nobody paid us to look after cash. So we’re looking at how we use that to drive growth.” 

This could take the form of more aggressive marketing, or even acquisitions to scale the business faster “so that the capital is very productive very quickly”. 

Options include more credit-based products, using customers’ EasyEquities assets as collateral, as well as insurance. 

Asked whether Purple is perhaps a takeover target, Savage says: “Since the last results we’ve taken our p:e ratio from 50 to 20; the bigger we get and the lower that p:e remains, the more of a target we’ll become. I don’t worry about it; our shareholding is very tightly held so it could never be a hostile takeover. For now I think it’s a remote opportunity – but it won’t go away if we continue to deliver the growth we are.”  

As for local investors, no institutions cover the company, though insurance giant Sanlam is a 30% shareholder in EasyEquities. Analyst comment is basically non-existent. But with Purple’s more than R67bn in assets under management now, perhaps it’s time they had a closer look.  

The writer owns shares in Purple Group.

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