Rising Net Liabilities and Cash Crunch Cloud Equity Story Group’s Outlook
Equity Story Group reported a 9.1% revenue increase driven by its Securities division and reduced its net loss by 14.5% for FY2025. However, the company’s net liabilities grew and cash reserves sharply declined, raising questions about its financial footing.
- Revenue up 9.1% to $1.15 million, led by Securities division
- Net loss after tax narrowed 14.5% to $1.64 million
- Net liabilities increased to $850,787 from $682,530
- Cash reserves fell significantly to $174,902
- Two capital placements boosted financing cash inflows
Revenue Growth Driven by Securities Division
Equity Story Group Ltd (ASX, EQS) has reported a modest but notable improvement in its financial performance for the year ended 30 June 2025. The company’s revenue rose by 9.1% to approximately $1.15 million, primarily fueled by stronger results in its Securities division. This growth signals some operational traction in a challenging market environment for financial services firms.
Losses Narrow but Remain Substantial
Despite the revenue uptick, Equity Story Group remains unprofitable, posting a net loss after tax of $1.64 million. While this represents a 14.5% reduction compared to the prior year’s $1.92 million loss, the company is still grappling with significant expenses, including employee benefits, consulting fees, and finance costs. The prior year’s results were also impacted by a one-off loss on disposal of a subsidiary, which partially explains the improved loss position this year.
Balance Sheet and Cash Flow Challenges
The company’s balance sheet reveals growing financial strain. Net liabilities increased to $850,787, up from $682,530 in 2024, driven largely by a sharp decline in cash and cash equivalents, which dropped from $808,458 to just $174,902. Operating cash outflows widened significantly to $1.82 million, reflecting lower customer receipts and higher payments to suppliers and employees. This cash burn raises concerns about the company’s liquidity and ongoing viability.
Capital Raises Provide Temporary Relief
Equity Story Group completed two capital placements during the year, which bolstered financing cash inflows to $1.19 million, up from $918,650 the previous year. These injections have provided some breathing room but underscore the company’s reliance on external funding to sustain operations. The formation of a new wholly owned subsidiary, Baker Young (SA) Pty Ltd, in May 2025 also indicates strategic moves to diversify or expand its business footprint.
Audit and Going Concern Considerations
The company’s financial statements are currently under audit, with an expected emphasis on going concern. This highlights ongoing uncertainty about Equity Story Group’s ability to continue as a viable entity without further capital or operational improvements. Investors will be watching closely for the auditor’s final opinion and management’s plans to address liquidity and profitability challenges.
Bottom Line?
While Equity Story Group shows signs of operational progress, its cash depletion and rising liabilities signal a critical juncture ahead.
Questions in the middle?
- Can Equity Story Group sustain revenue growth in its Securities division to achieve profitability?
- What are the company’s plans to improve cash flow and reduce net liabilities going forward?
- How will the auditor’s going concern emphasis impact investor confidence and future capital raising?
