Halo Technologies (ASX: HAL) halves its net loss but faces revenue pressure and going concern doubts

Halo Technologies Holdings Ltd (ASX: HAL) reported its half-year results for the six months ended 30 June 2025, revealing a narrowed net loss but also significant challenges as it battles revenue pressure, rising expenses, and questions over its ability to sustain operations without fresh capital. The financial services technology group, which operates the HALO Global and HALO Trading platforms for retail investors and advisers, also highlighted progress in its UK expansion strategy through HALO Invest and plans to launch managed funds access in Australia later this year.

The company’s shares closed flat at A$0.031 on 29 August, giving it a market capitalisation of just A$3.99 million. Over the past 12 months, the stock has lost nearly half its value, delivering a negative return of 49.18%, reflecting persistent investor concerns about funding, competition, and the path to profitability.

How did Halo Technologies perform financially in the half year to June 2025?

Revenue from contracts with customers fell 19% year-on-year to A$7.81 million, down from A$9.67 million in the prior comparative period. The decline was primarily attributed to volatility in adviser numbers at B2B clients and weaker brokerage levels, exacerbated by market instability linked to the Trump Administration’s tariff war in April 2025.

The group’s underlying EBITDA loss widened to A$6.07 million compared with a loss of A$4.57 million a year earlier, driven by higher headcount costs, UK operational expenses, and increased IT and finance charges. Despite this, the statutory net loss after tax narrowed to A$6.06 million from A$8.04 million in the prior year, aided by the reversal of a previously impaired A$1.125 million convertible note and associated A$150,000 interest recovery from Success Publishing Pty Ltd.

Expenses rose in several categories: employee benefits increased to A$3.4 million from A$2.7 million, while IT systems costs rose to A$1.47 million from A$1.02 million. Legal and professional fees fell modestly, easing to A$2.22 million from A$2.43 million.

What challenges did the company face with funds under management and operating cash flow?

Funds Under Management (FUM) dropped from A$434.8 million in June 2024 to A$395.7 million at the end of the reporting period, though it had partially recovered to A$409 million by late August 2025. The decline reflected broader market volatility, geopolitical uncertainty, and subdued trading activity, although management stressed that new dealer group partnerships and UK client acquisition initiatives will support longer-term growth.

Operating cash flow remained a pressure point, with net operating outflows of A$3.76 million compared with A$1.9 million in the prior half-year. This deterioration reflected reduced revenue intake and higher operating costs.

What progress has Halo made with its UK expansion and product diversification?

The company’s UK subsidiary, HALO Invest, achieved a major regulatory milestone when the UK Financial Conduct Authority (FCA) verbally confirmed licensing permissions, with formal attestation pending. This regulatory approval clears the path for HALO Invest’s official platform launch, initially targeting both traditional adviser-led clients and semi-advised investors through its “Adviser Gateway” model.

In Australia, the group expects to roll out Managed Funds access in October 2025, providing financial planners and investors exposure to a near-complete universe of funds alongside its existing 30,000 global equities and ETFs. Analysts view this expansion as an important step in diversifying revenue away from volatile brokerage income.

How is Halo funding its operations and addressing going concern risks?

Halo Technologies’ balance sheet remains under strain, with total equity slipping into a negative A$2.7 million position as at 30 June 2025, compared with a positive A$3.6 million at year-end 2024. The group had A$3.88 million in cash at the end of the half year but is heavily reliant on client trust account liabilities and convertible note borrowings.

Borrowings stood at A$5.94 million, primarily from 5.56 million convertible notes carrying a 12% coupon and a conversion trigger of A$0.41 per share — well above the current share price of A$0.031. The group also holds a short-term loan of A$0.48 million carrying a steep 17% interest rate.

To address funding needs, Halo is seeking to raise up to A$11 million through a pro-rata renounceable rights issue, partially underwritten and due to close by 30 September 2025. Management has also signalled the introduction of platform fees on its wealth platform customers as a potential new recurring revenue stream.

Despite these measures, auditors BDO Audit Pty Ltd issued a qualified review opinion, highlighting concerns over the recoverability of A$5.01 million in intangible assets, which they believe are overstated by approximately A$2.86 million. They also flagged material uncertainty around going concern, noting that without successful capital raising, the group may not be able to realise assets or discharge liabilities in the ordinary course of business.

How are investors reacting to Halo’s performance and what is the outlook?

Investor sentiment toward Halo Technologies remains cautious. The group’s stock is trading near its 52-week low of A$0.021 and well below the A$0.41 conversion threshold for its outstanding convertible notes. Institutional investors are likely to view the pending A$11 million rights issue as both a dilution risk and a critical test of shareholder support.

Analysts note that while the narrowing statutory loss and regulatory progress in the UK provide some grounds for optimism, the company’s reliance on frequent capital raisings, its negative cash flow profile, and ongoing audit concerns keep the risk profile elevated. For retail shareholders, the stock remains highly speculative, dependent on successful execution of the HALO Invest launch and stabilisation of Australian revenue streams.

Looking ahead, Halo Technologies’ management continues to emphasise growth through product and geographic expansion as the central pillar of its turnaround story. The most immediate catalyst on the horizon is the October 2025 launch of Managed Funds in Australia, which the company believes could transform its distribution model by giving financial planners and wealth advisers access to a near-complete universe of investment funds. This move is strategically important because it allows Halo to diversify away from volatile brokerage revenue and tap into the larger and stickier pool of recurring funds under management fees, a model favoured by larger platform operators in the Australian wealth-tech sector.

At the same time, momentum is building in the United Kingdom, where Halo Invest has secured critical regulatory permissions from the UK Financial Conduct Authority. Management is positioning the UK business as a challenger platform targeting both fully advised and semi-advised client segments. By offering automated model portfolios that combine listed securities such as ETFs with unlisted products like managed funds, Halo aims to capture demand from investors seeking lower-cost digital solutions in a market historically dominated by entrenched incumbents. Analysts believe that successful client acquisition in the UK could provide Halo with a second engine of growth, one less dependent on domestic trading cycles.

Despite these opportunities, the overriding priority for Halo Technologies remains securing sufficient funding to bridge its operational shortfalls and stabilise its balance sheet. The partially underwritten A$11 million rights issue scheduled to close by September 2025 is viewed as a make-or-break moment. If completed successfully, the raise would provide runway for the company to execute its product launches and accelerate growth initiatives. However, failure to attract adequate participation could deepen going concern risks and further weigh on investor sentiment. For shareholders, the path forward is therefore a balancing act between near-term dilution risk and the longer-term potential of Halo’s expanded product offering and international footprint.