OFX Group Limited

Thank you for standing by and welcome to the OFX Group Limited FY21 financial results. All participants are in a listen only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Skander Malcolm Chief Executive Officer and Managing Director. Please go ahead.

Thank you, Ashley, and thank you everyone for joining the call. As Ashley mentioned, I'm joined by Selina Virth, our Chief Financial Officer, and Matt Gregorowski, who leads our Investor Relations Program with Citadel Magnus. Selina and I will take you through the pages and then there'll be time for Q&A. This year we'll cover three things. Firstly, the full year result, what it is and what drove it. Secondly, why we're a valuable company. And thirdly, why and how we'll be more valuable in the future. Let's move to slide four in the pack. Our financial year was a full COVID year, starting on 1st of April 2020 and finishing on 31st of March 2021. Against that backdrop, we're happy with the financial results and particularly happy with the second half and the momentum we take into fiscal year 22. We delivered revenue of $134.2 million, underlying EBITDA of $30.4 million and generated $27.9 million of net cash from operating activities against a backdrop of very mixed trading conditions over the full year. Whilst the first half was soft in the wake of exceptional activity levels in Q4 fiscal year 20, we saw a strong rebound in the second half of fiscal year 21, with net operating income up 18.7% and underlying EBITDA up 82% on first half 21. This reflects the strength of our corporate segment, up 23.7% in second half 21 versus first half 21, a strong online seller segment, and a recovery in our consumer segment. Turnover was up 1.4% for the full year versus the prior period. We finished the year in good shape. Over $60 million of net cash held, revenue momentum, particularly in our corporate segment, more enterprise wins, a healthy trajectory in bad and doubtful debts, and a clear strategy to continue to grow. Moving to slide five, in a very unusual year, there was very good execution. We continue to be obsessed by better client experience and our net promoter score grew to 68.7. I have rarely heard of such a high score in financial services, but we can do better. An example of that attitude and that execution is in North America, where the team, supported by our technology, risk and compliance teams, reduced the onboarding time for corporate clients by 25% through the year. Having a great client experience builds trust, not just with clients, but with regulators and our banks. An example of how we turned that into progress was the securing of our Irish electronic money institution license from the Central Bank of Ireland. Regulators are appropriately more rigorous, and it's reassuring that they got comfortable with our approach. Naturally, we're delighted to have a new office in Dublin that will spearhead our European ambition. Our North American team continued to deliver, driving revenue growth of 5.9% in the second half fiscal year 21 versus second half fiscal year 20, even when second half fiscal year 20 included the month of March, which was the largest single month of revenue in OFX's history. The second half of the momentum in North America growing 19.2% versus the first half was excellent. Winning new partners takes time, expertise and some luck. So it's wonderful to see that even in a year like no other, we won the trust and support of new clients like WiseTech Global, Perla and Storefund. These are some of the higher profile wins, but there were many more and to win well in every region is especially encouraging. Our pipeline is also stronger now than a year ago, and we'll share a bit more detail with you on the enterprise pipeline later on slide 19. We could not have won those clients or grown our existing clients without continually improving our platform. Last year, we processed over 1.4 million transactions, a new record for us, consistently and quickly. We will continue to invest in our systems to improve this for our clients. But for our employees and our investors, it's great to see banking costs decline while transactions increase. That is delivering real benefits of scale. Another highlight was the hard work, skill and technical savvy we applied to our risk management. Last year, we saw bad and doubtful deaths drop over 40% versus the prior year. We did that whilst the industry saw some very big losses. Managing losses is also critical to scaling. Our bankers want to see us operate sustainably, our clients want a trusted provider and our regulators want to see us apply this discipline consistently to the service we offer. Amongst other highlights, the regulatory exam results were again very strong, rewarding the investment we've made in systems, people and culture that is required to operate in this area. And finally, our people. I could not be prouder of our team across all levels, functions and geographies last year. They delivered when their clients needed them to. They kept us safe. They figured out how to make their contribution against a very challenged backdrop. On top of all of that, they are more engaged than ever, which gives us confidence to continue to invest. They managed the change to a work-from-home environment in less than 15 days and they handled a record number of over 1.8 million calls in the process. Great execution. Moving to slide six, we've shared previously that our corporate and online seller segments are valuable for their strong growth, strong returns and hard-to-imitate characteristics. We've grown our investment in these two segments considerably in the last two to three years, so it's wonderful to see the progress last year. Our corporate segment grew revenue over 11% last year versus the prior period, and over the last four years has grown at a CAGR of 12%. That is very healthy, especially given the high lifetime value of this segment. But it's incredibly encouraging to see our new corporate revenue, which is the revenue we receive from clients who have registered in fiscal year 21, grow 30% versus the prior period. That is a very healthy lead indicator of the future. Quite simply, our scaling of new client acquisition in the corporate segment may just be the single biggest highlight of fiscal year 21 because it's taken us years to put in place the best value proposition, the right commercial teams, the improved client experience and the right operating disciplines to grow corporate at scale. Our online seller segment is also growing well and we had a strong year. Revenue growth of 11% is lower than past years, but it was done against the backdrop of deliberately pivoting away from high-volume, low-value clients in Asia, as we've talked about previously, and into high-value, high-volume clients in the rest of the world. We saw 36% growth in revenue ex-Asia, and as you can see from the chart, we've developed a healthy regional mix in our online seller segments. Again, prior investments in a stronger product, better risk management tools, and more commercial resources are working. Moving to slide seven, when we announced our fiscal year 20 results this time last year, we shared what we saw in the fourth quarter of fiscal year 20, as well as some of what we were already seeing in our consumer segment. To briefly recap, our consumer segment delivered over 20 million of revenue in the fourth quarter of fiscal year 20, which was more than 4 million or 25% higher than the third quarter of that year. It was driven by a surge in clients moving funds as COVID unfolded. We saw a big growth in use cases associated with wealth transfer, and we saw a surge in new clients activating from registrations that were more than six months old. In March of 2020, Reactivating consumer clients generated an increase of 132% in revenue versus the year-to-date average through February, compared to an increase of 62% from already active clients. In the first quarter of fiscal year 21, that activity declined substantially, and we delivered just over 12.4 million of revenue. Over the year of fiscal year 21, every quarter was better than the one prior, and fourth quarter was just over $15.2 million in revenue, lower than fourth quarter fiscal year 20, but returning to the levels we saw pre-COVID, with the second half up 13.4% versus the first half. We've naturally done a lot of work to understand what has happened, and you can see a summary here. In short, several use cases disappeared during COVID, most obviously travel, but also immigration and immigration, some expat salary transfers and property-related transfers. All up, we saw a decline of around 14 million over the full year through these use cases declining or disappearing. Against that, other use cases grew, particularly overseas purchases, wealth and family transfers. Those increases delivered around a $4 million gain in revenue versus the prior period. By subtracting the negatively impacted use cases from the positively impacted one, we see around $10 million of lost revenue last year. Naturally, we are very interested to dig further and have conducted client surveys to understand more. The great news is that to understand this in detail, we conducted a survey of over 1,500 clients across every region who had not transacted in fiscal year 21, but had transacted in fiscal year 20. And we got a very healthy 11% response to this survey. Of those respondents, 76% felt they would have a need this year to transfer and of those 97% were either very likely being 81% or quite likely being 16% to use OFX. Further, they cited great rates, ease of use and great service as the reasons for sticking with us. We cannot predict the future. but we are especially pleased to know that the clients who are active in fiscal year 20 but did not do a transfer in fiscal year 21 due to COVID largely intend to do transfers this year and keep using us. Turning to slide eight, this is a page we've shown you over the last several years. It helps you get a feel for what's driving our volume and in turn acts as a good lead indicator of the underlying health of the business. Starting on the left-hand side, as I mentioned, we saw a decline in active consumer clients that we hope that if their intentions are accurate, they will return. Pleasingly, we grew active clients in our corporate segment. These corporate clients, along with online seller clients, were busy, driving transactions for active client up 39% versus the prior period. That, in turn, drove a record number of transactions at over 1.4 million. though we have shared that some of that growth was due to an unusually high number of offshore share purchases that we don't expect to repeat in fiscal year 2022. Those offshore share purchases also skewed ATVs down somewhat, but nevertheless, we saw turnover end up slightly over $25 billion, a small increase in the prior period, which is pleasing given the record fourth quarter of fiscal year 2022. Apart from a new record, more importantly, it highlights the pivot we've been driving to more corporate and more online seller business. And later, we'll talk to the positive effects this has on the value of OFX. Moving to slide nine, you can see the story by region. In short, the UK and Asia were the hardest hit by COVID, whilst we saw the strongest rebounds in Australia, New Zealand and North America. The exceptional growth in transactions in Australia and New Zealand also reflects the unusually high volume of offshore share purchases I referenced previously. So overall, a good outcome in a very unusual year. Now let me hand over to Selina to walk you through more detail on our results and why we're a valuable company.

Thank you, Scanner. Moving to slide 11, we have delivered a strong financial outcome after a soft first half of the year. First half 21, fee and trading income or revenue was down 5.6%. However, a strong second half meant the full year revenue was only down 2.2% for the year. The second half was 18% higher than the first half, showing the recovery and momentum. A scan has already taken us through. All regions were impacted by COVID in the first half, but we saw solid recovery in North America and Australia and New Zealand. With North America, second half 21, up 19.2% on first half 21, and delivering an overall growth rate of 5.2% for the year. Australia and New Zealand second half 21 was up 17.2% on the first half of 21 and overall growth rate of 1.4% for the year. Europe and Asia are improving with Europe revenue second half 21 up 19.9% on the first half of 21 but overall down 16.7% for the year. Asia revenue second half 21 was up 12.8% on the first half of 21 and overall down 19.9% for the year. Net operating income, which is fee and trading income, less partner commissions and bank fees, is down 5.8% per year. The first half was soft, down 9.4%. There was a recovery in the second half, with the second half, 21, up 19% on the first half of 21. You may recall we said at the half year that the increase in offshore share purchases have had an impact on many of the metrics. They are high volume, high margin transactions, but with a low ATV and quite a high partner commission payment. The higher partner commission causes NOI to grow at a slower rate than revenue. The NOI softness is also driven by a reduction in consumer activity post-COVID that Skanda took you through. As indicated when we released our third quarter trading update, NOI margins are lower than fiscal year 20 at 47 basis points versus 51 basis points. This is a result of our corporate and online seller portfolios growing faster than consumer. We continue to carefully test ways to deliver a stable NOI margin through pricing programs, both in reducing price and increasing price. Operating expenses of 87.5 million are marginally up on fiscal year 20 by 0.6 million or 0.7%. This has resulted in an underlying EBITDA of 30.4 million down 20.5% on fiscal year 20, but a really nice recovery in the second half 21 with EBITDA of 19.6 million. The effective tax rate is high this year at 21.7% after a very low year in fiscal year 20 of 17.9%. This was within expectations. Stats between net profit after tax is $12.8 million, down 37.1% on fiscal year 20 due to the impact of COVID in the first half. Net cash held is strong at $60.6 million and net available cash, which is after collateral obligations and bank guarantees, is $36.8 million, up $12.3 million on fiscal year 20. This is due to the lower volatility in renegotiated collateral lines. Moving to slide 12, our underlying operating expenses are $87.5 million, up 0.7% on fiscal year 20. We continue to manage our expenses while also investing for growth and our client experience. We continue to invest in our promotional spend as well as continue to adjust the mix of spend. Last year, the VIX was approximately 55% on demand generation or brand type spend and 45% on demand capture or search spend. Promotional expenses were 6.9 million in the first half of 21. This is slightly lower in the second half of 21 at 5.9 million as more was spent on branding earlier in the year. What is fantastic to see is the spend delivering efficiencies with our second half 21 cost per NDC down 13.3% compared to the first half of 21. Also, our registrations for the year of 127,600, up 4.5% on fiscal year 2020, 122,100, also show the same efficiencies. A reduction in promotional expense of 6.2% for generating more registrations. Technology expenses are flat year over year as we hold our software as a service cost and server hosting costs constant while growing transactions. We're expecting these to increase in fiscal year 22 as some of our software as a service components go live. Other expenses are $8.8 million down 8.2% on fiscal year 20. The reduction is due to lower travel costs, which are typically $1.5 million for our business. This is partially offset by an increase in insurance premium. Insurance is up $0.8 million or 53% for the year. Bad in doubt for debt is $2 million, which is a 41.4% reduction on fiscal year 20, which is $3.3 million. Bad debts in the first half of 1.2 million and down even further in the second half of 21, 0.8 million. This is a result of the investments we have made to detect and prevent fraud. A number of our new technologies, including identity verification and voice biometrics, were live by third quarter, substantially reduced the number of fraud events, a positive lead indicator for bad debts in the first half of 22. This is an era where we'll always be vigilant and be active in fighting off new types of fraud as it emerges. Turning to slide 13, we continue to have a strong balance sheet, no debt and generate good cash flows. This is exceptionally valuable as we have maintained this position throughout the pandemic and have a strong balance sheet for supporting future growth. Our next cash held position, which includes cash held for own use and deposits due from financial institutions, is $60.6 million, down $0.4 million on fiscal year 2020. You may remember we hold some of this cash as collateral for our trading lines and a bank guarantee. Collateral was $23.8 million, down from $36.5 million. Trading volumes have reduced from their peak at March 20, and we have renegotiated our collateral agreements. Net available cash is $36.8 million, up $12.3 million on 6-3-20. Cash flow from operating activities is $27.9 million, which is an excellent cash conversion rate from our underlying EBITDA of $30.4 million. Of the $27.9 million of cash from operating activities, we have invested $10.3 million in intangible assets, and we continue to deliver our single scalable platform and our payment and risk capabilities. We also paid a dividend of $7.8 million in our rent obligations. Moving to slide 14, as part of our ongoing capital management strategy, we have announced an on-market share buyback program to place the dividend on hold. The program provides capital flexibility as there are benefits returning capital to shareholders by way of an on-market buyback rather than paying dividends. The flexibility allows us to respond quickly to growth opportunities. We also believe that buying back shares at prevailing share price will provide a near-term benefit to shareholders. Further, it reflects the confidence in the group's ongoing strong performance. The on-market share buyback program will be up to 10% of ordinary shares on issue over the next 12 months. The number and frequency of shares to be acquired will depend on the prevailing share price, market conditions, incremental growth capital requirements and any unseen circumstances. There is a level of cash we do need to keep in the business for working capital and to support periods of volatility. During highly volatile periods, we do need to post higher collateral to keep trading and ensure we remain in business for our clients at this critical time. By suspending the dividend and entering a share buyback program, it allows more flexibility for capital management that provides both a way to distribute earnings by the buyback, but also retain the flexibility to support growth opportunities when they come up. TreasureUp is a great example of this, which Skanda will take you through in more detail later. An investment opportunity that we can fund via cash that will enable us to accelerate our corporate growth strategy. I will now hand back to Skander to take us through why we believe we are growing a more valuable company and the fiscal year 2022 outlook.

Thank you, Selina, for that excellent coverage of our financial performance. Turning to slide 16, we've worked very hard over the last two years in particular to get a deep understanding of what the opportunity is for OFX, where we want to play, how we can be distinctive, and if we execute against that, why we will be more valuable in the future. This slide summarizes that thinking. Firstly, our total addressable market, or TAM, is huge, with McKinsey estimating the total cross-border payments market at over $130 trillion in turnover per annum. We have a small fraction of that, supporting just over $25 billion in payments last year. The economic outlook for the countries and regions where cross-border payments are largest and where we are located, particularly the U.S., UK and Australia is very good, with GDP growth in those markets in 2021 calendar year estimated at 6.3%, 5.5% and 4.4% respectively. Healthy and growing economies tend to support increased economic activity, including trade. We have targeted segments of the $130 trillion market that we see as being valuable and where we believe we can be distinctive. Consumers who value great rates and a digital and human service delivery typically send larger transactions than consumers who value a purely digital platform or who send smaller amounts for remittance use cases. In a growing economic climate, we expect that segment to return to growth. Corporate or smaller mid-sized enterprise clients who also value great rates, a digital plus human service, and the expertise of a company able to help will typically do very well in a growing economic climate also. So we expect that segment to grow even faster than consumers. SMEs who specialize through e-commerce are expected to do very well indeed this year. And again, we see strong growth from them coming through our online seller segment. Finally, we see more and more enterprise clients flourishing in an increasingly global economy. So we also see strong future growth from them, particularly as global banks retreat from this segment. While each of these segments will grow, it's our job to win disproportionately in these segments by being distinctive and executing better than our competitors. I've mentioned that our research tells us that at the heart of what clients in these segments want is a great digital platform supported by human service to provide the expertise we're valued in. But to execute that well, we've laid out those elements that we believe and clients have told us are most important. The winners will have a single global platform that provides a world class payment experience, both in terms of the product and the service, supported by strong risk management and run by the best team. We believe that by unlocking that opportunity through those segments with our execution, we can build an even more valuable company. characterised by healthy revenue growth, high recurring revenue, strong EBITDA at attractive EBITDA margins that generates good cash flow. And as we foreshadowed, we see the industry consolidating and see ourselves as well positioned to participate in that. Turning to slide 17, this is a bit more detail on the use cases we're targeting and why we believe they can deliver the growth we want. Firstly, the use cases we are targeting are big enough that a fraction of the total market. But more importantly, the characteristics of the segments are very well positioned to grow. The consumers we focus on are more inclined than ever to switch away from banks, their traditional providers. SMEs who conduct cross-border payments for use cases like accounts payable payments and cross-border payroll are also growing well. SMEs who specialise in e-commerce are growing much faster than other SMEs. And enterprises who support cross-border flows are growing faster than those who don't. That's why we chose those segments specifically. The opportunity is better. Our job and our opportunity, therefore, is to be distinctive and much better than our competition for those segments. Turning to slide 18, this is how we'll win in those segments and what makes us distinctive. Firstly, all of those segments have some common must-haves for the clients. They are the ability to move funds safely, the ability to move them quickly and the ability to move them cheaply relative to the incumbent provider, who's usually a bank. Delivering these is not as easy as it sounds. Safely equates to strong risk management, strong regulatory relationships and good governance. Unfortunately, we've seen record fines for large and small institutions, which means safe is getting harder every year. Quickly is getting easier in some respects and harder in others. Our working assumption is that it will get to instant at some point. And in some cases, it's already there. But whilst that may be achievable already for some corridors, it is by no means there for all. And with speed comes the opportunity for higher risk. Cheaply is also evolving. Ten years ago, we were very competitive. Now, some are cheaper, especially in the lower value consumer space. The key to consideration from our target segments is not being the best at any one of these must-haves, but by being the strongest across a blend. Being instant and unsafe just doesn't work for high value consumers or corporates. Being safe but slow doesn't work either. But consideration is not winning. Winning requires differentiation and great execution. And that's hard, especially in such a crowded space with over 7,000 new entrants in the last five years. Our research and experience tells us that delivery of a great digital experience complemented by humans that have the right expertise, are local, and are available 24-7 is what differentiates us for a high-value consumer segment. in the corporate segment is to deliver the must-haves of fast-crusted digital and great price and to provide the risk management product and service that's appropriate for their needs. That means things like forward products, knowledge and expertise in currency movements and a risk culture that ensures we'll be around when the markets are at their most volatile, not shut just when their clients need us or limiting amounts they can transfer as with some of our competitions. For online sellers, like corporates, they need that digital plus human product and service and they want risk management support. But in addition, they need their provider to understand and be respected and active in the marketplace ecosystem. It's no good launching your product in the US and withdrawing six months later or not being able to support sellers in Europe. Marketplaces are very global and increasingly are very focused on high quality sellers. So they want their payment service providers to be strong, well credentialed, as well as technically savvy. For enterprise clients, they value the platform as a service proposition, integration to their ecosystem to make their clients' lives easier and better value. If you want to serve enterprise clients, you need a strong technology platform. But more than that, you need to manage the risk on behalf of your client and provide them and their clients with a great experience that is aligned to their propositions. For WiseTech Global, for example, integrating to CargoWise. It's not enough to just be fast, cheap and safe. Moving to slide 19, we've talked for the last three years about growing our presence in the enterprise segment. And in the last two years, we've highlighted two new strategic alliances with Link Market Services Australia and WiseTech Global. Looking forward, key to us being more valuable is adding to these two wins. And this is a snapshot of our pipeline in this segment. As you can see, we've broken the pipeline into five different stages to give you a sense of what we're working on and what stage these prospects are at. I'm delighted to share with you that as recently as the 1st of May, so after year end, we were appointed by the Reserve Bank of Australia to provide money transfer services. The Reserve Bank of Australia acts as the provider to government agencies, and the first agency to benefit from our appointment is the Australian Taxation Office. Our job will be to provide a payment service for Australians overseas, both consumers and SMEs who want to pay an Australian tax obligation. This is a very important win for us in two ways. Firstly, because the TAM is large, estimated to be between 400 million to 800 million per annum, And secondly, because it's a huge vote of confidence by our government in who we are. I'm also delighted to say that as of the 17th of May, we're already helping several new clients using our service and many more registering to use it. The verticals we're focused on include wealth management, payroll services, financial institutions, government and accounting platforms. And our pipeline includes prospects in every vertical. We see this segment as being hard to win, but highly accretive to earnings as it matures. Moving to slide 20, let's talk about our investment program. In the last three years, you've seen us invest in our global operating model, reliable and scalable systems, risk management and people. For the purposes of this slide, we've focused on the investment in intangible assets, or CapEx. There's also been considerable OpEx invested in people, in software as a service, and in service delivery also. Our CapEx investment so far has delivered many substantial improvements and several differentiators, such as a customized client experience for linked market services clients. There is more to do. Over the next three years, we'll continue to invest in the main categories, always with an eye to winning and growing in our target segments. For our investors, we expect this to peak in the next year or so, and that excludes one-off opportunities that we may see. And as we touched on earlier, the returns from this investment historically can be seen in areas like enterprise wins, lower bad debts, stronger regulatory exam results, and lower cost of payments. Moving to slide 21, I'm delighted to share that we'll be investing €3.15 million in preference shares and €750,000 in a convertible note. That will mean we will hold a major investor position in TreasureUp, a software company located in the Netherlands that provides automated hedging and risk management solutions to banks and their corporate clients. We will co-invest alongside Rabobank and Coera who are the software development company TreasureUp have used to develop this solution. We're delighted with the expertise and cultural alignment between us and the TreasureUp management team. Like us, they want to make the CFO or treasurer's life simpler, safer and more reliable in the cross border payment space. That's what their software does. It allows the CFO or the treasurer to automate their hedging policy as well as implement controls to make it safer and more reliable. The high degree of automation also saves time as the software executes the relevant trades rather than the staff. Our client due diligence was highly encouraging on this point. It's very exciting for us in a number of ways. Firstly, it's the first substantial M&A investment for us at OFX ever. More importantly, it gives us access to a risk management tool that we know mid-sized corporate clients value and one that we also believe may be attractive to both online seller and enterprise segments too. The investment agreement is signed and the transaction is expected to close by the end of the first half and we'll update the market further at that point. In conclusion on slide 22, We're very encouraged by the progress we've made and by the outlook for this year. We'll continue to invest in the areas that will make us more valuable, being regional growth in North America particularly, but also globally. We'll invest and grow our corporate and online seller segments as a priority. We'll win prospects in our enterprise pipeline and activate the ones we already have. And we'll win the rebounding consumer as it happens. As we do these, we expect our financial results to be healthy, net operating income growth of 10% plus at stable net operating income margins. We will preserve the principle of delivering positive annual operating leverage, that we will keep an eye on opportunities to invest, and we may do that if we deem the opportunity to be in the medium-term interest of our investors. Thank you for your time, and now let me hand back to Ashley for any questions.

Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Seth Hoskin with Canaccord Genuity. Please go ahead.

Morning, everyone, and thanks for taking the questions. Just firstly on the guidance commentary and the NOI growth, I suppose just touching on what level of bounce back in consumer that assumes, or is that largely a continuation of the corporate and RLS and some pick up from the link deal and then consumer provides sort of somewhat upside if you can bounce back above that pre-COVID level?

Yeah, so I'll turn it on, Seth. We are expecting continued growth, and we're really happy with that growth rate that we've experienced in corporate online sellers this year, so we're expecting continued growth in those areas. We are expecting consumers to bounce back, but it's yet to be said when and how. Like, if you look at each quarter, it's more positive than the quarter before, but if it gets back to the full levels, we're not sure this year.

Cool, now that's really helpful. And I suppose just focusing on the fourth quarter result, which in terms of fee and trading income was flat quarter on quarter, and it was sort of despite some seasonal benefits you flagged in the 3Q update. I suppose as we go forward throughout the, I suppose, FY22 and beyond, should we see a less volatility sort of interim result to interim result as corporate and OLS makes up a greater mix of your revenue base? And then I suppose just further, was there any sort of benefits in the one-off sort of seasonal benefits in the fourth quarter that we should be aware of? Or is that 36 number pretty consistent with what we should expect going throughout FY22?

Maybe I can talk to that. The composition of the revenue and the momentum, as you touched on, for corporate and online sellers is something we're very happy with. typically what we've seen over the last several halves is it's fairly consistent so as we look forward and as you touched on in terms of the guidance that corporate online sellers revenue is really underpinning kind of what our outlook looks like and you know to the second part of your question there were no you know, unusual one-offs in that number for fiscal year 21. Obviously, fiscal year 20 included some fairly unusual items with both on the revenue and the bad debt side, but in fiscal year 20, sorry, in fiscal year 20, whereas in fiscal year 21, bad, doubtful debts was down, revenue was obviously recovering through the third and the fourth quarter.

Cool, thanks. And then this is more sort of a point of clarification in terms of maintaining positive operating leverage. I suppose looking at, you know, there was a bit of a diverse result in the year as you've talked to, but is the positive operating leverage versus the 27% EBITDA margin in the second half, or is that versus the full year?

Look, it's versus the full year, but as we always say, we do run... the concept of positive operating leverage, but that being said, if we do find an investment opportunity that makes sense for the business, and obviously positive operating leverage is within a fiscal 12 months, but if we found something that makes sense for the business and it happens to be in the third or the fourth quarter and we wanted to invest in that, which would then move us away from a positive operating leverage, we would do that. So we have an overall guidance of positive operating leverage for the business, because it's good for making really good decisions and understanding if things are working, but if we see something we like, we'll go after it.

Cool, thanks guys. Just a couple more. In terms of the enterprise pipeline, you obviously announced a couple of deals today, and then you've got 40 in the pipeline. Could you just touch on a few of the key reasons you're being selected in these deals, and I suppose on the other side of that, what you're investing in or working on over the next 12 to 18 months to position yourself to win more of the pipeline?

Yeah, I'd say the first thing in terms of why we're getting selected, largely we're not in, let's call it an RFI process, not exclusively, but largely. We've typically gone and approached prospects in order to determine whether there's an opportunity and to some extent obviously that drives a longer timeline but at the same time it allows us to present our value proposition I think earlier on in the consideration cycle as CFOs and COs. What we typically are seeing in the enterprise pipeline that prospects are finding attractive about OFX relative to some of our competition is firstly, obviously, you know, table stakes are you've got to be able to support them across the range of different currencies. Second of all, you've got to provide a cost-effective solution. That's a kind of must-have. What's starting to become a differentiator is risk management and having both a culture and a set of tools that mean that the enterprise client is comfortable that as they service their clients, there's not going to be a hidden risk, for want of a better term, that materialises for them, their clients, and that they can rely on a firm like OSX that has a very strong regulatory track record and risk culture to make sure that the services are done well. Now what we're also starting to see as well is that as we learn more about the particular verticals, there are certain things that we're learning about what's particularly important to particular verticals and obviously what we wanted to share in sharing that pipeline of the verticals that we're focused on We certainly think that's helped us fill that pipeline and obviously our experience in the verticals is something that prospects find attractive. The last thing I'd say is that we've also completed our hiring in every region in the last 12 months. We've got an exceptional group of enterprise commercial talent across the region. They're very well supported by risk, tech, product, marketing talent. And it really does take a team in order to win clients of this size. They need to get comfortable across several dimensions. So having that talent in place as well as a bit of experience has certainly helped us fill that pipeline and start to pull through some wins.

Thanks, guys. That's really helpful, Carla. And then just finally on the e-money licence in Ireland, would you just be able to touch on what that sort of provides and the additional functionality that allows as you look for that European expansion?

Well, I mean, as of January 1st, if you didn't have that, then you couldn't be offering services outside of the UK. The prior licence obviously was passported into Europe. Then with Brexit taking effect from January 1st, Money services businesses were required to have a license and then have that Passported into Europe if you wanted to provide those services back to originate and service existing European clients and we chose Ireland because We understood the geography. We thought they were a very strong regulator with a very good track record. And again, they were appropriately rigorous. This was not a straightforward process. They really wanted to understand our corporate structure. They really wanted to understand our track record. They wanted to see people in the region. And so on. So all of those things came together and we were delighted to be able to be granted that license and have that passport into Europe. And it allows us, to your question, to push into Europe, which we intend to do really starting this year in more earnest and into next year as well.

Thanks, Gander. Thanks, Lena. I appreciate the time and the questions.

Once again, if you wish to ask a question, please press star 1 on your telephone. We will now pause momentarily to allow questioners to enter the queue. Your next question comes from Owen Humphreys with Canaccord. Please go ahead.

Good day, team, and well done on the results today. Business's momentum looks good. Just a quick question around that e-money license. Sorry if you've already answered it, but I'm just curious. One thing around what the e-money license brings to your business and two, you mentioned about instantaneous payments or cross-border payments. Can you just talk me through who do you think the market leader would be in that space, the timing of when that could be available for some of those large cross-border corridors? And I guess, is that something that you guys are investing in?

Sorry, Owen, I missed the second part of your question. The first part was about to expand on the e-money license and what it really means. The short answer to that is that if you want to originate clients in Europe and you want to support existing clients with their money transfer needs, who are based in Europe, you need to have that in order. And that goes across consumer and corporate clients and online sellers. In the case of enterprise, obviously as well, we'll need that license in order to win enterprise prospects that are located in Europe. I missed the second part of your question.

Oh, the second part, the second part of the question was just around the instantaneous payment you just talked about on the call. Just talk me through when do you believe that could be a reality? Are you guys investing for that opportunity? And could that be differentiated for your business in the future?

Yeah, okay. Thank you for clarifying. Look, it already is a reality in certain corridors. And we know that in certain clients... they certainly, for example, will pay extra, for instance. So we know some of our competitors will charge a fee if a client wants that instantly. Look, it's impossible to tell when the whole market gets to that point. Right now, if you looked at it on a sort of conjoint basis, you know, and you had a bundle on one side and a bundle on the other, Clients would generally, in our experience, be happy with a bundle that included same day at a great price with great service versus instant at a slightly higher price where there was no service. But again, that varies depending on how much they want to send, whether the client is consumer or corporate. which currency corridors. So there's no short answer to what it's actually at right now. We certainly think it's attractive. We certainly think it's heading there. And as I said, there are already players who are making instant happen. But I wouldn't want to kind of describe it as the whole market's there now or that if you're not there, you can't satisfy client needs and win clients.

Good one. Thanks, mate. Well done on the results.

There are no further questions at this time. I'll now hand back to Mr Malcolm for closing remarks.

Thanks, Ashley, and thanks again for joining the call. As I said, to summarise, from an OFX perspective, we're really delighted with that second half rebound. Very strong momentum, good quality. And, you know, we're encouraged going into fiscal year 22 that the momentum we have is sound, it's well constructed. And then secondly, that really we do believe the investments we've made and we continue to make are positioning us to be a much more valuable company going forward. So thanks for your support.

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.