OFX Group Limited

Thank you, Darcy, and thank you, everyone, for joining the call. As Darcy mentioned, I'm joined by Selina Vers, 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. And this year, we'll cover four things. The full year result, what it is and what drove it, our financials in more detail, our strategy, including our investment in Patron, and announcing a share buyback and our fiscal year 24 outlook as well as the Q&A. Let's move to slide four in the pack. And fiscal year 23 was another record year with turnover of $39.1 billion, driving net operating income or NOI $214.1 million and underlying EBITDA of $62.4 million. These metrics represent the biggest NOI we've ever produced, up 45.6% on prior corresponding period, and the biggest underlying EBITDA we have ever produced, up 40.3% versus prior corresponding period, whilst generating the strongest net available cash of 67.4 million we have ever had. This financial performance was the result of very strong execution. Clearly, the external environment was as unusual as we've ever seen, with rapidly rising interest rates, inflation, and considerable political and geopolitical conflict causing uncertainty for our clients and team. Nonetheless, we were very disciplined in driving an exceptional integration of Firma, in continuing to invest and deploy new features and services in our global platform, in leading our team and engaging our employees, and in managing the considerable risks we faced. we saw the highest fraud and loss prevention we've ever had to manage, which is a testament to the efforts and capabilities of our team, which continues to grow. Moving to slide five, the performance of our three segments that comprise B2B has been strong and underpins both our fiscal year 23 result and our fiscal year 24 outlook. The three segments in B2B are corporate, online sellers, and enterprise. Corporate is our largest of these generating just under 90% of the total B2B fee and trading income or revenue. And in fiscal year 23 was the strongest performer generating 124.6 million of revenue up just under 90% versus fiscal year 22 and up 10.7% second half versus first half and more on the corporate segment in a moment. Online sellers saw revenue decline 6.9% as it reflected the overall decline in e-commerce volumes we've seen following the COVID-driven surge. It was encouraging, however, to grow at declines 5.5% and to further strengthen our product integration with Amazon. And we continue to see a great opportunity in this segment in the future, notwithstanding the short-term challenges. Enterprise saw revenue growth of 2.1% in fiscal year 23 versus fiscal year 22, and the rate of growth was higher in the second half as it grew 14% versus the first half. The growth in the second half was driven by the activation in our LINK program, some growth in our WiseTech program, and continued strength in our Macquarie program. Importantly, as previously mentioned, We've been focusing on targeting smaller prospects that are in our strategic sweet spot that we feel would be easier and faster to activate and would use existing technical infrastructure. We saw that bear fruit, especially in the fourth quarter, where we announced and activated programs with Atomic and Shift, for example, and grew the pipeline from 56 to 67. And these were well dispersed regionally. In all, very encouraging indeed. Moving to slide six, the corporate segment is performing very well for OFX and is very much the key driver as we build a more valuable company. Firstly, our clients are very loyal, delivering recurring revenue of over 88%. And as we've shown, the revenue growth we see is very much the steady growth over time of clients using us more complemented by adding new clients. Secondly, we target and support clients who give us substantive average transaction values. In fiscal year 23, these were 31,900, broadly stable versus fiscal year 22. FIRMA had targeted and served clients who used FIRMA for fewer but larger transactions, which meant the group corporate ATVs rose to 36,500 over the full year. These healthy transaction sizes give us good economies of scale and reflect the trust and support we get from clients. The growth in ATVs since fiscal year 20 has been due to a change in the mix of portfolios. We see larger transactions from clients in industries such as wholesale trade, investments and public administration versus industries like retail or business services. These ATVs were stable in fiscal year 23 and we expect them to remain stable in fiscal year 24. Thirdly, We grow with our clients, evidenced by the consistent growth in transactions per active client. Excluding firmer, we've grown transactions per active client around 19% in the last three years, whilst growing ATVs and fee and trading margin. Growing transactions by number and size creates terrific operating leverage, as the incremental cost of a transaction is low once a client is onboarded and active. We see a terrific opportunity here with Firma. Given the majority of their clients were phone-based, their transactions per active client were lower. And as we migrate them onto our platform, we expect to see this grow at a low marginal cost. Indeed, the fastest growing subset of the Firma portfolio were the clients on the Firma online platform, which supports our thesis. Moving to slide seven, our B2B portfolio is complemented by a valuable consumer portfolio. In our case, we serve consumers who use us for high value use cases, such as wealth management and property purchases or sales. The nature of these use cases means we see transactions and ATVs fluctuate half on half. Historically, it tended to fluctuate as volatility hit currency markets. Events like Brexit or COVID tended to trigger our clients and prospects to move money. In the last year, we have seen a fair bit of volatility, but for the first time in 10 years, we've seen a combination of rapidly rising interest rates and inflation, which has deflated asset prices. And in turn, the higher value use cases have softened this proportion of all activity. However, we see the consumer portfolio perform well through the cycle. generating modest growth but healthy returns. And this also despite pivoting our marketing program to focus on the corporate segment over the past three years. So the number of active clients is slowly declining, although revenue grows in particular periods as the size of transactions grow or margins grow or both. Through the cycle, we see growth around 5%, though in any given year it will vary, such as fiscal year 23, where we saw revenue growth of 11% in the first half versus first half 22, offset by a revenue decline of 13% in the second half, generating an overall revenue of 71.6 million, which was largely flat to fiscal year 22, but up over 24% versus fiscal year 21. We remain pleased with our consumer portfolio and the continued growth in the quality of the portfolio and intend to continue to support clients who value the trust, great value and the simplicity of the service we provide. Moving to slide eight, as I just covered, our overall performance in fiscal year 23 was strong in the first half and a flat second half driven by a softening in the consumer confidence globally for high value use cases. The chart on the left shows group revenues split by segment by half since first half of 21. We share this to illustrate a few important points for investors. Firstly, the total portfolio is affected by swings in the consumer portfolio, but that effect will be more limited going forward as the pivot to B2B has well and truly taken hold. We do occasionally see some softness in corporate, such as first half 22, but largely we see steady growth at a long-term CAGR of between 10 and 15%. Secondly, whilst we can have unusual half on half performance, as we did in fiscal year 23, driven by a consumer, it is rare that that persists over multiple periods. And finally, as we start to build synergies from firmer and as we start to build stronger growth from OLS and enterprise, we expect to see the effects of consumer fluctuations lessen on the overall result, though it will still remain valuable. All of this revenue growth can be supported by good execution across margin, OPEX and risk management levers also. Now, let me hand over to Selina to share more detail on our financials, including our P&L, our balance sheet, cash and intangible investments.

Thank you, Skanda. Moving to slide 10, we have driven a record financial result. We have growth across all regions and are delighted with the contribution from FIRMA. Fee and trading income or revenue was up 42.4% to $225 million. FIRMA contributed $59.7 million to the result and a record year for their business. We saw growth in all regions with APAC up 7.4%, EMEA up 27.2% and North America up 105.7% or 7.1% ex firma. The revenue growth rate of 42.4% when adjusted for currency is more like 41.3%. Their operating income was up 45.6%, which is a high growth rate in revenue as our bank fee and commission ratios held whilst we had a benefit of $3.9 million from interest and other income. Rising interest rates have allowed us to make some interest on the cash we hold. The benefit has increased from $800,000 in the first half of 2023 to $2.6 million in the second half of 2023. Our clients value speed, so our treasury function is critical in providing liquidity and security, enabling fast and low-cost payments. Interest income is a nice upside to money moving through our accounts. but we will not prioritize this over speed of payments. Our underlying EBITDA is 62.4 million, up 40.3% on fiscal year 22, a record for OFX. As we had outlined, we had a very strong first half 23 with underlying EBITDA of 32.3 million. We continue to see growth in corporate in the second half of 23, but weaker conditions for consumer resulted in a second half 23 underlying EBITDA of 30.1 million. As Skanda has talked to, consumer revenue saw a decline in high value use cases such as property and wealth transfers as a result of rapidly rising interest rates. Consumer does fluctuate, but delivers steady single digit growth through the cycle. Over the year, we generated healthy EBITDA margins of 29.2%, which is some of the highest in the industry. Our fiscal year 23 tax rate is unusually low at 16.2%. The main two The main items that have contributed to this, as we have guided, the offshore banking unit tax regime ceases in fiscal year 23. As a result, the deferred tax position has been remeasured to 30%, creating a decrease in the fiscal year 23 income tax expense of $800,000. The ATO has also implemented an intensity measure for R&D tax benefits. Essentially, because we have invested more in intangibles, we have gone over into a new threshold which delivers a higher R&D rebate. As a result, the tax credits have increased from 8.5% to 15%, resulting in an increased benefit of $700,000 on the fiscal year 23 eligible R&D spend. Considering what this means for fiscal year 24, we previously guided that with the cessation of the OBU tax regime, the tax rate would increase to 29%. We now expect this to be more like 25%, the increase in R&D tax credits. Statutory earnings before tax is 37.5 million, up 14.8%, and includes 5.9 million of interest on our debt which we use to fund the firmer acquisition, and 6.7 million of firmer transaction and integration costs. Our statutory net profit after tax is 31.4 million, up 25.6% on fiscal year 22, and our net cash held is a healthy 93.8 million, up 9.6 million on fiscal year 22. Moving to slide 11, our underlying operating expenses are $151.7 million, up 47.9% on fiscal year 2022. A significant portion of this increase is firmer as we complete the acquisition on 1 May 2022, including 193 employees. Employee expenses had the largest increase, up 58.2% or $38.6 million. 26.2 million of this increase was due to Firmat, and the remaining 12.4 million represents further investment in technology and sales, as well as salary and inflation, for approximately 5% over the period. Promotional expenses were 16.8 million, up 1.5% for the year. In the first half of 23, we spent 9 million, and the second half of 23 was lower at 7.8 million. You may remember there was high volatility in the first half of 23 and, as always, we continue to invest in marketing where we see the demand. Also, the cost of branding campaigns have a higher weighting to the first half of 23. We would expect a similar spend in fiscal year 24 as fiscal year 23. Technology expenses of $11.4 million were up 37.7%, largely due to FIRMA and a shift to software as a service infrastructure from OWN for risk management, onboarding and payments. We are currently running two platforms, OSX and FIRMA, until we complete the integration. We are excited that the first region to go live, which was Australia, has successfully completed in April. Bad and doubtful debts are in line with our expectations of $2.5 million and just over 1% of revenue. We always guided that the fiscal year 22 bad and doubtful debts of $100,000 would not continue given industry fraud levels. Like previous years, most of the bad and doubtful debts originate from fraud in North America. Only a few hundred thousand of the $2.5 million in fiscal year 23 was a credit loss on a forward contract. With the US banking collapses, increasing interest rates and heightened financial stress for some corporates, We are remaining vigilant, ensuring we review our credit positions and collect collateral from customers when positions move out of the money. Despite the increase in fraud losses, as Skander mentioned, we saw the highest fraud and loss prevention we've ever had to manage, which gives us confidence that the systems and processes we have in place are effective and continuously improving. In fiscal year 23, our productivity initiatives were focused on bank fee savings, which you can see through the NOI margins. and also a reduction in our office footprint. We successfully reduced our office footprint in closing firmer Sydney, London and Winnipeg offices and co-locating with OFX. We have also reduced our footprint in our Sydney head office by over 30% as we adopt a more hybrid working model. We expect fiscal year 24 growth in FTE and operating expenses to slow as we continue our focus on productivity and the realization of the annual 5 million firmer synergies by the end of fiscal year 24. 3 million of these are cost focused. Turning to slide 12, you can see the continued progress we've had on margin management. You may remember the first half 23, NOI was 53 basis points and 62 basis points at the same currency. As many of the margin changes occurred in the first quarter 23, we did expect the full year NOI margins to be higher than at the half. For the full year, we had an NOI margin of 55 basis points and 65 basis points at the same currency. On our annual turnover of $39.1 billion, the 11 basis points margin increase has a substantial impact. Four basis points of the increase is due to pricing changes in the book. We watch the market closely and have an excellent pricing engine that we can use to test price elasticity. If there's more elasticity for the service that we offer, we can command a higher price. We've also seen many of our competitors increase their prices throughout the year. This is a result of costs rising due to inflation and the growing need to generate a profit for their shareholders. This may provide more opportunity for us in fiscal year 24. As mentioned before, with rising interest rates, we're able to make some interest income from the cash balances we hold with our customers. In the second half of 23, this was $2.6 million compared with $800,000 in the first half of 23. We continually look at more efficient ways of offsetting our FX risk while generating a small return at the same time. Overall treasury revenue represented 14.7 million of our fee and trading income or revenue in fiscal year 23. All of this while growing our corporate portfolio, which has lower margins, faster than consumer is an excellent outcome. Adding to that, as you can see, five basis points of the margin increase is from our firmer portfolio. As it is a service led proposition, they're able to get a higher price, which we love. As we continue in an inflationary environment, investors are naturally concerned about the effect it may have on our growth and returns. But what this shows is that managing margins is a critical lever which can generate excellent value when it is managed well. We will continue to monitor pricing and ensure we get the right price for the fantastic service we offer. Turning to slide 13, we continue to have a strong balance sheet. Our net cash held position is 93.8 million, which is both the cash held for own use and deposits due from financial institutions. As mentioned, this is up 9.6 million from March of 22. We hold some of this cash as collateral for our trading lines and bank guarantees. Collateral and bank guarantees were 26.4 million, which is down 15.2 million on March of 22, or 22.6 million from the first half of 23 of September 22. You may remember September 22 was a particularly volatile period as the GBP almost hit parity with the USD. As volatility has eased, the collateral position has reduced and we've continued to negotiate better arrangements with our bank, freeing up cash. Net available cash is 67.4 million. We saw our cash flows from operating activities in the second half of 23 revert to our usual high cash conversion rates, with the second half 23 statutory EBITDA of $29.1 million, converting to $28.3 million of cash, a conversion rate of more than 90%. The annual underlying cash conversion when excluding thermal items is also strong at over 90%. We funded the thermal acquisition using debt. When the transaction closed on the 1st of May, we drew down our $100 million five-year Aussie facility. We've paid down $32 million of the debt facility in fiscal year 23 and are on track to repay the debt facility within four years. subject to no other value accretive growth opportunities emerging which require funding. With our current net available cash balances, our current net debt position is 18.8 million. Skanda will take you through our capital management policy later and how we'll use this excess cash. Turning to slide 14, as we guided at Investor Day, we've invested 17.7 million in our single global platform in fiscal year 23. We have also invested a further 1 million in the platform for the firmer integration. We are very pleased that the first region went live in April and that others will follow throughout this year. We invested 10.5 million in fiscal year 22, but you may remember the original intention was to invest more like 12.5 million. But like all companies in fiscal year 22, it was hard to find resources in this space. So we spent a little less than we intended to. Since then, we've developed a number of outsourced partnerships for technology development and hired talent outside our core office locations. This has allowed us to catch up on our fiscal year 22 delivery program. The team has had a huge year of delivery. You may remember we spent fiscal year 22 automating incoming payment allocations. This year, we took this a step further and created intraday streaming to make faster USD payments for our clients and reducing the payment processing time by nine hours. Improved connections also provide flexibility and cost efficiencies with bank fees as a percentage of revenue down 16% over the past three years. We've rolled out an improved consumer risk management process and implemented a global customer biometric identification and verification system. The new platform allows for automation, but more importantly, we have better verification rates in North America with an improvement of 17% and 25% in EMEA. This increased fraud protection has allowed us to keep bad and doubtful debts around 1% of revenue, which is very low for our industry. Like many companies, we have also invested in cyber security and data protection. This included a multi-factor authentication process, which helps stop credential stuffing and botnet attacks. We have a global customer management system, which all our front lines are using, allowing us to better track and respond to customer queries. We have also enhanced our online seller partner integration, to ensure that we continue to be included in Amazon's list of approved payment service providers. All of these elements led to a high client engagement scores with Trustpilot score at 4.2% and NPS of 71. Skanda will now take you through the fiscal year 24 outlook and our new investment in the platform we have announced today.

Thank you, Selina, for that excellent summary of our financials. And in this section, I'll cover the exciting investment we're making in Patreon, a contemporary platform for the streamlining of business payments and workflows for small and mid-sized enterprises, as well as our announcement that we intend to buy back up to 10% of our shares as part of our capital management program. Moving to slide 16, investors will be familiar with our strategy on a page, describing our goal to build the world's leading cross-border payment specialist. We discussed this at our investor day on March 23rd, so I won't go over this in much detail. However, I will restate a few key points. Firstly, we are playing in a huge market that grows every year and is largely dominated by major banks who are more expensive and less well-liked by their clients than the new entrants. More and more customers are taking up the specialist service in every region, as evidenced by the growth rates of all the new entrants, whether they are public or private. Secondly, we choose to target four segments. We chose those because we feel we have the right combination of skills, knowledge, global presence, platform, risk management and service delivery for those clients and prospects. Our competitive position is strong. driven by years of investment, learning and progress. And we know that we are differentiated through feedback from clients, competitors, banks and regulators. Finally, we have a valuable business, but we can make it more valuable through good execution, better capital management, a strong team, and by leveraging our credibility as an industry specialist to grow wallet share of our clients by generating revenue beyond the core spot transaction. Today's investment is a great example of this. Moving to slide 17, whilst any investment or technology has technical and financial dimensions, we prefer to start by asking, what do they do for our clients? This page describes our investments in building a best-in-class client experience over time, and it underpins the growth in transactions. ATVs, client retention and ultimately revenue and EBITDA that we have seen in our corporate segment in the last 10 years and how this will be further improved by our investments in Patron and Treasurer. OFX started by creating a simpler, lower-cost way for clients to make payments cross-border. It was digital, complemented by humans, and it dramatically reduced the cost of these payments for our clients as well as improving the time spent by clients on this, as well as the speed it took for beneficiaries to receive client payments. As we spent time serving clients and understanding their needs better, we added features and benefits. Forward contracts, for example, reduced the risk for our clients. Limit orders let them set a preferred price without having to monitor the market. Then we added the ability for a client to receive a payment, which complemented their ability to make a payment. That step was enabled by our prior investment in more sophisticated transaction monitoring that gave our banks confidence we could get comfortable with incoming payments as well as outgoing payments. As we started to serve enterprise clients who wanted the ability to do mass payments with a single instruction, we developed that feature. Larger clients wanted role-based access for their employees, so we developed that. As we entered the online seller segment, it was clear that we needed to be integrated with the major marketplaces and PSPs, so we built that. Those clients tended to transact more often and because they were also heavy users of accounts receivables, we had to ensure we had a reasonable picture of the client's funds or a prototype of a ledger. But we've known for some time that we don't get all our clients wallets because the smaller transactions tended to get paid with corporate cards. We had done a bit of work to assess the work required to build it ourselves. and had a path to do that. But Patron gives us a ledger, which is what is required when processing more transactions and real-time authorization, as well as the ability to issue a card. As I previously mentioned, they have also developed deeper integrations with accounting software and invoice management to further help clients manage AP and expense workflows. Each of these features has been added over time, built from the insights we gained from working with clients understanding the cost and the risk, and deciding whether that is a feature we can do well. We don't add everything we see as possible, and generally we look to stay focused on flow features, i.e. features that enable flow as opposed to balance sheet features, which rely on us using our balance sheet or push us into risk areas we don't have experience in. We expect to generate revenue beyond spot transactions and more transactions by deploying features that add value to the client experience and this is why we have acquired Patreon. Turning to slide 18, today we generate broadly 90% of our revenue from spot transactions and the remainder from transactions that are related to forward contracts. This mix reflects our history of starting with consumer clients who largely used us to move funds at a lower price more quickly than banks as well as corporate clients who found our combination of price, service and speed compelling. Corporate clients increasingly see the value in laying off risk, especially as they navigate turbulent supply chain, payroll and other risks in their businesses. However, we also know that the same corporate clients have needs that are associated with their cross-border payments and accounts receivables that we do not serve. Firstly, they'll have generally smaller value transactions so they use corporate cards to pay. For example, software costs that are billed in US dollars or vendors for services provided offshore. They can use OFX for many of these but they don't because it may seem easier to use a card. Cards are widely accepted, the reporting is excellent and they can be controlled well. Secondly, as invoicing has become increasingly digitized and accounting packages increasingly integrated with invoice management, corporate clients have turned to firms specializing in integrating their invoice management with their payable solutions, both domestically and globally. Those firms generally charge a subscription for that service. Patreon provides a digital solution across cards and invoicing, and by OFX acquiring them, we get immediate access to the software we were in the process of building to access these revenues from clients. The software we were building, as Selina described many times in our intangible investments, creates competitive advantage by making life simpler, safer, more reliable, and more visible for our corporate clients. The acquisition of Patron fits into our platform journey by giving us card and invoice management solutions. And over the next three years, we will continue to operate the two platforms until we're ready to merge the two, which we expect to start within one year of closing. In addition to the software, we're also delighted to welcome Patron's team to become part of OFX, led by co-founders Jaco Belsman and Francois Henriot. Jaco and Francois have over 30 years of experience across multiple geographies in major banks and entrepreneurial organizations in the payments and trading space they've assembled a very strong and experienced team to build this platform and take it to market we've structured this investment to align the interests of shareholders the vendors and clients in summary we will acquire patron in exchange for a consideration of 11.25 million ofx performance securities which best when certain revenue targets are met by Patron over the next three years. OFX will fund the operating budget with OFX retaining discretion in line with their revenue performance. This structure will encourage revenue to be generated, a strong integration and a better client experience, all underpinned by our usual discipline, risk and compliance foundations. And we think this is a great way to add valuable features and services for our corporate clients and create the most compelling proposition for corporates globally while enhancing our revenues over time. In addition to generating revenue from loyal clients, OFX has always been a strong generator and converter of cash. This gives us options with respect to the best way to generate value for shareholders. Moving to slide 19, today we have announced that we intend to buy back up to 10% of our shares via a share buyback program. In simple terms, the program will run for up to 12 months and will be periodically reviewed during that time, and its purpose is to return value to shareholders whilst we believe it is to shareholders' advantage to do that. It will not be done at the expense of investing for sustainable growth or in repaying debt, as Celina outlined, or at the expense of investing in M&A or other strategic investments, as Patron has highlighted. As our last buyback demonstrated, we will run a disciplined program and will keep investors abreast of outcomes. Moving to our outlook, we've carefully considered our business and performance in creating a range of outcomes we expect. Turning to slide 21 to summarize what is a complicated set of possibilities we expect to grow. Firstly, we expect to grow our net operating income so that it finishes between $225 and $243 million. That range is a little wider than normal, but reflects in particular the difficulty in synthesising and forecasting the range of economic outcomes we see globally, and largely how that plays out in our consumer portfolio globally, and in the US region for our corporate segments. We'll keep the market appraised. However, in the trading we have seen in April and May today, the evidence confirms the range we are providing. Secondly, we expect that to translate to underlying EBITDA of between 63 million and 74 million. Again, that range is a little wider than normal, driven by the NOI factors I described earlier. We expect the EBITDA impact of Patron to be approximately 4 million in fiscal year 24 offset against the 63 to 74 million range. Thirdly, we expect intangible investments to be between 17 million and 19 million. The range here is a reflection of the availability and cost of technical resources, as Celina mentioned earlier. We have a clear program that is well understood and resourced. The patron investment will add in the region of 1 million in fiscal year 24 as we uplift their product to enable the future combination I mentioned earlier. And finally, we expect to generate the 5 million of synergies from the thermal integration in line with expectations with the Australian migration complete and performing well. Against this outlook, we've summarized our main assumptions as well as the main tar wins and headwinds potentially affecting the outcomes. Our main assumptions are that our corporate segment will perform in line with the historic CAGR underpinned by stronger trading in the second half of 24 as corporate clients get more confident in interest rates and inflation our enterprise segment will grow steadily as it started to do in the second half of fiscal year 23 our consumer and ols segments will be in line with fiscal year 23 performance with confidence picking up in the second half in consumer to complement steady start the main tailwinds to this would be a stronger corporate client confidence driven by improved economic conditions. Also, should consumer rebound sooner than the second half, fueled by stabilizing rates, better economic and political conditions, we would trend toward the higher end of the range. The main headwinds would be unforeseen losses or risks materializing in cyber or fraud and an extended hard landing in the U.S. affecting U.S. corporate confidence and activity. In closing, OSX has never been stronger, more global and more engaged. Fiscal year 24 is off to a good start that we must execute well to drive an even better year. We're delighted by the progress of the firmer integration and excited to bring the patron team and platform to our clients in due course. And with that, I'll hand back to Darcy to manage a Q&A.

Thank you. If you'd like to ask a question, please press star one on your telephone and wait for your name to be announced. If you'd like to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. We ask that you please limit your questions to two per person. If you'd like to ask further questions, please rejoin the queue. Your first question today comes from Cameron Hulket from Wilson's Advisory. Please go ahead.

Thanks, Avareta. Morning, Skander and Selina. Just firstly, thanks for the colour on the guidance ranges and things and outlining your assumptions. I think we all appreciate it's certainly not easy to distill an adequate range. I guess just following on your comments firstly, Skander, before you concluded, just around the confidence in the outlook with perhaps what you've seen you know, since the update in late March. I just wonder if you could shed any more colour without, you know, obviously spoiling what you guys generally say in your first quarter update.

Sure, Cam. So to give you a little bit more colour, you know, as we touched on and as you're aware, the dip in the second half of fiscal year 23 was really mostly fourth quarter. for the business and corporate, for example, was down 6.4% versus the third quarter in that fourth quarter. But what we started to see in very late February and which carried on into March and is continuing is if you look at corporate, the average monthly revenue for corporate for that quarter was 6 million, but March was 6.9 million or 15% better than the average And we actually saw a similar effect in consumer. So fourth quarter average monthly revenue for consumer was 5.3. And I'm only talking about our effects here. So this is experiment, but just so that you can get a feel for it. March was 6.3 million on 19% up. So that's what, you know, Selina and I have been working on in terms of the outlook. It gave us, I guess, if you like to use your phrase, a bit more renewed confidence in producing that outlook.

Yeah, that's great. And then just the second, following on from Selena's comments around, you know, competitors and pricing, I've seen recently a certain pair of yours made sizable increases in their margin on euro and pound transfers. I'm just curious whether OFX has followed suit.

We're always looking at the book of what pricing, there's some elasticity there and we'll change those levers. So we're always looking at the pricing within the book. So we'll keep you updated as we go. But what we're really happy with is if you look at that NOI walk, the pricing levers that we did deploy during the year really played out really well. When we got to the end of fiscal year 23, we were happy with what we had already done. We'll always re-look at it, but it was quite a steep, you know, there was quite a few changes that we did throughout that year. A little bit more of that will play through into this year, but we've done quite a lot already.

Understood. All right. Thanks, guys.

Thank you. Your next question comes from Lafatani Sotorado from MST. Please go ahead.

Good morning everyone and congratulations on a good result. I just want to dive a little bit more into the Patreon acquisition and just understand a bit more around the integration and the current growth rate. So can you just remind me, I think you said you're not going to integrate it for two years but they've got revenue targets that you'll be monitoring over the next two to three years. Is it a case that it's just growing organically, or how should we think about the cross-selling to your existing business? And will it be a cross-sell globally over time, or can you just add a bit more colour, please?

Yeah, maybe I'll touch on that, and then I'll just get Selina to clarify, because thanks for your note, which I saw went out last, to clarify the consideration. So Patreon are operating today out of Australia. They have an AFSL. They have clients. They're generating revenue. And as I mentioned, they're targeting the same sort of target clients as us. That will continue for the first year under the Patreon brand. What they'll be doing is in that first year, uplifting their core product so that It is equivalent to OFXs in Australia for the corporate segment. There's a couple of smaller things that they don't do today, which they had on their roadmap anyway. So they will uplift their product. And in that first stage lap, once that is ready, then exactly as you said, we will offer that product to OFX Australian corporate clients and obviously rebrand Patron at that point so that for any OFX or Patron client they're gonna get, corporate client I should say, they're gonna get the best of both, so to speak. Then what will happen is over time we will add the OLS segment and then of course other regions one by one, and we're going to be doing very detailed planning over the next sort of 60, 90 days to sort of map that out with a patron team. So that by the end of that three years left, to your point, the main countries in region will have the availability of the Patron product, and we will be offering that product to OSX clients and generating the revenue from that. And I'll just get Selina to clarify the consideration while we're at it.

Yeah, so in the consideration, and it's on slide, I think it's 18 on the presentation, the consideration is just shares, okay? So the consideration is 11.25 million shares, the performance security, the best over two to three years based on their development and revenue, milestones the six million that we refer to is actually cash to fund their business so really it's a payment over the next 12 months to fund their business to really see help them develop that platform and also continue to generate those revenue synergies that six million because it's cash to fund the business that's why you see it drop through on the ebitda and the intangible assets it is not a goodwill payment that goes onto the balance sheet. So we just wanted to clarify that for everyone, but in $6 million cash and you see it through EBITDA and intangibles.

Look, that makes sense. And so can I just follow up in terms of the revenue mix? So card and subscription revenue, so adding this back in, how should we think about, is it, because there's a lot of features that you talk about that Patreon has, but is it primarily the card and invoice management? That is the key things that you're attracted to or is it the user interface and how do we think about the pricing? What is the subscription revenue more specifically? Is it just a set annual fee to be able to use the invoice management or how should we think about it?

Yeah, so a couple of things to unpack there, Lach. Certainly, cards are a very, very well-known use case and product for corporate clients. You can have a look at some of the competitors' offerings and start to see the revenue they're generating, the penetration of clients that are taking up a card. And you can see in what we put on slide 18, a kind of an illustrative, well, if we generate, you know, a reasonable uptake in cards, what the proportion of revenue would come from cards Subscription is less certain because it's candidly a little new in this space. Patreon is generating nice subscription revenue. But that said, what we've seen in other use cases is the subscription revenue hasn't over time been as much as the card revenue. So that's something that we'll learn as we go. And we've certainly done a little bit of analysis so far to get confident that the value proposition is attractive. but we'll flex around pricing and adoption as we go. But certainly the cards piece is something that, as you know, I'm very familiar with in my background. There's plenty of comparables that you can go and check.

Thank you.

Thank you. Once again, if you'd like to ask a question, please press star 1 on your telephone and wait for your name to be announced. Your next question comes from Julian McCauley from Evanston Partners. Please go ahead.

Hi, Stan. Just a couple of questions for me. Firstly, with the EBITDA guidance, how much is included for interest income you expect to earn on the book over the next year?

Yeah, so that second half, the interest income was about $2.5 million. A rate rise on top of that will slightly increase it. So that's what I would expect through the halves as we go forward.

Right, okay, cool. And with the customer growth, I mean, it's gone backwards in the core of X business, but you're still spending a fair bit on promotional and advertising. When do you think you're going to get some traction for that investment?

Yeah, it's... It's an interesting one, the active clients. I mean, it went up in the first half and declined in the second. It's largely a function of our consumer. uh active client portfolio julian because of just the number um active clients in corporate were slightly down uh in in the second half broadly flat um we've been working very hard on improving our go-to-market both in terms of promotional and commercially led propositions so we we We're definitely targeting active client growth, but the overall number, like I said, went up at the half, declined in the second, much more driven by consumer. Right. Cool.

Thanks, guys.

Thank you. Once again, if you'd like to ask a question, please press star 1 on your telephone and wait for your name to be announced. Thank you. Your next question is a follow-up question from Cameron Holcott from Wilson's Advisory. Please go ahead.

Thanks, Alfredo. Guys, just wondering with thinking about the amount of spend you are actually getting from the average corporate customer, now that you're thinking about cards and some of the use cases you mentioned there before, Skander, I just wonder if you guys have any statistics around how much or flow you are getting per average corporate customer and what you obviously target to take that to.

At this stage, Cam, we are just saying we will generate incremental transactions, which will generate incremental EBITDA. We will update you in due course with what that detail looks like. We know, as you've seen, for example, and that we've quoted, that our average transactions for active client and corporates continue to grow every half. And we know that with cards and we know from looking at competitors that that will grow again. And that's what we tried to show on 18, which is an illustrative revenue number. Some of the comparables, obviously, you can look at firms in the public space like Payoneer, WISE does, it's a bit less clear with WISE what the penetration of cards is in their corporate base, but you can certainly get a feel for interchange revenues. And that's kind of how we've developed our kind of illustrative future revenue profile.

Yeah, that makes sense. And then just coming back to Patreon, the management staff has always been very focused on profitability and cash flows and I believe the $4 million impact EBITDA this year is expected to be around a nine-month contribution. So I just wonder, as you look to embed that business within NOFX, there's surely some easy wins there from the cost side. But also, I'm sure there's some expected revenue synergies and things over time as well. So just wondering if you can provide a bit of feel for us on looking further out the profitability of the Patreon to the broader group.

Yeah, so you'll also see in the outlook slide, yes, the EBITDA drag for this year for nine months will be four million. We did say that we're giving them six million to fellow development platform and the business. The great thing with Patreon, which we love, is it's a platform that's working today. It's actually generating revenue. It's got a million dollars of revenue coming through it and they're only just getting started. Obviously our focus is going to be building, make sure the products are there for us to then sell to our customers as well and migrate our customers across. So that EBITDA drag should decline over the years as that all comes to play. We obviously have not guided on that, but what we do love is it's a platform that's up and running and working and has real clients.

Okay. Yep, thanks, Selena. And look, if I can just quickly squeeze one further in. We've got Patreon now. It is supposedly still on the hunt for additional accreted M&A, perhaps something sort of similar to Firma. I guess just balancing all of that in addition to continue to grow the core book, I suppose just perhaps the question being that, you know, with where Firma is today is, you know, much of that largely complete with just finishing up a number of the remaining synergy targets such that, I guess, You know, things are quite hands-off.

I wouldn't describe it as hands-off. We're very pleased with the technical and people integrations. And as I mentioned, the Australian migration is now complete. And so we turn our sites on to the UK and then New Zealand and then Canada. The good thing about the technical migration is you learn a lot to iron out the kinks in the first one and then the second and the third and the fourth become easier, but they still need to be executed and they're still making sure that the firmer clients get used to the new platform. As I said, we really believe that those synergies are going to be mostly a function of them creating opportunities to generate more revenue, but also access our banking arrangements and so forth. So that's not yet complete. Generally speaking to your question around accretive M&A, Selena and I have always been of the view that we would be better at programmatic M&A. So do some things regularly rather than one thing every five or 10 years. And that's really what we're sort of moving into here, and obviously we're keeping our eye open for thermalite transactions, but we'll be disciplined about making sure we only get the ones where we can generate a good return for shelves.

Understood. Thank you.

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

Well, thank you, Darcy, and thanks, everyone, for dialing in. As I summarized at the end, we feel very, very good about the fiscal year 23 performance overall, and we're executing well in the early part of fiscal year 24. So thanks for your support.