OFX Group Limited

Thank you, Cameron, and thank you, everyone, for joining the call. As Cameron mentioned, I'm joined by Selina Virth, our Chief Financial Officer, and Matt Gregorowski, who leads our Investor Relations Program with Mauro Sedali. Selina and I will take you through the pages, and then there'll be some time Q&A. The presentation will cover four things. Firstly, our fiscal year 24 results and the performance drivers. Secondly, our financials in more detail. Thirdly, the strategy for the larger OFX. including why and how we will be more valuable in the future. And finally, our fiscal year 25 and median term outlook. Let's move to slide four in the pack. Fiscal year 24 was a solid year financially. Our net operating income was $227.5 million at the lower end of our guidance range and up 6.3%. However, we were able to deliver underlying EBITDA of 64.6 million, which was in the middle of our guidance range, and up 8.2%, excluding the impact of our patron acquisition. It was a year that illustrated both the challenges and strengths of our business. Our challenge is to deliver net operating income growth regardless of the prevailing macroeconomic conditions, and our strength is that we have diversity in our global revenue streams and levers we can pull to generate returns regardless of the economic conditions, thus delivering value for both our clients and shareholders. A few of the highlights of our performance include the pivot to B2B is well and truly operational, with just under 70% of our revenues now being B2B. And what is especially pleasing is that we are getting real traction in attracting new B2B clients, with revenue from new clients one in a year up over 20%. a healthy signal for future revenue growth as B2B clients tend to grow revenue in years two onwards versus consumer who tend to generate a significant revenue contribution in the first 18 months. Whilst inflation persists, disciplined cost control as well as the synergies we have realised through the firmer integration has meant our underlying operating costs were up 7.4% delivering EBITDA growth of 3.4%. If we exclude the impact of Patreon, underlying operating costs were up just over 5% and EBITDA up 8.2%. So excluding Patreon, we generated operating leverage, which augurs well to fiscal year 25. The cash generation and balance sheet quality continues to be a source of real strength for OFX and provides us with growth options. Moving to slide five, the second aspect of our strategic pivot to generate global growth has also well and truly taken effect, with around two-thirds of all our revenue now generated outside of Australia. Structurally, this has been accelerated by the acquisition of Firma, which doubled our North American revenues, and by the organic growth in Nia, which last year was up 16% across all segments and 26% for their B2B segment. Global growth is important for a number of reasons. Firstly, that is where the TAM is, so the demand we can tap into is substantially higher. Secondly, we generate healthy NOI margins offshore. Thirdly, there's enough scale offshore which drives EBITDA margins up. And then finally, the diversity of revenue sources reduces the risks associated with macro factors in any given market. And as slide five shows, we're seeing that diversity and especially that growth in EMEA. I'll talk later about the sub-regions and specifically the largest contributor to growth and returns, our corporate segment in those sub-regions. But we're pleased overall that we now have reasonable scale in North America as well as APAC and are growing into that in EMEA. Turning to slide six, I'll share more detail on our main segment performance and their drivers, starting with B2B. B2B is our main focus and represents two-thirds of our revenue, which is largely recurring in nature. So it's good to note that we've delivered 27.6% growth on a three-year CAGR basis. Fiscal year 24 was up 4.8% versus fiscal year 23, which was naturally disappointing, but not driven by factors that we believe will persist through the cycle. That annual growth was softened by specific factors. Firstly, difficult economic conditions in Canada and Australia, softening revenue growth in our two largest sub-regions for the corporate segment. And secondly, the decline in revenue from our OLS segment. I'll unpack what happened in the corporate segment shortly, but in OLS, when we acquired Patreon, we decided to deprioritize product and platform development roadmap on our existing platform, as it will be delivered through our new client platform. We moved our leader of the OLS segment to a new role, leading the patron integration, which naturally impacted momentum. In future, a new client platform will provide enhanced products and services for our OLS clients, and we will assume management of that segment within our corporate segment, and as such, report it within corporate in our financial reporting going forward. That said, we feel as enthusiastic as ever about this group of clients and the opportunities for growth. There is no question that e-commerce and embedded payments will continue to grow and our capabilities as well as our experience in working with large e-commerce platforms and PSPs means we can be a strong player going forward. I'll talk to our enterprise segment shortly. Moving to slide seven, we see momentum building in our corporate segment with three of the five largest sub-regions growing at 14% plus, overall new revenue growing at 26% plus and transactions growing overall, despite headwinds in Australia and Canada. In Australia, we saw a strong US dollar and a very range-bound AUD USD, along with shifting expectations on the economy and interest rates. This meant that ATVs declined 4%, and thus annual growth and revenue was 1.1%. Whilst fiscal year 24 growth was below the long-term CAGR, new corporate revenue growth was over 20%, we continue to see improvements in our onboarding of new clients. The launch of our new client platform to all new OFX and patron corporate clients will further strengthen our growth in Australia. Canada also saw softer revenue performance, down 3.5% overall. We saw growth in the third quarter, but a strong US dollar and dampening economic expectations drove a decline in the fourth quarter. We have not seen any further trader exits and margin continues to recover, with fourth quarter margins being higher than at any time fiscal year 23. ATVs dipped back sharply in fourth quarter, however, have recovered in April. Such that corporate revenue in Canada was up just under 25% in April versus the prior corresponding period. And note, April does have three additional trading days in year 25, but revenue growth is still up, even adjusting for this. The integration of Burma in the fourth quarter was a very big effort in Canada, but it's complete now and the teams are performing well. Elsewhere, corporate growth has been good, with the sub-regions of the UK and Europe being our standards, delivering just under 19% and over 140% growth respectively. Our teams in EMEA are well organised, clear about their target clients, They drive consistent commercial and risk management and continue to see opportunities. We completed the largest single transaction in OFX's history, which was a corporate client from Europe in December, a wonderful example of the region driving teamwork with global functions and having very high ambition. It's also important and encouraging to see the US corporate growth at over 14%, different to Canada and healthy. Despite the challenges, the combined North American team drove just over 30% growth in new revenue, which is a very healthy signal of what is to come. Moving to our enterprise segment on slide eight, it's wonderful to see the revenue growth at over 32% and a three-year revenue CAGR of over 20%. Given the investment and hard work our teams have put in, we have learned a great deal here, particularly how to win and activate smaller clients, And it's terrific to see traction building, especially amongst the more recent ones. The pivot to focus on smaller opportunities and to activate them quickly is working. We've seen strong growth from our established clients too. The pipeline has helped with 10 prospects added during the year, taking the total to 77 in the pipeline. And we're delighted to have three new enterprise clients in North America with activation underway. As we previously said, this segment will grow its contribution to OFX over time, generating EBITDA accretive returns. Moving to our high-value consumer segment on slide 9, we delivered $68.4 million of revenue, down 4.4% versus prior corresponding period. We see in consumer that volatility has been lower than in prior years, which in turn has driven down activity in some high-value use cases, particularly large purchases, property, and wealth transfers. We have seen an improvement through April, with consumer revenue up just under 15% versus prior corresponding periods. Naturally, as we took all our marketing spend and redirected it to be focused on the corporate segment a couple of years ago, we see part of the revenue decline due to a small drop in active clients. But we nevertheless retain and support a valuable consumer segment, which has grown at over 6% on a three-year CAGR basis. So in all, good execution and some momentum key areas that point to a stronger fiscal year 25. Now, let me hand over to Selina to walk us through the financials in more detail.

Thank you, Scamber. Moving to slide 11, we've continued to grow revenue, net operating income and underlying EBITDA. Fee and trading income is up 2.1%, strong growth from EMEA up 16.6%, while APAC and North America have softer growth at 0.3% and negative 1.9% respectively. driven by Australia and Canada, where we were impacted by a strong US dollar, as Skanda has mentioned. Pleasingly, we are seeing strong new corporate revenue up 26.5% with growth in all regions. Net operating income of $227.5 million is up 6.3% on fiscal year 23. This is up more than fee and trading income due to strong interest income for the year at $8.7 million as we generate interest from our cash balances. You may also remember from the first half results presentation that NOI also includes the $3.7 million escrow relief, which has offset the lower North American fee in trading income. These items, along with pricing increases, have driven the higher NOI margin up five basis points to 59 basis points. Underlying EBITDA is $64.6 million, up 3.4%, and excluding Patreon, up 8.2%. This has been driven by a stronger second half underlying EBITDA of 32.8 million, higher than the first half 24 at 31.89, which also included the 3.7 million escrow payments. Second half of 24 underlying EBITDA is up 3% on the first half of 24 and 8.7% on the second half of 23. We take you through our operating expenses. While they're up 7.4%, the growth rate, as we highlighted in the first half results, has slowed. and our core underlying expenses were up over 5% excluding Patreon. This has been driven by productivity programs and a successful integration of Burma, which we will walk through later. And as Skanda mentioned, excluding Patreon delivered positive operating leverage. Our tax rate was 18%, and this is lower than our guidance tax rate of 24%. This is due to 1.5 million of prior year R&D tax credits, as we highlighted in the first half. And also as we highlighted in the first half, escrow release, which is a non-taxable item, further reducing the tax rate. We expect the future tax rate to be between 21% and 24%, but it's dependent on R&D expense. Statutory net profit after tax is $31.3 million, down 0.4%. This does include $3.4 million of one-off pre-tax costs relating to the We have a strong balance sheet and our net cash held balance is $88 million. Moving to slide 12, we continue to see margin expansion versus fiscal year 23 at 59 basis points. This was relatively in line with our first half margins at 60 basis points. We've experienced higher same currency transactions and it is pleasing to see ex-same currency margins at 71 basis points, up from 64 basis points at the end of fiscal year 23. We can see from the margin walk, we increased pricing in the book by two basis points. We watch the market closely and have an excellent pricing engine that we can use to test price elasticity. And if there is more elasticity for the service that we offer, we will command a higher price. We've worked hard to ensure the cash balances we generate interest income with the rising interest rate. We generated 8.7 million of interest income, up from 3.4 million in fiscal year 23, and the second half of 24 of $4.4 million is up 3.6% on the first half of 24. The second half of 24 is a normal run rate, as it included the last rate rise at the very beginning of the half. This will grow as client funds grow and will reduce if interest rates decline, which is looking less likely for year 25. It is really pleasing to see the North American margins have net growth of two basis points throughout the year. At the first half of 24, we were down one basis point, even including the escrow amount, and the teams have done a lot of work in the second half of 24 to manage our pricing levers and deliver an overall margin increase. We continue to look at pricing and our price elasticity. We have also spent a lot of time this half considering our pricing strategies for our non-FX products that will be released with the Payson platform. Moving to slide 13, our underlying operating expenses were $162.99. And as we highlighted, the half-year result, the growth has slowed. Overall, underlying operating expenses were up 7.4%, but when adjusted for Patreon, which was not in the 6.23 expenses, expense growth is 5.1%. Employee expenses are up 7.1%, but the second half of $54.2 million was $4 million lower than the first half of $24 or down 7%. As you may recall, we have been running a productivity program, and we've successfully completed the firm integration. This has resulted in a net FTE reduction of 20 year-over-year, with the year-ending FTE at 619. Promotional expenses have increased over fiscal year 24, second half of 24 of 8.6 million, lower than the first half of 24 of 9.8 million. Being encouraged by the investments, we've seen our new corporate revenue up 26.5%. Our investment in the information technology expenses is up 2.2 million, basically 24, due to running two platforms as we migrated firmer. We will start to see some of these expenses reduced in 2025 as the migration is complete. We also continue to invest in cybersecurity and our data and privacy infrastructure. We're really pleased to announce we've obtained the ISO 27001 certification for our Australian business, a great achievement and testament to our investment in this space. Bad and doubtful debts are higher than we want them to be at 3.7 months. We did experience some fraud in North America late in the second half. We commend the team on identifying it early, doing a full review of the portfolio to ensure we don't have any similar situations and implementing further controls to improve our defences. We continue to remain vigilant and invest in the space and expect bad debts to be more around 1% of revenues on an ongoing basis. Moving to slide 14, the teams have done an outstanding job completing the migration of FIRMA. Just under two years ago, we announced the acquisition of FIRMA and committed to a two-year integration timeline with synergies of $5 million plus and a 30% EPS accretion by year two. What we have achieved is outstanding. Both Scanner and I have been involved in many integrations in the past and we could not be prouder of the teams. They delivered the integration in two years on time and they delivered a true integration. not only the two platforms into one, but all other functional systems, over 90 vendors and seven offices. It's created scalability for our North American business, with corporate active clients 34% higher than pre-acquisition, and the synergies are better than expected at 7 million plus run rate. EPS accretion is up 30% versus for 2022, so an outstanding outcome for shareholders. It is a great example of the scale and synergies that can be achieved when combining similar businesses. Moving to slide 15, our intangible investment in fiscal year 24 was $19.4 million, which is within the guidance range provided. Our investments in fiscal year 24 were focused on payments and continuing to improve our payment speed and corridor efficiency. We also have the payment engine ready to connect to the Patreon platform in early fiscal year 25. The client experience is always a focus, and we did lots of work this year on the corporate experience, which has improved our conversion funnels. delivering strong corporate new revenue up 26.5%. Risk, data, and security are critical areas for investment. Teams continue to invest in our cyber protection, data privacy, and fraud tools. While the bad debts were higher than what we wanted, we believe they are lower than the industry benchmark. Also, a huge milestone for the business was achieving the ISO 27001 certification, which provides all our clients and partners additional reassurance around our cyber defenses. The area we are investing more over time is product. We're excited to launch the Patreon platform for Australia corporate clients early in fiscal year 25, provide more products that solve business needs while delivering non-FX revenue streams. As we guided at the half year, we expect the overall investment envelope to reduce to approximately $18 million in fiscal year 25, which will be less than 8% of revenue. As some of our core infrastructure work is now complete, we are shifting the investment so 40% is focused on equipment products to our clients. Example of these are multi-currency corporate cards, global expense management, accounts payable workforce solutions, and accounting software integration, which Skander will talk about later. Turning to slide 16, we continue to have a strong balance sheet. Our net cash held position is $88 million, which is both the cash held for our users and deposits due from financial institutions. We hold some of this cash as collateral for our trading lines and bank guarantees. Collateral and bank guarantees were 19.8%, down from 26.4 million at the end of fiscal year 23. The reduction in collateral and bank guarantees, the combination of lower volatility, but also integration, allowed us to combine our firmer trading lines, bringing up over $6 million of cash. This resulted in our net available cash balance of 68.2 million, being up 0.8 million, or 1.2% on fiscal year 23. We saw our cash flows from operating activities generate a high cash conversion rate, with 64.6 million underlying EBITDA generating 60.6 million of net cash flow from operating activities. We funded the firmer acquisition using 100 million five-year Aussie debt facility. We've paid down 24 million since we did 24, with our loan balance now at 44 million. Our net debt is a positive cash flow position of 11.8 million, given our strong cash generation. We are on track to repay the debt facility by the end of fiscal year 26, subject to no other value-accrued growth opportunities emerging which require funding. We announced our share buyback program at the fiscal year 23 results in May. It is a part of our active capital management strategy which returns value to shareholders while also providing capital flexibility to execute on growth investments. In fiscal year 24, we deployed $14.3 million on market to purchase 8.69 shares. Turning to slide 17, we will look at this in further detail. Our capital allocation principles are to drive sustainable growth by return to shareholders in the most efficient form. We generate a lot of cash and then deploy that in four ways. Our healthy cash generation allows us to leverage our balance sheet to purchase assets, i.e. M&A and drive EPS accretion. So here's a great example of this. We levered up to two times EBITDA and took on debt for the acquisition. was mentioned. We continue to invest in our platform and product capabilities. As we have already discussed, we invested $19.4 million in between year 24 and expect this to be more like $18 million in between year 25. We continue to look at inorganic ways to add products or scale to our business. Last year, Patreon was a great example of this. It is delivering product and platform enhancements that were already on our roadmap. Our investment in TreasureUp is also a good example of an investment that provides us with access to the risk management product roadmap and thought leadership. We're always looking for value and creative opportunities, and we use a combination of cash, debt, or where it makes sense, equity. As we've already mentioned, our on-market share buyback program is a flexible return on capital for shareholders. We are renewing the buyback program for fiscal year 25, and it will run for another 12 months. Skanda will now take you through the strategy and our fiscal year 25 outlook.

Thank you, Celina, for that excellent description of our financial results and what drove them. Moving to slide 19, we have never felt more energized or confident in our strategy. Put simply, we can deliver better experiences for clients and thus generate a faster growth by solving for the pain points they experience in and around payments, not just payments. Because we've demonstrated we can execute well through the cycle, we know that we can generate good returns. Our focus will remain scaling in developed markets where we see the largest TAM combined with the strongest opportunity for our blend of growth and returns. Our ideal client profile or ICP is a small or mid-sized business who's exposed to cross-border flows and who generates FX turnover of between one and 10 million per annum. Of course, we'll support the clients outside of those parameters too, that this will be where our commercial, marketing, and product focus will be. As we solve more pain points around payments for our ICPs, we'll provide more products and services, including cards, subscription services, and more. And we'll deliver this primarily through digital means, designing everything to be as simple and intuitive to self-serve digitally as possible. However, our experience and the research we have done is clear. that when clients experience a problem, they want a human to solve it and we will be there 24-7 in ways our competitors clearly are not. Our commercial teams will also support clients who wish to de-risk their flows through simple risk products. As we deliver that, we expect to grow revenue from non-FX faster than FX revenue, partly because non-FX revenue is off a very low base and partially because demand for those products and services when integrated with FX, risk management and delivered digitally is huge. Moving to slide 20, this transition to OFX 2.0 started of course with an external link. What did clients and prospects want and why? What we were seeing and hearing from our clients was a desire to develop more product to complement our outstanding FX offering. They told us That, for example, cards would make their corporate expense management payments easier as more SaaS vendors build in US dollars. And it would also simplify their payments as well as reduce their costs. We were building these capabilities when we acquired Patreon. The combination has been outstanding. They built their platform designing the solution for the pain points and the non-payment jobs first and then the payments. So as we set about to integrate, we had very complementary skills and products. Patreon had developed a very sleek and easy-to-use customer user interface, a digital wallet, and linked it to cards and virtual accounts. We had a wallet, but we were stronger in the non-CardFX payments. We did just under $40 billion in turnover last year, and with it all we associated rigor. Tier 1 banking partners, mature risk and compliance programs, service delivery globally, strong onboarding excellence, and terrific regional teams. So addressing those client and prospect needs, a competitive price and ease of use came very naturally to us. But where the opportunity really arose was to satisfy more of those needs. And as you see in the middle of this slide, like AP, AR, expense management, and all the workflows that are associated with it. Naturally, we had both done integrations with accounting software, but the new platform Deeper workflow integration, stronger configurability for clients, and the extra products it offers makes it much more attractive to target ICPs and the accountants who support them. And then finally, bringing all that together, offering clients the ability to de-risk their cross-border flows differentiates us from most of the recently launched competitors and will be at the heart of saving our clients a great deal of money over time. Moving to slide 21, I am absolutely delighted to share that our new client platform will be live for all Patreon clients and all new OFX corporate clients in Australia by the end of Q1. It's a beautifully designed, simple-to-use platform, taking what Patreon endures and ensuring it meets the scaling requirements we have developed in OFX. It will be branded OFX and allow clients to do their usual FX payments But in addition, access the digital wallet, which can be linked to cards. It will allow the client to take advantage of integrated AP workflows, suggesting invoices and linking these through accounting software programs, as well as providing capabilities for employee expense management. We chose to offer it to all new corporate clients in Australia first, as Patreon had secured the necessary licenses and partners to make it live here. But during this calendar year, we'll be integrating the full range of OFX services, and ensuring all global licenses are in place to commence global rollout from the fourth quarter of this fiscal year. Moving to slide 22, this is how it creates economic value for our shareholders. On the left, you can see the revenue profile of a typical patron client. In fact, this client used to be an OFX client. They loved our FX and our service, but we couldn't supply the cards or the digital wallet they wanted, So they went to a competitor who happened to be Patreon. The revenue they generate for Patreon reflects the extra services and products. In this case, they generate more than two and a half times the revenue from non-FX as from FX. And as you know, a typical OFX client generates 90% of our revenue from spot FX. So this represents a huge opportunity. To illustrate this, we've shown you two major competitors on the right-hand side and how they generate revenue. from FX versus non-FX. They are both public companies, and the first competitor offers digital wallets, targets primarily consumer, but also serves the B2B segment, supporting micro-businesses with its consumer product. They generate just over 40% of their revenue from non-FX, and it is growing at roughly twice the rate of their FX revenue growth. The second competitor targets B2B clients, which are typically smaller than our ICP. They offer the same products we see through Patreon, but they are less streamlined into smaller mid-sized business workflows. They're generating just over 55% of their revenue from non-FX, and that portion of their revenue is growing at four times their FX revenue. And the third example is Patreon itself. It's a good example of why targeting non-payment jobs first drives the adoption of products and services in addition to FX. Moving to our outlook on slide 23, the conviction we have translates to a healthy growth and returns profile. We expect to grow our net operating income at least 10% per annum over the next three years as we build out the products and services and continue to drive a strong commercial and marketing program. We expect that at or around three years, we'll see the effect of more products and services being available, maturing globally, as well as our OLS clients growing again, which means that we'll increase our annual net operating income growth rate to be at least 15%. And we expect our EBITDA margin to grow from around 28% to 30% or more at that point, as new products and services are EBITDA accredited. board and management are very excited by the stronger growth and returns profile. And moving to slide 24, these are the reasons we are confident in these growth assumptions. On the left, you can see the organic growth rate over the three-year CAGR along with the growth rate for fiscal year 24 and the actions we are driving to our outlook for fiscal year 25. Firstly, the growth rate in fiscal year 24 was substantially lower than the long-term especially for our two largest sub-regions, Canada and Australia, in our corporate segment, driven by the factors we've discussed. To put it into perspective, I have already shared that the growth in corporate in Australia was less than the long-term average CAGR, but Canada also, prior to the acquisition of FIRMA, saw corporate revenue CAGR through fiscal year 22 at 14.6%. We've already seen growth improve through April. Canada, for example, was up 25%, prior corresponding period, as I mentioned earlier, and we are confident that the factors we can control, margin, service delivery, and new products will continue to improve. In addition, fiscal year 25 has an extra three trading days. As the enterprise continues to grow faster than the rest of B2B, it will become a bigger part of the mix and thus drive B2B growth overall, as well as accretive EBITDA margins. And then finally, the Patreon portfolio continues to grow strongly. largely driven by non-FX revenue, and even though it has only been implemented in Australia, it is growing well and will contribute to our growth overall. On the right are the main assumptions underpinning the outlook, along with the usual tailwinds and headwinds. Overall, we have better visibility to fiscal year 25 drivers because of our experience in fiscal year 24. Our team is executing well, and the rollout of the new client platform, initially in Australia, has energised us Thank you for your attention, and I will now pass back to Cameron to handle Q&A.

Thank you. If you do wish to ask a question, please press star then one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star and then two. And if you are on a speakerphone, please pick up your handset before asking your question. We do also ask that questions are limited to two questions per person, and you are welcome to rejoin the queue if you have further questions. Your first question today comes from Cameron Holcutt at Wilson's Advisory. Please go ahead.

Hi, Skanda. Hi, Selina. Great results. Well done. Let's start with the first one. For FY25, it's implied EBITDA is a bit above $70 million. Correct me if I'm wrong, Selina. But just wondering how we think about Patreon within that and beyond, given it has been a profitability drag this year.

Yeah, so the Patreon, the lovely thing is we love the platform and hopefully you've got some nice images there to kind of start to see what it will look like. As we start to put new corporate customers onto that platform, those obviously all new revenue will go onto that platform as well, but we are managing the business as one, so we won't separate it out the cost of the Patreon platform going forward because truly it is part of what we do. We're really excited about the revenue streams it will bring. We're excited about the experience for our new corporate customers. So that's how that will kind of play out as we go along. And we haven't given specific guidance for EBITDA in fiscal year 25, but we have given you the medium term what that will look like.

Yep, that's helpful. And then the last one is, I saw a pair of yours make moves again on pricing in the last couple of weeks. Sorry. I think they may very well be one of the pairs listed on one of the final slides there that Scania talked about before. Are you able to comment on whether you saw this as being a net increase? And does that open the door again for IFX in 25 to look at price increases as well? Thank you.

Yeah, I mean, as you say, Cam, the tail wind on margins is healthy. And the actions we took in 24 as Selina touched on, give us a good exit run rate. And we continue to see competitors looking to expand margin where they can. The other thing I'd say, Cam, that's really different in fiscal year 24 is the combination of margin and onboarding excellence means that's what's really driving that growth in corporate new revenue because the margin differential prospects look at it and say, well, it's a similar price and OFX has gotten significantly better at pulling through those prospects. Obviously, the back book, we have pricing algorithms that look like currency corridor. We look at the amounts that our corporate clients are moving. We look at a whole range of factors and we're constantly testing and calibrating. But to your point, Against the backdrop of increasing price, it does give us flexibility to continue to test different price levels and we've been successful in 24 as a result of doing that.

Okay, thank you. Well done again. I'll jump back in the queue.

Thanks. Thank you. Once again, if you would like to ask a question, you can register by pressing star then 1. Your next question comes from Laffatini Sotiru from MST Financial. Please go ahead.

Hi, guys. Another follow-up question on patron. So can I clarify? So you'll be live for new clients in Australia in this quarter. Can you talk us through what the roadmap is to roll it out to other jurisdictions and also to address the back book?

Yes. So thanks, Laff. So what's happening is we have effectively taken the middle office services and any product gaps that Patreon hadn't developed. But what that means is the Patreon brand will be replaced by the OFX brand on that platform, so all prospects will be onboarded onto an OFX branded site. The Patreon clients have already been notified that's now going to be OFX and not Patreon. And then to your question, what we're doing is all our marketing in relation to our corporate prospects will point those prospects to the new client platform. So all new Australian corporates will go onto that new client platform and that'll be done this quarter. What we're doing at the same time, as I mentioned, And we're working on adding them to the new client platform so that by the fourth quarter, our goal would be to start offering and moving all the other Australian existing clients onto that platform as well. And that's our goal. At the same time, we're also looking at our other regions and we're in active consideration right now as to how we're going to do that in other parts of the world. The factors that drive that are things like licenses that we need, being ready from a service delivery perspective to offer what is fundamentally a substantially enhanced set of products and services and so on. But we should have a decision on where we're going to go to next by the half, and we'll let the market know where that's going to be. And obviously, as part of our plan in acquiring Patron, We have set out a roadmap internally as to when we would hope to get all that complete globally, and we're progressing well, as I mentioned in the announcement. The integration is going very well.

Okay. I'll unpack the guidance you provide for NOI over the medium term. Is it moving from 10% to 15% partly driven by when you think you'll get the main impact from patron being rolled out, given that there's a, as you've stated, a material revenue increase potential just by through the cross-sell opportunity, or is that how we should be thinking about it? Is that why we've got to step up from 10% to 15%?

Yeah, I mean, that's one of the key factors, probably the largest, but the other one, Laf, would be, as I mentioned briefly, is that you've got enterprise growing faster to become a bigger factor. Once we have set up the new client platform, we can get back to growth on OLS as well. That will be a factor. So those three are the biggest driving factors in getting us from 10 to 15. And obviously, throughout this year, we'll be picking up experience on losing existing Australian corporate clients, for example, onto the new platform will get better. knowledge on uptake of the new products and services. So that's really kind of how we thought about it.

Alright, great. Thank you.

Thank you. Your next question comes from Owen Humphreys at Canaccord. Please go ahead.

Hey guys, and well done on the results. Consistent execution here. I just wanted to just dive into the NOI guidance for next year. just looking at the NOI trend on an underlying basis over the last kind of four halves, then looking to FY25, it kind of jumps up from around that 113 mark to 125 per half. Can you just talk us through the drivers here? How much of this growth is driven by new products, market movements, price? Just understand what's the basis of that 10%.

So you can see, and we tried to lay it out for you guys on that slide, slide 24 of the drivers there. If you look at our portfolio, even if you have a one basis point change in margin, that's over $3 million of incremental revenue that you can generate. We really like what the teams are doing. We always tread cautiously, though. In particular, the work that North America did in the second half is absolutely excellent. So obviously, margins can generate that extra revenue. Obviously new revenue, we're getting some really nice new revenue from our corporate business. We'll also continue to work on the funnel and make sure we pull as much of that through as possible. The non-FX revenue, we've given you examples there of what customers look like. We're really excited to launch for new Australian customers this quarter and get going and see how big that can be. And then obviously you've got, last year we had a Easter twice in the year, so three less trading days. So what we like about the year ahead is there are all things we can control, we can measure the operational execution to really help drive that growth rate towards the 10% range.

Good one. And just on Therma, the 7 mil, could you just talk about, I know that's more of a run rate exiting FY24, could you just talk about how much was realised or how much was the tailwind into FY25s? from the synergy?

Yeah, so the 7 mil, we originally said that two was revenue and three was cost. I'll be honest, the cost has completely exceeded our expectations, which is excellent, and the revenue is still to come. There is some synergy there, but it's still to come in fiscal year 25 and beyond, and really for that, it's because of the access to the US licenses. It's only once we're fully migrated that salespeople have access to that, can generate that additional revenue synergy. If you look at the expense synergies, you know, bank fees, you can already see it coming through. Staffing, there was excess capacity. And also when we did the integration and the final integration happened in February, it was clear that there were some roles that no longer needed to exist. So I'd say that that run rate into fiscal year 25 is even larger, even though you already see the 20, over the net 20 heads down this year because some of those exits only happened late in fiscal year 24. Office closures, we've been going and that's already in the run rate for fiscal year 24 and the vendors are going to tick up and become even more in fiscal year 25. Some of them we could not turn off until we finished in February. So a decent amount of it is in fiscal year 25 as it run rates into the, in fiscal year 24 as it fully run rates into 25.

Good one. And just a really quick one, just to understand why you guys don't want to give EBITDA guidance, given you've given NOI guidance and the costs are controllable.

Look, we give you an envelope to work within, and that's what we work within as well. You know, we did say in the medium term EBITDA margins at 28% to 30%, and we do try and target positive operating leverage to kind of cover figure out what that might mean. We're always looking at the levers in the business. We're making sure we're spending the right dollar for the revenue that it generates. And if we see a huge opportunity or a growth opportunity out there, we'll go after it. But you kind of have it in a there or thereabouts way.

Thank you. Thank you. Your next question comes from James Bissonella from Unified Capital Partners. Please go ahead.

Yeah, thanks for taking my question and congratulations on a strong result and very well set out strategy. So just one from me, I guess just looking at your average cost per head at that circa 160k annually, just wondering if there's potential sort of for cost out over time as you grow by outsourcing or focusing on lower cost geographies?

Yeah, it's one of those strategies that you're always looking at. We do, you know, there are certain roles that we do have in lower cost geographies at the moment, but it's not substantial in any way, shape or form. You've also got to get the right scale and also make sure you're not adding a lot more management over time, but leadership in there to be able to manage the offshore experience. So there is tipping points for that. We're always looking at it. At the moment, we have current resourcing strategies predominantly in the regions that we are in. which is something that we're always looking at.

James, I'll just maybe build on what Selina said there. In fact, the bigger productivity drivers that we've been seeing and driving ourselves, one is voluntary attrition now is at all-time lows for the company, and that actually drives a lot of repeatability and quality in the tasks, so you're not redoing a bunch of tasks and you're getting a lot more efficient. The second thing is we've been deploying AI and various... automation tools, especially when you're doing a lot of different payments. If you're driving things like straight through payments, automatic reconciliations, that's where you're getting productivity. You don't have to send the job offshore. A lot of these things are actually better done with software and there's been a real drive to that the last couple of years. Those intangible investments that Selina touched on, we talk about scalability, that's really where it is. And look, finally, we genuinely have looked at, for example, in our technology team, where do we have resources that are expensive? Contractors, for example, and where do we have FTEs? And in fact, we've largely found, especially in the last 18 months, our technology team has more and more built their own quality program, very, very skilled engineers, which is just cheaper than some of the expensive contractors. And candidly, three or four years ago, we kind of had to go there because that was where the technology market was. It's not the case now. The great thing is the value proposition of working for OFX and technology is you're now shifting to a lot more product deployment. We make payroll, we generate earnings. cost is significantly better than it was two or three years ago. So everything that Selina said plus more digital automation.

Great. That makes a lot of sense. Thanks for taking my question.

Thank you. Your next question is a follow-up question from Cameron Holcutt at Wilson's Advisory. Please go ahead.

Hi team, me again. One more just around the integrated platform launch. As we look a little bit further out, do we begin to look a little bit of a different revenue model here, Skanda, Selina? Rather than perhaps volume-based business, can IFX begin to move more to a more recurring subscription type model? Thanks.

Yeah, I mean, I think... That's one way to look at it, Cam. Already, as you know, there's a high level of recurring revenue through the volume that we attract. But as you say, when you can attach that to subscriptions, revenue from other sources like change and interest income, it just is generally revenue that is less, let's call it origination intensive than just volume. So I think that's a reasonable profile, but it'll take a little bit of time to get their cam. And that's why we've kind of said, look, it's a couple of years away, but those examples that we shared of the competitors, that is real. That is what they're actually generating. That's the public company. So we are certainly confident and high conviction we can get there.

Yeah, understood. And if I just look at the FX volatility you provide on the Aussie dollar on slide 27, second half 24 was obviously quite muted, and I think Q4 in particular was really quiet. How should we think about FY25 from an FX goal perspective, given we'll have federal elections around the world and potentially the beginning of a rate-cutting cycle? Are they expected to be incremental tailwinds for FY25?

Yeah, look, our base case is we haven't assumed a lot of volatility. We're definitely not in the business of predicting volatility. It's a very difficult thing to do. But as you say, typically the types of events that cause volatility are things like elections or geopolitical events. And we know, for example, obviously you've got the U.S. election coming probably going to get an Australian election. We're possibly going to get a UK election. We're possibly going to get a Canadian election. All in fiscal year 25. Some of it might go into 26. And as you know, that tends to benefit our consumer business. And it's quite interesting because I was looking back at some of the numbers. Some of the things that I've heard is that the active client decline in consumer means you're just not going to benefit the By way of example, back in first half 21, we had about 118,000 active clients. We generated about $26.9 million of consumer revenue. Fast forward to second half 22, we lost about 10% of those active clients, but we generated about 37% more. In other words, $36.9 million of revenue. So it's not necessarily active client driven. It's much more kind of what over and over again that on the larger value use cases, clients keep coming back to us. Things like the recent Canva share sale, we were well subscribed into that. So we're feeling, you know, if that volatility happens, as we've highlighted on the tailwinds, that could be a tailwind. You know, even our currency assumptions are not in the sort of extreme case in our base case.

Extremely helpful. Thank you both.

Thank you. That does conclude our question and answer session for today. I'd like to hand back for some closing remarks.

Thank you Cameron and thanks everyone for dialling in. Obviously over the next week or two I hope to be able to catch up with you individually but I'll just leave you with my concluding remarks which was that fiscal year 24 we learned a lot. We were able to pull the leaders We emerged stronger than when we entered, and we're particularly excited about the kind of medium-term future and the investments that we've been making to create new revenue streams, better client experiences going forward. Thanks very much.