The Australia-based foreign exchange and payments solutions provider ( ASX:OFX ) saw its shares tumble 36% on Thursday after the company released an update on its financial 2025 results, which OFX described as “lower than expected”.
Shares of OFX – which last week hit a 52-week high of $2.39 – fell from Tuesday’s close of $2.28 by 36% to close at $1.47 on Wednesday, recovering somewhat after trading as low as $1.20 early in the day. The drop essentially erased all the gains the stock had made so far in 2024.
OFX stock price chart, 2024 year to date. Source: Google Finance.
OFX said that in its first half financial year 2025 results (ie the six months to 30 September 2024, as OFX has a 31 March financial year end) it expects to deliver NOI (ie net operating income or revenue) of approx. $111 million, and underlying EBITDA of approximately $29 million. This result, as noted above, is lower than expected and reflects the following factors, which relate to key year 25 assumptions:
- Trading in the first months of the first half was in line with expectations, as the short-term economic environment showed some positive improvements.
- However, later-than-expected shifts in the interest rate cycle and the corresponding range-tight key currency corridors as a result of the strong USD led to a slower recovery in corporate confidence. This inhibited customer trading patterns at the end of the half, especially in September, resulting in lower than expected commission and trading income (revenue).
- Unusually, company ATVs in the UK were down 21.8% compared to the previous corresponding period (PCP) and in Canada were down 7.1% in the PCP, which led to lower PCP revenue. In Australia and the US, corporate ATVs were mixed, however, higher transaction volumes led to double-digit growth in corporate PCP revenue in each geographic region.
- Happily, new corporate clients are performing well, with new corporate revenue up 11% in PCP from FX alone. In Australia, where the New Client Platform (NCP) was launched in June, new revenue growth for corporate FX alone is 25% in PCP and up 38% including non-FX activity.
- While OFX’s core resources are focused on B2B growth, consumer confidence in most geographies remained subdued, which, along with historically low levels of volatility, led to lower trading volumes overall, but particularly in Australia. Excluding Australia, consumer revenue was flat versus PCP, but up 9.2% compared to 2H14.
- Partially offsetting these macro factors, execution was strong. Pricing actions led to improved commission and trading margin across the portfolio, up 2bps on PCP. OFX continues to diligently manage its operating expenses and cash flow well, while bad debts for 1H25 are better than planned.
Update new client platform
OFX said it continues to execute on its OFX 2.0 strategic pivot, with the development of the New Client Platform (NCP) progressing well. The migration to NCP for existing enterprise customers in Australia has begun and is expected to be completed by the end of 1026. OFX has committed an additional ~$1M in intangibles in 2H25 to accelerate global growth.
Early data from the introduction of NCP to new corporate customers in Australia has been encouraging in terms of product uptake and revenue contribution. In addition to the 38% increase in new revenue from PCP, non-FX revenue from these new corporate customers is approximately 50% of total revenue. In terms of uptake, 40% of all corporate clients at NCP have already received a non-foreign product or service.
OFX Outlook
In light of H1 conditions, OFX expects to achieve positive NOI growth in 2H25 relative to PCP and 1H25. This will result in FY25 NOI growth being lower than the approximately 10% reported in the May FY24 results announcement. OFX’s underlying EBITDA margin is expected to be around 28% for FY25, subject to any unforeseen impairments in 2H25.
When OFX has migrated Australian corporate clients to the NCP, OFX will have a clearer picture of client uptake of non-FX products and services. This will help OFX form a view on the potential contribution to incremental revenue in other geographies and hence NOI growth. As such, OFX will provide an update on its medium-term outlook as part of its FY25 results announcement in May 2025 and the path to a return to 10% NOI growth, but remains committed to its long-term outlook of 15% annual growth + NOI and ~30% Underlying EBITDA margin.
OFX will report H1 FY25 results on Tuesday 12 November.
About OFX Group
Founded in 1998, OFX is a Sydney-based international financial services provider with a presence in nine countries and ~700 staff. It offers money transfer and foreign exchange services for corporate, consumer and corporate customers in more than 50 currencies. Through its “digital + human” business model, OFX provides 24/7 customer support to complement its global digital platform.