Release Date: May 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• OFX Group Ltd (OZFRY) demonstrated resilience in a challenging macroeconomic environment, maintaining healthy margins and cash flows.

• The company completed an extensive share buyback program and repaid $24 million of outstanding debt, showcasing strong cash management.

• Enterprise segment revenue grew by 17%, driven by contributions from new partners and long-standing clients.

• OFX Group Ltd (OZFRY) is the first non-bank issuer of corporate cards in Canada with Visa, indicating strong operational capabilities and balance sheet strength.

• The company is investing in strategic transformation through the OFX 2.0 strategy, which aims to expand its value proposition and total addressable market.

Negative Points

• Net operating income decreased by 5.5% and underlying EBITDA fell by 10.7% compared to the prior corresponding period.

• Business confidence was subdued, particularly affecting small to medium businesses, leading to a decline in average transaction values.

• Revenue in the corporate segment declined by 4% due to a 22.8% drop in average transaction values.

• The consumer segment saw a 1% decline, with transactions down 6.4%, despite a 7.3% increase in average transaction values.

• OFX Group Ltd (OZFRY) faces uncertainty in providing a clear fiscal year '26 outlook due to mixed interest rate outlooks and persistent cost pressures.

Q & A Highlights

• Warning! GuruFocus has detected 7 Warning Signs with OZFRY.

Q: Can you explain the changes in the reinvestment profile and the impact on growth targets? A: Unidentified_1: The reinvestment profile has shifted to bring forward operating expenses, focusing on go-to-market programs and commercial resources. This adjustment is based on a better understanding of how these levers operate, which gives us confidence in achieving medium-term returns despite current challenges in predicting core FX growth.

Q: How do you expect interest income and non-FX revenue to perform in the coming year? A: Unidentified_2: Interest income may decline if rates decrease, but growth in client wallet balances could offset this. Non-FX revenue is expected to grow significantly as the new client platform rolls out in Canada and the UK, with increased adoption by both new and migrated customers.

Q: Can you provide insights into corporate customer behavior amid tariff threats and recent revenue trends? A: Unidentified_1: In February, corporate clients were cautious due to unclear tariff implementation, affecting transaction values. However, activity picked up in March and April as clients gained confidence, leading to strong revenue growth in April across both corporate and consumer segments.