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Edited Transcript of OFX.AX earnings conference call or presentation 11-Nov-19 11:00pm GMT

Half Year 2020 OFX Group Ltd Earnings Call

SYDNEY Dec 4, 2019 (Thomson StreetEvents) -- Edited Transcript of OFX Group Ltd earnings conference call or presentation Monday, November 11, 2019 at 11:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* John Alexander Malcolm

OFX Group Limited - CEO, MD & Director

* Selena Verth

OFX Group Limited - CFO

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Conference Call Participants

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* Ian Munro

CCZ Equities Pty Limited, Research Division - Senior Analyst

* Tim Lawson

Macquarie Research - Division Director of Australian Insurance and Diversified Financial Market Research

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Presentation

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John Alexander Malcolm, OFX Group Limited - CEO, MD & Director [1]

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Thank you, everyone, for joining the call. And as Edwin mentioned, I'm joined by Selena Verth, our CFO; and Matt Gregorowski, who leads our Investor Relations program with Citadel-MAGNUS. Selena and I will take you through the pages, then there will be time for Q&A. We will cover the first half result, what it is, what drove it and our outlook for FY '20.

So let's move to Slide 4 in the pack. We delivered a good operating result. Revenue up 0.5%, expenses down 1.6% and underlying EBITDA up 2.3% against the backdrop of difficult trading conditions.

Net operating income was slightly down at $59.5 million, driven by lower ATVs than we expected. The interim dividend will be $0.0235 per share. We continue to see good fundamentals. Transactions, up 5.2%; transactions per active client, up 9.3%; and stable net operating income margins, ex IPS, at 56 basis points. Our expense control is good, more on that later. And our execution, particularly in driving down our cost per registration and our cost per NDC has been exceptional.

In difficult markets, executing well and consistently is critically important. So we're pleased with the outcome. Our investments in growing our North American business and our corporate segment continued to perform well. North American revenue grew at over 19%, with the U.S. being even stronger at 25%. Our corporate business globally grew at 9.7%. And within that, our global currency account grew at over 24%.

Corporate active clients grew at 4%. While these customers take longer to win, they are significantly more valuable than consumer and extremely sticky. We have previously highlighted that growing through partnerships is a key strategic priority, and the first half produced some positive outcomes with our new partnership with Link Market Services as well as several other opportunities which are now live, including our partnership with the International Tennis Federation. This is already generating growth for the business, and it's great to see some momentum on winning new clients. As well as scaling these new wins, we are building pilots such as our recent pilot with Payability, a leading online financing operating predominantly in the U.S., joining forces with us to provide a better suite of capabilities for online sellers that we expect will further help us accelerate our growth in that segment. Equally, helping existing clients grow faster is rewarding. And there's no better example than our existing partnership with Stake, who are growing very strongly in the first half.

Moving to Slide 5. Market conditions were challenging. Global spot markets were down again in the first half, driven by political uncertainty in trade wars, which affected business and consumer confidence substantially. However, as we've previously committed, what's important is that we will outperform even in a soft market and that our business model remains resilient. We have demonstrated that in these results. The table on the bottom left shows the data points comparing our first half performance over the last 2 years against our first half '20 performance.

As you can see, with very similar conditions to first half '18, we have substantially grown transactions. Transactions per active client, net operating income and underlying EBITDA. We're also rebuilding the EBITDA margin from first half '19, which had been declining. In fact, that's the first time we've grown EBITDA margin in the first half since 2015. So despite some of the toughest markets we've ever seen, we delivered record revenue and net operating income in the second quarter. All this from fewer active clients, showing that our pivot to higher value clients, being disciplined about expenses and generating real improvements through operating leverage are all contributing to building a more valuable company. The Board and management believe we can and will grow this business regardless of the economic backdrop and build a strong and sustainable company over time.

Moving to Slide 6. We continue to grow engagement in our active client base. Whilst the number of active clients overall is slightly down, reflecting our pivot to grow corporate clients, transactions per active clients are up 9.3%, and transactions are up 5.2%. As previously mentioned, the decline in ATVs has been an overall decline in turnover of 5% to $11.5 billion. We are disappointed not to have grown active clients on an absolute level, consistent with what we saw in Q3 '19 and Q4 '19, whilst our consumer marketing efforts continue to improve, the overall market was soft, and therefore, too expensive in some regions to acquire new dealing clients at acceptable returns. So we chose not to spend on marketing in those parts. And as a result, we do not add consumer active clients at the rate we had hoped. Nevertheless, we grew corporate clients, and we grew consumer active clients in North America. Our CRM programs have also helped us to accelerate revenue from the higher value consumer clients that we're targeting, which are growing, both in number and contribution.

Moving to Slide 7. We have maintained a strong and recurring revenue profile, with 76% of our revenue coming from returning clients. This is stable and reflects our focus on ensuring we keep our existing clients engaged and active through our CRM programs, our pricing incentives and industry-leading service delivery, and our revenue from corporate clients continues to grow, further demonstrating our focus on building the lifetime value of our portfolio.

Moving to Slide 8. Our global footprint continues to be a source of competitive advantage. As previously mentioned, North America continues to grow well, and our focus on growing our corporate portfolio in other regions is helping driving growth in transactions in the U.K. and Australia and New Zealand. We have seen declines in turnover due to lower ATVs. In fact, overall ATVs are down 9.3%, driven by economic factors that I've mentioned. Our target consumer and corporate clients have not changed. So whilst the drop in ATVs creates a slight variance to our expected economic outcomes, we do not see this as a long-term trend.

In Asia, we've taken a deliberate pivot following an in-depth review of the business and market. The review looked at the type of client we were supporting versus the prospects we could attract, and we found that there's a deep pool of alternative prospects that better fit our global target audience. ATVs are up as our margins as a result.

In summary, we continue to like Asia, it remains a terrific opportunity for us but we will pivot our focus to ensure we target the clients we like and at the returns that we like. There have already been some encouraging wins. However, this will take a little while to filter through.

Moving to Slide 9. Our marketing, commercial and service efforts are creating a more valuable portfolio in North America. Our fee and trading income or revenue has grown more than 40% in the last 2 years across our consumer and corporate segments. We wanted to share the main drivers behind this to give you a feel for why we believe this is sustainable.

Firstly, our focus on the client and investments in the client experience. Whether they be web, mobile app, service delivery or pricing continue to be the cornerstone of how we grow. When we combine a very strong product with great local service, we see a compelling value proposition, which in turn means we get more clients and more of our clients' business. Website registration form completion rates are up 20% this half versus first half '19. Our Net Promoter Score continues to grow and the adoption and usage of the app leads to [will-throw effect], with over 30% of all transfers in the U.S. now booked in the app.

Overall, across North America, we have grown our OpEx investment by around 40% in the last 2 years, the majority of which is revenue-generating expense such as sales and marketing. Our efforts to grow corporate have been strong too across the U.S. and Canada. In addition to our investments in client experience for corporate, we've invested in adding salespeople, improving the training we provide and the sales tools we use to make our salespeople more productive.

In addition to the results you've already seen, our corporate prospect pipeline has grown by 136%, just in the first half, and our conversion program, which measures how quickly we pull-through clients has improved by over 200%. We continue to invest in training, rolling out specific new sales programs, new incentives and have invested in simplifying our corporate onboarding late in the first half, which is already starting to show positive results.

Finally, our team is in strong shape. It's great to welcome Alfred Nader, as our new President of North America. His background is perfect for the next stage of our journey, and his values are a great fit for what we want to be. We're delighted also that our Canadian team have addressed the challenges we faced, and we're seeing much better momentum. And as I mentioned previously, we're continuing to add salespeople because we have developed much stronger and more productive mechanisms for them to be effective.

I'll now hand over to Selena, who will walk you through the financial results in more detail.

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Selena Verth, OFX Group Limited - CFO [2]

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Thank you, Skander. Moving to Slide 11, we have delivered a good result given the difficult trading conditions, resulting in EBITDA of $16.5 million, up 2.3% on the first half of '19. The underlying metrics delivering this result are transactions are up 5.2%, with growth in both the consumer up 0.7% and corporate up 12%. This is offset by ATVs of $21,100, down 9.3% and has resulted in turnover of $11.5 billion, down 5% from the first half of '19. We continue to work on margins within the portfolio, and margins are stable, ex IPS, at 56 basis points. This has driven a positive results in fee and trading income of $65.3 million, up 0.5% on the first half of '19.

Net operating income, which is our fee and trading income less bank fees and partner commissions, is $59.5 million, down 0.5% on the first half of '19, as our costs do not proportionately scale down as ATVs decline. Given the difficult trading conditions, we have been disciplined in our execution, resulting in operating expenses at $43 million, down 1.6% on the first half of '19, allowing us to deliver EBITDA growth of 2.3%. If you refer to our segment reporting note, you will see that international payment solutions or IPS revenue of $2.3 million is down 29%, with the resulting EBITDA of $0.9 million, down 14%. This is a result of an overall decline in the portfolio as our largest partner reduce their wealth management distribution with flows adjusting accordingly. However, we've revised the revenue structure, which has removed the profit share component. So while IPS revenue declined, the EBITDA margin is 40%, up from 33% in the first half of '19.

We continue to have a strong relationship with our major partner and are putting plans in place to rebuild transaction volumes, so it will take a bit of time. IPS remains a strong strategic priority and is EBITDA accretive to the portfolio. This segment will also begin to benefit from transaction flows from the Link agreement in fiscal year '21 and beyond.

Statutory net profit after tax of $8.3 million was down 7.7% on the first half of '19, due to $0.4 million of corporate action costs related to unexpected advisory fees as well as increase of $0.4 million in intangible amortization, in line with our increased spend on intangible assets and $0.3 million increase in our lease asset depreciation.

We continue to have a solid cash balance with $51.5 million cash held for own use. Within this balance, $26.5 million held as collateral for our own regulatory license and liquidity trading lines. We will pay an interim dividend of $0.0235 per share, franked at 70%.

Moving to Slide 12, you will see that we continue to manage our expenses while investing where appropriate. Employee expenses are $26.8 million, up 0.4% on the first half of '19. We have increased our revenue-generating FTEs by 6.1%. Promotional expenses of $7.1 million, down 25.1% from the first half of '19. As we discussed at the full year results, we have been disciplined in our spending and will only bid where we see the volume at an acceptable cost. Despite this big decline in promotional spend, registrations were down just 12%. Meanwhile, the cost per registration is down 14.5%, and the cost per NDC is down 18.4%, reflecting our strong execution.

Technology infrastructure costs of $2.8 million, up 12.8% on the first half of '19. As we guided the full year results, this line has increased as we invest in software-as-a-service initiatives, for example, transaction monitoring.

Occupancy expenses have been restated in line with AASB16. For your ease of analysis, we have completed a full restatement so that each period is on a comparable basis. Please refer to Note 1 in our financial statements, we have outlined the adjustments we made. The impact on the first half of '19 operating expense is a reduction of $1.7 million as these expenses are now recognized as depreciation and interest expense.

We like our growth in North America, up 19%; and the U.S., up 25%. We have seen bad debt increase in the region versus the prior year relating to a small number of transactions. With each incident, we completed retrospective assessment and further enhanced our controls. Despite the increase in bad debts, you will see that segment reporting note that EBITDA for North America is $1.5 million, up 115% on the prior year.

Turning to Slide 13. We continue to invest in the client experience and reliable, scalable systems. For the half, we've invested $4 million of CapEx. As you may remember, we were focused on the consumer client experience in fiscal year '19 and are now turning our attention to the corporate client experience. As a result, global registration completion rates are up 40% versus first half '19 and 90-day clear to deal rates are up 84%. We continue to develop our global currency accounts, with active clients up 79%. With our new pricing engine, our pricing program has been established, and we can now hedge price elasticity at scale. We ran a number of campaigns in the first half of '20, which has resulted in some critical learning and holding our margins stable despite the higher growth rate in the corporate book, which has a lower overall margin than consumer.

We continue to invest in our reliable, scalable systems. And our focus has been the payments engine, transaction monitoring and risk management. We've added an additional currency corridor, a best-in-class money laundering detection capability and continued strong outcomes from our regulatory exams.

Moving to Slide 14. Our balance sheet remains strong. We have no debt, generating strong cash flows and have an overall return on invested capital of 32.3%. AASB16, we have now included the right-of-use assets of $12.9 million and lease liabilities of $16.1 million in our balance sheet and every stated prior periods. If you look at our cash flow from operating activities, we had $16.5 million of underlying EBITDA, generating $7.2 million of cash.

You will note that we have increased our tax installments this half and do not expect this level of tax payments to repeat in the second half of the year. Of the $7.2 million we generated in cash from operating activities, we invested $4 million of this in CapEx, continuing to build our client experience and reliable, scalable systems. We also paid out $8.2 million in a final dividend for fiscal year '19 and lease payments of $1.1 million are now included in financing activities. This has resulted in an overall decrease of $7 million in cash held for own use when including deposits from financial institutions from 31 March '19.

We continue to have a very healthy cash position with $51.5 million cash held for own use. And of these $26.5 million is held at collateral, leaving $25 million of available cash. We are announcing an interim dividend of $0.0235 per share, which is 70% of statutory profit after tax and will be franked at 70%.

I will now hand back to Skander to take us through the fiscal year '20 outlook.

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John Alexander Malcolm, OFX Group Limited - CEO, MD & Director [3]

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Thank you, Selena, for that detailed review.

Now let's turn to Slide '16 and cover our FY '20 outlook. For the second half of FY '20, we will retain our rigorous focus on the 3 foundational enablers and 3 growth drivers that underpin our strategy.

Firstly, our foundational enablers. Our investment and progress in delivering reliable, scalable systems will continue. We will also continue to scale our pricing program and expect to close out our project in delivering a new treasury management platform. The investments we have made and will make in streamlining our corporate onboarding program will continue, and we hope to be able to report even better conversion rates as a result. Our risk management investments continue. And in second half, we expect to create some operating leverage from our investment in new fraud management programs across transaction monitoring and onboarding at scale.

Our people agenda continues. And in addition to continuing to grow our regional teams and our salespeople, we are working hard to ensure their support structures continues to get refined. Better sales operations, simpler and stronger incentive programs and a better global operating model for all teams to be more effective. Our growth investments remain absolutely essential regardless of the market conditions. Our client experience investments will continue to focus on better and easier corporate onboarding, rolling out the CRM program we deployed in consumer to our corporate clients and scaling the pricing programs everywhere to maintain stable net operating income margins, ex IPS.

With our geographic focus, we continue to scale our investment in North America, while striving corporate growth in the U.K. and Australia and New Zealand. In Asia, we will complete our pivot in the second half to set us up for further investment in FY '21 to drive growth.

Finally, our focus on partnerships will continue to broaden our pipeline of enterprise opportunities, while we work to convert existing opportunities. We have made excellent progress in winning new partners such as Payability for our Global Currency Account clients, and we'll continue to pull-through these types of opportunities.

Finally, we're working very hard on making our partnership with Link very successful by being ready for launch towards the end of the second half as well as working towards new opportunities to support them globally.

So in closing, on Slide 17, our teams are working hard to build a more valuable company through growing our base of corporate clients, expanding our presence in key regions and securing further enterprise opportunities. And our core financial commitments remain in place, delivering an annual positive operating leverage on an underlying EBITDA basis and maintaining stable net operating income margins, ex IPS. Our CapEx is expected to be $11 million for the full year, including the investment we are making in our infrastructure to support Link as well as all OFX clients. We remain, despite tough trading, confident in the model, excited by the future and resolute in delivering our commitments.

Thank you for listening. And now let me hand back to Edwin, our facilitator to ask for Q&A.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from the line of Tim Lawson from Macquarie.

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Tim Lawson, Macquarie Research - Division Director of Australian Insurance and Diversified Financial Market Research [2]

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Just a couple. In terms of the CapEx, Skander, you mentioned in there, you announced you have $11 million in FY '20. I think it was around $8 million in the pcp, and you're talking about Link and the general infrastructure investment. Can you talk more about that, what you're doing? What the sort of outlook is maybe ROI? And how much of that is sort of Link-related?

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Selena Verth, OFX Group Limited - CFO [3]

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Yes. So last year, our CapEx investment was $8.9 million. If you look at what we're going for here, the underlying investment is $8.9 million and then Link is $2 million. And we always said that when we announce a partnership, we would tell you exactly how much that CapEx investment was. So when we announced Link, we told everyone that, that was going to be $2 million. Now the Link investment is a wonderful one. We love that partnership. It's got a great return. We're making sure that we've got partnerships that within itself would pay back. Also, some of that and we can use for other things as well. Now in the remainder, it's continuing, and you were seeing in that page that we put there, what we're continuing to focus on. It's really that client experience and reliable, scalable system, which is underneath the remainder of approximately $9 million of the CapEx investment. We really like what that is delivering right now. We're going to continue to invest in those programs. So that's the profile that we have.

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John Alexander Malcolm, OFX Group Limited - CEO, MD & Director [4]

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Maybe just to build on that too, Tim, to Selena's point around those client experience investments, if you look at things like those conversion rates that we've quoted in consumer, they're really driven from the CapEx that we put into things like web and mobile and app. That's what's helped us drive much better conversion rates. Also, if you look at things like pricing, our ability to grow corporate as well as consumer -- sorry, while consumer has been relatively stable means that we've actually been able to hold price overall, they're just direct coming out of things like our investments in the pricing engine. And again, we're certainly confident that things like the investment in transaction monitoring is going to create operating leverage. Because what it does is it basically really minimizes the amount of false positives that you have to deal with, and that's clearly going to generate operating leverage from an OpEx perspective. So those are the types of ROIs and business cases we look at.

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Tim Lawson, Macquarie Research - Division Director of Australian Insurance and Diversified Financial Market Research [5]

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Yes. Just a question on the ATV, it's obviously down despite the continued shift to more corporate customers. From memory, there might have been a large transaction to pcp. But can you just talk more about that decline in ATV?

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Selena Verth, OFX Group Limited - CFO [6]

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Yes. And if you look at it, there was a large transaction in the IPS segment last year. And on Slide 6, we've actually done the average transaction values, what is IPS versus the rest, and you'll see that even if you exclude IPS, average transaction value is actually down across the portfolio. Now what we're seeing is that it's down in consumer, and it's down in corporate. It's actually down further in corporate than consumer. And when we start to ask -- in every region, we start to ask what's going on out there. We're seeing customers trade just as much. So the number of transactions are good, but actually ATVs are down. And when you start to ask what's going on, it seems like customers, for example, corporate customers, there's uncertainty out there. They're not buying as much inventory. And as a result, therefore, the ATVs are down. So yes, there was a large transaction in first half '19. But even when you exclude that, the ATVs are still down across the board.

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John Alexander Malcolm, OFX Group Limited - CEO, MD & Director [7]

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And just again, to build on that, and we've sort of gone back over time, Tim, I haven't seen -- well, certainly, since I've been in the role, we have never seen ATVs at this level, which, again, if they're skewed towards corporate, we're pretty confident that that's to do with economic conditions rather than anything else. And to Selena's point, with each region, we've looked at things like our top 10 corporates, consumers, high-value consumers versus low-value consumers, all of the above, and it's pretty consistent theme around economic uncertainty driving that down. That said, while it can change quite quickly. And even what we've seen over certain weeks is when there's good news economically, we can see sort of return to the mean of ATVs. So we don't expect it to be a long-term trend. It does reflect a pretty difficult set of trading conditions out there at the moment.

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Operator [8]

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Your next question comes from the line of Ian Munro from CCZ Statton Equities.

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Ian Munro, CCZ Equities Pty Limited, Research Division - Senior Analyst [9]

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Just looking at the U.S. market, can you perhaps just give us a sense of -- with the app transactions that you'd mentioned, just the impact that that's having on transaction rates and actual values versus nonapp transactions?

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John Alexander Malcolm, OFX Group Limited - CEO, MD & Director [10]

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Yes. Basically, what we've seen with the app itself is that -- it's really substantially improved pull-through rates in consumer, particularly because what we were saying before was people -- it's very mobile-first in the U.S., and I shouldn't sort of generalize with the U.S., there's kind of West Coast, there's Midwest, there's south and so forth. But if I was to generalize the U.S. is the most at first -- or mobile-first market of any of our markets in the world. So the work that we've done on the app to kind of completely redesign the forms, link bank accounts, allow people to upload documentation and so forth, all digitally has meant that the time it takes for a consumer to actually get in there and apply, be registered and deal has dramatically reduced. And so what that, in turn, has done is it's reduced our cost per registration, our cost per new dealing clients substantially. Obviously, as well, it's going to have an ongoing benefit around our service costs because what we find is that, particularly in the U.S. and in the U.S. consumer, they will go mobile first.

So it's really had a positive effect on the kind of upfront onboarding costs. We think, over time, as well, it will have an effect on our service support costs. And in addition to that, the great thing about the U.S. is that a lot of what we've learned about how to do that and how to test that we can take into other markets around the way we design our app for each market. So overall, we think it's accelerated consumer, particularly acquisition, and we're starting to feel pretty good about what it's going to do in corporate too by some of the things that we've already seen, for example, in our Global Currency Account.

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Ian Munro, CCZ Equities Pty Limited, Research Division - Senior Analyst [11]

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Just on that last point, just the corporate versus consumer performance in the U.S. I know there's some pretty aggressive numbers in the pipeline for corporate. Can you maybe give us a sense of where they're at in absolute terms and how you feel distance to critical mass and it's a point of scale in the U.S. that can really deliver on the potential?

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John Alexander Malcolm, OFX Group Limited - CEO, MD & Director [12]

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Yes. Look, I've said on that about -- that if you look at the segmental results, they're actually already delivering direct cost of EBITDA accretion, which is probably ahead of our own forecast in terms of what the scale point that you talk to. In the past, then, we've kind of benchmarked the U.S. or North America versus, say, Australia and New Zealand, given we're sort of a bit older here. And the U.S. is well ahead of that in terms of its ability to kind of grow that top line and, therefore, cover its costs and start generating genuine operating leverage.

In terms of scale and opportunity, we're still -- I would say, it's very early on in terms of that opportunity, particularly -- it's across consumer and corporate. But certainly, we continue to grow our active clients in both. We're continuing to get terrific margin, terrific acquisition costs, terrific growth, global currency account is very strong in North America. It's only just getting going. Globally, we grew that 29%, I think, in terms of active clients. And bear in mind, that was $1 billion turnover business globally. So we still think there's a long way to go. And again, you take that Payability partnerships in the U.S. that's actually with all of the international clients. And it's -- we've done a soft launch of that, and we're already getting pretty positive early results from that. So really, there's a long way to go with North America, but it's probably ahead of our estimates in terms of generating EBITDA, if that makes sense. Sorry, I said 20-odd. I've meant 70-odd for active clients in Global Currency.

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Ian Munro, CCZ Equities Pty Limited, Research Division - Senior Analyst [13]

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Yes. Yes, understood. Just on the pivot in Asia, can you maybe just elaborate in, look, just the rationale behind that?

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John Alexander Malcolm, OFX Group Limited - CEO, MD & Director [14]

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Yes. So with Asia, we've been growing that pretty fast, and it was largely through Global Currency Account. We set up in Singapore about April last year because we kind of saw a pretty nice opportunity, not just in consumer but in corporate. Southeast Asia, obviously, is very different to Hong Kong, China, and Singapore is a more natural hub to Southeast Asia. So we've sort of put a small team in there. We relocated one of our best private dealers, as we call them, to Hong Kong, who's a Hong Kong native.

What we found very quickly was that previously, in consumer, there was a bit of a miss, that it was a highly competed, very difficult market. HKD to USD is normally very low-margin, tough market. He immediately, along with some marketing support, found that there is a ton of good expat flows at a very reasonable margins. And so we started attracting that, not just in Hong Kong but also in Singapore. Then we appointed Yung Ngo, who's our new APAC regional leader back in April. Yung and I had a couple of trips up to Hong Kong. In fact, Yung is up there right now. Working with the local team, kind of one of the first things that Yung said was, "look, there's really fundamentally 2 different markets. There's the kind of local market and the expat market." And that's true for consumer and corporate and Global Currency Account. And really, what Yung said is his preference is the expat market is huge, and it's untapped, whereas the local market is highly competed, particularly by Chinese indigenous payment companies. And so we really looked at that opportunity and said, "look, that expat, corporate and consumer and GCA market is much more in our strike zone, there's plenty of it. So we're going to start pivoting away from the kind of high volume, low margin, sort of, let's call it, Hong Kong-Chinese." And that's what we started to do and already some really nice wins. As I mentioned, the margins are up. ATVs are up. But what I want to do is build a deeper marketing and sales program into those expat opportunities and Southeast Asian opportunities, which will take us really through the second half in Asia. Does that make sense?

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Ian Munro, CCZ Equities Pty Limited, Research Division - Senior Analyst [15]

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Yes, it does. And just one more, if I can. Just on the enterprise business, look, with the Link, this deal is still in the making and to be delivered towards the end of the next half. Can you give us a sense of what's in the pipeline, enterprise-wise? And how to think of the size and breadth of the engagement versus what you've announced with Link?

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John Alexander Malcolm, OFX Group Limited - CEO, MD & Director [16]

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Yes. So firstly, on Link, as we mentioned in the announcement that, that partnership is with Link Market Services here in Australia. And really it's to serve the clients of Link's investors. So ASX-listed companies in their share registries business. And they have -- those companies have a lot of investors who are offshore. And really, the work we've been doing since the announcement is building that, if you like, sort of onboarding program that will allow us to onboard those investors at scale. The engagement is very strong. The Steering Committee is meeting regularly. The investment is continuing. We're on track for the launch. We're really excited by that one in because when I think about partnerships, everyone's talking about partnerships, but I'm very, very focused on which partners could provide target clients. So I'm less interested in onboarding partners who would be, for example, trying to attract. For lack of a better term, kind of low-value consumers versus -- the great thing about Link is if you think about people who own stock and people who were based offshore, they're probably much more in the OFX sweet spot than, say, other potential partners. So that's on track.

I touched on briefly in my remarks that we're also talking to other parts of the Link world, and they have share registry businesses in other jurisdictions. And I mentioned previously that we were talking to the U.K. and those conversations are underway. The U.K. share registry business is substantially bigger than the Australian share registry business. So obviously, it's our goal to create a really compelling opportunity there as well. And they have share registry businesses in Hong Kong and other places, plus they have employee benefit programs and other opportunities that in due course if we can execute well, we'd certainly want to try and support them with.

Beyond Link, the regional presidents and I sit down every month to go through their pipeline. It's strong. There's some very nice opportunities in every region. What we're seeing is that the type of client that -- so we were focusing on -- we acted very positively to the Link announcement. It's certainly helped give them more confidence that a company like that would actually work with us and has certainly helped us. So look, obviously, I'm not going to comment on commercially sensitive information, but the pipeline is healthy, seems very focused. It's very nice to have the first announcement out there, and obviously, to builds to Selena's point earlier on, can be used potentially for other partners, if their needs are very similar. And that's how we'll play it out over time.

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Operator [17]

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(Operator Instructions) There are no further questions at this time. I would now like to hand the conference back to Skander. Please continue.

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John Alexander Malcolm, OFX Group Limited - CEO, MD & Director [18]

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Look, I'd just like to thank, Edwin. And I'd just like to thank everyone for dialing in. Obviously, we hope to see you soon, and we'll be available for any follow-up questions, if you have them. Thanks very much for taking the time to dial in.