OFX Group Limited (OFX) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the OFX Group Limited FY '24 Full Year Results Call. [Operator Instructions] I would now like to hand the conference over to Mr. Skander Malcolm, CEO and Managing Director. Please go ahead.

Thank you, Cameron, and thank you, everyone, for joining the call. As Cameron mentioned, I'm joined by Selena Verth, our Chief Financial Officer; and Matt Gregorowski, who leads our Investor Relations program with Morrow Sodali. Selena and I will take you through the pages and then there'll be some time for Q&A. The presentation will cover 4 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 medium-term outlook. Let's move to Slide 4 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 Paytron acquisition. It was a year that illustrated both the challenges and strength 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 year up by the 20%, a healthy signal for future revenue growth as B2B clients tend to grow revenue in year 2 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 realized through the Firma integration has been our underlying core -- sorry, our underlying operating costs were up 7.4% delivering EBITDA growth of 3.4%. If we exclude the impact of Paytron, underlying operating costs were up just over 5% and EBITDA up 8.2%. So excluding Paytron, we generated operating leverage, which augers well for fiscal year '25. The cash generation and the balance sheet quality continues to be a source of real strength for OFX and provides us with growth options. Moving to Slide 5, the second aspect of our strategic business to generate global growth has also well and truly taken effect with around 2/3 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 EMEA, which last year was up 16% across all segments and 26% of our 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 generated 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 5 shows, we're seeing that diversity and especially that growth in EMEA. I'll talk later about the subregions and specifically the largest contributor to growth and returns, our corporate segment in those subregions. 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 6, I'll share more detail on our main segment performance and their drivers, starting with B2B. B2B is our main focus and represents 2/3 of our revenue, which is largely recurring in nature. So it's good to note that we've delivered 27.6% growth on a 3-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 subregions for the Corporate segment; and secondly, the decline in revenue from our OLS sector. I'll unpack what happened in the Corporate segment shortly, but in OLS, when we acquired Paytron, we decided to deprioritize product and platform development road map on our existing platform as it will be delivered through our new client class. Further, we moved our leader of the OLS segment to a new role, leading the Paytron integration, which naturally impacted momentum. In future, a new client platform will provide enhanced products and services or our OLS clients. And we will assume management of that segment within our Corporate segment and as such, reported within corporate in our financial reporting going forward. That said, we feel as enthusiastic as ever about this group appliance 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 7, we see momentum building in our corporate segment with 3 of the 5 largest subregions 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 U.S. 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 in revenue was 1.1%. Whilst fiscal year '24 growth was below the long-term CAGR, new corporate revenue growth was over 20%, and we continue to see improvements in our onboarding of new clients. The launch of our new client platform to all new OFX and Paytron 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 U.S. 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. ATV dipped back sharply in the 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 3 additional trading days in fiscal year '25, but revenue growth is still up even adjusting for this. The integration of Firma in the fourth quarter was a very big asset in Canada that is complete now and the teams are performing well. Elsewhere, corporate growth has been good, with the subregions of the U.K. and Europe being our standards, delivering just under 19% and over 140% growth, respectively. Our teams in EMEA are well organized, clear about their target line, 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 U.S. 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 8. It's wonderful to see the revenue growth at over 32% and a 3-year revenue CAGR of over 20%, given the investment and hard work our teams have put in. We have learned a great deal, particularly how to win and activate smaller clients, and it's terrific to see traction building, especially amongst the more recent clients. The pivot to focus on smaller opportunities than to activate them quickly is working. We've seen strong growth from our established clients too. The pipeline is healthy with 10 prospects added during the year, taking the total to 77 in the pipeline, and we're delighted to have 3 new enterprise clients in North America with activation underway. As we've 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're seeing consumer that volatility has been lower than in play, 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 period. Actually, as we took all our marketing spend and redirected 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 3-year CAGR basis. So in all, good execution and some momentum in key areas that point to a stronger fiscal year '25. Now let me hand over to Selena to walk us through the financials in more detail.

Thank you, Skander. 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 15.6%, while APAC and North America had softer growth of 0.3% and negative 1.9%, respectively, driven by Australia and Canada, where we were impacted by strong U.S. dollar, as Skander just 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 a $3.7 million escrow release, which has offset the lower North American fees and trading income. These items, along with pricing increases have driven the higher NOI margin up 5 basis points to 59 basis points. Underlying EBITDA was $64.6 million, up 3.4% and excluding Paytron, up 8.2%. This has been driven by a stronger second half underlying EBITDA of $32.8 million, higher than the one -- first half '24 at $31.89 million, which also included the $3.7 million escrow amount. Second half of '24 underlying EBITDA was up 3% on the first half of '24 and 8.7% on the second half of '23. We'll 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 Paytron. This has been driven by our productivity programs and a successful integration of Firma, which we will walk through later. And as Skander mentioned, excluding Paytron, 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 non-taxable item, further reducing the tax rate. We expect the future tax rate to be 21% to 24%, that is dependent on R&D expense. Statutory net profit after tax was $31.3 million, down 0.4%. This does include $3.4 million of one-off pretax costs relating to the Firma integration of Paytron transaction costs offset by a continued consideration revaluation. We have a strong balance sheet and our net cash held down to [ $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 margin of 60 basis points. We've experienced higher same currency transactions and it is pleasing to see extend currency margins of 71 basis points, up from 64 basis points at the end of fiscal year '23. You can see from the margin walk, we increased pricing in the book by 2 basis points, watch the market closely and have an excellent pricing adjustment we can use to test price elasticity and if there is more elasticity for the service that we offer, we will come on a higher price. We've worked hard to ensure the cash balances we generate interest income with the rising interest rates. We generated $8.7 million of interest income, up from $3.4 million in fiscal year '23 and the second half of '24, $4.4 million is up 3.6% on the first half of '24. Second half of '24 is a normal run rate as it includes the last rate rise at a very beginning of the half. This will grow in the client funds grow and will reduce if interest rates decline, which are looking most likely fiscal year '25. It is really pleasing to see that North America margins have net growth of 2 basis points throughout the year. At the first half of '24, we were down 1 basis points, even including the extra amount and the team has done a lot of work in the second half of '24 to manage our pricing list 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 changes for our non-FX products that will be released at the Paytron platform. Moving to Slide 13, our underlying operating expenses were $162.9 million. And as we highlighted, the half year results, the growth has slowed. Overall, underlying operating expenses were up 7.4%. But when adjusted for Paytron, which was not in the fiscal year '23 expenses, expense growth is 5.1%. Employee expenses are up 7.1% with 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 successfully completed the same integration. This has resulted in a net FTE reduction of 20 year-over-year with the year-end FTE at 690 employees. Promotional expenses have increased over fiscal year '24 -- the second half of '24 of $8.6 million lower than the first half of '24 of 9.8%. We're encouraged by the investments and have seen our new corporate revenue up 26.5%. Our investment in the information technology expenses grew up $2.2 million fiscal year '24 due to running 2 platforms as we migrated Firma. We will start to see some of these expenses to reduce in fiscal year '25 as the migration is complete. We also continue to invest in cyber security and our data and privacy structure. We are really pleased to announce we've obtained the ISO 27001 certification for our Australian business, a great achievement and testament to our investments space. Bad and doubtful debts are higher than we want them to be at $3.7 million. We did experienced 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 a similar situation and implementing further control to improve other factors. We continue to remain vigilant and investing in this space and expect bad debt 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 2 years ago, we announced the acquisition of Firma and committed to a 2-year integration timeline with synergies of $5 million plus and a 30% EPS accretion by year 2. What we have achieved is our debt, both Skander and I have been involved in many integrations in the past, and we could not be prouder of the team. They delivered the integration in 2 years on time, and they delivered a true integration not only the 2 platforms into 1 but all other functional systems over 90 vendors and 7 offices. This 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 fiscal year '22. So an outstanding outcome for shareholders. This is a great example of scale and synergies that can be achieved when combining several businesses. Moving to Slide 15. Our intangible investment in fiscal year '24 with $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've also had the payment engine ready to connect Paytron 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 plan, delivering strong corporate new revenue up 26.5%. Risk, data and security are critical areas for investment. The teams continue to invest in our cyber protection, data privacy and [indiscernible]. While the bad debts were higher than what we wanted, we believe they are lower than the industry best fit. Also a huge milestone for the business was achieving the ISO 27001 certification, which provides all our kinds of partners additional reassurance around our cyber defenses. The area we are investing more over time to product, we're excited to launch the Paytron platform for Australia corporate clients early in fiscal year '25, provide more products solve business needs while delivering non-FX revenue stream. As we guided at the half year, we expect the overall investment of the work to reduce to approximately $18 million in fiscal year '25, which will be less than [ 8% ]. And some of our core infrastructure work is now complete. We are shifting the investment so 40% is focused on -- within products to our clients. [indiscernible] corporate cards, global expense management, accounts payable workflow 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 of $88 million, which is both the cash held for own uses 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 fiscal year '23. Reduction in collateral and bank guarantees is a combination of lower volatility, but also integration allowed us to combine our Firma trading line, bringing up over $6 million of cash. This resulted in our net available cash flow of $68.2 million, being up $0.8 million or 1.2% on fiscal year '23. We saw our cash flows from operating activities to generate a high cash conversion rate $64.6 million underlying EBITDA, generating $60.6 million of net cash flow from operating activities. We funded the Firma acquisition using a $100 million 5-year auto-detect facility. We've paid down $24 million as fiscal year '24 with our loan balance now at $44 million. Our net debt is 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 '26 subject to no other value-creation growth opportunities emerging which require funding. We announced our share buyback program at fiscal year '23 [indiscernible]. 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 8.6 million shares. Turning to Slide 17, we will look at this in the detail. Our capital allocation principles are to drive sustainable growth by returning to shareholders in the most efficient form. We generate a lot of cash and then deploy that in 4 ways. A healthy cash generation allowed us to leverage our balance sheet to purchase assets, i.e., M&A and drive EPS accretion. Firma is a great example of this. We levered up to 2x EBITDA took on debt of the acquisition and are on track to pay this out by the end of fiscal year '26 as mentioned. We continue to invest in our platform and product capability. As we have already discussed, we invested $19.4 million in fiscal year '24 and expected to be more like $18 million in fiscal year '25. We continue to look at inorganic ways to add products or scale to our business. Last year, Paytron was a great example of this. It is delivering product and platform enhancements that were already on our road map. Our investment in [indiscernible] and investment are priced by users access to the suspension product road map and thought leadership. We are always looking for value-accretive opportunities, and we have a combination of cash, debt or where it makes sense, equity. As we have already mentioned, our on-market share buyback program began to -- is a flexible return of capital to shareholders, we are renewing the buyback program for fiscal year '25 and it will run through another 12 months. Skander will now take you through the strategy and our fiscal year '25 outlook.

Thank you, Selena, for that excellent description of our financial results and what drove. 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 business by solving to the pain points that experienced in and around pain, not just pain. 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 [indiscernible] growth and returns. Our ideal client profile or ICP is a small or midsized business is exposed to cross-border flows and to generate FX turnover of between $1 million and $10 million per annum. Of course, we'll support clients outside of those parameters, too, but 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 a 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 derisk their flows through simple risk products. As we deliver that, we expect to grow revenue from non-FX faster than FX revenue, partially because non-FX revenues 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 the clients and prospects want and why? What we were seeing and hearing from our clients was the desire to develop more products to complement our outstanding FX offering. They told us that, for example, cards would make their corporate expense management payments easier as more SaaS standard is billed in U.S. dollars, and it would also simplify their payments as well as reduce their costs. We were building these capabilities when we acquired Paytron. The combination has been outstanding. They built their platform designing the solutions for the pain points and the nonpayment jobs first and then the payment. So as we set about to integrate, we had very complementary skills and products. Paytron has developed a very sleek and easy-to-use customer user interface, digital wallet and linked it to cards and virtual accounts. We had a wallet that we were stronger in the non-card FX payments. We did just under $40 billion in turnover last year, and with that only 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, our competitive price and ease of use came very naturally to us. But where the opportunity really arose 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. Nationally, we have both done integrations with accounting software with the new platform with its detailed 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 derisk their cross-border flows differentiates us from most of the recent large competitors and will be at the heart of saving our clients a great deal of money over time. Moving to Slide 21. I'm absolutely delighted to share that our new client platform will be live for all Paytron 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 Paytron has built and ensuring it meets the scaling requirements we have developed in OFX. It will be branded OFX and allow clients to do the usual FX payments but in addition, access to 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 Paytron has 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 Paytron client. In fact, this client used to be an OFX client. They liked our FX and our service, but we couldn't supply cards or the digital wallet they wanted, so they went to a competitor, who happened to be Paytron. The revenue they generate for Paytron reflects the extra services and products, in this case, they generate more than 2.5x the revenue from non-FX as from FX. And as you know, a typical OFX client generates 90% of our revenue spot FX. So this represents a huge opportunity. To illustrate this, we've shown you 2 major competitors on the right-hand side and how they generate revenues from FX versus non-FX. They are both public companies, and the first competitor offers digital wallets, targets primarily consumer but also serve the B2B segment supporting micro businesses with its consumer product. They generate just over 40% of their revenues 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 ICPs. They offer the same products we see through Paytron, but there are less streamlined into small and midsized business workplace. They're generating just over 55% of the revenue from non-FX, and that portion of their revenue is growing at 4x their FX revenue. And the third example is Paytron itself, which is a good example of why targeting nonpayment 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 3 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 3 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 will 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 accretive. The 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 3-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 average, especially for our 2 largest subregions, Canada and Australia in our Corporate segment, driven by the factors we've discussed. To put 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 from fiscal year '20 through fiscal year '22 at 14.6%. We've already seen growth improve through April. Canada, for example, was up 25% versus 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 3 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 Paytron 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 tailwind 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 energized us hugely. Thank you for your attention, and I will now pass back to Cameron to handle the Q&A.

[Operator Instructions] Your first question today comes from Cameron Halkett at Wilsons Advisory.

Great results. Well done. Let's start with the first one. For FY '24, its implied the EBITDA is a bit above $70 million. Correct me if I'm wrong, Selena, but just wondering how we think about Paytron within that and beyond given it has been a profitability drag this year?

Yes. So the Paytron, the lovely thing is we love the platform, and hopefully, you've got some nice images that kind of start to see what it will look like as we start to put new corporate customers onto that platform. So obviously, all new revenue will go into that platform as well, but we are managing the business as one. So we won't separate out the cost of the Paytron platform going forward because truly is part of what we do. We're really excited about the revenue streams that we'll 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.

Yes. That's helpful. And then the last one is sort of peers of yours make moves again on pricing in the last couple of weeks. They may very well be one of the peers listed on one of the final slides there that Skander has 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 FX in '25 to look at pricing increases as well?

Yes. I mean, as you said, Cam, the tailwind on margin is healthy, and the actions we took in '24, as Selena touched on, give us a good exit run rate. And we see -- we continue to see competitors looking to expand margin where they can. The other thing I have to say can really be different in the fiscal year '24 is the combination of margin and onboarding excellence means that we -- that's what's really driving that growth in corporate new revenue because the margin differential is kind of disappearing. So prospects look at it and say, well, consumer price and FX has gotten significantly better at pulling through those prospects. Obviously, the back book, we have pricing algorithms that look by 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 material plan 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.

[Operator Instructions] Your next question comes from Lafitani Sotiriou from MST Financial.

Another follow-up question on Paytron. So can I clarify, so you'll be live for new clients in Australia in this quarter. Can you talk us through what the road map is to roll it out to other jurisdictions and also to address the backlog?

Yes. So thanks, Laf. So what's happening is we have effectively taken a new client platform, which was what Paytron has developed, and we are adding effectively the OFX middle office services and any product gaps that Paytron hadn't developed. What that means is the Paytron brand will be replaced by the OFX brand on that platform. So all prospects will be onboarded onto an OFX branded side. The Paytron clients have already been notified and have already signed up to the fact that it's now going to be OFX and not Paytron. And then to your question, what we're doing is all our marketing in relation to our corporate prospects, we'll point those prospects to the new client platform. So all new Australian corporates will go onto that new client platform, and that will be done this quarter. What we're doing at the same time, as I mentioned, is looking at all the products and services that the OFX platform had traditionally provided voting all the different payments that we operate, all the service delivery that we operate, all the fraud tools, all those types of things. 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 for 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. 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 Paytron, we had set out a road map 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.

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 on Paytron being rolled out, given that there's a -- as you've stated, a material revenue increase potential just by cross-sell opportunity. Or is that how we should be thinking about? Is that why we've got to step up from 10% to 15%?

Yes. 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. So as a proportion of all that starts to become a bigger factor once we have set up the platform -- the new client platform, we can get back to growth on OLS as well, that will be a factor. So those 3 are the biggest driving factors in getting us from 10% to 15%. And obviously, throughout this year, we'll be picking up experience on moving 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.

Your next question comes from Owen Humphries at Canaccord.

Well done on the results. Just an execution here. I just wanted to just dive into the NOI guidance to next year. Just looking at the NOI trends on an underlying basis over the last kind of 4 halfs and looking to FY '25, 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 try to lay it out to you guys on that Slide 24 of the driver there. But if you look at our portfolio, even if you have a 1 basis point change in margin, that's over $3 million incremental revenue that you generate. We really like what the teams are doing. We always tread cautiously though, in particular, the work in North America is in the second half, it's absolutely excellent. So obviously, margins can generate that extra revenue. Obviously, new revenue, we're gaining some really nice new revenue from our corporate business. We're also continuing to work on the funnel and make sure we pull as much 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 as to how big that can be. And then obviously, you've got -- last year, we had -- at least twice in the year for best 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 term of the $7 million, could you just talk about -- I know there's like kind of more of a run rate exiting FY '24. Can you just talk about how much was realized or how much was the tailwind into FY '25 from the synergy?

Yes. So the $7 million, we originally said that $2 million was revenue and $3 million was cost. I'll be honest, the cost has completely exceed our expectations, which is excellent, and the revenue is still to come. There is some growth opportunity there, but it's still to come in fiscal year '25 and beyond. And really for that is because of the access to U.S. licenses. It's only once we're fully migrated, people have access to that can generate that additional revenue synergy. If you look at the expense synergies, 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 maybe to exist. So I'd say that, that run rate into fiscal year '25 is even larger, even though you already see the 20 -- 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 in fiscal year '24 and the vendors are going to pick up and become even more 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 rate -- in fiscal year '24 as it fully run rate fiscal year '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 cost of controllable?

Well, we give you an envelope to work within, and that's what we work within as well. 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 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 we see a huge opportunity or growth opportunity out there, we'll go after it. But you kind of have it in there or thereabouts way.

Your next question comes from James Bisinella from Unified Capital Partners.

Congratulations on a strong result and very well set out strategy. So just one for me. I guess, just looking at your average cost per head at that circa 160,000 annually, just wondering if there's potential sort of cost out over time as you grow by outsourcing or focusing on lower-cost geographies?

Yes. It's one of those strategies that you're always looking at. We do -- there are certain roles that we do have in lower-cost geographies at the moment that is 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. Leadership in there to be able to manage the offshore experience. So there is keeping 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. But is something that we're always looking at.

James, I'll just maybe build on what Selena said that. 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 past. 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. I mean a lot of these things are actually better with software, and there's been a real drive to that in the last couple of years. And those intangible investments that Selena 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, sort of 18 months, our technology team has more and more built their own quality program, very, very skilled engineers, which are just cheaper than some of the expensive contractors. And candidly, 3 or 4 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 FX and technologies. You are now shifting to a lot more product deployment, we make payroll, we generate earnings. So the value problem in technology, which is a big piece of our cost is significantly better than it was 2 or 3 years ago. So everything that Selena said plus or digital automation.

Your next question is a follow-up question from Cameron Halkett at Wilsons Advisory.

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, [ can ] Selena rather than perhaps a volume-based business can OFX begin to move more to a more recurring subscription-type model?

Yes. 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 will take a little bit of time to get that count. And that's why we've kind of said, look at it's a couple of years away. But those examples that we shared with the competitors, that is real. That is what they're actually generating. That's the public company. So we are certainly confident in high conviction we can get there.

Yes. Understood. And if I just look at the FX volatility you provided on the Aussie dollar on Slide 27. Second half '24 was obviously quite muted. And I think Q4, in particular, was really quite. How should we think about FY '25 from an FX vol 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 FY '25?

Yes. 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 of things like elections or geopolitical events. And we know, for example, you've got the U.S. election. We're probably going to get our Australian election. We're possibly going to get a U.K. 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 looking back at some of the numbers, some of the things that I've heard is that the active client decline consumer means just not going to benefit. But 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've lost about 10% of the clients that 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 are those use cases. And we're finding over and over again that on the larger value use cases clients keep coming back to us, things like the recent -- Cam, share sale. We were well subscribed into that. So we're feeling if that volatility happens, as we've highlighted on the tailwinds, that could be a tailwind. Even our currency assumptions are not in the sort of extreme case in our base case.

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

Thank you, Cameron. Look, thanks, everyone, for dialing in. Obviously, over the next week or 2, I hope to be able to catch up with you [ individually ]. But I'd just leave you with at my concluding remarks, which was that fiscal year '24, we learned a lot. We were able to pull the levers. We emerge stronger than when we entered and we're particularly excited about 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.

Thank you. That does conclude the call for today. You may now disconnect your lines.