PEXA Group Limited (PXA) Earnings Call Transcript & Summary

Good day, and welcome to the PEXA Group Limited full year results announcement. [Operator Instructions] And finally, I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Lisa Newns-Smith, Head of Investor Relations to begin the conference. Lisa, over to you.

Thank you. Good morning, and thank you for joining us for PEXA's 2026 Full Year Results Briefing. I'm joined today by PEXA's CEO and Group Managing Director, Russell Cohen; and Interim CFO, Liz Worrell, who will discuss the group's performance for financial year ended 30th of June 2026. At the end of the presentation, we'll open up to questions. Before we begin, we acknowledge the traditional custodians of the land on which we meet today and pay our respects to elders past and present. I'll now hand over to Russell.

Good morning, everyone, and thank you for joining us today as we share our full year results. As usual, I'll start by taking you through our FY '26 highlights. Following that, I'll hand over to Liz, who will walk you through our financial results for the year in more detail. We'll wrap up by discussing our FY '27 strategy and key focus points and providing you with our FY '27 guidance. At the end of our presentation, we'll be very happy to take any questions. Turning now to Page 4. I'm incredibly proud of our team for the performance we have delivered this financial year. We implemented significant cost efficiency measures in September last year in Australia, which together with record Australian transaction volumes in drove strong operating leverage and EBITDA margin expansion. In the U.K., we were pleased to deliver NatWest remortgage implementation 3 months ahead of schedule. Following go live in late March of this year, NatWest is fully functional on the PEXA U.K. platform. As most of you are aware, the impact of our Australian regulatory environment was mixed this year. In March, ARNECC decided to conclude the interoperability program. And on the same day, IPART released its proposed pricing methodology as part of its review of PEXA's service fees. Following this, in July 2026, IPART released its draft report, and I'll go into this in more detail shortly. Lastly, we executed well against our strategic priorities by focusing on our core business and customer groups. We completed the strategic review of our Digital Solutions segment and have now substantially exited the portfolio. We launched our AML solution, PEXA Clear to help real estate agents and conveyances meet the new AML/CTF requirements, which commenced in July 2026. We're also in the final stages of preparations for the launch of a pilot in New Zealand, which will commence later this calendar year. Moving on now to our financial snapshot on Page 5. The results on this reflect the results from continuing operations. Financial year '26 was a strong year for PEXA, with group revenue exceeding $400 million for the first time up 7% on FY '25. Our EBITDA increased by 12%, and our EBITDA margin expanded to 37.3%, reflecting strong operating leverage as well as savings from our cost efficiency programs and continued cost discipline. Our net profit after tax adjusted for acquired amortization increased 35%, excluding significant and nonrecurring items. Statutory NPAT from continuing operations returned to a profit of 100 -- sorry, of $19.2 million compared with a loss of $65.6 million in FY '25. The Australian exchange continued to demonstrate excellent cash generation with free cash flow up 39%. Overall, these results demonstrate strong underlying earnings growth and the continued improvement in the quality of our financial performance and execution. Turning to Page 6. I'll now take you through the performance of each of our businesses, starting with Australia. FY '26 was a strong year for the business, with revenue growth supported by record transaction volumes, particularly in December. The second half volumes remained relatively resilient. We saw changes in market sentiment impacting volumes in July 2026, which Liz will come back to later in the presentation. Operationally, we now serve customers in every state and territory in Australia. We launched remortgages in the Northern Territory in August 2025 and continue to build traction in Tasmania. We're also pleased to see digitization advance in Tasmania with the removal of the paper title requirement from the first of September 2026, and we are grateful to the land registry and other industry stakeholders who have collaborated to bring e-conveyancing to the state. We also continue to invest in Australia with $35 million in CapEx directed towards strengthening platform security, reliability and resilience, enhancing our customers' experience as well as developing PEXA Clear. Turning to Page 7. As most of you would know, PEXA operates in a highly regulated environment. We are required to meet stringent service standards and maintain a comprehensive compliance regime of consumer protections most notably our regulated exchange pricing, which has not increased by more than CPI since 2014. Financial year '26 was a year of significant regulatory activity and scrutiny. We participated in federal and state inquiries into e-conveyancing, which enabled us and other industry participants to share our view on significant industry issues. One significant development during the year was the conclusion of the interoperability program. Following the release in December of 2 independent reports commissioned by ARNECC, they decided not to proceed with the interoperability program as it was originally conceived. On the same day, that decision was announced, IPART released its proposed methodology for its regular review of PEXA's exchange service fees. In July, IPART released its draft report recommending a 20% reduction in our regulated revenue from FY '28 followed by CPI increases thereafter. As I said earlier, we strongly disagree with both the methodology and a number of the inputs IPART has used to arrive at their recommendation. So let's turn to the next slide and give you some additional color on why we believe substantial changes are warranted to IPART's draft approach. The charts on this page come directly from our submission to Part in their response to their draft report. To our own -- to support our own submission, we commissioned independent analysis from RBB economics and 4 leading academics. You can read all of these materials on our Investor Relations website. Starting with Chart 1. On the top left, we share 8 alternative approaches to assessing Pax's initial asset base, this asset base is the primary driver of the proposed revenue reduction of 20%. Starting from the top of this chart, we have 3 views from expert economists. We also have the PEXA 2019 trade sale price rolled forward to adjust for inflation. We just show the PEXA asset base consistent with how the tax office recognized as the asset base. We show an extension of IPART's own 2019 review of our prices. We show PEXA's asset-based value using the original investor risk premium. And lastly, we showed PEXA's view, our calculation of the initial asset base with a series of what we believe are more appropriate inputs. Looking at this chart, 2 things stand out. First, the outcome under a building block methodology is highly dependent on the assumptions and inputs used. Relatively small changes in those inputs can have a very significant impact on the resulting asset base. such as the early rate of return, the useful asset lives and the year of commencement of depreciation. Second, each 1 of the 8 alternative approach produces an initial asset base materially above IPART's draft calculation. These divergences are significant and in our view, needs to be reconciled for such a substantial change to our pricing is made. Chart 2 helps explain why we believe the methodology itself is a poor fit for PEXA. PEXA has a different mix of capital and operating expenditure compared to a traditional physical infrastructure business. As you can see from the table, a traditional physical infrastructure business spends between 49% and 69% of its total expenditure on capital. Conversely, only 17% of PEXA's 2025 total expenditure was capital. This would result in PEXA realizing a significantly lower return on its total expenditure throughout the life of the asset compared to a physical asset. If IPART ultimately determines that a building block model should be retained, we have identified a number of material issues with the inputs it is used. As Chart 3 demonstrates, correcting those inputs would increase PEXA's initial asset base to between approximately 1.6 and 3.5x IPART's draft assessment. Chart 4 provides another useful perspective. It compares the EBIT margins of the PEXA exchange with a range of comparable businesses. This chart shows that PEXA's EBIT margins are comparable and in many cases, lower than other familiar platform businesses in Australia. More importantly, we need to consider what this methodology means over the longer term. Our submission to IPART includes a hypothetical cash flow scenario using IPART's methodology and assumptions. If that framework were maintained beyond the current regulatory period, with all other factors held constant and no management intervention, the modeling shows PEXA becoming cash flow negative within the next decade. Clearly, that cannot be a sustainable, long-term regulatory outcome, and we don't believe this is what IPART intended. PEXA Exchange has designated national critical infrastructure in Australia and requires continued investment to remain secure, resilient and current. A significant fee reduction could compromise this critical Australian asset. We do not believe IPART intends to create an outcome that compromises the security and resiliency of conveyancing. We therefore believe there is a strong case for IPART to reconsider both the methodology and its key inputs ahead of the final report. Turning now to Page 9. Let's focus on PEXA Clear. This is a natural extension of our capabilities in Australia and a good example of the growth opportunities available to us outside the regulated exchange. PEXA Clear is our end-to-end AML/CTF compliance solution developed to help real estate agents, conveyances and legal practitioners meet the new obligations that commenced on the first of July 2026. We've deliberately kept the pricing model simple and transparent with no subscription fees or ongoing commitment. Customers pay only when they use the service. This pay-as-you-go model lowers the barrier to adoption, particularly for smaller real estate agencies and conveyancing practices and allows customers to scale their use of PEXA Clear in line with their transaction volumes. While it is still early days, we've been encouraged by the strong interest in PEXA Clear from real estate agents, which is a new customer segment for PEXA in Australia. We expect revenue growth in FY '27 to be modest as we build adoption and continue to develop the product. Over time, we believe PEXA Clear represents an attractive opportunity to solve a genuine customer need and extend our role across the broader property transaction ecosystem. Turning to Page 10. We'll move on to our International segment, which currently is represented by our U.K. business. As I mentioned earlier, we made important progress with NatWest during the year, delivering remortgage capability ahead of schedule and successfully scaling volumes following launch. I want to focus here on what this progress means for the broader U.K. opportunity. The successful NatWest implementation has demonstrated our platform operating successfully with a major U.K. lender and provided a proof point as we engage with other lenders and conveyances. At the same time, we're seeing growing momentum across the government and industry to improve the U.K. home buying and selling process. That reform agenda is increasing the focus among lenders on modernizing transaction processes and strengthening the case for PEXA's proposition. Customer satisfaction has been high, providing further validation of the platform as we focus on driving broad industry adoption. While we would have liked lender adoption of our U.K. platform to progress more quickly, we have established some important foundations. The technology is built and operational, NatWest is live, and we have received positive feedback from customers using the platform. With refreshed U.K. leadership, we are now adjusting our approach to place greater emphasis on our technology strength and execution quality. This includes working more closely with lenders and conveyances to identify and remove practical barriers to adoption and using our expertise to support the changes occurring across the U.K. property market as government and industry work together to improve the home buying and selling process. Turning now to Page 10. We've spoken previously with you about the measured exploration of New Zealand as a potential growth opportunity. We've also been clear with shareholders about the criteria we will apply to any new market entry. This entry should be capital light. It should be derisked through local partnerships wherever possible, and supported by a regulatory environment conducive to digitization. New Zealand meets those criteria, and we are now in the final stages of preparing for a phased pilot. Phase 1 will focus on the purchases bank and solicitor. During the pilot, we'll test a defined set of AI-enabled capabilities, including simplifying document review, preparing and executing electronic signatures and automating communications throughout the workflow. This initial phase does not include lodgment or financial settlement. However, we have formulated the high-level solutions and partnerships should we progress past our pilot. We have deliberately structured the pilot this way to test the proposition and validate customer and industry demand before committing significant capital. We expect to be in a position to update the market on our progress at our first half 2017 results in February. I will now hand over to Liz for a review of our financial results.

Thanks, Russell. We'll start on Page 13 with our core operating results. Consistent with the first half, in discussing these results, we will exclude discontinued operations and significant items, which are detailed on the following page. Unless otherwise stated, all comparisons are gained in FY '25. Group revenue grew by 7% in the year, with growth across both Australia and international. As we discussed at the half year results, our ongoing productivity and efficiency initiatives have continued to drive strong cost discipline. This enabled the group to continue investing in our international business for growth, while limiting group expense growth to just 4%. Pleasingly, this resulted in group EBITDA of $152 million for the year, up 12% with EBITDA margin expanding almost 2 percentage points to 37.3%. This flow through to a core net profit after tax of $26.3 million, up from $9.2 million in FY '25, representing an increase of 186%. Now turning to Page 14, we show our reconciliations of our core to statutory results. As expected, significant items in FY '26 were well below prior periods contained to $9.7 million driven by redundancy and restructuring costs following our operating model changes in Australia. Importantly, the operating model changes delivered more than $10 million in savings to the group in FY '26. Net finance expenses were lower this year due to lower interest rates combined with $92.4 million in debt repayments during the period. On core operating tax on core operations increased $3.7 million to $27.3 million in FY '26. As a result, higher taxable earnings from the strong performance as a result of the higher taxable earnings from the strong performance of our Australian business. Discontinued operations from our Digital Solutions segment made a loss after tax of $35.1 million for the year, largely as a result of impairments taken against these assets. Pleasingly, in Australia, we announced the sale of the last of these assets in August with sale completion expected before the end of the calendar year. Next, I'll take you through the financial highlights, starting on Page 15 with Australia revenue and transaction volumes. Revenue growth of 8% in our Australian business segment was driven by record transaction volumes in the first half of the year with volumes remaining relatively resilient in the second half. We saw our overall market penetration stayed stable at 90% across the year, with small gains due to growth in Tasmania and Northern Territory, offset by lower penetration in other products. Lastly, we also put through our regulator approved price increase of 2.4% from first of July 2025. As I touched on earlier, while we did see transaction growth remained relatively stable in the second half of the year, but let me unpack that further for you on the next slide. We thought given the significant amount of press about the downturn in the Australian property market, we share more about the drivers of PEXA's market volumes. Recently, we've seen the big 4 banks in Australia, call out declines in mortgage application activity of between 12% and 20%, and in the exchange for the month of July '26, we saw transfer volumes fall 15% versus July '25, broadly consistent with what the banks are seeing. Historically, property transaction volumes are driven by a combination of macroeconomic drivers, including interest rates, and adult population growth, combined with sentiment drivers such as house prices and growth in the ASX Index. In the first half of the year, a combination of lower interest rates, rising house prices and first home buyer policy support helped drive record volumes in the exchange. In the second half, we saw this growth moderate as interest rates rose, that as you can see from our monthly year-over-year volume growth in the appendix on Slide 32. It wasn't until July '26 that we saw a significant shift in momentum with a 15% drop in transfer volumes. Consistent with this, we do expect to see a double-digit fall in transfer transaction volumes in FY '27, driven by the elevated interest rate environment impacting affordability. Negative consumer sentiment as how prices fall and combined with the as-yet unknown impact from the changes to negative gearing and capital gains tax. We believe these tax changes will incentivize some investors to hold properties for longer, reducing the series and the volume of transfers. The unknown years, of course, whether this will be a short to medium-term impact of our structural shift. While investors may hold for the short to medium term, for many of the reasons to sell such as freeing up capital and retirement will remain. What we do know is that the annualized property transaction growth rate over the last 10 years has been about 2.4%, and over the longer term, we'd expect the market to revert to this growth rate with the unknown variable being potential structural shift from the tax change. Now we'll turn to international revenue and volume on Page 17. Looking at international revenue. I do want to call out, excluding FX and the reduction in search revenue following the cessation of a low-margin contract, which was largely offsetting cost of sales. International revenue grew by 12.2%. This was reflected in strong margin growth, which increased by 15% for the year. This growth was as a result of price increases in smooth combined with stronger market volumes in the first half, which slowed in the second half, impacted by affordability and U.K. consumer confidence. As a result, sale and purchase volumes grew by just 1% in the second half versus second half '25, significantly lower than the 15% year-over-year growth seen in the first half. Conversely, remortgage volumes continued to recover, up 16% in the second half '26 versus second half '25, a rough result of an increase in fixed rate mortgages maturing in 2026. Moving on to Slide 18, we'll take a look at our costs. Group operating costs remained well controlled, growing just 4%, well below group revenue of 7%. As we've already mentioned, our cost efficiency and productivity programs remained a key focus during the year. Our operating model changes early in the period delivered more than $10 million in savings during the year. These savings, combined with procurement savings and lower professional fees resulted in just over $19 million in efficiency savings for the year. These savings have been partially reinvested as PEXA continued to strengthen the exchange's cyber security and Brazilians. We also continue to invest in our international expansion. While our U.K. second half cost didn't increase as expected, a result of taking a cautious approach to hiring in light of the slowing macroeconomic environment and pace of lender adoption, we did see an 11% increase in the international costs for the year as we scale the business. These results delivered a strong EBITDA growth in Australia, which was up 12% with international EBITDA loss increasing $3.3 million to $41.1 million for the period. Looking ahead to FY '27, we expect group EBITDA margins to decline reflecting Australian macroeconomic headwinds, which Russell will touch on later. Moving to Page 19. Following our strong operating performance, we saw free cash flows increased to $93.5 million for the year, a 64% conversion and up from $67.2 million in FY '25. On the right-hand side, you can see the breakdown of our CapEx spend by business segment and by investment category. Capital expenditure in Australia for the period was slightly above FY '25, reflecting investment in PEXA Clear as well as investment in exchange enhancements and security. International CapEx decreased $3.4 million to $16.5 million compared to the prior year, reflecting the sale and purchase build largely being completed in FY '25. We saw depreciation and amortization charges reduced by $1.1 million for the year due to the runoff of aging exchange and fee assets, partially offset by the impact of new FY '26 assets. In FY '27, we're expecting to see mid-single-digit growth in depreciation and amortization with new assets coming online, having a shorter average useful life than historical assets. Turning to Page 20. We'll now discuss capital management. The group repaid $92.4 million in debt during FY '26 reducing our leverage ratio to only 1x and increasing our interest cover to 9.6x, further strengthening our balance sheet. This strength enabled us to renegotiate our existing debt facilities negotiating more favorable margins and reducing our facility from $500 million to $330 million, while extending the average life of the facility to 4 years with a combination of 3, 4 and 5-year facilities. As many of our investors are aware, PEXA has a deferred taking debit balance, which we must reduce prior to being able to pay a for dividend. As we begin paying tax in FY '26, the first year we've ever paid corporate tax in Australia due to historical losses. We expect to progressively reduce this balance over the coming years. In the meantime, we believe the most effective use of surplus capital is to continue paying down debt. Over time, as our capital position evolves, we will consider the most appropriate means of returning capital to shareholders. With that, I'll now pass back to Russell to take us through the conclusion and outlook.

Thank you, Liz. Turning now to our FY '27 strategy on Page 22. We started thinking about our strategy by focusing on our purpose. At its core, PEXA exists to connect people to place. That purpose underpins our strategy and how we think about our success and success at PEXA has 3 dimensions. For our shareholders, it means protecting the strength of the Australian exchange growing the discipline and delivering returns from the investments we make. For our customers, it means making property transactions simpler, faster and more secure whether that's settling a home in Australia, meeting new AML requirements or completing a remortgage in the U.K. And for our people, it means creating an environment where they can do their life's best work, where our values guide how we operate and where everyone understands the role they play in delivering our strategy. If we deliver for our shareholders, our customers and our people, we will deliver on our purpose and create a stronger pace for the long term. On the next page, I'll take you through how that translates into our priorities for FY '27. First, we are focused on protecting and strengthening the Australian exchange, the engine room of our business. Our priorities are reliability, resilience and customer service while continuing to expand digital coverage across Australia. We will also remain focused on regulatory compliance, working constructively with ARNECC and through the IPART process. Second, accelerate U.K. adoption. We have proven the technology through NatWest and our focus now shifts firmly to adoption and transaction volumes. Our next major milestone is delivering sale and purchase with NatWest while bringing additional lenders and conveyances onto the platform. Third, disciplined new business growth. We want to grow, but we will be disciplined about where and how we invest, focusing on opportunities that where PEXA has a genuine right to win. For PEXA Clear, the priority is now driving adoption and building a profitable business. In New Zealand, as I mentioned before, the priority is to test the proposition with customers and industry before committing significant capital. Fourth, people-powered growth. Delivering our strategy requires the best people, capabilities and ways of working. We'll continue strengthening our team through AI enablement, focused personal development, improving collaboration between Australia and the U.K. and building clearer career pathways. Together, these priorities give us a clear framework for FY '27, protect the strength of our core business, grow with discipline and execute against the opportunities we have in front of us. Turning now to Page 24. Given the current macroeconomic uncertainty that Liz has talked to, we thought it would be useful to provide greater transparency around the sensitivity of our EBITDA margins to Australian transfer volumes. The majority of our group revenue is currently generated by the Australian exchange. While the collective revenue contribution from our growth investments is expected to remain modest in FY '27, each represents an important long-term growth opportunity. These 4 scenarios illustrate the impact of different levels of transfer volume decline on our FY '27 EBITDA margin with all other factors held constant. In each scenario, we have assumed same low single-digit growth in the Australian refinance and other transaction volumes. Importantly, the scenarios on this page are sensitivities and not guidance. They also do not reflect any management action to improve cost efficiency across the business. Let me now address a question that I think investors should be asking of management given the softer outlook for volumes and revenues. What are we doing about costs? As Liz covered earlier, in FY '26, we took out around 10% of -- we took out 10% head count out of the Australian business and delivered $19.2 million in cost efficiencies. We do have further levers available to us, but we won't pull them to manage a short-term margin outcome while awaiting the final part price recommendation. While we have presented strong and well-supported arguments regarding IPART's proposed methodology, the final pricing outcome does remain unknown. When we have further clarity on the recommendation and on the implementation pathway proposed by ARNECC, we will come back to investors with more clarity on what this means for the future cost profile of the business. Against this backdrop, any further cost efficiency initiatives will be carefully considered balancing near-term financial performance with the capabilities resilience and investment required to support the business over the long term. We remain confident in the strength of the Australian exchange, the opportunities across our newer businesses and our ability to respond appropriately as market conditions evolve. I'll now close with our guidance for FY '27. We are guiding to group revenues of between $385 million and $415 million. The range reflects the significant macroeconomic uncertainty we are seeing in Australia. Given that backdrop, we believe it is appropriate to take a cautious approach to the year ahead. We expect our group EBITDA margin to moderate in FY '27. Like other platform businesses, our business has a relatively high proportion of fixed costs, so lower Australian transaction volumes do have a direct impact on our operating leverage. This will be combined with higher costs associated with productivity tools and targeted investments in PEXA Clear and our New Zealand pilot. Similarly, group NPAT from continuing operations is expected to decline in FY '27, primarily reflecting lower Australian revenue together with these targeted investments. We continue to be disciplined in our approach to capital allocation with CapEx expected to remain broadly in line with FY '26. Importantly, our investment remains flexible and control. The level of spend will be linked to customer adoption in the U.K. and the outcome of the New Zealand pilot, so we will deploy additional capital as those opportunities are validated. In the U.K., we expect a modest reduction in cash outflow with that improvement broadly offset at a group level by investment in the New Zealand pilot, reaching the upper end of our investment range would be driven by signing new U.K. customers, so additional investment would follow a demonstrated commercial progress. Before we take questions, I'd like to thank shareholders for their continued support, our customers for the trust they place in PEXA and our team members for their hard work and contribution throughout the year. In particular, I'd like to express my sincere gratitude to Liz, who has been a valuable thought partner to me and our broader leadership team and a strong leader as we've navigated key priorities across the business. I wish you every success for the future. I'd also like to acknowledge those shareholders and investors who have engaged constructively with the ongoing pricing review, whether through submissions to IPART or by sharing our insights and perspectives. We appreciate the time and effort you've taken to contribute to this important process and advocate for a fair and sustainable outcome. We enter FY '27 with a clear strategy and a strong focus on execution. Thank you again for your time today, and we look forward to keeping you updated on our progress.

We'll now hand back for questions.

[Operator Instructions] And your first question comes from the line of Elizabeth Miliatis from Macquarie.

The first 1 is just on the FY '27 guidance. Are you able to give us color perhaps at the NPAT line or -- yes, at the NPAT line on exactly what you're capturing in there for New Zealand expansion and also perhaps AML/CTF?

Yes. So look, it's all in there, Liz. We haven't given out -- and we won't be giving out specific guidance on those businesses. What we will say, though, is, as you can see, the international cash outflows next year, look, we think it will be broadly and that's inclusive of this additional investment in New Zealand. So it is -- it's a relatively modest investment in New Zealand. And similarly, for AML for the year, the revenues, we think, will be reasonably modest, certainly as we start to grow the business. But again, it's not a significant cash outflow.

Okay. And maybe just on IPART. Obviously, you've been engaging with them significantly. You put forward some pretty compelling cases as to potential flaws in their calculations. How have they responded to the pushback? And is there any chance, given some of the things you're suggesting a fairly material, I would imagine for them that the fund or is delayed a little bit?

I'll take that one. Thanks, Liz. So with respect to IPART, so we put in our submission and obviously, there was an extensive public submissions we believe also went in. We have not received feedback on how IPART have viewed those submissions. I think they're going through their process to, I imagine, review all that information, our input and other stakeholders as well as the research that we commissioned sort of challenging the idea of the building block model and some of the assumptions, particularly around PEXA's early years. So we will expect to hear from a similarly on the schedule that they'll communicate with the public. The second part of your question, remind me again, what was that, Liz, sorry?

Just is there any recent...

[indiscernible] yes, sorry. Look, at this stage, we are unsure. We are operating on the time line that has been shared previously, which is that we anticipate final report will be published around the end of September and make its way to the New South Wales Minister.

Your next question comes from the line of Ed Henning from CLSA.

I just got 1 on the U.K. then 1 on New Zealand, please. Starting with the U.K., can you just touch on a couple of things there. One, NatWest coming out in the third quarter. I imagine that's by March. Just to clarify that, that was fiscal year, not calendar year? And is that a slight delay? I thought it was due to come through at the end of this year, like the second quarter financial year. And just within that and thinking about NatWest, is it really important to get the other remortgage conveyances on board. So then NatWest can get more of their volume to come through for remortgage to really show the benefits to potential mortgage holders? And can you just touch on how that's going, please? That's the first question.

Yes. Thanks, Ed. Look, it is a slight delay. And it's really the delays getting FCA approval. Moving into S&P, we do need -- or sorry, NatWest actually needs some specific approvals that were kind of -- that have been a bit delayed and will be delayed over Christmas, unfortunately. So that will push us out.

Yes. The sale and purchase transaction for a lender in the U.K. is what's called a core or critical business process as designated by the regulator, Ed. And so NatWest, because they're changing that flow and their workflow need to get those approvals. So we'll be ready to go we hope March of next calendar year.

Yes. I'm sorry, Ed, what was your second question?

Just more if I think about the true benefits that are NatWest are going to get. If you look at Optima, they've got around 20% share. You can't really go and seeing to everyone and say we can do a mortgage a lot quicker unless you can get the other remortgage conveyances on board because I don't think I can do a small proportion through Optima. How is the conversations going with the other remortgage conveyances? And is NatWest, I guess, leaning on them or trying to push down that path to get the other remortgage conveyances so they can get more of their volume to come through the PEXA channel? If it's...

Yes, no, we absolutely are. And having some really good discussions and absolutely, we're focusing on NatWest other bulk conveyances. When we've got some more committed time lines there, we'll definitely share them. But at the moment, yes, we're actively engaging on our pathways to integration.

Okay. That's great. And then just 1 further follow-up on New Zealand, if I can. You talk about just dipping the toe in and capital light, which is great. Can you just talk about how we should think about the size of the price here for New Zealand if you do get adoption, should we think of it like of a small state in Australia from revenue size-wise?

Our solution in New Zealand is quite different to Australia from a technology perspective and a workflow perspective. When we are ready to share a little bit more on how it works, we'll do so. And from there, you can kind of size it up. I think the way to think about New Zealand for us is that we're building a new workflow process, a new workflow tool primarily to service banks and lawyers to communicate securely and in a timely manner, and it's AI driven. So for us, the proposition on how we charge and monetizing can be a little bit different. That's all I'm going to share for now. In terms of TAM, it will really depend on how the services are structured, which we're still working through in the pilot.

Your next question comes from the line of Josh Kannourakis from Barrenjoey.

Russell, Liz, can Y-o-u hear me okay?

Yes. Good.

Yes.

Just first one, just with regard to the guidance range and then linking that back to some of that helpful commentary you gave on the transfer sensitivity. So I mean, obviously, it's very early on the year, we've heard a lot of backdrop around the macroeconomic headwinds and tax changes. But is it sort of implying transfers sort of down closer to the 15% range at the midpoint. Is that how we sort of should be looking at it? And how are you thinking about the backdrop in terms of refi activity as well into '27 as you sit there today?

Yes. Look, it will certainly be down double digit is what we'd expect at this stage. Look at the moment, we've seen 15% in July, but it is only 1 month. And when you look at that monthly chart in the appendix, you can say that it can actually move year on month-on-month, and the sentiment can actually change fairly quickly. So look, we'll have to play that out over the year, but certainly, we're expecting double digits over the year. We think refis hopefully will be a little bit more -- hopefully get a little bit more growth from them during the year. But we will have to play that out. But it will certainly be very modest.

Okay. That's great. Just second question, just with regard to the U.K. So Obviously, great that you're getting closer to NatWest despite the slight delay there. In terms of, I guess, the road map, there's been a fair bit going on in a number of places putting together a coil more the front end of the sort of offering around speeding up the efficiencies there. How are you interacting with some of the other players in the market? And in terms of where you feel like you'll end up in terms of the best market fits it still focused on the back-end settlement payment sort of handling and how we should think about the, I guess, the competitive environment over there?

Yes. Thanks for that. So look, you're right. The government's recent housing market performance. I mean, they touch on a few elements, but the upfront data piece, which has been a problem for a number of years in the U.K. in terms of impacting the buying and selling completion journey is a focus in this immediate period. In discussions with lenders, Josh, they're focused on the whole flow to be candid. Upfront data, binding contracts, settlement, conveyance digitization, electronic signatures, all of that fits into that superior customer journey, the knowledge they have of what PEXA has been able to drive in Australia is well known amongst both big and small lenders in the U.K. So upfront information, yes, is a top of mind issue for the lenders, but they're very clear on how it matches with the full PEXA proposition.

Got it. And just I guess just maybe the second point of that is just to do you see yourselves being potentially able to capture some of the upfront piece as well over time? Or do you think it's more likely to be a partnership model with some of these other established players?

Josh, more likely to be a partnership model to be candid. A lot of the upfront players right now, they don't offer an extension into lodgment and no financial settlements. So in order to make the whole end-to-end journey, work, there would likely need to be a partnership model, potentially facilitated by a bank unique to their flow or PEXA forming a partnerships. We're working with a few different industry players to understand that right now.