QuickFee Limited (QFE.AX) Earnings Call Transcript & Summary

Dale Smorgon, the Chair of QuickFee, welcome to the AGM for 2025. I'll introduce to my right Bruce Coombes, Executive Director and CEO. To my left, I've got Michael McConnell, Non-Executive Director, he joins us in person, having flown in from the U.S. this morning. Thanks, Mike. Great to see you. I also like to introduce Simon Yeandle, QuickFee CFO and Company Secretary, he joins us here in person. As well as Alan Finnis from William Buck, who's the auditor, who joins us here in person as well. Thanks, Alan. Alan, so you can answer any questions in relation to the annual report. I'll just ask any attendees to switch their phones off on to silent. Thank you very much. The notice of meeting have been properly dispatched, and we do have a quorum, and I can call the meeting now to order. I propose to conduct the meeting in 3 parts. Firstly, we'll provide some comments about the 2025 financial year that's been. And I'll then hand over to Bruce, who will provide a presentation on the financial year and the performance, and I'll talk through the business in a bit more detail. I'll then move into the formal business of the meeting. Today, there's 5 resolutions to be considered by shareholders and as set out in the Notice of Meeting. An opportunity will be given to shareholders to ask questions about or make comments on the items of business on the agenda for today's meeting. The Board recommends that shareholders vote in favor of all the resolutions other than resolution 1 on the adoption of the remuneration report, for which the Board abstains from providing a recommendation in the interest of good governance. So on behalf of the Board, I'm pleased to welcome you here today as Chair and extend a warm welcome to all shareholders attending in person and online. Also welcome all members of the team, our executive team, both in Australia and in the U.S. With the recent successful sale of the U.S. Pay Now business, there's been significant change at QuickFee over the past few months. However, I'd first like to have a look back and present the financial results for the year ended June 30, 2025. QuickFee delivered strong financial results in the year with revenue growth across all products, a decrease in operating expenses and a positive underlying EBTDA of AUD 2.4 million, which represents an important inflection point in profitability for the company. Total revenue was up 25% on prior corresponding period to AUD 25.3 million, driven by an outstanding year for the Aussie business with revenue up 36% to AUD 12.4 million and a solid performance in the U.S. business with revenue up 15% to AUD 12.9 million. Total transaction volume, or TTV, were at record high again in FY '25 with significantly improved revenue yields in the Australian business due to increasing the proportion of higher-margin disbursements funding business in our Australian loan book. QuickFee delivered savings of 12% in underlying operating expenses, leading to an underlying net loss in FY '25 of $900,000. This is a significant improvement from the net loss of AUD 4.7 million in FY '24. The Board and management team were disappointed to record a one-off provision expense of USD 2.2 million for credit impairment due to one U.S. firm defaulting on its payment guarantees on our QuickFee finance product. We have commenced legal proceedings in the U.S. against the firm and its clients with a view to recovering claims under our existing -- view to recovering amounts that were due and payable and in discussions with our insurer regarding claims under our existing policies. We'll update the market as more information becomes available on any prospect of this recovery. Now a major operating milestone in FY '25 was the refinancing of our debt facilities, a new term loan facility as well and a AUD 1.53 million capital raise, which all directors participated in, including an oversubscribed SPP, or share purchase plan. We entered 2026 with positive momentum. And in September, we announced the sale of our U.S. Pay Now business for AUD 40 million to Aiwyn, one of our major U.S. competitors, at an acquisition multiple of 5x FY '25 revenue. A large majority of our staff have now effectively transitioned to Aiwyn, and our U.S. Pay Now customers are well served under this new ownership. Importantly, we've retained our high-margin finance business in the U.S. and have established a valuable reseller agreement with Aiwyn, whereby our U.S. finance offering will be embedded into Aiwyn's payment solutions. This effectively exposes our finance product to the growing base of Aiwyn customers. As this partnership develops, we anticipate strong growth in our U.S. loan book. The Board has agreed to distribute the majority of the proceeds of this sale back to shareholders, and we are proposing a capital return of $0.075, subject to shareholder approval at today's AGM. QuickFee Founder and Executive Director, Bruce Coombes, has now stepped into the CEO role to run the Australian operations on a business-as-usual basis and also to manage our finance team in the U.S. As we all know, QuickFee is in an extremely strong position, having well-established growing profitable Australian business with low CapEx requirements and significant growth potential in the U.S. market. The Board is considering all options for capital management and corporate activity, including M&A opportunities that might arise and in the best interest of our shareholders. At this point, I'd like to thank the entire QuickFee team for their focus and dedication, particularly through the significant changes over the past few months. I'd like to thank shareholders for their continued support. I'll hand over to you now, Bruce to deliver a bit more of a detailed presentation on the year just passed.

Perfect. Thanks, Dale. We'll move forward then just through -- okay. Perfect. So Dale's, of course, hit on the major highlights, so just look at this particular slide here for anybody who hasn't been a QuickFee shareholder for the -- a major part of the journey. The numbers on the left-hand side, 650 firms is the number of firms we've got today with one or more clients using our money to pay a professional services firm. The $700 million number is the total number of value of loans that we've done since we started operating our business in Australia and includes the U.S. lending as well. One final point on this slide is our disbursement funding business. Dale touched on this. It's now a significant part of our business. We help people which have got a personal injury claim, which is typically going to be settled through some policy of insurance, access justice by paying the costs -- the hard costs of the litigation by funding their plaintiff attorney or plaintiff lawyer firm for those costs so they can move forward with the -- ultimately to get settlement on their personal injury matter. Okay. I'm going to skip through this slide relatively quickly because where we need to get to is where QuickFee sits today. So yes, we had a fantastic year. We grew our business. We have, of course, exited the QuickFee Pay Now business, which was the software business as well as the pay in full business, what in the U.S. we call ACH. Earnings were up. We've had our first year, a maiden year of a profit before the provision for credit loss, and that's put QuickFee in a great position and literally put us in a position where we had a business capable of being sold. Some of the key numbers here. If you look at the first row, U.S. finance pay over times, that's the business we retained. USD 3 million of revenue there. So that translates to about AUD 4.5 million or so. The U.S. Pay Now row is the business we sold. U.S. the AU Finance row, of course, is our Australian business, which, of course, has had a stellar year. So our U.S. business is more profitable than it has ever been, partly because it grew, but partly because we have also now disposed of the most capital-intensive elements, our Pay Now business, where we operated a pay in full solution, credit cards, EFT and also a software business. Having exited that, the U.S. now is a profitable business in its own right. Our Australian business continues to grow, and this slide is testament to the incredible effort made by everybody in the relatively small but mighty Australian team. 20% increase in AU transactions, EBTDA growth, stable gross profit. We're very fortunate to have the team that we've got that have contributed the excellent numbers you can see on the screen. Which, of course, following the sale to Aiwyn means that not only have we got profits, we've also got significant capital, which has flown from the sale of that business. As Dale mentioned, we sold that business for AUD 40 million. There's a small part of that, which is held in escrow, roughly AUD 1.8 million. The remainder after transaction costs and a bit of debt repayment is what the resolution for the capital return is about. So looking forward, having exited the U.S. Pay Now and software businesses, we've received $25 million of the $26.35 million. That's roughly AUD 40 million of consideration from the exit of that business. Importantly, the company we sold that to, which is pronounced Aiwyn, is also our exclusive reseller of the QuickFee Finance business. They enjoy revenue share from the sale and onboarding of customers for our QuickFee Finance business. We retain the broad customer relationship around continuing customer care for those finance customers. They sell our solution into their customer base. When they acquired QuickFee, it took the number of customers that the combined Aiwyn and QuickFee business has in the United States to 300 of the top 500 accounting firms in the United States market. Roughly half of those do not have QuickFee Finance. So this is an important part of our outlook for financial '26 and beyond. With the credit loss, we, of course, ceased to do business with that one particular firm, which we are pursuing out of the insurance policy and pursuing legally. That explains part of the decrease in the U.S. finance rolling TTV you can see on this chart. Having now Aiwyn, exposing us to 300 of the top 500, plus a whole of other customers that they're onboarding regularly means that we are now able to focus solely on our finance business in the United States and our finance business in Australia. We're very fortunate to have a team member who's come back to us following this change, now heading up our U.S. business in my reporting line. Australia has had a great year. We are very fortunate to have the amazing team that we have. We've grown revenue yield, suffered no credit losses and continue to see growth in our loan book and in our originations. So let's move to the capital return. Around about AUD 28.4 million, which represents about AUD 0.075 per share. That we return to shareholders subject to the resolution being passed at this general meeting. You can see the timetable on the right-hand side. This has all been published on the ASX side as well in terms of the record dates and the payment date for the capital return. Finally, QuickFee has never had a stronger balance sheet. We have capital. We have a growing loan book. We have a debt facility, which will enable us to continue to grow our loan book in both markets. Our debt facility is multicurrency. We're in a position where we are able to significantly grow our business. At this meeting, I'm reconfirming our EBTDA guidance of between $3.75 million and $4.25 million for financial '26. You can see from the charts here that arguably, the current share price does not necessarily reflect an earnings multiple of a business with that level of guidance, particularly given the capital return, which will pass, we imagine at this AGM. Our outlook is strong. We no longer need to invest in software. I'm proud of the fact that QuickFee built software that was sufficiently desirable to our largest competitor to make the acquisition they made. Going forward, we are focused on one thing: lending money to help small businesses in the United States access accounting and legal advice, helping small businesses and litigants in Australia, access accounting, legal advice and justice in our disbursement funding product. We will continue to review our capital position and look at initiatives to enable the returns to shareholders where appropriate, and we'll report more to the market after the capital return is complete. Thank you, everybody, for your attention.

Thanks, Bruce. Appreciate that great update. Let's now move to the formal part of today's meeting. The Notice of Meeting has been circulated to all shareholders, and I would like to take the Notice of Meeting as having been read. So the voting procedures, all shareholders will have had an opportunity to submit voting instructions by proxy. And before each resolution is put to a vote, we will display the proxy voting instructions on the screen for your information. The proxy instruction forms received are held by the Company Secretary and are available for inspection. Voting on each resolution at today's meeting will be conducted via poll immediately prior to the conclusion of the meeting. For those who are physically in attendance at the meeting, you'll be able to submit a voting card, which will be collected by a representative from the company. Shareholders who are viewing the meeting via webcast will not be able to vote in real time. There will be an opportunity for shareholders or representatives who are physically present today to ask questions or make comments in relation to the resolutions. If you wish to do so, I ask you to identify yourself by name and whether you're a shareholder, proxy holder or corporate representative and how many shares you either own or represent. Shareholders who are not in attendance have had an opportunity to submit questions to the company ahead of the meeting. No questions have been received. I present for discussion the annual report of the company comprising the financial statements and directors' report and the independent auditor's report for the company for the financial year ended June 30, 2025. The company's annual report was released to the market on August 21, 2025, and is available on the company's website. There is no requirement for a resolution of the annual report be adopted. However, at this point, I invite any questions that shareholders may have in relation to the annual report for the directors or for Andrew Leigh, the company's auditor for William Buck in relation to the annual report or Alan Finnis, who is present. Members may ask questions of the auditor in relation to the conduct of the audit on behalf of the audit report itself. Okay. No questions. Let's move on to the resolutions. Resolution 1 is the adoption of the remuneration report, the first item of business relates to the adoption of that report for the year ended 30 June and sets out in Pages 16 to 31 of the 2025 annual report, namely that for the purposes of Section 250R(2) of the Corps Act and for all other purposes, approval is given for the adoption of the remuneration report as contained in the company's annual financial report for the financial year ended 30 June 2025. Shareholders should note that the resolution is advisory only and does not bind the directors of all the companies. I invite any questions in relation to the remuneration report. There doesn't appear to be any. The total number of valid proxies which have been received and recorded and are exercisable for the resolution are shown on the screen now. Thank you, Simon. The exact wording of Resolution 1 is set out in the notice of meeting. I now put that resolution to the meeting. The vote on this resolution will be conducted by way of poll immediately prior to the conclusion of the meeting. Let's move on to Resolution 2, the reelection of Michael McConnell as a Director of the company for the purpose of 14.2 of the company's constitution, ASX Listing Rule 14.4 and all other purposes, Michael McConnell, a Director, retires by rotation and being eligible for election is reelected as a Director of the company. If shareholders do not approve the reelection of Michael McConnell, then he will cease to be a Director at the conclusion of the meeting. Biographical background information about Michael is set out in the notice of meeting. I invite any questions from the floor. There are none. Thank you. The total number of proxies has been received and recorded are exercisable for this resolution are now shown on the screen. Thank you, Simon. The exact wording of Resolution 2 is set out in the Notice of Meeting, and I put that resolution to the meeting. Again, the vote on this resolution will be conducted by way of poll immediately prior to the conclusion of the meeting. Resolution 3 concerns the issue of performance rights to Bruce Coombes, a Director of the company, and that for the purposes of ASX Listing Rule 10.14 and for all other purposes, approval is given for the issue of up to 2,300,523. Thank you, Bruce. Performance rights to Bruce under the QuickFee performance rights and option plan, or the PROP, on the terms and conditions described in the explanatory statement accompanying the notice of meeting. Any questions from the floor in relation to the resolution? There are none. Again, the total number of valid proxies which have been received and recorded and are exercisable for this resolution are shown on the screen. The exact wording of Resolution 3 is set out in the Notice of Meeting, and I'll put that resolution to the meeting. The vote on this resolution will be conducted by way of poll immediately prior to the conclusion of the meeting. Thank you. Which moves us to Resolution 4. Thanks, Simon. And that concerns the reduction in share capital for equal reduction that for the purposes of and in accordance with Sections 256B and 256C of the Corps Act and for all other purposes, approval is given to the company -- approval is given for the company to reduce its share capital by up to $29,129,868 by way of an equal capital reduction on the terms and conditions described in the explanatory statement accompanying the notice of meeting and such that each shareholder will be paid an amount of $0.075 per share held at the record date. I invite any questions in relation to the approval of the reduction in share capital for equal reduction. No questions from the floor. Before I put the motion to a vote, I advise that the total number of valid proxies which have been received and recorded and are exercisable for this resolution are shown on the screen. Thank you very much. The exact wording of Resolution 4 is set out in the Notice of Meeting, and I put that resolution to this meeting. The vote of this resolution will be conducted by way of poll immediately prior to the conclusion of the meeting. Which brings us to Resolution 5, the last item of business, and it relates to the approval to refresh the company's 10% placement capacity. That pursuant to and in accordance with ASX Listing Rule 7.1A and for all other purposes, the shareholders of the company approve the issue up to that number of equity securities equal to 10% of the issued capital of the company at the time of the issue, calculated in accordance with the formula prescribed in ASX Listing Rule 7.1A.2 and otherwise on the terms and conditions set out in the explanatory statement accompanying the notice of meeting. I invite questions in relation to the approval of additional share capacity under Listing Rule 7.1A. There are no questions from the floor. The total number of valid proxies which have been received and recorded and are exercisable for this resolution are shown now on the screen. Thank you, Simon. The exact wording of Resolution 5 is set out in the Notice of Meeting, and I now put that resolution to the meeting. The vote on this resolution will be conducted by way of poll immediately prior to the conclusion of the meeting. This resolution requires 75% or more votes cast to be in favor for the resolution to pass. Are there any questions from the floor before we close the meeting? No. Thank you very much. Now that all resolutions have been put to the meeting, I declare that the poll for voting on each of the resolutions is now open. If all shareholders or representatives of shareholders who are present at the meeting, if they could provide their voting cards for collection and counting. Thank you very much. Great.

Voting cards have been collected.

They've all been collected. Thanks, Simon. That's terrific. We'll reconvene the meeting in approximately 5 minutes who announce.