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

All right. Welcome, everybody. Thank you so much for taking the time to view this video in relation to QuickFee's Q2 results update. For those of you who don't know me, I'm Bruce Coombes, Founder and CEO of QuickFee, and I'm joined today with -- by our CFO, Simon Yeandle. I'll take you through some of the highlights. But initially, for those who may be newer shareholders or this is the first one of these you listened to, this is what QuickFee does. QuickFee is a B2B lender, providing finance to the clients of accounting and law firms, so they can pay the professional fees and also providing a disbursement funding solution for personal injury and estate matters, as a B2B product to law firms that specialize in those areas. We've done over $700 million in lending since we started, and we operate in a substantially unregulated B2B environment where we've suffered absolutely minimal credit losses. We are specialists in professional services firms. So we do three things: Finance for professional fees in the United States, finance for professional fees in Australia, which, in some cases, is coupled with a paying full EFT and credit card option. And as I mentioned, disbursement funding for law firms. So let me start with a run-through of our underlying results. Many will know that in September last year, we sold two business units, which were operated in the United States. One was a Pay Now business, operating credit card and EFT, what's known as ACH in the United States, payments platform and a software platform for e-invoicing, A/R acceleration and similar services. Those businesses were sold in September to a company by the name of Aiwyn, a very well-resourced private equity-backed company that was essentially our major competitor in the United States. We're very glad to have achieved the price we achieved for that. And the results on this page look to eliminate the pieces of the business, which are no longer continuing and show you the revenue from the parts which are. In quarter 2 financial '26, you can see our U.S. finance business was down 14% in terms of revenue, and our Australian business was up 7% in terms of revenue from our finance product in each of those markets. Transaction volumes were down 37% in the United States and 7% in Australia. We are operating now on a much smaller cost base with the elimination of any significant product development expenditure, and we are able to reaffirm our previously stated earnings guidance within the range of $3.75 million to $4.25 million of earnings before tax, depreciation and amortization. We have delivered a positive EBITDA in quarter 2. Revenue was $4.2 million for the quarter, and that was consistent with that for the year, for the prior quarter. The half revenue was $8.5 million, up a little on normalized continuing business previous corresponding period half year revenue. Our core finance business delivered a net interest margin of 15%. Following the sale of the business units in the United States to Aiwyn, we received approximately AUD 40 million and distributed $0.075 per share as a capital return in December last year. Operating a profitable business, we are in a position where we can confirm what we said at the AGM that we will be making a minimum distribution each year of $0.01 per share with a minimum of $0.005 per share on an interim basis and a further $0.005 per share on a final basis for financial '26. We see growth potential in the Aiwyn distribution agreement. Our core operations have negligible product development and capital expenditure requirements. We confirm our -- reaffirm our guidance in relation to $3.75 million, $4.25 million of earnings and are well funded with a significant undrawn debt facility to enable us to grow our lending in Australia and the United States. Looking at our revenue, you can see that whilst it was flat for the quarter, as mentioned before, it was up from $8.2 million for the continuing finance businesses in both markets to $8.5 million for this half. The graph on the left shows the margin expansion we've been able to enjoy in relation to our NIM or net interest margin on a rolling 12-month basis. 15% for the most recent quarter. So let's turn to the Australian business. The Australian business continued to perform well. The number of finance plans is up 8%, and our disbursement funding business continues to grow. Disbursement funding now represents around 39% of the Australian loan book. It is a high-margin business spread across a significant number of individual lending transactions across quality, personal injury and deceased estate firms. Our traditional fee funding business, which was the very first product that QuickFee brought to market, continues to be a low loss, high-margin business. So let's move to the United States. United States volumes were down 37%. Revenue was down 14%. We had a significant Q3 FY '25, and you can see in the rolling TTV that the business is relatively flat and has declined a little over the course of the last couple of quarters. We are now totally focused only on running the finance business in the United States, akin to what we've been doing in Australia from inception. We now have four staff in the United States business and across them, they have 12 years combined QuickFee experience. We have a deep level of experience, quality people to grow the U.S. finance business in conjunction with our partnership with Aiwyn to distribute our solution across their footprint of around 300 of the top 500 CPA firms in the United States. I'm going to hand over to Simon now and allow him to discuss capital management and liquidity.

Thank you, Bruce, and hello, everyone. As Bruce has already mentioned, QuickFee returned approximately AUD 28.5 million to shareholders in December 2025 via a return of capital of $0.075 per share from the proceeds of the sale of the U.S. P&L business. With a further $5 million of the proceeds used to immediately pay down debt. There is a further $3.8 million held in deposits and escrow from the sale to be released to us over the next 2.5 years. From an accounting perspective, we expect to record a book profit in our 31 December accounts of approximately AUD 35.5 million from the sale. And we also expect to be able to use existing tax losses across the group. So we do not expect there to be any significant tax charge on the profit of the sale. In addition, on the 2nd of December, we announced the capital management and dividend policy, whereby the company intends to make shareholder distributions of a minimum of $0.01 per share per year, as Bruce mentioned, with the intention of paying a minimum of $0.05 per share on both on interim and final basis. The amount and timing of such payments has not been determined and is, of course, subject to us holding sufficient cash and meeting all regulatory requirements at the relevant time. And of course, for the full year, meeting our guidance at a minimum. We currently have franking credits of approximately AUD 510,000 to be utilized in franking any potential dividend payment. Our balance sheet remains strong. Mid last year, we refinanced our credit facilities and have now expanded capacity with facilities that run to June 2028. The new asset-backed receivables financing facility with Viola credit consists of AUD 118 million revolving credit facility, comprising initial committed amounts of AUD 45 million and USD 15 million with additional optional committed amounts of AUD 25 million and USD 15 million subject to Viola's approval. We also closed a $5 million term loan facility with Fancourt Capital Group to fund further loan book growth in both markets. We used surplus funds from the U.S. sale to pay down the Viola facility as the Fancourt term loan, while it's more expensive, has a minimum 1-year interest cost, while the Viola facility is revolving and can be repaid and redrawn for no additional fees. On the right, you can see our loan books in total have grown $2 million and debt has reduced by $3.8 million since June 2025. And below that is a summary of our cash movement since June. We keep minimum cash on hand to minimize interest costs where possible and have used surplus cash to fund loan book growth rather than draw more debt where we can. I'll now hand back to Bruce to wrap up.

Thanks, Simon. Just want to wrap this up with restatement of our singular focus. The very first product that QuickFee had was our fee funding solution in Australia back in 2009. The very first product we took to the United States was that identical fee funding product. We are totally focused on funding fee finance in Australia and the United States for disbursement funding in a B2B sense for personal injury and estate firms in Australia. We have an Aiwyn reseller agreement, which is in its early days, but has shown contribution to lending since the inception of that agreement. We are spending very little on product development now that we have sold the software business. We continue to consider other potential inorganic opportunities where they're available and where they will maximize value for shareholders, and we expect to achieve financial '26 full year EBITDA in the range of $3.75 million to $4.25 million. I want to thank all the shareholders that have listened to this. I want to thank the shareholders for their support. We've got the details there if you want to reach out. Thank you very much for being with us. If you're a long-term shareholder or recently joined us. Thank you very much for your support.