Earlypay Lowers FY25 EPS Guidance to 1.8c, Reports $8m Surplus Capital

Earlypay’s Mixed Half-Year Performance

Earlypay Limited (ASX: EPY), a specialist in working capital finance for Australian SMEs, has released a trading update revealing a softer second half for its core Invoice Finance product. Funds in Use (FIU) for Invoice Finance fell below expectations due to reduced activity from existing clients, higher attrition, and slower uptake from new customers. This underperformance has prompted the company to revise down its underlying earnings per share (EPS) guidance for FY25 to 1.8 cents, from an earlier forecast of 2.2 cents.

Despite these challenges, Earlypay’s Equipment Finance division continues to expand steadily, delivering attractive margins and providing a bright spot in the portfolio. Meanwhile, the Trade Finance product is being deliberately wound down, with its contribution to income significantly lower in the second half as planned.

Capital Position and Debt-Free Status

On the balance sheet front, Earlypay has made a notable stride by fully repaying its remaining $5 million corporate loan in April, leaving the company debt-free at the corporate level. This deleveraging strengthens Earlypay’s financial flexibility as it approaches the end of FY25. The company anticipates holding approximately $8 million in surplus capital, equivalent to around 3 cents per share, which it is actively exploring ways to deploy to maximise shareholder value.

Corporate Activity and Market Implications

Adding an element of intrigue, Earlypay disclosed ongoing discussions regarding a potential change of control transaction. While details remain sparse and there is no certainty that a deal will materialise, the company has paused its previously announced share buyback program in light of these talks. This development suggests strategic options are being considered that could reshape Earlypay’s ownership or operational structure.

CEO James Beeson emphasised the company’s commitment to keeping the market informed in line with continuous disclosure obligations, signalling that investors should expect further updates as these discussions evolve.

Looking Ahead

Earlypay’s revised outlook reflects the challenges in its Invoice Finance segment but also highlights resilience in other areas and a clean balance sheet. The potential change of control adds a layer of uncertainty but also opportunity, making the coming months critical for shareholders and market watchers alike.