OFX Faces Rising Costs and Bad Debts Amid Profit Collapse and Strategic Shift

• Statutory net profit down 78% to $2.4 million
• Fee and trading income declined 4.7% to $109.1 million
• Total expenses rose 8.7%, including $3.2 million in unexpected bad debts
• New Client Platform migration progressing with strong client engagement
• New on-market share buy-back program initiated, buying back 2.3 million shares

Profit Decline Amid Challenging Macroeconomic Conditions

OFX Group Limited has reported a significant 78% decline in statutory net profit for the half year ended 30 September 2025, falling to $2.4 million from $10.7 million in the prior corresponding period. This steep drop was primarily driven by a 4.7% decrease in fee and trading income to $109.1 million, reflecting ongoing global macroeconomic uncertainty and subdued business confidence across key markets.

Despite the revenue pressures, OFX’s total expenses increased by 8.7% to $105.5 million. The rise was largely attributed to higher employment and promotional costs supporting the company’s accelerated 2.0 strategy, alongside $3.2 million in unexpected bad debts linked to a few incidents within the North American Corporate segment. The company is actively pursuing recoveries and has strengthened its risk controls in response.

Strategic Investments and Platform Rollout

OFX continues to invest heavily in its New Client Platform (NCP), which is now live across all major markets. Approximately 39% of existing Corporate clients have migrated to the NCP, with full migration expected by the end of the current fiscal year. This platform upgrade has driven a 23.8% growth in non-foreign exchange revenue from the first to the second quarter of 2026, and the number of clients holding interest-bearing balances has risen to 6,100.

The company also refreshed its High-value Consumer strategy, with plans to migrate this segment to the NCP in fiscal 2027. These strategic moves underline OFX’s commitment to simplifying financial operations for global businesses and positioning itself for future revenue growth despite current market headwinds.

Capital Management and Share Buy-Back Program

In July 2025, OFX announced a new on-market share buy-back program aimed at returning capital to shareholders while maintaining growth flexibility. The program allows for the repurchase of up to 10% of the company’s fully paid ordinary shares and is expected to run until August 2026. During the half year, OFX bought back approximately 2.3 million shares at a total cost of $1.9 million.

The company’s balance sheet remains robust, closing the period with $47.1 million in net available cash and continuing to reduce debt, having repaid $2.5 million in principal during the half year. No dividends were paid during the period, reflecting a focus on reinvestment and capital management.

Outlook and Market Positioning

While the near-term financial results highlight the challenges posed by global economic uncertainty and softer trading conditions, OFX’s ongoing investments in technology and client engagement signal a strategic pivot toward sustainable growth. The successful rollout of the NCP and the company’s disciplined approach to risk and capital management will be critical to navigating the evolving market landscape.

Bottom Line?

OFX’s sharp profit decline underscores current market challenges, but its strategic platform investments and share buy-back program set the stage for a pivotal growth phase.

Questions in the middle?

• How will OFX manage and recover from the unexpected bad debts in North America?
• What impact will the full migration to the New Client Platform have on future revenue and client retention?
• How might the share buy-back program influence OFX’s share price and capital structure over the next year?