OFX’s Heavy 2.0 Investment Risks Profitability as EBITDA Halves in 1H26

Financial Performance Amid Challenging Conditions

OFX Group Limited’s first half of fiscal 2026 results reveal a company navigating a complex macroeconomic environment. Net operating income (NOI) declined by 5.6% to $105 million compared to the prior corresponding period, while underlying EBITDA dropped sharply by 50.1% to $14.5 million. This softness reflects subdued corporate transaction volumes and revenue pressures across key markets including Australia, North America, and parts of Asia-Pacific.

Despite these headwinds, OFX maintained a solid balance sheet with net cash held at $75.4 million, supporting ongoing investments. The company’s NOI margin contracted slightly by 4 basis points, underscoring competitive pricing pressures and cautious client spending amid fragile small business confidence.

Strategic Shift – OFX 2.0 Platform and Market Expansion

Central to OFX’s outlook is the accelerated rollout of its OFX 2.0 platform, designed to broaden its service offering beyond foreign exchange to a wider suite of financial operations for small and medium enterprises (SMEs). This transition effectively doubles the total addressable market (TAM) for SMEs from $34 billion to $66 billion, targeting a significant share currently dominated by banks.

The platform introduces multi-currency corporate cards, integrated global payment workflows, accounting software syncs, and risk management tools, positioning OFX as a trusted partner combining digital innovation with human service. Early adoption metrics are promising, with non-FX revenue growing 23.8% quarter-on-quarter and corporate new transacting clients rising 11.8% year-on-year.

Investment in Technology and AI Integration

OFX is investing heavily to accelerate its 2.0 transition, with underlying operating expenses rising 10.2%, driven by increased employment, promotion, and technology spend. The company is embedding artificial intelligence across its platform to enhance client onboarding, expense management, and customer service, aiming to streamline operations and deliver smarter workflows.

These investments include a modern data warehouse, API architecture for rapid product development, and AI-driven marketing campaigns. The integration of AI is positioned as a key differentiator to scale growth and improve client value in a competitive payments landscape.

Outlook – Balancing Growth and Investment

Looking ahead, OFX expects continued investment through fiscal 2026, with operating expenses forecast between $173.7 million and $181.2 million. The company is not targeting operating leverage this year due to the accelerated rollout of OFX 2.0 and expansion of non-FX revenue streams. Corporate migration to the new platform is expected to complete across major markets by the third quarter of FY26, with consumer segment migration planned for FY27.

Despite ongoing macroeconomic uncertainty and weak business confidence, OFX targets net operating income growth in the second half of FY26 and anticipates strong, sustainable growth from FY28 onwards, including a projected 15% NOI growth and non-FX revenue comprising 10% of total revenue.