OFX Faces Margin Pressure Amid Accelerated Platform Investment

FY25 Financial Snapshot

OFX Group Limited (ASX: OFX) has released its full-year results for the fiscal year ending March 31, 2025, revealing a modest revenue decline amid a challenging global economic environment. The company reported fee and trading income of $221.9 million, down 3.4% compared to the previous year, while net operating income fell 5.5% to $214.9 million. Despite these headwinds, OFX demonstrated resilience with a 24% increase in transaction volumes, although average transaction values softened.

Strategic Shift: New Client Platform

Central to OFX’s outlook is the accelerated rollout of its New Client Platform (NCP), which was initially launched in Australia in 2024 and is now expanding globally. The platform aims to enhance client onboarding, payments, and risk controls, driving a more seamless and scalable customer experience. Early adoption by new clients has been strong, and migration of existing Australian corporate clients is underway, with plans to extend to Canadian clients in FY26 and further segments thereafter.

This strategic pivot is already reshaping OFX’s revenue mix, with non-foreign exchange (non-FX) revenue climbing to 27% of total income. The company views this diversification as critical to capturing a larger share of the growing FinTech market, which is projected to expand at a compound annual growth rate of 10-15% through 2028.

Financial Discipline Amid Growth Investment

OFX’s management has committed to significant investment in the NCP rollout over FY26 and FY27, accepting that underlying EBITDA margins will contract in the near term. The company reported an underlying EBITDA of $57.7 million for FY25, down 10.7%, with margins slipping from 28% to 26.8%. However, operating expenses were well managed, declining 3.5% year-on-year.

Cash flow remains robust, with $51 million in available cash and ongoing debt reduction efforts, including a $24 million repayment in FY25. The company also continues an on-market share buy-back program, signaling confidence in its capital management strategy despite uncertain global conditions.

Market Position and Outlook

CEO Skander Malcolm highlighted the strength of OFX’s value proposition for small and medium-sized enterprises (SMEs), noting their readiness to switch providers in search of better cross-border payment solutions. While OFX is not providing specific net operating income targets for FY26, it emphasized a focus on growth and long-term value creation through the accelerated NCP rollout.

The company expects approximately 15% annual growth in underlying EBITDA by FY28, driven by higher-margin non-FX revenue streams and increased lifetime value from corporate clients. This strategy positions OFX to compete more effectively against major banks, which still dominate the SME cross-border payments market.