OFX Reports $45.3 Million in Operating Income as Equals Deal Exclusivity Ends

Key Facts

OFX ended the process agreement for the proposed deal with Equals, but discussions between the two parties continued on a non-exclusive basis, according to a summary of the company’s announcement published by InvestorPA. This coincided with operating income of $45.3 million in the second quarter of fiscal 2027. Income increased 3.1% from the first quarter, according to the same summary. The year-on-year comparison, however, showed a 9.6% decline from the corresponding period, according to a SureStone Capital summary. That puts the quarterly improvement alongside weaker annual performance, while the takeover offer remains open without the exclusivity that had governed negotiations.

Equals’ proposal was an all-cash offer to acquire 100% of OFX’s shares through a scheme of arrangement, according to the company’s update published on 24 September. The consideration was reaffirmed at A$1.00 in cash per share, implying a stated equity value of A$247 million. Those terms did not make completion certain: OFX said in the update that there was no certainty the proposal would lead to a binding deal or implementation of the scheme. Entry into a deal implementation agreement also remained conditional, according to the update. OFX’s board viewed the proposed scheme as being in shareholders’ interests, while completion remained subject to satisfying conditions and reaching an acceptable implementation agreement.

By business line, corporate revenue rose 6.9% quarter on quarter to $28.4 million. OFX attributed the improvement to higher cross-currency margins and increased transaction volumes associated with them. Those margins increased by 3 basis points to 0.6% in the second quarter compared with the first quarter, according to SureStone Capital. The figures show that improved corporate activity came alongside gains in both margins and transaction volumes, rather than being driven by a single factor. Corporate revenue was also the largest among the business lines detailed in the available update.

Revenue from other activities moved in different directions. Revenue from high-value consumers rose 2.8% quarter on quarter to $13.3 million. Project revenue, meanwhile, fell 31.3% to $2.8 million in the same quarter. Revenue from non-FX products was $1.0 million, up 31.0% from the first quarter, according to the SureStone Capital summary. The divergence highlights improvement across some business lines alongside a sharp decline in projects, while non-FX product revenue remained small in absolute terms among the figures disclosed.

Alongside revenue, OFX had $36.6 million in available net cash at the end of the second quarter, down 25.7% from the first quarter, according to InvestorPA. The company also said in the same summary that it had delivered $15 million in annualised cost reductions through its quarterly trading update. Available cash declined during a period when income improved quarter on quarter, although it remained lower year on year. The liquidity and cost figures provide additional context for the quarter’s performance, alongside the divergence in revenue from corporate, consumer and project activities. The available summary provides no further breakdown of the factors behind the change in available cash.

OFX said in its 24 September update that trading conditions in fiscal 2027 had become more difficult than expected, and that it no longer expected annual growth in group operating income or in the number of active corporate customers. An earlier update also pointed to continued growth in non-FX product revenue alongside greater customer adoption of more than one product. These expectations provide context for the quarterly result: limited growth from the previous quarter, a decline from the corresponding period and varying performance across business lines. Exclusivity had been extended in September until 30 October at Equals’ request to complete debt financing arrangements. The current update says the deal process agreement and exclusivity have ended, while discussions continue on a non-exclusive basis, without confirmation that they will lead to a binding agreement.