Multiple credible bidders sit in Phase 2 as management targets a return to 15% NOI growth.
On the face of it, OFX Group’s (ASX:OFX) FY26 result is ugly. Net operating income fell 8.5% to A$196.6m, underlying EBITDA dropped 56.4% to A$25.2m, and statutory NPAT slipped into a A$0.4m loss.
But the more interesting line in today’s release sits well above the financials. OFX confirmed its strategic review has moved into Phase 2, with multiple credible parties engaged and a process expected to conclude in the first quarter of FY27. That reframes the entire investment case.
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The cross-border payments group used the result to flag a return to growth in FY27, with medium-term targets of 15%+ NOI growth and a roughly 30% underlying EBITDA margin. Whether shareholders ever see that organic path play out is now an open question.
We think the read here is unusually binary. Either a bidder takes OFX out at a premium to today’s depressed earnings base, or management gets the chance to prove the OFX 2.0 platform actually delivers the operating leverage it has been promising for two years.
The strategic review is now the main event
OFX kicked off its review in February 2026 after inbound inorganic interest picked up and the board concluded long-term value was not reflected in the share price. Phase 1 attracted significant global interest and selected parties have progressed to Phase 2, which is expected to wrap up in 1Q FY27.
Our view is that the timing tells the story. Running a sale process into a result that prints EBITDA down 56% would normally be terrible optics. OFX has done it anyway, which suggests bidders are looking through the cyclical FX weakness to the migrated client base and the recurring wallet balances now sitting on the new platform.
Total client cash balances ballooned 42.3% to A$403m, with A$232.9m of that on the New Client Platform. That is a deposit-like asset earning interest income, and it is the kind of recurring economics a strategic acquirer pays up for.
Why FY26 earnings cratered, and why management says it is over
The damage came from three places. Fee and trading income fell 8.1% as business confidence hit its lowest level since April 2020 and FX volatility halved versus the prior two years. A A$11.8m incremental spend on the OFX 2.0 rollout absorbed another chunk of profit, while a small number of bad debt incidents in the North American corporate book added A$4.2m of unexpected expense.
The bull case is that none of these are structural. Corporate migration to the new platform is 91% complete, active clients on NCP grew almost 14 times while server costs only rose 2.7 times, and multi-product adoption sits at 8.4% versus 4.5% just one quarter ago.
Non-FX revenue jumped 177% in the month of March alone to A$613k, and management expects that line to compound as cards, wallets and subscriptions scale across the migrated base.
The FY27 guidance reads ambitious against the FY26 base
Management is guiding to a return to operating leverage in FY27, with corporate NOI and active client growth, cost growth capped at inflation, and capex of A$19-20m. Medium-term targets are 15%+ annual NOI growth and around 30% underlying EBITDA margin.
Worth noting that the FY26 underlying EBITDA margin was just 12.8%. Getting to 30% requires both NOI to reaccelerate and the bad debt issue to genuinely be a one-off, and we have heard variations of this growth promise before while core topline growth has remained subdued through the OFX 2.0 investment phase.
The supporting evidence is more encouraging than the headline numbers suggest. Corporate new transacting clients grew 8.3% excluding the run-off OLS book, Australian corporate lapse rates flipped from positive 2.1% to negative 1.2%, and migrated clients are showing materially higher multi-product attachment.
The Investors Takeaway for OFX Group
Two scenarios sit in front of shareholders. A bidder emerges from Phase 2 and OFX gets taken out, likely at a price that reflects the platform, the licences, the wallet balances and the option value, rather than the depressed FY26 EBITDA. Or no deal lands, and the stock trades on whether the FY27 organic plan converts NCP infrastructure into the operating leverage the guidance implies.
We think the wallet balance growth and the migration completion data are the two metrics that matter from here. If 1H27 shows continued non-FX revenue acceleration and the corporate active client base stabilises as flagged, the organic case strengthens regardless of what the review delivers. For investors who want broader context on small-cap ASX situations like this, stocksdownunder has further coverage of fintech and payments names worth working through.
