Release Date: August 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- QuickFee Ltd (ASX:QFE, Financial) achieved EBITDA positive status in Q4 FY24, indicating improved profitability.
- Operating expenses decreased by 12% in H2 FY24 compared to H1 FY24, reflecting diligent cost management.
- Revenue growth has been consistent, with a 37% increase to AUD20.3 million in FY24.
- The company signed 103 new customers and launched three new strategic partnerships in FY24.
- The Australian segment saw a 49% revenue increase, driven by record lending volumes and higher yields.
Negative Points
- Despite improvements, QuickFee Ltd (ASX:QFE) still reported a net loss of AUD4.7 million for FY24.
- Interest expenses increased significantly to AUD4.7 million due to higher borrowings and interest rates.
- Overall new firm sign-ups decreased, attributed to a focus on larger, higher-quality firms.
- The U.S. market faces challenges such as increasing inflation, talent shortages, and economic uncertainty.
- The Australian BNPL product, while growing, remains a small contributor and could be seen as a distraction from core products.
Q & A Highlights
Q: There's been a lot of talk in the past week about US interest rates potentially going lower by the end of the year. What impact would that have on QuickFee in FY 25 and on your earnings guidance?
A: Simon Yeandle, CFO: The rates we charge our clients are relatively inelastic in terms of demand, so a decrease in interest rates wouldn't necessarily decrease our rates to customers. Our cost of borrowings are tied to cash rates, and a 1% change would impact our interest costs by about AUD 500,000. This shouldn't materially impact our earnings guidance.
Q: You've talked a lot about Connect and its importance to the business moving forward. What does success look like for Connect in FY 25?
A: Jennifer Warawa, President, North America: Success for Connect includes a firm foundation of happy customers, a solid base of subscription revenue, increased QuickFee finance volume, and increasing transaction volume across our P&L solutions. Connect underpins many of our business goals.
Q: Can you shed some light on Q1 FY 25 so far?
A: Simon Yeandle, CFO: We're seeing similar growth rates to FY 24 across both Australia and the US. We don't expect any decline in the OpEx base in the first half as we are accelerating the deployment of our products.
Q: What has been the customer feedback after the launch of the integration with New Law?
A: Jennifer Warawa, President, North America: The feedback has been extremely positive. Customers appreciate the robust functionality and easy customization. The integration has helped us retain customers who were considering competitive solutions.
Q: Have you received any customer feedback following the launch of the integration with Thomson Reuters?
A: Jennifer Warawa, President, North America: The response has been incredibly positive. We had a webcast with 100 attendees just to look at the TR integration. We're already seeing implementation revenue and subscription base growth.
Q: What is the next Connect integration you are working on?
A: Jennifer Warawa, President, North America: The next integration is with Practice ERP, built on the NetSuite platform. We have good momentum and referrals already coming in for this integration.
Q: What are your thoughts on the economic environment in Australia and its outlook for FY 25?
A: Simon Yeandle, CFO: Insolvencies have spiked, but accounting and legal firms tend to survive in both good and bad times. Cost-of-living pressures are still there, but small businesses are still growing and spending on professional advice. We expect conditions to continue working in our favor.
Q: How is the M&A activity in the US impacting QuickFee?
A: Jennifer Warawa, President, North America: M&A activity is high and can impact us both positively and negatively. We benefit when firms we work with acquire others and move them to the QuickFee platform. However, we can lose business if a firm we work with is acquired by a firm that doesn't use QuickFee.
Q: Has there been any thought to shut down the Australian BNPL product to focus on core product lines?
A: Simon Yeandle, CFO: The BNPL business takes minimal resources and is generating a small amount of cash from a growing base of merchants. We have no intention to shut it down but will continue to monitor its performance.
Q: What is QuickFee doing to improve its visibility in the investor community?
A: Katie Mackenzie, Investor Relations: We are committed to transparency and engaging with our investors through webinars, an upcoming investor hub, and more PR and Southeast focus. We have also welcomed new institutional shareholders to the register.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
