Global money transfer provider OFX Group, formerly OzForex, has dumped chief executive Richard Kimber before he was halfway through a multi-year turnaround strategy. It is the latest upheaval for the once promising fintech start-up which has consistently failed to deliver on ambitious targets.
OFX was one of those disruptive companies with a strategy that sounded unbeatable. Its technology platform would allow customers to transfer money between countries at cheaper rates than big banks or traditional foreign exchanges companies could offer.
That was until former chief Neil Helm, who convinced investors like Macquarie Group and Carlyle Group to invest in the company, quit suddenly in February 2015.
Kimber came on board the following June, announcing plans to consolidate seven global brands and double revenue to $200 million.
The former ANZ senior executive will not have a chance to deliver on his long-term plan after another profit warning, which wiped almost 19 per cent off the company's share price on Wednesday, was the last straw for the board.
Chairman Steven Sargent has replaced Kimber with an old General Electric colleague Skandar Malcolm. It is the latest in a string of chief executive departures and profit downgrades by Australian companies heading into interim earnings season.
While OFX is blaming the impact of Brexit for its latest earnings downgrade on Wednesday, the real problem is the company has failed to properly execute on an aggressive marketing strategy in Australia where revenue projections have fallen short.
The management change is a recognition by the board that the strategy is not delivering the results Kimber promised. Part of the problem was that the company had not completed the heavy investment in the company's technology platform needed before it started marketing its services.
Despite this, some investors feel Kimber's departure is premature despite the disappointments. They are not yet confident that bringing in new blood is the answer to the company's problems. "I'm surprised that one year into a four-year strategy the board has got rid of the CEO. I thought he would have been given more time," one key institutional investor in the company says.
The company says $3 million has been wiped off its forecast fee and commission income because Brexit and the sharp fall in the British pound sapped demand for transactions. This accounts for around three-quarters of the company's profit downgrade. The rest is due to disappointing revenues from its Australian marketing program in the third quarter and into January. It is now forecasting a net profit of $19 million this year.
OFX is upgrading its global technology platform, migrating to Amazon Web Services and making it more modern with single source coding and abolishing the need for data centres. This is designed to make the user experience faster and more customer-friendly. However, there was a timing issue in the execution as the upgrade was not completed before OFX started marketing its services as it accelerated its expansion in Australia, the United States and other markets.
The board is confident the company will still fire up under a new chief executive and the existing senior management team Kimber put in place. The company has scale and the relationship with big banking networks.
michael.smith@fairfaxmedia.com.au
