The OFX Group Ltd Fully Paid Ord. Shrs (ASX: OFX) share price jumped after it struck its largest enterprise partnership when it announced a deal with WiseTech Global Ltd (ASX: WTC).
The OFX share price surged 4.9% to $1.28 while the WTC share price rallied 2.3% to $31.81 in early trade.
In contrast, the S&P/ASX 200 Index (Index:^AXJO) and IT sector gained around 1% each at the time of writing.
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OFX share price and WTC share price getting a boost
OFX struck a strategic alliance with the logistics software company that will see OFX money transfer service integrated with Wisetech's CargoWise platform.
CargoWise customers will have a low-cost way of paying international invoices in 55 currencies through the OFX offering.
"The process for making international payments will be significantly simplified, creating accounts payable efficiencies and a better customer experience," said OFX in its ASX statement.
"The alliance will be for an initial term of three years, with marketing of the new solution to customers to commence in 4Q21 ahead of a full launch in 3Q22."
Recurring revenue growth
This deal is expected to generate at least $5 million in annual fee and trading income by FY24, according to OFX.
"It will generate Fee & Trading Income in FY22 and FY23 as we onboard customers," added the company.
"The alliance will be supported by a capital expenditure investment of approximately $1m over the next 12 months funded by cash."
But the service will only be offered to CargoWise customers located in countries where OFX operates. This includes Australia, New Zealand, United States, Canada, UK, Europe, Singapore and Hong Kong.
ASX tech stocks back in the spotlight
News of the partnership comes at a time when tech stocks are rocketing. The sector is finding favour again in the wake of the yet-to-be-decided US presidential election.
The tech-heavy NASDAQ is outperforming as investors believe the likely outcome will see Joe Biden win the White House but Republicans control the Senate.
Such as outcome will mean that corporate tax cuts made by Trump is unlikely to be unwound, while record low interest rates will be with us for years.
The same thematic is happening in Australia. Our central bank is committing to keeping rates at 0.1% for at least three years, while the federal government moved to cut taxes in the latest budget.
These measures are seen to favour tech stocks both here and in the US. But they aren't the only stocks that are well placed to outperform in 2021.
