The OFX Group Ltd Fully Paid Ord. Shrs (ASX: OFX) share price wasn’t invited to the morning rally after it posted its profit results.
But it may not only be earnings news that’s holding back the stock as the S&P/ASX 200 Index (Index:^AXJO) jumped by around 2%.
ASX tech stocks on the nose
Some of the negativity towards tech and online stocks may be casting a shadow over the OFX share price, which fell 2.7% to $1.29.
OFX share price dragged by big profit and dividend hit
The fintech’s half year result didn’t help either with management posting a near two-thirds crash in underlying net profit to $2.9 million.
The foreign exchange platform certainly wasn’t much of a winner from COVID-19. Management blamed a sharp drop in transactions in February and March when the pandemic hit for the dismal result.
The drop in earnings forced OFX to slice its interim dividend to $0.81 from the $2.35 a share it paid this time last year.
Silver-lining for the OFX share price
The weakness is largely driven by its consumer business, although its B2B transactions held up better.
The number of new corporate clients improved 10.6%, while revenue from online sellers outside of Asia surged 52% in the half.
This helped support turnover, which dipped 2.7% to $11.2 billion in the six months to end of September this year.
Is the outlook for OFX improving?
Management also told the market that it thinks the worst is over. It noted that transactions bounced by 10.1% across all its business segments in the second quarter of FY21.
OFX attributed the recovery to “a sustainable business model and good execution of its strategy”.
Lack of guidance will weigh
The reassurances would have meant more if not for the fact that OFX shied away from providing any guidance.
“With the near-term revenue outlook difficult to predict and continued sensible investment in our growth engines, as previously indicated we will not be targeting positive operating leverage for FY21,” said OFX’s chief executive Skander Malcolm.
“That said, we continue to see a good recovery in trading underpinned by strong cash flows, while our growth investments position us well going forward.”