Thank you all for joining us this morning. As Jamie said, I am Jamie Twiss, the CEO of Beforepay Group, joined by Laavanya Pari, our chief financial officer, and we are here to present our fourth quarter results for FY 2026. I am delighted to be presenting these results, and I am delighted to be presenting these results not only because the numbers are outstanding, as those of you that have seen the ASX release will know, but also because the way in which these numbers are outstanding represents actually something of a turning point for Beforepay Group. Indeed, I think it is the culmination of the last couple of years of work and a number of things that we have been thinking about and working on and talked about for a while, but now we are seeing them truly pan out in the numbers.
Laavanya will talk through the numbers in more detail. I think just to call out a couple of high points. First of all, as you will have seen, we have truly started scaling personal loans. Originations were up 47% quarter-on-quarter, up to more than AUD 7 million. That product is now well and truly launched, and we expect that to become pretty meaningful for the group over the course of FY 2027. Then, as we noted in the release, we have completed the repricing of our Pay Advance product. Again, you are seeing that flow through to the numbers as well. I think the actual results of the quarter pretty clearly speak for themselves. Quarterly revenue was up 43% year-on-year. Profit before tax was up 68% year-on-year.
I think those initiatives are not only now well and truly underway but are actually materially contributing to the group, and we expect the benefits from that work to continue into the future as well. It is a very meaningful quarter for us. I think, again, really shows that upwards rebasing of the business in light of the initiatives and how they are starting to come to fruition. Laavanya, do you want to take us through the numbers in more detail?
Thanks, Jamie. I will now go through the financial results for the quarter. Advances were up 22% compared to the prior year, up to AUD 255.4 million. That was a combination of the average advance size increasing on the Pay Advance product, as well as growth in the personal loan book. Revenue grew by 43% compared to the prior year, up to AUD 14.8 million. In addition to the reasons that I just gave for advances growing, we also had the repricing of the Pay Advance product. By the end of June, substantially all the loans issued were attracting interest, resulting in that increase.
When you move down to the net transaction margin, we had a record quarter at AUD 9.2 million, which was an increase of 26% on the prior year and 16% compared to the prior quarter. On Pay Advance, we continue to optimize our advances and our net defaults, resulting in that improved net transaction margin. It's also important to note on the personal loan side that we take 12 months' worth of the expected credit loss provision upfront at origination. From a timing perspective, that results in higher provision costs upfront, while the revenue for personal loans extends over the life of the loan. It's just important to keep that in mind when considering the net transaction margin. The operating expenses were AUD 5.9 million for the quarter, which was down 13% compared to the prior quarter.
We had some reductions in employment costs as well as on the digital marketing expenses, including some one-offs that were included in that number. That combination of the improved revenues, growing net transaction margin, and reducing operating expenses gave the net profit before tax of AUD 2.4 million for the quarter, which was 68% up compared to the prior year and 566% up compared to the prior quarter. You can see that we had AUD 12.9 million from a cash perspective. That includes the funding and settlement accounts. Our equity position was AUD 48.6 million. A very strong and healthy balance sheet that we have.
We also drew a further AUD 5 million on our debt facility during the quarter, on the existing debt facility prior to the change. That was to support the growth in the personal loan book. I'll now hand it back over to Jamie.
Thanks, Laavanya. I'll just finish where I started. As those of you that have been on this journey with us for some time know, as a company, our preference is always to underpromise and then overdeliver. We'd always rather do the thing first and then talk about the thing once we've done it. I think that's where we stand now. This quarter, we demonstrated that personal loans can scale and become pretty material. We obviously completed the new debt facility, which will have significant financial benefits to us, but also will unlock significant balance sheet growth in the months and years ahead. Finally, the completion of that repricing work, introducing interest on the Pay Advance product, is very significant for us, and we expect the benefits of all three of those accomplishments to continue into FY 2027 and beyond.
I think it was a fantastic quarter. We expect FY 2027 to be very, very strong as well as a result of this progress. Thank you, and with that, happy to take your questions.
Thank you, Jamie. We will now move to the question -and -answer session. Once again, if you have a question, please type it into the Q&A box on your screen. We have a couple of questions in the screen already. The first one is in relation to your release today, the new payment model, or the pricing model for Pay Advance. Can you just please talk about what this might mean for earnings in FY 2027?
Yeah. Just to clarify that, we have always charged a 5% origination fee on our Pay Advance. Over the course of FY 2026, we progressively rolled out an interest charge as well of 2% per month. That has now largely been completed, with a few minor exceptions here and there. Essentially all of our Pay Advance are now paying that slightly higher rate. We did point out in the advance today that if you took the FY 2026 volume and you had applied interest at the current level to all of the advances originated in FY 2026, disregarding second-order effects and any other moving parts, the increase in profit would have been AUD 12.5 million.
While of course there are always ups and downs and moving parts, and that is essentially the right way to think about it for FY 2027 as well, depending, of course, on how the actual volumes and duration and things like that evolve. We do expect a number of that magnitude to be incremental to FY 2027 profits.
Thank you. We've got another one here from Luke Alexander. It's quite a long one. Congratulations, Jamie and the team, on what appears to be one of the strongest quarterly updates I have seen in years. Aggregating the quarterly figures suggests a full-year profit of approximately AUD 7 million-AUD 8 million. Looking ahead into next year, if we factor in the anticipated AUD 12.5 million in interest income, alongside the expected AUD 1 million in savings from the new debt facility, plus adjusted user loan interest fees, is it reasonable to assume company net profit approach AUD 20 million, assuming all other variables remain constant?
We don't make a forecast; I don't want to actually put forward a view on what will happen in FY 2027. The way that you are thinking about our business and the different moving parts is correct. Of course, there will always be moving parts and there will always be ups and downs, but the different pieces that you have put together to think about FY 2027 are the right pieces.
One additional point on that, just with the debt facility. The AUD 1 million savings that we've included assumes a debt facility of AUD 40 million. At the moment, we have drawn AUD 35.9 million under the existing debt facility. With our growth in the personal loan product, we expect to continue to utilize the debt facility. I think that's just one clarification on that.
Great. Got a question here from Dean Fergie. There's always a balance between writing more or larger loans and increasing bad debts. Where is the company thinking they will move on this scale?
Let's talk about Pay Advance and personal loans slightly differently, although we have the same methodology on both. One of the things that we do when we are thinking about the size of actually an advance or a loan is for that individual user, we estimate the likelihood of a default or a loss based on different possible sizes of loans or advances we could give them. Essentially, when we map our product economics onto that, we find that you generally get this kind of curve where at the smaller end you have low losses but not enough revenue. At the high end, you have more revenue, but the losses can be high. We actually literally calculate that contribution curve, that transaction margin curve between them.
Subject to a few other things that we do, we essentially set the limit for that individual at the top there. We are very mindful of this trade-off, and we have an analytic approach that I think in a fairly rigorous way will optimize that trade-off for any one individual. In terms of how that actually plays out at any point in time, we go where the data tells us. If we saw, for example, that if default rates were to decrease because of a more powerful risk model, and this is essentially what's been happening over the last few years, essentially that curve kind of starts to shift a bit to the left, my left, your right, and we would see limits go up overall.
When you look at the increase in average advance size, Q4 FY 2025 at AUD 390 to AUD 454 at Q4, that's what's happened. Defaults have come down a little bit, and we've chosen to take that gain in the mathematically optimal combination of how that closes with both defaults and revenue at the same time.
Great. I've got a follow-on question related to that. How is the retention rate looking at the moment?
Very strong. It's a pretty loyal and sticky customer base. The most significant driver of churn is actually if somebody is blocked from using the product for any reason, often because of a default or for falling out of our eligibility criteria. There's sometimes just a little bit of voluntary churn, but we haven't seen any material changes.
Okay, thank you. Got one here on, Do you still expect roughly 80% advance rate on the new debt facility for future loans?
We haven't given any more information within our release specifically on that. I can't give you, but we're not retracting from the 80%.
Yeah. It's not a material change.
Okay, one more here from an anonymous attendee. Are you marketing personal loans to both new and existing customers?
Yes. We have opened up the personal loan to new-to-group customers. Most of the volume is still coming from the existing customer base, simply because we know those people so well. We have hundreds of thousands of loyal, active users where we deeply understand their risk and rate of excellent communication and good loyalty from them. The bulk is still from existing users. Yes, if new-to-group customers download the app, log in, and then are eligible for a personal loan, they have the option to take that out.
A related one from Thomas Sema. With active users flat to modest at 267,000, is the future growth narrative shifting from net new user acquisition to deepening monetization per user through larger advances sizes and personal loans?
That's a great question. I think the answer is in line with what we've been saying for a little while now, which is that the active user number is something we've reported for a very long time; we don't want to not give it to people. In practice, the economics of the business are focused on the lower-risk users who are taking out on the Pay Advance side, now AUD 1,000, AUD 1,500, AUD 2,000 advances, or are taking out a personal loan. The active user number has a whole lot of people who are taking out AUD 50 advances. While they're valuable customers and we want to be helpful to them, they're not as financially material to the group.
About 18 to 24 months ago, we started shifting both the way we thought about eligibility as well as our marketing to be much more focused on those lower-risk and higher-average-balance users. What we're seeing is that riskier, lower-value tail has been shrinking as a proportion of the over-the-book overall. You can see that in that increase in average advance size. I think the answer to your question is probably yes, not so much because we, an individual user, is necessarily getting a very different offer than they got last year or next year, but because that mix is shifting as we focus more on value-creating customer acquisition.
Great. One here from Philip Deason. Congratulations, team. Is the new average net loss rate inclusive of personal loans? What are the loss rates for each product type?
They are inclusive of personal loans. We actually haven't broken it out between the two of them yet. You should expect that personal loans will run at a higher loss rate than Pay Advance. As personal loans become a more material part of the business and start to contribute on its own two feet, then obviously we'll look to provide more information about that.
Right. Another anonymous attendee question. If the presumed profit of AUD 20 million, what are the prospects of the company doing a buyback to add value to shareholders who have been in the business for a while?
I'll start by saying that the AUD 20 million has gained currency through this Q&A. I just want to be clear that's not a forecast from us as to what FY 2027 profit will be. I think ultimately, if we're in a position where we should be thinking about capital management, as we do with everything, we will follow the logic and the reasoning and see where it goes. I do think that the rate of growth of the personal loan product will obviously create opportunities to continue to deploy the capital that we're generating, the profit that we're generating, in a pretty value-creative way.
No problem. Then there's a few questions here on Carrington Labs, which I've sort of merged into one. Can you provide an update on the sales pipeline? Basically, just an update really on how things are going. What's the sort of prospects for it being a standalone profit center?
Obviously this was, well, the last couple of quarters, especially this quarter; we've had a lot of focus on Pay Advance and personal loans, given the results and the growth that we're seeing there. We did have the release of the cashflow Score on Snowflake; that's actually quite a nice milestone for us. That gives much easier access for a much wider pool of clients and potential clients to try out the score as well. As we've said in the past, as indeed I said earlier on this call, we'd always rather do the thing first and talk about it later. We don't have any other new client announcements from this quarter; when we do, obviously we'll be excited about those.
Maybe just one more on Carrington there, that there is a question here relating to AI and whether that's something that could be beneficial to the business or is it a risk?
Yeah. I'm always cautious about talking too much about AI, just because it can be such a buzzword, and there can be a fair bit of hype in there. Actually, we use AI pretty extensively across the business. It's used quite significantly, especially in the very upstream model creation process. We don't use it for inference, the actual decisioning of an individual. We don't use any kind of black box algorithms. Everything is fully explainable. Upstream in that model creation product process, we use it quite a bit. I think it is a significant opportunity for us overall. It's one of the many reasons that we are able to create custom models for individual clients quickly and cheaply enough that actually we can deliver them as a service and keep those models evergreen and updated, which is quite a competitively disruptive thing to do.
It's a tremendous advantage for us.
Great. I've got another one here from an anonymous person. With personal loans, what is the average size and duration, and do you expect this to change materially over time?
I don't think we actually published an average size this quarter, but I think we might have last quarter. The range of personal loan sizes goes from AUD 2,001 -A UD 5,000. It's roughly in the middle of that. In terms of duration, we offer a range of durations up to 12 months. I think many to most of the users opt for that maximum 12-month duration. It is fully our expectation that, and again, without putting a specific timeframe on it, that both the maximum size, which is currently AUD 5,000, and the maximum duration at 12 months, that we will expand those when we feel that, from a credit risk standpoint, we're well-positioned to do so. I think that will be a significant growth vector for personal loans at the right time.
Okay. Got a few more coming through here. In the previous quarter, cash was increasingly used to fund loans. Given the new facility, do you plan for changes in that balance?
As I said in my update, we drew a further AUD 5 million on the existing facility; that's to fund the personal loan group book. As you said, on the Pay Advance side, what we've seen in previous quarters when personal loans growing, at least we were able to use the cash to fund the personal loan books. As that's growing, especially as the duration is growing, going up to 12 months in duration, we continue to use our debt facility; that's a primary factor for getting an increased debt facility and some better rates.
Yeah. We've been using cash more recently simply because we don't have a lazy balance sheet. We do wanna work the balance sheet a bit harder than we have in the past. Obviously, where we need to use the new facility with its additional firepower, of course, we will do that. It's good to be able to grow the personal loan book at what we feel like the natural rate.
Okay. One more here from Thomas. I think it's maybe a follow-on from his previous question, just in case you haven't answered it already, What is your view on Beforepay's total addressable market penetration in Australia, and what is the catalyst required to re-accelerate quarterly user acquisition back into mid- to high single digits?
I think if you look at the total addressable market, first of all, there's Pay Advance, and there's personal loans. Pay Advance really did not exist as a product before we started. I think it's tricky to try to draw conclusions about it just from where we and a few others are today. As we think about user growth in Pay Advance, as with everything, we are very much driven by what the data is telling us about value. We will spend up to the value of a customer on a marginal basis, not an average basis, on a marginal basis to acquire that customer, and then we will stop spending. If we change that approach and we wanted to spend more, I think we could grow the book faster, but that wouldn't be value-creating; we don't do it.
On the personal loan side, that's obviously a market with tens of billions of dollars across Australia. As we push out our durations and limits, we expect that we will increasingly take larger and larger shares of that. Within the personal loan space that's currently defined, that AUD 2,000-AUD 5,000 space, this is off the top of my head. Somebody should check these facts, but ASIC put out a report in March 2025; it looked at quarterly origination volumes for loans in that AUD 2,000-AUD 5,000 range. I think when you do the math, and this data's now a couple of years old, it came to about 3,000 loans a week.
We do some kind of back-of-the-envelope math, and you'd say that by loan count, we've got about, standing start, we've got to call it 5% of that AUD 2,000-AUD 5,000 loan market. We expect that that will grow in and of itself, and as we add durations and larger limits, that we will penetrate the larger market as well.
Great. Okay. One more here. It's in relation to the share price. I'm not sure what you can add. Why do you think the stock price has dropped quite so much before stabilizing at the current level? Has the market misread the performance of the potential of the business?
Look, we generally don't try to form a point of view on the stock price. Obviously, we will often trade with the broader tech or fintech market. As that's been challenged, our shares have generally traded in line with that as well. Again, it's not something we spend a lot of time on.
Great. Okay. The last one here at the moment, bit of a funny one. Are the Beforepay T-shirts available for sale?
Actually, one of my pet projects that I've been trying to get around to for about three years has actually been to have a merch shop because I'm really proud of the company, and I think more people should be able to wear the T-shirts. I'll tell you what, whoever put that question in, send me an email and I'll sort you out. I think we can square a T-shirt.
Very good. All right. Well, that concludes the Q&A session. I'm gonna hand it back to Jamie for any closing remarks.
No, I just wanna say, this does feel like a pretty significant turning point for the business. I think this quarter has demonstrated that the things we've been working on for the last couple of years really are coming to fruition. I think we genuinely have rebased the business upwards, both in terms of volumes and margins. As you've seen from some of this discussion, again, without putting out a forecast or being overly specific about FY 2027, we do think it's going to be a very significantly different and better year for us, and indeed, the next several years. I'm grateful to everybody who joined today. I know many of you have been on this journey for a while. As always, we appreciate your support and confidence and trust, and we're delighted to be where we are today with all of you.
I certainly appreciate you joining today, and we'll see you at the full year.
Very good. Thank you. You can now disconnect.