Shiva Nithiaseelan: Good morning, everyone, and welcome to Beforepay Group's Q1 FY27 results webinar. Thank you for joining us today. My name is Shiva, and I work from investor relations at Beforepay. We will provide an overview of the company's performance for the quarter, followed by questions at the end of the presentation. If you have any questions throughout the session, please submit them using the Q&A function in Zoom, and we will address as many as possible. I will now hand over to our CEO, Jamie Twiss, and CFO, Laavanya Pari, to take us through the results. Jamie, over to you.
Jamie Twiss: Well, thank you, Shiva, and thank you everybody for joining us this morning. We are delighted to have you here. This was obviously a very strong quarter for us, so many of you will have had the chance to see the release, which is out on the ASX and on our website now. The best quarters are always the ones when the numbers and your results do the talking for you. Just to summarize very briefly, performance in the last quarter on a year-on-year basis, we delivered a revenue increase of 45%.
Jamie Twiss: Cash profit was up 58%. As that shows, on a cash basis, we had a significant net margin expansion to 35%. This was driven by a number of factors. The run rate effect of the new pricing structure we put in last year, as well as the new debt facility contributed as well, of course, as strong volume growth and our usual tight cost discipline. I hand it over to Laavanya to take you through the numbers in more detail.
Laavanya Pari: I will now go through our financial performance for the quarter. Total advances were a record AUD 264.7 million, which was 17% up from the prior year. This was driven by the average advance size, which went up from AUD 446 to AUD 524, which was also 17% up. That contributed to another record, which was revenue at AUD 16.5 million, which was 45% up on the prior year. The advances contributed to that, as well as the repricing that Jamie mentioned on the Pay Advance product.
Laavanya Pari: Going specifically on the Pay Advance product, you can see that the total advances were AUD 257.7 million, which was an increase of 16%. Looking specifically at the Personal Loan product, it was AUD 7 million, which was up 269% on AUD 1.9 million in the prior year. Looking at our credit performance for the quarter is 1.41%, which was an increase from the prior year. As you know, we deliberately manage our average advance size to ensure that our credit performance is maximized.
Laavanya Pari: You can see the increase in our risk-adjusted revenue and our profitability contributed to the overall result. When you take that increase in revenue of 45% and the credit performance and the overall performance of the business, that contributed to a cash NPAT for the quarter of AUD 5.7 million, which was 58%. Overall, a very good result for us this quarter.
Laavanya Pari: Moving to our balance sheet, you can see our cash at bank was AUD 6.4 million, and overall cash was AUD 13.6 million for the quarter. Our equity position increased from the full-year results at AUD 48.9 million up to AUD 54.1 million. Our funding position was, we had a drawn amount of AUD 36.6 million and our overall facility amount, as we mentioned in the previous quarter, is AUD 100 million now with the new facility. I will now hand it back to Jamie.
Jamie Twiss: In terms of where to from here, the answer is, as it usually is, more of the same. Obviously, these are very strong numbers. We are really pleased that all of the capabilities we have in automation and credit risk management are so clearly and dramatically flowing through to the bottom line. I would note that there is nothing about Q1, about this quarter just passed, that was particularly unusual in terms of what we expect going forward, no material one-offs.
Jamie Twiss: While we do not put out a forecast, future quarters will also have the same benefits that Q1 had. As we said at the full year in August, we said then that we felt very confident about FY27, and I think these numbers show you why we felt confident at the time and why we continue to look forward to the rest of the year. Thank you.
Jamie Twiss: It's very gratifying to be able to deliver a result like this, and many of you have been on the journey with us for many years. It's wonderful to be able to deliver outcomes like this for you in particular. Thank you. We'll now turn to questions, so I'll hand back to Shiva to moderate the Q&A.
Shiva Nithiaseelan: Thank you, Jamie and Laavanya. We'll kick off the Q&A section shortly. If you have any questions, just a reminder, please submit them using the Q&A function in Zoom. I've got a couple of questions coming through. Jamie, there's a question on net bad debts for the core Pay Advance product increasing in Q1 from Q4. Can you just provide a bit of context around what drove the increase on that? And was it
Jamie Twiss: Yeah
Shiva Nithiaseelan: season pressures or was there macroeconomic stress?
Jamie Twiss: Well, actually the answer really is neither, as far as we can tell. Seasonally, Q1 is actually usually a pretty good quarter for us. We haven't actually seen anything that feels like significant macroeconomic stress come through the portfolio on the credit line and either the Pay Advance or the Personal Loan product. Happy to talk more about that, if that's of interest. I was actually quite pleased that we were able to, I know it sounds odd for a lending business, that we were able to bring net bad debts up.
Jamie Twiss: The reason for that is, as Laavanya mentioned during her remarks, we look at average advance size and credit performance, net bad debts, as one thing, and we optimize across both of them. One of the things that has been challenging over the last couple of years, and again, this is a good problem to have, has been actually those loss rates have been lower than what they should be to be optimally efficient.
Jamie Twiss: What we have done over the last several months is we have been able to increase that average limit quite significantly, and that has brought up net bad debts with it. In general, all things equal, the higher the limit, the greater the probability of default. But as Laavanya Pari mentioned, the increase in revenue and in that gross contribution number has significantly outweighed the increase in credit losses.
Jamie Twiss: So all in all, that has been an important driver of our success, is getting those limits right-sized, bringing up that net bad debt number, bringing up that average advance size, and that is what you are seeing flow through. That is a big part of what you are seeing flow through to the bottom line.
Shiva Nithiaseelan: Thanks, Jamie Twiss. I will combine a couple of questions on Personal Loans. I think, can you provide just a bit of context around the growth of the Personal Loans? The quarterly origination seems to have plateaued in Q1. Why is that?
Jamie Twiss: Yeah. Q1 and Q4 Personal Loan originations were very similar, actually timed it down Q4 to Q1. The big reason for that was we introduced a new Personal Loan specific risk model and rolled it out over the course of July. As we sort of settle that in, that has held approval rates at a slightly lower level. We have also done a little bit of work around limits and eligibility, but primarily it is around that new risk model.
Jamie Twiss: The pleasing news is the credit outcomes from Personal Loans are actually just a bit like the advance. If anything, too good right now. We did say in the 4C, we put a number out there of below 2% and said this number will normalize and it should normalize. If we ran it at that very low loss level, we would be doing something wrong, in terms of what we are lending.
Jamie Twiss: So Q4 to Q1, flattish. I think we continue to be very bullish on Personal Loans. I think, as we always say, in any individual quarter, even a couple of quarters, any metric may go up or down, but we feel pretty confident in the patterns over the course of longer periods of time. So we are very committed to Personal Loans. We continue to be very bullish about that product.
Shiva Nithiaseelan: Question from Phil, just around Carrington Labs and if you can provide an update on that.
Jamie Twiss: Well, I think as we said for Carrington Labs, we always prefer to underpromise and over-deliver. I think we would always rather do the thing first and then tell you about it rather than, "Oh, it is going to do this, it is going to do that." So we did not have any major announcements this quarter in Carrington Labs. I think one of the things that we have done over the course of this calendar year has been focusing on larger potential clients and deals, and those obviously move at a stately pace given the purchasing process on the other side.
Jamie Twiss: Obviously, at the right time, we will be very excited to make an announcement when we get there.
Shiva Nithiaseelan: Question from Chris on marketing spend for the quarter compared to how that is trending from previous quarters.
Jamie Twiss: Yeah. So marketing spend, it moves around a little bit from quarter to quarter, as those of you that have been with us for a while may recall. The big reason for that is while we do have a budget for marketing spend, we don't really manage that budget. What we manage towards is the productivity of that marketing spend on a marginal basis. So we always think about for the last paid acquisition we do of a customer, the most expensive one, how much did that cost us?
Jamie Twiss: And did that make sense in terms of the economic value of that customer? So when marketing spend goes up, it's because we have found a way to acquire more customers that are still profitable in a value-creating way. Now, Q1 was a bit unusual in that we actually had pretty healthy customer acquisition despite that spend not moving up in the same way. That was very pleasing to us. We're not yet sure if that's actually part of a longer-term trend in terms of better acquisition models or if that's just the way this quarter worked.
Jamie Twiss: We also are seeing a bit of a halo effect from the Personal Loan product. As we said previously, the Personal Loan product is available to new-to-group customers, people that have never taken out a Pay Advance, and we are doing some advertising around that. People who come in for that product, if they're not eligible for the Personal Loan, they then can choose to apply for a Pay Advance, and we are seeing some of that flow through as well.
Jamie Twiss: So that may be part of the increased productivity of our marketing spend. It's probably too early to say definitively, though.
Shiva Nithiaseelan: I have an anonymous question here just on the net bad debt write-offs and I guess the provisioning right back and I guess generally how we do provisioning at Beforepay. If you can just provide a bit of color on that.
Jamie Twiss: Loving you guys speaking up.
Laavanya Pari: Yeah. On the Pay Advance product, it is pretty straightforward. At 62 days, we consider it to be in default, which is a fair standard. Then a further 62 days from that, we write off the debt. That is the point at which that happens. When it comes to, it is slightly different for the Personal Loan product where it is more on the days past due. There we are looking at 90 days past due, and then a further 90 days from that is the point that we write it off. A loan could be in flight and at some point parts of it could be written off.
Laavanya Pari: Pretty standard, I would say, in the way that we do it from an accounting perspective. What I will also mention is that we do provision as required. We provision upfront on all of these loans regardless of the duration. Because they are up to 12-month loans, we do provision upfront for the entire duration of the loan, even though the revenue is taken up only for the component that relates to that period. We do have this mismatch in terms of the revenue that we recognize and how much we are taking up on that ECL expense.
Jamie Twiss: We do adjust that provision for the in-flight Personal Loans as well. If we see a cohort of loans performing better than expected or worse than expected, we will adjust that provision accordingly.
Shiva Nithiaseelan: I have a question here from Chris just on a bit more color on seasonality per quarter that is expected in Q2 and Q3.
Jamie Twiss: Yeah. Usually, if we think across the four different quarters, with Q1 obviously being the July to September quarter and finishing with Q4 at the end of the financial year in June. Usually Q1 is a bit more subdued from a growth standpoint as people are getting their tax refunds is a big part of that. Economically, things are a little bit quieter in the winter. Q2, you are obviously heading into the holiday season at the end of the year, and we see that volume start to pick up, but a bit of credit stress comes with that as well.
Jamie Twiss: We see credit is a bit worse in Q2 through that holiday season. It usually peaks right around Christmas. In Q3, demand I would say sort of normalizes to more of an average level. You just get the very tail end of that holiday credit experience in Q3. Finally, Q4 is probably the most normal of all the quarters. Easter kind of often has a slightly confounding effect, but Q4 is usually a reasonable bellwether for a full year number. If you think about where we are right now, as we head into Q2, you probably expect to see demand pick up further and a bit of that kind of temporary credit stress.
Shiva Nithiaseelan: Question from Chris: Which quarter do you expect to start paying income tax?
Laavanya Pari: Well, yeah, we are, as you well know, in a loss position.
Jamie Twiss: Net over the life of the company, obviously. We have been very profitable for a number of years.
Laavanya Pari: That is right. We have been utilizing the losses for a period of time. We still have an amount of losses still to go, so not in the immediate quarters would we expect for that to happen. But certainly, in the next year or two, progressing exactly as we are at the moment with no other change, we would expect to over time. Because we do not put out a forecast, it is a bit challenging for me to say exactly when that point will be. But obviously, we are in quite a profitable position, and we do know the repricing is coming through, so that will come. It just will not come in the next quarter or two.
Jamie Twiss: Yeah. You can obviously go back and add up our entire net profit position over the life of the company from our public financials to get a sense of how much more of the tax assets remains.
Shiva Nithiaseelan: Cool. I have a question here from Zhang. "Hi, Jamie. Thanks so much for the results. It is gratifying to see how much have you built the business to today. Interest rates have been going up in the macro world. What does that mean for our business?
Jamie Twiss: Yeah, that's a great question. Interest rates, they touch us in a few different ways. I will start by saying we don't have particularly high interest rate exposure on either side. Primarily, the nature of the product and the duration of the product. In general, it's not as big a deal for us as it would be for many other lenders who have much longer-dated books and maybe not fixing rates a bit differently. It affects us in 2 ways. One of them, of course, is on the demand side.
Jamie Twiss: Some of our investors have interest-bearing liabilities or incur new ones that have some sort of reference to the current level of rates. Either they've got a floating rate loan somewhere, or they might take out a new loan and be paying more for it as well. Now, we watch this very carefully, of course, and we look at what other obligations someone has because we have their bank transaction data. We can see flows in and out.
Jamie Twiss: Obviously, if they have other debt positions, we're very mindful of that on a risk basis. Because we run also the fixed pricing, when interest rates go up, our product becomes more attractive on a relative basis. So it's net probably a bit helpful for demand. Then on the risk side, we're cautious about that as well. Neither one's a huge effect. Then our third-party funding that we get is on a floating rate basis, so the higher rates do flow through to our funding costs.
Jamie Twiss: Now, again, given the duration of the book and kind of the yield on those assets, you probably wouldn't notice it in our financials unless you were specifically looking for it. But there is a bit of an effect there as well. So it's always something we think about. What we think about much more are the other things that go with changes in the rate environment. So, the extent that macroeconomic activity is driven by that, we have a lot of customers who work in industries with some level of exposure there, whether it's construction or something else.
Jamie Twiss: So we watch those a little bit through rates overall, but particularly through the individual economic experience those people are having. Some people do better, some people feel that pressure a little bit more, and we adjust our risk settings for each individual on that basis. Great question.
Shiva Nithiaseelan: I have a question here from an anonymous attendee. "Given the progressive rollout of higher limits on Pay Advances, do you therefore expect average size to continue rising?
Jamie Twiss: Yeah, that's a good question. I'll start by saying that actually, we haven't changed the overall limits on Pay Advances actually in years now. They range, the smallest one is 50 and the largest one you can get is AUD 2,000. What has changed is the mix of who's getting what limit. There are really two drivers for that. One is a customer mix effect.
Jamie Twiss: We've gotten much better in the last few years at targeting that less risky, perhaps slightly more affluent customer who's going to get a AUD 1,000, AUD 1,500 Pay Advance, as opposed to somebody who's going to have a smaller one. That mix effect by itself obviously increases that average advance size. Indeed, we've allowed some of the riskier customers, we're not acquiring as many of those. As those people default or roll off, they're not being replaced quite the same rate.
Jamie Twiss: The composition of the book is changing in a very positive way. The second piece of it is we are always improving the risk model. The 12th generation is the one we have right now. As I think I said at the full year that we're going to be moving towards the 13th generation over the course of the coming months. As the risk models get more powerful, that gives us the confidence with customers that previously it was a little bit unclear could they handle 600 or was 800 a better fit, or is that too.
Jamie Twiss: You cannot write, and it should be 400. As that risk model gets more powerful, all else being equal, and it is all else never equal. All else being equal, you would expect us to feel more comfortable assigning those higher limits to a broader number of customers. You do have those two structural tailwinds in the average advance size. It is a number that can bounce around a lot just from noise, right? We acquire a bunch of customers with lower limits that dramatically can shift down that average advance.
Jamie Twiss: Usage mix changes. Different groups of people borrow in January versus in October. Overall, of course, if macro conditions change, then that will flow through. There's so many moving parts that go into average advance size. I don't want to simply say that you should expect it to be higher this time. I genuinely don't know. But there are those two structural tailwinds behind it.
Shiva Nithiaseelan: Another question from an anonymous attendee. Can you tell us about headcount and how you think it will trend with growth plans?
Jamie Twiss: Yeah. One of the things that I think I am really proud of is that a lot of businesses say they run a fixed cost business, then you look at their revenue and costs seem to trend up with it as well. That is genuinely not the case with us. When I became CEO in 2021, we had about 35 people. We ran in the 30s for a few years. We have added some people over the last couple of years to build out the new loan management system and do a few other things.
Jamie Twiss: We are now right around 50. I should say that excludes some offshore contracted support staff we have in the Philippines, different economics and probably not that material to the spirit of the question. We are running at about 50 people, and that increase from 35 to 50, if you look at our FY21 revenue, was less than AUD 5 million for the year. We, yeah, got that right. We have obviously been able to really get the operating leverage of being a genuinely fixed cost business.
Jamie Twiss: The reason for that is that we are so heavily automated. We are writing 40,000 loans a week. Monday morning is not a particularly busy time for us, but we have probably done 100 loans since we got on this webinar, and it is highly unlikely that any human has touched any of those. It is genuinely a fixed cost business. I think our headcount does not really scale with the volume of business that we are doing. If it were to increase meaningfully from here, it would be off the back of something new that we were doing.
Jamie Twiss: If we launched a new initiative and we felt confident in that, we would add headcount to do that, but we do not really need to add people just to keep growing with the current strategy.
Shiva Nithiaseelan: I have a question here around guidance and forecast. How come you are not releasing guidance or forecast? The business has been listed for a few years now.
Jamie Twiss: Yeah. We generally don't think it's helpful to try to put out a forecast. Essentially, there's a lot of distraction factor around tracking against what we've told the market. I think our belief is, we're always running as hard as we can, and we deliver the results that we're able to deliver off the back of that. If you look at our performance over the last several years, it's been pretty continuous and steady progress. We don't put out a forecast.
Jamie Twiss: As I said earlier, we always believe we'd rather talk about what we've already done and achieved rather than what we hope to convince you we're about to do.
Shiva Nithiaseelan: I have a question here for Laavanya Pari. Now that we have activated and drawn down AUD 36.6 million of the new AUD 100 million facility, how does this asset fundamentally change our cost of funds going forward? What advantages does it give us over our peer fintechs, like Plenti, Wisr, who are facing compressed margins?
Laavanya Pari: We look in terms of the old facility moving to the new facility. What we have said is that under the previous facility, we had a rate of around 12.25% to 13.25%. We save at current rates around 3% to 4% on those previous rates. It is a pretty material amount. What we have said as well is on a AUD 40 million facility, that would save us annually about AUD 1 million.
Laavanya Pari: In terms of what that does for us versus our competitors, as Jamie Twiss mentioned, with the duration of our loans, especially on the Pay Advance products, but also on Personal Loans up to what we're currently issuing, the turnaround is so quick. Our average duration is less than a month. On the Pay Advance products, when you're looking at that, the funding costs, I guess, are not as material and we're not as subject to it as some of our competitors might be, who have those longer duration, and they're very much subject to rates going up and down.
Laavanya Pari: It is different in the way that they do as opposed to us. Saying that, on our Personal Loan products, we do plan to continue to extend dollar value and duration. We're up to AUD 5,000 over 12 months, and we do plan to extend that out. We do have plenty of available funds to be able to do that, and that's the reason for us getting this new facility. What is also different for us compared to the previous facility, which was only on the Pay Advance product, this one also includes the Personal Loan product. So that also gives us that flexibility as we continue to scale Personal Loans.
Shiva Nithiaseelan: I have a question from Mark. What was the net transaction margin for this quarter?
Laavanya Pari: We haven't released that metric this particular time. What you can do if you're looking for something similar from a cash perspective, is to take our revenue amount as published. We've given you our net bad debts percentage, and that will pretty safely give you a cash net transaction margin that you can use for comparison.
Jamie Twiss: Yeah. Then you would subtract out funding costs on the back of that. Most of the book is Pay Advances, so you know the average duration. We published the book size at the full year, so you can take a reasonable number off the back of that. But it's a pretty healthy number, obviously.
Shiva Nithiaseelan: I have a question from Larry. Has the Personal Loan outstanding amount been disclosed? If not, can you disclose?
Jamie Twiss: We haven't disclosed it. There's no particular reason we just haven't put the number out there. I think probably the best way to think about that number is if you wanted to do a back of the envelope, that'll get you in the general ballpark. If this number is important to you, please check my math as I do this. You can look at the last two quarters of originations because prior to Q4, most of the loans were 6-month loans, so that's largely run off now.
Jamie Twiss: Q4 and Q1, we originated about AUD 7 million, both of those. Oversimplify, let's say they're all 12-month loans. We're still writing other durations, but let's say they're 12 months. That would mean the Q4 loans average age of 4 and a half months at this point. So five-eighths the initial balance on a straight line amortization basis would be on the books. So five-eighths for Q4, seven-eighths for Q1. You add five-eighths and seven-eighths, so you'd say, okay, you've got 1 and a half times that AUD 7 million figure is probably roughly the outstanding. That'll get you AUD 10 or AUD 11 million.
Shiva Nithiaseelan: I have a question here from an anonymous attendee. Given the significant earnings improvement, what is management doing to ensure the institutional investors understand the company's profitability and growth trajectory going forward?
Jamie Twiss: That's a great question. I think, obviously there's a saying that in the short term, the share market is a voting machine, and in the long term, it's a weighing machine. The way that we think about this, of course, there are lots of different companies out there and we look forward to the results we're delivering being recognized in due course. The way that we think about that internally is, of course, we'll do everything we can to stay on the front foot in terms of that engagement and those conversations.
Jamie Twiss: But ultimately our job is to deliver results that are so compelling that they will demand and create the demand, create the attention that I think the growth and profitability and capability of the company requires.
Shiva Nithiaseelan: Can you talk us through some of the acquisition strategies used for Personal Loans? Surely these are not being marketed to current Pay Advance users, as this would directly cannibalize the current revenue due to end buy Beforepay.
Jamie Twiss: Yeah. I'd start by saying that as a mission-driven business, we do think a lot about how do we make sure that customers have the right choices in front of them. So if you are an existing Beforepay customer and the Personal Loan product is the right product for you, and from a risk standpoint, we feel comfortable offering it to you, then you do have the ability to take one out. We're not blocking people from doing that. There, of course, is a substitution from Pay Advance revenue to Personal Loan revenue when somebody does that.
Jamie Twiss: The question around cannibalization is actually an interesting one. So it primarily comes down to how to think about the probability of default on the Pay Advance versus Personal Loan for an individual customer. Actually, if you run some numbers about somebody who's taking out four Pay Advances a year at a certain value versus taking out an AUD 3,000 or an AUD 5,000 Personal Loan that runs the entire year. Actually, it's quite often a net positive for us.
Jamie Twiss: So I think that's just one thing to think about when we think about existing customers moving into the Personal Loan product. We also find, this is a big reason that we launched the Personal Loan product in the first place, a lot of our customers they graduate from the Pay Advance. They get to the point where that's actually not the product that meets their needs. They have more money. They are looking for something a bit different now, and we would hate to see them have to go elsewhere in order to get that AUD 3,000, AUD 5,000 beyond dollar loan.
Jamie Twiss: It is not that we are trying to keep existing customers out of the Personal Loan, but for them and for us, it can actually be quite a positive step for them at the right time. Having said that, I think the longer-term growth of the Personal Loan product will run increasingly through new customers. I think to date we have been really through the end of Q4. We were really buttoning down the credit on those new customers because obviously we know the existing customer base very well.
Jamie Twiss: A new customer, it is like a Pay Advance. You have to assess them quite quickly. We want to get ourselves in a point of feeling comfortable that we understood the credit around those new customers. I think we are there or thereabouts. We have been doing some testing of different marketing strategies, different ways to get in front of those customers.
Jamie Twiss: I think we will start to ramp that up at the pace that the data allows us to do. Then, of course, with Personal Loans, while there is obviously the direct side, we are a very expected value-driven business. If it makes sense to also look at distribution partnerships in intermediaries, aggregators, and so on, of course, we will do that at the right time as well. I agree with the spirit of the question, which is the strategic future of the Personal Loan product will come primarily through new-to-group customers.
Shiva Nithiaseelan: I have another question from Larry on Personal Loans. Are you observing a tendency for early repayment of Personal Loans?
Jamie Twiss: Not a huge one. There is a little bit of that because the Personal Loan construct is essentially a straight-line amortization loan. What we find is often people will say, "If I have the option to take this loan out for 12 months, I will do so. It gives me a bit of flexibility." We do not have prepayment penalties, so the tax refund comes in, and they decide they are just going to clean it up then. Of course, that suits us just fine as well. It is not material enough that I think you need to fundamentally change the way that you model it out. It is just a margin.
Shiva Nithiaseelan: Congratulations on the great results. Can you comment on what it would take for the company to continue on the growth trajectories in terms of people, the product mix, marketing, et cetera?
Jamie Twiss: Well, I think I would divide that question into two parts. One is the company as it is currently constructed, how do we keep moving forward at a good clip with good economics? And then what else might change there? So the company as it is currently constructed, as I alluded to a few minutes ago, we do not have to add a lot of people. There is not a huge amount of CapEx. I think if the Personal Loan book grows, of course, at some point there will be a need for more debt funding. But we are pretty well set up to continue the way we have been going and to continue growing in a very healthy way.
Jamie Twiss: We will always be optimizing and adding more things, but there is not a huge kind of cost burden, investment burden, FTE burden to keep growing the company across the existing businesses that we have with Pay Advance, Personal Loan, and Carrington Labs. Turning to the second thing, and again, I think we always rather do the thing first and then tell you about it rather than allude or promise things in the distant future that we are not rock solid confident on yet. As we make more money that does give us the ability to think about, okay, so we do three things today. When is the right time to introduce the fourth thing? What is that fourth thing going to be? We are, as many of you know, very disciplined around both cost and capital. So we are not going to just take a punt and hope something works out.
Jamie Twiss: We will always want to only put material resources behind something where we feel the right level of confidence to be confident that is a good bet for our shareholders. But I think, as these resources become available, as the company goes from strength to strength, of course, we are going to be thinking about what is the next big thing, what would it take to get there? And that could involve doing more. That could involve investment. That could involve people, capital, and so on. When it is the right time, we will obviously look forward to doing that.
Shiva Nithiaseelan: I think I have one more question coming through. As the economy is shifting, other lenders are finding the 28-day days past due loans are ticking up drastically. How does the business think about these risks whilst trying to grow the Personal Loan product in a saturated market?
Jamie Twiss: Yeah. I would say, first of all, we are finding credit getting steadily better overall, obviously adjusted for the changes we are doing in limits and the book mix and so on. We are not having the kind of struggles that I think some others are having, which I think is partially just the nature of our product being shorter duration. It is very easy for us to change our credit settings quickly if we need to. Also, I think we have a very strong capability to understand and lend to the right people in the first place by doing some of the deeper behavioral work that we are doing off transaction data. I think we avoid a lot of the pitfalls that are common to this industry. Having said that, of course, we always do think quite a bit about risk from every source.
Jamie Twiss: Macroeconomic risk becomes increasingly relevant as you get into those longer duration loans. The way we think about that primarily is by looking at what we can see in the data across different shifts in macro situations and how those flowed through to individual lending performance. Even if they were not as big as some of the shifts that might come up in the future, you can still get a huge amount of signal off the back of those, and then you can do scenario work to map that up and down. I would say at this point, we have not seen a lot that causes us to believe that, at least for our products, for our customers, and the way that we issue loans. We are very cautious. We never want to be complacent.
Jamie Twiss: We have not yet seen something that leads us to think that we may need to make a dramatic shift in how we approach originations.
Shiva Nithiaseelan: I have got one more question here, Jas. How is the Q2 outlook looking?
Jamie Twiss: I think, broadly speaking, as I mentioned earlier, seasonally, we always expect that Q2 will have some healthy demand, and then you will. It is not so much, it is a little too early for this. You see that kind of the credit performance start to change a little bit, sort of mid-November onwards. There is nothing we have seen that looks terribly different to that. I think in terms of the cost base, we continue to run lean. Operational resilience is good. I think Q2 is going to look like Q1 just for that extra little bit of the seasonal effects and then continued development growth of the business. We feel good about Q2.
Shiva Nithiaseelan: Cool. Thanks. I think we have gone through all the Q&As. Thanks everyone for that. I will hand it back to Jamie for final words.
Jamie Twiss: Great. Well, thank you, Shiva, and thank you, Laavanya Pari. I guess I will just finish where I started, which is to say that this was obviously a tremendous quarter for us. I think in addition to the results we actually delivered this quarter, again, this is what the sort of thing that we expect going forward. I think the work that we have been doing over the past several years, the changes we have made last year, they have delivered a very strong result and those conditions will continue as well. As we said at the full year, FY27 promises to be a very strong year for us and just very pleased that all of you are on that journey with us. Thank you very much, everyone. We look forward to seeing you at the Q2 results. You may now disconnect and thank you very much for joining us.
