Expansion in Business-to-Business International Transactions via Payment Systems

Article Title: Argentex Thrives Amidst Challenges Facing Peers in Foreign Exchange Market

In the dynamic world of foreign exchange and international payment services, one player stands out for its resilience and growth – Argentex. Based in Cambridge, UK, the company has been growing at a healthy rate since its launch in 2012, even amidst the unprecedented challenges posed by the pandemic.

Argentex's growth rates are on par with other leading B2B-focused players like Ebury, Cambridge, and Alpha. Despite the pandemic, the company did not report any adverse material impact from its hedging business, setting it apart from some of its peers who have faced challenges. EncoreFX went out of business, and Cambridge reported a $90m loss.

The corporate segment, with its long tail of small providers offering relationship-driven sales, remains an attractive market for Argentex. The company focuses on the mid-size and up corporate segment, a strategic decision that seems to have paid off.

Argentex's revenue from spot and forwards has been evenly split in the past few years, and its take rate (revenue share of FX flow) hovers around 0.2%. The balance of its clients, numbering 1,212 in total, have an average annual revenue of just over £14k. This is a testament to Argentex's ability to cater to a wide range of corporate clients.

Daniel Webber, a well-known figure in the industry, is associated with Argentex, as evidenced by his LinkedIn profile. The company IPOed in June 2019, further solidifying its position in the market.

Comparisons with peers are not possible for AFEX, Global Reach, and Monex due to lack of recent or available data. However, Argentex's revenue per employee is exceptional and comparable to peer companies in the financial services sector such as WorldFirst, HiFX, and TorFX, which also specialize in foreign exchange and international payment services.

Argentex's revenue per employee is particularly impressive, with just 54 staff members generating nearly £30m as of 31 March 2020. This high efficiency is likely a result of Argentex's focus on automation and technology, allowing it to serve clients effectively with a lean team.

While rivals like Revolut and TransferWise are gaining customers and primarily serve small businesses with much smaller per-customer revenue, Argentex's focus on the mid-size and up corporate segment has allowed it to carve out a niche for itself in the market.

Notably, Alpha FX initially reported a significant potential loss in April due to the pandemic, but this has been mitigated to a loss provision of £2m. This suggests that even in challenging times, Argentex's peers who have taken on more hedging risk have had a tougher time.

In conclusion, Argentex's performance in the foreign exchange market stands out, especially amidst the challenges faced by some of its peers. The company's focus on technology, automation, and the mid-size and up corporate segment seems to be a winning strategy, allowing it to thrive and grow since its launch in 2012.

Expansion in Business-to-Business International Transactions via Payment Systems