Smartgroup Corporation Ltd

FY25 revenue increased 8% year over year to $329.3 million. EBITDA increased 14% to $135.3 million, with EBITDA margin at 41% versus 39% in the prior year; NPATA rose 11% to $80.2 million, and ROE was 30%. Total expenses increased 5% to $182.7 million. Active salary packages increased 10% to 491,000, novated leases under management increased 15% to 85,300, and fleet-managed vehicles increased 9% to 35,200. Cash conversion was 122% of NPATA, net debt ended at $38.1 million, and leverage was 0.3x. The board declared a final fully franked dividend of $0.215 per share and a special dividend of $0.12 per share; together with the interim ordinary dividend of $0.195 per share, FY25 fully franked dividends totaled $0.53 per share, or 90% of NPATA. For 2026, technology CapEx is expected to be $11 million to $13 million, similar to 2025. Management said January leasing orders and settlements increased versus pcp, and January yield also increased versus pcp.

Scott Wharton framed the year as strong execution across Smartgroup’s core businesses, with record customer numbers and broad-based momentum in salary packaging, novated leasing, and fleet. He emphasized that the strategy is working through three levers: expanding the total addressable market, increasing uptake within existing clients, and improving cross-sell. His tone was confident but measured, repeatedly pointing to 2026 as a heavy investment year and 2027 as the point when more of the margin benefit should show through.

Jason King focused on the financial bridge behind the growth: revenue up 8% to $329.3 million, EBITDA up 14% to $135.3 million, NPATA up 11% to $80.2 million, and cash conversion at 122% of NPATA. He highlighted cost discipline, noting product costs fell 19%, staff costs rose 3%, and non-staff costs rose 12% mainly due to marketing, lead generation, and technology investments. He also pointed to a conservative balance sheet with $38.1 million of net debt, 0.3x leverage, and 2026 technology CapEx of $11 million to $13 million, while reiterating the dividend policy of 60% to 70% of NPATA and the board’s decision to return excess capital via ordinary and special dividends.

Analysts pressed on how Smartgroup is driving growth above the market, and management pointed to stronger client wins, better digital marketing, targeted data use, and partnerships such as BMW Financial Services and Qantas to lift both penetration and cross-sell. Questions also focused on the mid-40s EBITDA margin goal and what EV policy changes might mean; management said the 2027 target remains intact, 2026 is mainly an investment and change-delivery year, and they do not expect a major policy shock, though the government review could create some swing. On volatility in new lease orders and headcount, management said the second-half order dip was modest after a strong first half, that January started well, and that efficiency gains are allowing the company to support more volume without materially increasing headcount.