Smartgroup Corporation Ltd

Smartgroup reported first-half 2026 revenue of AUD 179.5 million, up 13% year over year; EBITDA of AUD 73.8 million, up 16%; EBITDA margin of 41%, up 1 percentage point; and NPATA of AUD 42.4 million, up 11%. Active salary packages increased 7% to 518,000, novated leases under management rose 15% to 91,600, and fleet managed vehicles increased 12% to 36,200. Total expenses increased 12% to AUD 100.6 million. Cash conversion was 120% of NPATA, net debt was AUD 35.4 million, leverage was 0.2x, and return on equity was 31%. For 2026, management reiterated a focus on EBITDA margin improvement and said it still expects EBITDA margin to be in the mid-40s during 2027. Technology capex for 2026 was guided to AUD 13 million-AUD 15 million, and the company declared an interim fully franked dividend of AUD 0.215 per share, equal to 70% of NPATA.

Scott Wharton framed the half as evidence that Smartgroup is executing its strategy well, with record customers, record settlements, and broad-based operating momentum. He emphasized the company’s digital platform, brand simplification, automation, and AI-enabled initiatives as the foundation for future scale. His tone was confident but measured: he repeatedly noted that 2026 is a year of investment and transformation, with the payoff expected in 2027 and beyond.

Jason King highlighted broad-based growth and the financial tradeoffs from ongoing technology and transformation spend. He cited revenue of AUD 179.5 million, EBITDA of AUD 73.8 million, NPATA of AUD 42.4 million, and a 41% EBITDA margin, while noting product costs fell 15% and operating expenses rose 12% due to staffing, marketing, technology, and depreciation tied to capitalized IT development. He also pointed to strong cash conversion of 120% of NPATA, capitalized technology investment of AUD 6.9 million, net debt of AUD 35.4 million, 0.2x leverage, a fully franked dividend of AUD 0.215 per share, and an on-market buyback of up to AUD 20 million.

Analysts focused on the path of margins, the rise in other operating expenses, the direct-yield trend, and how much recent growth was being driven by external EV and fuel-price conditions versus Smartgroup’s own initiatives. Management said it is not giving specific second-half margin targets, but expects to keep investing this year and still targets mid-40s EBITDA margins during 2027. On yield, Jason King said the mix shift toward more new vehicles helped, while Scott Wharton added that the business is disciplined and prioritizes volume first; on partnerships with OEMs and dealers, they said relationships with BMW, BYD, Jaecoo, and others are still early but progressing well. Management also said inquiry levels remain ahead of last year, but they are cautious on the second half because consumer sentiment could change.