Smartgroup Corporation Ltd

Smartgroup reported FY25 revenue of $329.3 million, up 8% year over year. EBITDA was $135.3 million, up 14%, with EBITDA margin at 41%, up 2 percentage points year over year. NPATA increased 11% to $80.2 million, and return on equity was 30%, up 1.2 percentage points. Total expenses increased 5% to $182.7 million, while cash conversion was 122% of NPATA. Net debt ended at $38.1 million with 0.3x leverage. Looking ahead, management said 2026 will be a significant year of technology investment and change delivery, expects technology CapEx of $11 million to $13 million in 2026, and reiterated an EBITDA margin target in the mid-40s during 2027.

Scott Wharton emphasized that the business is executing well on its strategy: growing the total addressable market, improving customer uptake, and increasing cross-sell through digital marketing and partnerships. He pointed to record customer numbers, stronger client wins, and ongoing platform modernization, saying the company is well positioned to deliver smarter benefits and further scale benefits over time. His tone was confident and constructive, while acknowledging that 2026 will be a heavy investment year before margin expansion becomes more visible in 2027.

Jason King highlighted the financial drivers behind the year: active salary packages rose 10% to 491,000, novated leases under management increased 15% to 85,300, and fleet-managed vehicles rose 9% to 35,200. He noted revenue of $329.3 million, EBITDA of $135.3 million, NPATA of $80.2 million, and stable leasing yield versus 2024, with cash conversion of 122% and capitalized IT development costs of $12.6 million in line with guidance. He also said net debt was $38.1 million with 0.3x leverage, planned 2026 technology CapEx of $11 million to $13 million, and reaffirmed the dividend policy of 60% to 70% of NPATA with excess capital returned when appropriate.

Analysts focused mainly on the drivers of growth, the path to the mid-40s EBITDA margin target, and whether EV policy changes could affect the outlook. Management said growth is being driven by expanding the TAM through new client wins, higher customer uptake from digital marketing and partnerships, and better cross-sell into the existing base. On margins, they said 2026 should be more of an investment and delivery year, with most of the benefit showing up in 2027, while EV policy changes could create some swing but the business is still growing strongly in both EV and ICE channels.