Smartgroup’s Growth Hinges on EV Demand Amid Market and Policy Shifts
Smartgroup Corporation Limited reported robust financial growth in 2024, driven by record customer numbers and a significant rise in electric vehicle leasing, positioning the company for a sustainable future.
- 2024 revenue up 22% to $305.8 million
- NPATA increased 15% to $72.4 million with strong cash flow conversion
- Novated leases under management grew 22% to 74,300 vehicles
- Electric vehicles accounted for 44% of new orders in 2024 and 51% in Q1 2025
- Continued investment in digital transformation and ESG initiatives
Strong Financial Momentum
Smartgroup Corporation Limited (ASX: SIQ) unveiled its 2025 Annual General Meeting materials highlighting a year of impressive financial and operational achievements. The company posted a 22% increase in revenue to $305.8 million for 2024, alongside a 15% rise in net profit after tax and amortisation (NPATA) to $72.4 million. These results underscore Smartgroup’s ability to deliver consistent growth and robust cash flow conversion, with operating cash flow reaching 108% of NPATA.
Record Customer Growth and Market Position
Smartgroup’s customer base expanded significantly, with active salary packaging customers rising 12% to 445,000 and novated leases under management climbing 22% to 74,300 vehicles. This growth reflects the company’s strong market position in salary packaging and novated leasing, particularly within government, health, and not-for-profit sectors. The renewal of major contracts, including the South Australian Government agreement, reinforces Smartgroup’s leadership in these segments.
Electric Vehicles Drive Leasing Expansion
A standout feature of Smartgroup’s 2024 performance was the accelerated adoption of electric vehicles (EVs) within its novated leasing portfolio. EVs accounted for 44% of new vehicle orders in 2024, rising to 51% in the first quarter of 2025. This shift aligns with the Australian Government’s Electric Car Discount Policy, which has effectively boosted EV accessibility and affordability. Smartgroup’s proactive approach includes dedicated teams supporting customers’ transition to low-emission vehicles, positioning the company well amid evolving regulatory and market dynamics.
Digital Transformation and Strategic Priorities
Smartgroup continues to invest heavily in digital assets and customer experience enhancements. The launch of the consolidated 'Smart' brand and improvements to digital portals have streamlined customer journeys, contributing to a 10% increase in packages managed per full-time employee. Strategic partnerships with Intellihub and BMW Financial Services further diversify the company’s offerings, while ongoing fleet management innovations, including a self-funded pilot, demonstrate a commitment to operational excellence and scalability.
Sustainability and ESG Leadership
Environmental, social, and governance (ESG) initiatives remain a core focus. Smartgroup reported a 15% reduction in Scope 1 emissions and a 43% decrease in Scope 2 emissions in 2024. The company earned top-tier ESG ratings globally, including a Sustainalytics ranking in the 95th percentile and recognition as an Employer of Choice for Gender Equality. These achievements reflect Smartgroup’s integrated approach to sustainable business practices alongside commercial growth.
Outlook and Capital Allocation
Looking ahead, Smartgroup maintains a cautiously optimistic outlook, supported by stable leasing demand and a strong pipeline of future revenue. The company plans to continue disciplined capital allocation, balancing investments in technology and digital transformation with a commitment to returning 60-70% of NPATA as fully franked dividends. This approach aims to sustain shareholder value while fueling medium- and long-term growth opportunities.
Bottom Line?
Smartgroup’s blend of strong financials, digital innovation, and ESG commitment sets the stage for continued leadership in employee benefits and fleet management.
Questions in the middle?
- How will Smartgroup navigate potential shifts in government policies affecting novated leasing incentives?
- What impact will increasing competition in the EV leasing market have on Smartgroup’s growth trajectory?
- How effectively can Smartgroup scale its digital platforms to sustain customer acquisition and retention?
