Kip McGrath Posts 8.9% Revenue Growth and 54% Profit Jump in FY25

Strong Financial Performance in FY25

Kip McGrath Education Centres Ltd has delivered a robust set of financial results for the fiscal year ended June 30, 2025. The company reported revenue of $31.4 million, an 8.9% increase year-on-year, supported by growth in both its franchise and corporate segments. EBITDA rose 13% to $7.8 million, reflecting operational efficiencies and a focus on sustainable business partnerships with franchisees.

Net profit after tax (NPAT) surged 54% to $2.3 million, while basic earnings per share improved to 4.02 cents from 2.62 cents the previous year. This strong bottom-line growth underscores the company’s ability to convert revenue gains into profitability despite ongoing market challenges.

Franchise Expansion and Premium Offerings Drive Growth

The franchise business remains the cornerstone of Kip McGrath’s growth strategy, with revenues up 11% to $21 million and 416 active centres operating globally. A key driver has been the increasing adoption of the company’s Gold Partner model, which commands higher franchise fees, around 20% compared to 10% for Silver Partners, boosting overall franchise fee percentages to nearly 19%.

Alongside this, the company has focused on enhancing the quality and consistency of its tutoring services, encouraging longer tutoring packages of 48 to 52 weeks per year. This shift supports a philosophy of continuous learning and has contributed to a rise in average weekly lesson numbers per centre.

Operational Highlights and Cash Flow Management

Corporate centres, numbering 37 after the closure of US operations and the addition of two UK centres, also contributed to revenue growth, increasing 4% year-on-year. The company maintained tight control over capital expenditure, investing approximately A$0.3 million in corporate centre acquisitions and technology upgrades, while fully repaying a $1.4 million debt facility.

Cash flow from operations improved due to strong EBITDA and effective working capital management, positioning Kip McGrath well for future investments and growth initiatives.

Outlook for FY26

Looking ahead, Kip McGrath expects lesson numbers to remain flat year-on-year, reflecting a mature market with stable demand. However, revenue is forecast to grow in the mid-single digits, driven primarily by modest price increases in key markets. Cost growth is expected to be contained below revenue growth, aided by savings in depreciation and amortisation expenses.

The company anticipates an early double-digit increase in NPAT for FY26, signaling confidence in its strategic direction and operational execution. Capital expenditure is projected at around A$1.7 million, focusing on technology enhancements, centre acquisitions, and other growth initiatives.

Overall, Kip McGrath’s FY25 results and FY26 guidance highlight a company balancing steady operational performance with strategic investments aimed at sustaining long-term growth in the competitive tutoring sector.