Smartgroup’s H1 Revenue Hits $159M with 11% Net Profit Growth

Strong Financial Momentum

Smartgroup Corporation Ltd (ASX, SIQ) has delivered a robust set of interim results for the six months ended 30 June 2025, reflecting continued growth in its core employee benefits and leasing services. Revenue climbed 7% year-on-year to $159.1 million, driven primarily by increased novated leasing volumes and new client acquisitions. The company’s net profit after tax rose 11% to $38.1 million, underscoring operational leverage and effective cost management.

Operating EBITDA, a key profitability metric, expanded 13% to $63.6 million, with the EBITDA margin holding steady at a healthy 40%. This performance highlights Smartgroup’s ability to scale its business while investing strategically in growth initiatives.

Novated Leasing and EV Policy Impact

Novated leasing remains a standout growth driver. The number of novated leases under management surged 24% to 80,000, supported by a 19% increase in new vehicle orders compared to the prior year. Notably, electric vehicles (EVs) accounted for 48% of all new novated lease orders in the period, reflecting the influence of the Australian Federal Government’s Electric Car Discount Policy.

While the policy ceased for plug-in hybrid vehicles (PHEVs) from April 2025, demand for battery electric vehicles (BEVs) has offset this shift, maintaining strong leasing momentum. Internal combustion engine vehicles also saw a 9% rise in new orders, indicating a balanced portfolio as the market transitions.

Salary Packaging and Fleet Management Growth

Smartgroup’s salary packaging customer base expanded 20% to 484,000, bolstered by new client onboarding and organic growth. The company launched a new digital sign-up journey, enhancing customer experience and streamlining onboarding processes.

Fleet management services also contributed to growth, with fleet vehicles under management increasing 6%. The funded lease pilot program expanded to 50 clients and 830 vehicles, strengthening client relationships and service offerings.

Financial Position and Dividend

Smartgroup’s net debt decreased to $41.6 million, with leverage at a conservative 0.3 times EBITDA, down from 0.4 times at the end of 2024. The company continues to invest in IT and strategic priorities, capitalising $4.5 million in development costs during the half, with full-year capital expenditure expected between $11 million and $13 million.

The Board declared a fully franked interim dividend of 19.5 cents per share, payable in September 2025, reflecting confidence in ongoing cash flow generation and financial stability.

Outlook Considerations

While Smartgroup navigates evolving government policies and market dynamics, its diversified revenue streams and strong balance sheet position it well for continued growth. The recent voluntary administration of a prior insurance supplier is not expected to materially impact future results.