Enero Faces Revenue Headwinds but Cuts Costs to Boost Margins and Declare Dividend
Enero Group posted a modest 2% EBITDA increase and improved margins in FY25 despite a 3% revenue dip, driven by operational efficiencies and strong second-half growth. The company declared a fully franked final dividend and sharpened its focus on core agencies after divesting OBMedia.
- EBITDA up 2% with margin improvement to 10.2% despite 3% revenue decline
- Second half FY25 EBITDA surged 21%, revenue grew 2% over first half
- OBMedia divestment resulted in a significant non-cash loss
- Final dividend of 1.3 cents per share fully franked declared
- Core agencies BMF, Hotwire, ROI·DNA, and Orchard show mixed but improving results
Navigating a Tough Market
Enero Group Limited (ASX – EGG), a global marketing and technology agency conglomerate, released its FY25 results revealing a nuanced performance shaped by a challenging macroeconomic and technology sector environment. While total revenue slipped 3% to $138.7 million on continuing operations, the company managed to grow EBITDA by 2% to $14.1 million, lifting margins from 9.7% to 10.2%. This margin expansion was largely driven by disciplined cost control and operational efficiencies, including a 4% reduction in expenses following a 7% cut in the prior year.
Second Half Momentum and Strategic Focus
The second half of FY25 marked a clear turnaround, with EBITDA jumping 21% and revenue increasing 2% compared to the first half. This rebound was fueled by stronger performances in Enero’s Technology, Healthcare, and Consumer Practice segments, alongside continued corporate cost reductions. CEO Ian Ball highlighted this momentum as evidence of the group’s adaptability and the strength of its portfolio, emphasizing a renewed focus on its core agencies, BMF, Hotwire, ROI·DNA, and Orchard, as the foundation for future growth.
Agency Highlights and Innovation
Among the key contributors, Hotwire faced industry-wide cost pressures but still grew EBITDA by 15% through rigorous cost management and innovation, including launching the Hotwire Global AI Lab. BMF, despite a 2% revenue decline, gained traction in the second half with an 11% EBITDA increase, buoyed by a landmark Westpac account win and creative accolades. Orchard overcame a slow start to double its EBITDA in H2, driven by healthcare and consumer divisions expanding services and efficiency tools. Meanwhile, ROI·DNA’s integration with Hotwire’s performance marketing teams enhanced brand prominence and client wins.
Divestment and Financial Position
A significant strategic move was the divestment of Enero’s 51% stake in OBMedia, completed at a nominal amount and resulting in a $16.7 million loss, mostly non-cash. OBMedia’s declining revenue and EBITDA had weighed on the group’s overall performance. Despite this, Enero’s balance sheet remains robust with net cash of $27.5 million, supporting a fully franked final dividend of 1.3 cents per share, reflecting confidence in the company’s financial health and future prospects.
Looking Ahead
As Enero enters FY26, the company’s sharpened portfolio and focus on innovation position it to capitalize on emerging opportunities in technology and healthcare marketing. However, the lingering effects of macroeconomic headwinds and the need to sustain revenue growth amid competitive pressures will test management’s strategic execution. Investors will be watching closely to see if the second half’s momentum can be sustained and translated into consistent full-year growth.
Bottom Line?
Enero’s FY25 results underscore resilience and strategic refocus, but sustaining growth amid market challenges remains the key test ahead.
Questions in the middle?
- Can Enero sustain second-half momentum into FY26 amid ongoing market uncertainties?
- How will the divestment of OBMedia impact Enero’s long-term revenue and profitability profile?
- What role will AI and innovation initiatives play in driving future agency growth and client wins?
