28% FY27 Q1 EBITDA decline leaves Enero balancing growth and restructuring

FY27 opens with a sharp earnings setback

Enero Group Limited (ASX:EGG) is taking a stronger FY26 profit base into a much less forgiving first quarter. Group EBITDA fell 28% year-on-year to $2.5 million in FY27 Q1, with Hotwire’s transformation and the delayed impact of BMF client departures outweighing Orchard’s record performance.

The contrast is stark. Enero’s continuing operations produced $129.5 million of FY26 net revenue, down 7%, while EBITDA rose 9% to $15.3 million and the margin expanded 1.6 percentage points to 11.8%. Adjusted net profit and adjusted earnings per share both increased 54%, to $6.4 million and 7.0 cents respectively. The group ended June with $24.5 million of net cash and declared total fully franked FY26 dividends of 2.4 cents per share.

The result continues a profitability improvement that had already been highlighted in the FY26 AI strategy update, when Enero reported higher EBITDA despite softer revenue and positioned artificial intelligence as a growth and productivity lever. The latest update, however, makes clear that the group’s agencies are moving at very different speeds.

Hotwire and BMF carry the immediate pressure

Hotwire Global generated $13.9 million of first-quarter revenue, down 20%, and EBITDA of $1.3 million, down 28%. Enero said the main factors were changes at ROI·DNA, foreign exchange translation and a persistently difficult technology market. On a constant-currency basis, Hotwire revenue declined 13%.

There is one more encouraging data point inside the decline: Hotwire’s AI Lab revenue was three times higher than in the prior-year quarter. Its four-product portfolio includes tools for AI search visibility, research and account intelligence, with Ember moving from pilot to commercial launch in FY27. The business is also integrating ROI·DNA into a narrower, lower-cost offering, with completion planned for the third quarter.

BMF’s first-quarter revenue fell 29% to $7.3 million and EBITDA dropped 40% to $1.3 million after the departures of Westpac and Endeavour Group in the second half of FY26. New work from Asahi Group, Amazon Ring and Superloop partly offset those losses, while a 18.2% EBITDA margin was achieved despite significant pitch costs. Enero said its Melbourne full-service operation is now established, but retained a FY27 revenue assumption 10% to 15% below the FY26 second-half run rate.

Orchard provides the clearest growth signal

Orchard delivered the strongest operating performance in the quarter, with record net revenue of $7.8 million, up 16%, and EBITDA of $1.7 million, up 38%. Its margin expanded to 22%, compared with 18.6% a year earlier, helped by healthcare demand and efficiencies from its “Agentic by Default” delivery model.

Enero expects healthcare and geographic expansion to support Orchard through FY27, including targeted organic investment in the United States. The agency is also extending its offer through AudienceIQ, which generates synthetic patient and clinician personas, and generative engine optimisation analysis. Those initiatives are presented as part of the group’s wider effort to turn AI investment into faster delivery and additional client services rather than simply a technology showcase.

The recovery case depends on execution

Enero’s stated priorities are specific: complete the ROI·DNA integration, rebuild BMF’s revenue base and sustain Orchard’s momentum. Group corporate costs are expected to remain broadly flat on FY26, excluding additional AI investment and the normalisation of bonuses and share-based payments. The group also plans to pursue automation and offshore delivery where appropriate.

That leaves a mixed near-term picture. The balance sheet and FY26 earnings provide some financial resilience, while AI Lab growth and Orchard’s margins offer evidence that the strategy can produce commercial results. But the next test is whether Hotwire can convert that early AI demand into a larger, more profitable business while BMF replaces lost accounts in a difficult Australian market.