Smartgroup's leasing engine accelerates as platform investment continues

Q3 Leasing Demand Remains Strong

Smartgroup Corporation Ltd (ASX:SIQ) has carried its leasing momentum into the third quarter, with total novated leasing settlements up 31% from the same period a year earlier. Orders excluding refinanced vehicles rose 33%, suggesting the growth was not limited to customers rolling existing leases into new arrangements.

The update extends a run of strong leasing indicators for Smartgroup. The company previously reported double-digit growth in early-2026 orders, while its latest presentation shows Q3 novated leases under management at 36,300, fleet vehicles managed at 98,000 and active salary packages at 524,000. The leasing figures also include a sharp shift towards battery electric vehicles: BEVs represented 72% of new-vehicle orders in Q3, with 73% of those orders below $75,000 and 83% below $80,000.

Profit Guidance Holds Despite Higher Reinvestment

Smartgroup retained its CY2026 NPATA expectation of $92 million to $94 million and its capital expenditure outlook of $13 million to $15 million. Management said it was deliberately accelerating reinvestment in the second half to strengthen the platform for scalable growth, while expecting the H2 EBITDA margin to be similar to H1.

That combination gives the update its main tension: operating demand is running strongly, but some of the benefit is being directed back into the business rather than flowing immediately to margins. Smartgroup has not disclosed Q3 revenue, EBITDA, cash flow or statutory profit in this announcement, so the trading metrics provide momentum indicators rather than a complete quarterly earnings picture.

Digital Platform and Fleet Expansion Advance

“Brand campaign ‘It pays to be Smart’.”

The company said it retained all significant clients during the period and secured new clients, while continuing its transformation program. Its stated priorities include simplifying the technology estate, moving towards a single Smart brand, expanding self-service and using AI and automation to improve operating efficiency. The presentation says customers per operations FTE reached 2,036 in Q3, up 17% from the prior corresponding period.

Smartgroup is also widening distribution through partnerships with BYD, Hyundai, Genesis, Mahindra and AutoLeague, alongside an expanded SME proposition. Fleet growth is another leg of the strategy, with the company citing new client wins, expansion within existing clients and a capital-light funding offering. This builds on the earlier EV leasing push, which was accompanied by a $20 million on-market buy-back plan after fleet portfolio sales.

2027 Margin Target Depends on Execution

Smartgroup continues to target EBITDA margins in the mid-40s during 2027, based on current market conditions and with its transformation program progressing to plan. The target is not presented as a firm earnings forecast, and the company’s near-term decision to increase reinvestment means the path to that margin will depend on the efficiency gains delivered by its technology and operating changes.

The immediate test is whether strong orders translate into sustained vehicle deliveries, recurring customer growth and improved economics across salary packaging, leasing and fleet. The Q3 pipeline stood at about $17.9 million at the end of September, down from $22.5 million in June, while average order-to-delivery time for Smartgroup’s top 30 makes and models was 35 days.