Smartgroup (ASX:SIQ) executives told investors the company delivered “strong financial results with solid operating momentum” in 2025, supported by higher novated leasing volumes, new client wins, and ongoing investment in its digital platform and operating model.
Managing Director and CEO Scott Wharton and CFO Jason King also reiterated a medium-term ambition for EBITDA margin to reach the mid-40s in 2027, describing 2026 as a “significant year” for technology investment and change delivery to underpin that outcome.
Full-year 2025 financial performance and dividends
EBITDA increased 14% to AUD 135.3 million, with EBITDA margin rising to 41%, an increase of 2 percentage points compared to the prior year. NPAT A increased 11% to AUD 80.2 million, and return on equity was 30%, up 1.2 percentage points year-on-year.
The board declared a final fully franked dividend of AUD 0.215 per share and a fully franked special dividend of AUD 0.12 per share. Combined with the AUD 0.195 per share interim ordinary dividend declared in August 2025, total fully franked dividends for the year were AUD 0.53 per share, representing 90% of 2025 NPAT A.
Operating metrics: salary packaging, leasing, and fleet growth
King said Smartgroup delivered “broad-based growth across product lines, customer segments, and vehicle segments.” Key operating measures cited on the call included:
- Active salary packages: up 10% year-on-year to 491,000
- Novated leases under management: up 15% to 85,300
- Fleet managed vehicles: up 9% to 35,200
In novated leasing, new lease vehicle orders were up 13% and total settlements (including new, used, and refinanced vehicles) were up 7% year-on-year. King noted that the “pipeline unwind” reduced in 2025 relative to 2024, affecting growth rates off a higher base.
Management emphasized a focus on yield, stating leasing yield was stable year-on-year. King said yield dipped modestly in the first half due to higher plug-in hybrid electric vehicle (PHEV) volume, then recovered in the second half as the company focused on product attachment rates. Average delivery time frames improved to 35 days, and management said it did not currently see vehicle supply as a constraint on the business.
EV and ICE demand trends and policy considerations
Smartgroup said its novated lease proposition continues to generate demand for both electric vehicles (EVs) and internal combustion engine (ICE) vehicles. In 2025, battery electric new vehicle orders grew 49% versus 2024, while ICE new vehicle orders increased 4%.
King discussed the end of the federal government’s Electric Car Discount policy for PHEVs on March 31, which he said accelerated PHEV demand in the first quarter. Following the policy change, new PHEV orders declined 31% year-on-year, while interest shifted toward battery EVs.
On questions about the impact of EV-related policy on margins, Wharton said the government review of the Electric Car Discount policy is underway and Smartgroup does not know the outcome. He added the company does not anticipate significant changes, while also emphasizing Smartgroup has driven growth in both EV and combustion engine vehicles and views novated leasing as a strong product “irrespective of EV policy.”
Strategy execution: digital investment, simplification, and efficiency
Wharton outlined progress against the company’s strategic priorities, which focus on (1) digital and technology investments in salary packaging, (2) innovative leasing growth, (3) broadening the product range, and (4) targeted investment in the fleet business.
He described a phased roadmap, with phase one focused on growth and demand generation in novated leasing and front-end digital assets, phase two (commencing in 2025) focused on building a scalable platform, and phase three focused on proposition innovation and new products.
Examples cited of digital and platform progress included:
- Launch of an enhanced car leasing portal in 2024 and the “smart.com.au” digital customer home
- A new digital salary packaging sign-up journey delivered in 2025, which management said has received positive client feedback
- A new “smart app” in testing, with rollout planned for 2026
Wharton said “smart.com.au” has attracted 3 million total users since launch at the end of 2024. He also pointed to operational simplification efforts, including reducing the brand footprint from eight to four and rationalizing contact center operations. On technology modernization, he said 45% of compute is now running in the cloud, with a target of 100% modernization by 2028.
Management also highlighted increased automation activity, including AI-driven knowledge management and automation of high-volume processes such as claims. Efficiency improvements were framed in part through customers per operations FTE, which improved 16% to 1,645 in 2025.
On costs, King said staff costs increased 3% due to wage pressures, but with lower average headcount, while non-staff costs increased 12% largely from marketing, lead generation, and technology investment. Depreciation and amortization rose 40%, primarily due to capitalized IT development costs.
Cash conversion, balance sheet, and 2026 investment plans
Smartgroup reported cash conversion of 122% of NPAT A, which King said was influenced by timing of working capital movements and tax payments. Capitalized IT development costs were AUD 12.6 million in 2025, in line with guidance.
The company ended the year with net debt of AUD 38.1 million, equating to 0.3 times leverage. King said Smartgroup has been piloting fleet funding products using its balance sheet since 2021 but has moved toward integrating external fleet funding providers, which it expects will lead to “significantly lower” internal funding in coming years.
For 2026, management guided technology capital expenditure of AUD 11 million to AUD 13 million, similar to 2025, and said capex should remain at current levels in the short term as strategic priorities are delivered before returning to a more normalized level.
Outlook: robust demand and mid-term margin ambition
Looking ahead, management said it sees a supportive environment for further growth and described demand as “robust.” Wharton said January leasing orders and settlements increased versus the prior comparable period, and January yield also increased.
Executives reiterated that 2026 will be a major year for technology investment and change delivery, positioning the group to realize scale benefits. Management maintained its expectation for EBITDA margin to reach the mid-40s during 2027 and said that with sustained investment, including automation and engineering capabilities, it sees opportunities to further elevate performance beyond 2027.
During Q&A, management declined to comment on February trading. It also said it does not feel compelled to pursue acquisitions to achieve strategic goals, though it retains flexibility for “compelling” inorganic opportunities and noted there is nothing active at present.
About Smartgroup (ASX:SIQ)
Smartgroup Corporation Ltd provides employee management services in Australia. The company operates through three segments: Outsourced Administration (OA); Vehicle Services (VS); and Software, Distribution, and Group Services (SDGS) segments. The Outsourced Administration segment offers outsourced salary packaging services, novated leasing, and outsourced payroll services. Its Vehicle Services segment provides end-to-end fleet management services. The Software, Distribution, and Group Services segment offers salary packaging software solutions; markets salary packaging debit cards; and distributes vehicle insurances and workforce management software to the healthcare industry.
