Half Year 2026 Smartgroup Corp Ltd Earnings Call

August 26, 2026

Speaker #1: Thank you for standing by, and welcome to the Smartgroup Corporation Limited (SIQHY) 2026 results. All participants are in listen-only mode. There will be a presentation followed by a question-and-answer session.

Operator: Thank you for standing by, and welcome to the Smartgroup Corporation Ltd SIQ H1 2026 results. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Mr. Scott Wharton, CEO. Please go ahead.

Operator: Thank you for standing by, and welcome to the Smartgroup Corporation Ltd SIQ H1 2026 results. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Scott Wharton, CEO. Please go ahead.

Speaker #1: If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Mr. Scott Wharton, CEO.

Speaker #1: Please go ahead.

Speaker #2: Right. Thank you, Betsy, and good morning, everybody. Thank you for joining us on the call today. My name is Scott Wharton, and I am the Managing Director and CEO of Smartgroup.

Scott Wharton: Great. Thank you, Betsy, and good morning, everybody, and thank you for joining us on the call today. My name is Scott Wharton, and I am the Managing Director and CEO of Smartgroup. Joining me on the call today is Jason King, our Chief Financial Officer. First, I would like to acknowledge the traditional owners of the land on which I am speaking to you, the Gadigal people of the Eora Nation. As this call is broadcast nationally, I would also like to acknowledge the traditional custodians of the various lands on which you all join this call. I recognize their continuing connection to land, waters, and culture and pay my respects to their elders, past and present. Going to slide 3. Today, I will start by providing some of the key highlights of the H1 2026 and a recap of Smartgroup's investment proposition.

Speaker #2: Joining me on the call today is Jason King, our Chief Financial Officer. First, I would like to acknowledge the traditional owners of the land on which I'm speaking to you, the Gadigal people of the Eora Nation.

Speaker #2: As this call is broadcast nationally, I would also like to acknowledge the Traditional Custodians of the various lands on which you all join this call.

Speaker #2: I recognize their continuing connection to land, waters, and culture, and pay my respects to their elders past and present. Turning to slide 3. Today, I'll start by providing some of the key highlights of the first half of 2026.

Speaker #2: And a recap of Smartgroup's investment proposition. I will then talk through the progress we have been making across our strategic priorities. Jason will then take you through the half-year performance in more detail.

Scott Wharton: I will then talk through the progress we have been making across our strategic priorities. Jason will then take you through the half year performance in more detail. To conclude, I will provide a brief outlook. Now let us turn to slide 5 of the investor presentation. Smartgroup delivered record financial results and strong operating momentum in the H1 2026. This performance reflects the disciplined execution of our strategy and the strength of our customer proposition. Our market-leading digital platform continues to support growth across our business. Revenue increased 13% to AUD 179.5 million. Smartgroup's ability to attract and win new clients through our compelling customer proposition and our strength in novated leasing underpinned the revenue growth. Growth was also supported by favorable market dynamics, including elevated fuel prices, continued EV adoption, and supportive government policy.

Speaker #2: To conclude, I will provide a brief outlook. Now let's turn to slide 5 of the investor presentation. Smartgroup delivered record financial results and strong operating momentum in the first half of 2026.

Speaker #2: This performance reflects the disciplined execution of our strategy and the strength of our customer proposition. Our market-leading digital platform continues to support growth across our business.

Speaker #2: Revenue increased 13% to $179.5 million. Smartgroup's ability to attract and win new clients through our compelling customer proposition, and our strengths in innovative leasing, underpinned the revenue growth.

Speaker #2: Growth was also supported by favorable market dynamics, including elevated fuel prices, continued EV adoption, and supportive government policy. Total expenses increased 12% to $100.6 million.

Scott Wharton: Total expenses increased 12% to AUD 100.6 million, reflecting increased leasing demand and fulfillment, a substantial program of transformation activity, and targeted uplift in capability. EBITDA of AUD 73.8 million was up 16%, and EBITDA margin was 41% for the half, an increase of 1 percentage point. NPATA increased by 11% to AUD 42.4 million. Smartgroup also delivered an attractive return on equity of 31%. Our strong financial performance and high level of cash generation have enabled the board to declare an interim fully franked dividend of AUD 0.215 per share, representing 70% of NPATA. Turning to slide 6. During the year, Smartgroup continued to retain and attract clients by investing in client relationships, market-leading service, and customer experience. Salary packaging customer numbers, novated leases under management, and fleet managed vehicles all reached record levels during the period.

Speaker #2: Reflecting increased leasing demand and fulfillment, a substantial program of transformation activity, and targeted uplift in capability. EBITDA of $73.8 million was up 16%, and EBITDA margin was 41% for the half, an increase of 1 percentage point.

Speaker #2: NPATA increased by 11% to $42.4 million. Smartgroup also delivered an attractive return on equity of 31%. Our strong financial performance and high level of cash generation have enabled the Board to declare an interim fully franked dividend of $21.5 per share.

Speaker #2: Representing 70% of NPATA. Turning to slide 6, during the year Smartgroup continued to retain and attract clients by investing in client relationships, market-leading service, and customer experience.

Speaker #2: Salary packaging, customer numbers, innovative leases under management, and fleet-managed vehicles all reached record levels during the period. Our proposition also continued to resonate strongly with customers, driving solid demand for innovative leasing during the first half.

Scott Wharton: Our proposition also continued to resonate strongly with customers, driving solid demand for novated leasing during the H1. We saw a significant shift in consumer preferences toward battery electric vehicles, with new BEV orders increasing 162%. This growth was supported by improving affordability, a broader range of vehicle models, and increasing consumer awareness of the savings available through novated leasing. These factors continued to resonate with customers in an environment where households remain focused on managing cost of living pressures. Our market-leading digital platform is attracting new partnerships that are opening new sales channels and extending our reach to new customer segments. Together, they are strengthening customer engagement and creating additional growth opportunities across the group. I will touch on the progress we are making later in the presentation. Smartgroup remains actively focused on managing yield while also growing volumes.

Speaker #2: We saw a significant shift in consumer preferences toward battery electric vehicles, with new BEV orders increasing by 162%. This growth was supported by improving affordability, a broader range of vehicle models, and increasing consumer awareness of the savings available through innovative leasing.

Speaker #2: These factors continued to resonate with customers in an environment where households remain focused on managing cost-of-living pressures. Our market-leading digital platform is attracting new partnerships that are opening new sales channels and extending our reach to new customer segments.

Speaker #2: Together, they are strengthening customer engagement and creating additional growth opportunities across the group. I will touch on the progress we are making later in the presentation.

Speaker #2: Smartgroup remains actively focused on managing yield while also growing volumes. In the first half of the year, direct leasing yield grew 2% and remains within our expected range.

Scott Wharton: In the H1 of the year, direct leasing yield grew 2% and remains within our expected range. We are also making excellent progress against the strategic priorities we outlined to the market 2 and a half years ago. I will speak to these in more detail later. Importantly, we are successfully executing on our ambition of delivering smarter benefits for a smarter tomorrow with tangible progress across our key growth, customer, and digital initiatives. We remain committed to sustainability, and we are proud to have been ranked in the 87th percentile worldwide in the S&P Global Sustainability Assessment. We are also pleased to have been recognized by the Workplace Gender Equality Agency as an employer of choice for gender equality. This recognition reflects our ongoing commitment to fostering an inclusive workplace and supporting gender equality.

Speaker #2: We are also making excellent progress against the strategic priorities we outlined to the market two and a half years ago. I will speak to these in more detail later.

Speaker #2: Importantly, we are successfully executing on our ambition of delivering smarter benefits for a smarter tomorrow, with tangible progress across our key growth, customer, and digital initiatives.

Speaker #2: We remain committed to sustainability, and we are proud to have been ranked in the 87th percentile worldwide in the S&P Global Sustainability Assessment. We are also pleased to have been recognized by the Workplace Gender Equality Agency as an Employer of Choice for Gender Equality.

Speaker #2: This recognition reflects our ongoing commitment to fostering an inclusive workplace and supporting gender equality. These outcomes recognize the importance of ESG, and diversity and inclusion, to Smartgroup and our customers.

Scott Wharton: These outcomes recognize the importance of ESG and diversity and inclusion to Smartgroup and our customers. Moving to slide 7. Smartgroup continues to offer a compelling investment proposition. We are the market leader in salary packaging and novated leasing with a large client base that provides significant opportunities for future growth. Our scalable technology foundations, sector expertise, and customer-centric service model enable seamless transitions for new clients. We benefit from recurring revenues, long-term client relationships, and exposure to attractive sectors, including government, healthcare, education, and not-for-profit. Combined with our capital light business model, strong cash generation, and clear strategic priorities, we remain well positioned to deliver sustainable growth and attractive shareholder returns. Turn to slide 8. Since we announced our strategic priorities in February 2024, we have delivered consistently strong financial performance. Between 2023 and 2025, revenue grew 31% through disciplined execution of our strategic priorities.

Speaker #2: Moving to slide 7, Smartgroup continues to offer a compelling investment proposition. We are the market leader in salary packaging and innovative leasing, with a large client base that provides significant opportunities for future growth.

Speaker #2: Our scalable technology foundations, sector expertise, and customer-centric service model enable seamless transitions for new clients. We benefit from recurring revenues, long-term client relationships, and exposure to attractive sectors, including government, healthcare, education, and not-for-profit.

Speaker #2: Combined with our capitalized business model, strong cash generation, and clear strategic priorities, we remain well-positioned to deliver sustainable growth and attractive shareholder returns. Turning to slide 8, since we announced our strategic priorities in February 2024, we have delivered consistently strong financial performance.

Speaker #2: Between 2023 and 2025, revenue grew 31% through disciplined execution of our strategic priorities. This has included successful investments in digital to enhance our customer proposition, as well as stronger account management and business development capabilities.

Scott Wharton: This has included successful investments in digital to enhance our customer proposition and stronger account management and business development capabilities. Over the same period, EBITDA increased 35%, reflecting the increased scalability of our operating model. NPATA increased 27%, with strong operating momentum continuing into the H1 2026. Turning to slide 10. This slide summarizes the strategic priorities we outlined in February 2024. These priorities continue to guide our investment decisions and growth initiatives across the group. Turning to slide 11. This slide outlines our strategic roadmap. While our strategy focuses on the four strategic priorities, we have deliberately phased execution. The first phase focused on growth and demand generation to build our leadership position in novated leasing. We have also invested in our front-end digital assets to enhance customer experience and sustainably fuel growth into the future.

Speaker #2: Over the same period, EBITDA increased 35%, reflecting the increased scalability of our operating model. NPATA increased 27%, with strong operating momentum continuing into the first half of 2026.

Speaker #2: Turning to slide 10, this slide summarizes the strategic priorities we outlined in February 2024. These priorities continue to guide our investment decisions and growth initiatives across the group.

Speaker #2: Turning to slide 11, this slide outlines our strategic roadmap. While our strategy focuses on the four strategic priorities, we have deliberately phased execution. The first phase focused on growth and demand generation to build our leadership position in innovative leasing.

Speaker #2: We have also invested in our front-end digital assets to enhance customer experience and sustainably fuel growth into the future. The second phase, which commenced in 2025, is focused on building a scalable business platform.

Scott Wharton: The second phase, which commenced in 2025, is focused on building a scalable business platform. This phase includes investments in consolidating our brands, removing duplication of operations, modernizing our technology, and automating processes. The third phase of our strategy focuses on innovating our propositions to meet evolving customer and client needs. Having established a scalable digital platform through the first two phases, we have commenced investing in this next stage of growth. These investments are designed to accelerate long-term growth by expanding our employee benefits offering and building a broader mobility ecosystem. While phases 1 and 2 focused on creating the foundations for scale, phase 3 will be focused on leveraging those foundations to drive growth in the years ahead. As a result of our investments in demand generation and scalability, we anticipate EBITDA margin to be in the mid-40s during 2027.

Speaker #2: This phase includes investments in consolidating our brands, removing duplication of operations, modernizing our technology, and automating processes. The third phase of our strategy focuses on innovating our propositions to meet evolving customer and client needs.

Speaker #2: Having established a scalable digital platform through the first two phases, we have commenced investing in this next stage of growth. These investments are designed to accelerate long-term growth by expanding our employee benefits offering and building a broader mobility ecosystem.

Speaker #2: While Phases 1 and 2 focused on creating the foundations for scale, Phase 3 will be focused on leveraging those foundations to drive growth in the years ahead.

Speaker #2: As a result of our investments in demand generation and scalability, we anticipate EBITDA margin to be in the mid-40s during 2027. Beyond 2027, with sustained investment—particularly in automation and AI—we see opportunities to further elevate business performance.

Scott Wharton: Beyond 2027, with sustained investment, particularly in automation and AI, we see opportunities to further elevate business performance. We will continue to develop our product offering to meet evolving customer needs and strengthen our value proposition. On the following slides, we provide concrete examples of the progress we have made against each of our priorities. Turning to slide 12. This slide highlights the progress we have made against the first phase of our strategy, focused on digital investment and customer experience. Importantly, we have delivered what we said we would deliver. As part of our strategic priorities, over the last two years, we have launched smart.com.au, enhanced our car leasing portal, and implemented our new digital salary packaging journey, all designed to improve customer experience and support future growth.

Speaker #2: We will continue to develop our product offering to meet evolving customer needs and strengthen our value proposition. On the following slides, we provide concrete examples of the progress we've made against each of our priorities.

Speaker #2: Turning to slide 12, this slide highlights the progress we have made against the first phase of our strategy, focused on digital investment and customer experience.

Speaker #2: Importantly, we have delivered what we said we would deliver. As part of our strategic priorities, over the last two years we have launched smart.com.au, enhanced our car leasing portal, and implemented our new digital salary packaging journey—all designed to improve customer experience and support future growth.

Speaker #2: In the first half of 2026, we continued to build on these foundations through enhancements to our rewards platform, the launch of our new smart app, and a range of AI, data, and automation initiatives.

Scott Wharton: In H1 2026, we continued to build on these foundations through enhancements to our rewards platform, the launch of our new Smart app, and a range of AI, data, and automation initiatives. These investments have delivered significant improvements in customer service and engagement. Together, these investments are strengthening our digital capabilities, improving scalability, and positioning the business for future growth. Turning now to slide 13, which outlines the progress we are making through phase 2 of our strategic roadmap to build a more scalable, efficient, and technology-enabled platform. Smartgroup is delivering on the commitments we set out. Since launching our strategic priorities, we have focused on simplifying the business, modernizing our technology, increasing automation, and improving efficiency. We continue to make strong progress across each of these areas.

Speaker #2: These investments have delivered significant improvements in customer service and engagement. Together, these investments are strengthening our digital capabilities, improving scalability, and positioning the business for future growth.

Speaker #2: Turning now to slide 13, which outlines the progress we are making through Phase 2 of our strategic roadmap to build a more scalable, efficient, and technology-enabled platform.

Speaker #2: Smartgroup is delivering on the commitments we set out. Since launching our strategic priorities, we have focused on simplifying the business, modernizing our technology, increasing automation, and improving efficiency.

Speaker #2: We continue to make strong progress across each of these areas. We have reduced our brand footprint from eight to four, divested non-core businesses, and established a clear pathway towards a unified Smart brand.

Scott Wharton: We have reduced our brand footprint from eight to four, divested non-core businesses, and established a clear pathway towards a unified Smart brand. This has enabled the simplification of our operating model, reducing duplication, and allowing us to focus investment behind a smaller number of stronger brands. We have also streamlined the way we serve customers, reducing our contact center footprint from seven locations to four, with further opportunities ahead as we continue to simplify processes and leverage technology. Our technology transformation remains firmly on track. We have transitioned from a fully on-premise environment and multiple legacy systems inherited through acquisitions to a position where 85% of our compute infrastructure now operates in the cloud, up from 45% at the end of 2025, moving us steadily towards our target of 100% cloud-based infrastructure by 2028.

Speaker #2: This has enabled the simplification of our operating model, reducing duplication and allowing us to focus investment behind a smaller number of stronger brands. We have also streamlined the way we serve customers.

Speaker #2: We are reducing our contact center footprint from seven locations to four, with further opportunities ahead as we continue to simplify processes and leverage technology. Our technology transformation remains firmly on track.

Speaker #2: We have transitioned from a fully on-premise environment and multiple legacy systems, inherited through acquisitions, to a position where 85% of our compute infrastructure now operates in the cloud.

Speaker #2: Up from 45% at the end of 2025, moving us steadily towards our target of 100% cloud-based infrastructure by 2028. At the same time, we are leveraging AI as part of our broader transformation program to streamline processes, enhance customer interactions, and improve decision-making.

Scott Wharton: At the same time, we are leveraging AI as part of our broader transformation program to streamline processes, enhance customer interactions, and improve decision-making. Over time, these capabilities are expected to support a more scalable omni-channel operating model, driving productivity improvements, better customer outcomes, and enabling future product innovation. Importantly, the benefits are already being realized. Customers per operational FTE have increased from 1,389 in 2023 to 1,837 today, demonstrating the efficiency gains being delivered through these initiatives. Overall, this slide highlights a business executing with discipline against its strategic roadmap and building the scalable platform that will support the next phase of growth. Moving to slide 14, which shares some highlights delivered during the H1 2026. The progress we have delivered this half demonstrates our ability to translate strategy into tangible outcomes across the business. We exceeded half a million active salary packages for the first time.

Speaker #2: Over time, these capabilities are expected to support a more scalable, omnichannel operating model, driving productivity improvements, better customer outcomes, and enabling future product innovation.

Speaker #2: Importantly, the benefits are already being realized. Customers per operational FTE have increased from 1,389 in 2023 to 1,837 today, demonstrating the efficiency gains being delivered through these initiatives.

Speaker #2: Overall, this slide highlights a business executing with discipline against its strategic roadmap and building the scalable platform that will support the next phase of growth.

Speaker #2: Moving to slide 14, which shares some highlights delivered during the first half of 2026. The progress we have delivered this half demonstrates our ability to translate strategy into tangible outcomes across the business.

Speaker #2: We exceeded half a million active salary packages for the first time. We're continuing to enhance the customer experience through the launch of the new Smart mobile app.

Scott Wharton: We are continuing to enhance the customer experience through the launch of the new Smart app. We also delivered record novated leasing settlements, with volumes increasing 17%. In Fleet, vehicles under management increased 12% to 36,200 vehicles. Growth was supported by the group's partnership with Volkswagen Financial Services, which provides additional capability to support the continued expansion of the Fleet business. Overall, these outcomes reflect consistent execution against our strategic priorities and reinforce the strength of the platform we are building to support future growth. Turning now to slide 15. As part of our strategy to build a stronger and more unified Smart brand, we launched our new brand identity: It Pays to Be Smart. This is far more than a new look and feel. This brand identity and activation strategy helps simplify what can be a complex category, enabling us to engage more directly with customers.

Speaker #2: We also delivered record novated leasing settlements, with volumes increasing 17%. In fleet, vehicles under management increased 12% to 36,200 vehicles. Growth was supported by the group's partnership with Volkswagen Financial Services, which provides additional capability to support the continued expansion of the fleet business.

Speaker #2: Overall, these outcomes reflect consistent execution against our strategic priorities and reinforce the strengths of the platform we are building to support future growth. Turning now to slide 15, as part of our strategy to build a stronger and more unified Smart brand, we launched our new brand identity, with the pace to be smart.

Speaker #2: This is far more than a new look and feel. This brand, identity, and activation strategy help simplify what can be a complex category, enabling us to engage more directly with customers.

Speaker #2: By bringing to life our proposition of helping Australians stretch their salary further, we aim to make the benefits of salary packaging and innovative leasing easier to understand, more relevant, and more accessible.

Scott Wharton: By bringing to life our proposition of helping Australians stretch their salary further, we aim to make the benefits of salary packaging and novated leasing easier to understand, more relevant, and more accessible. Over time, we expect this to drive higher participation, improve client outcomes, and support a more scalable platform for the business. Feedback from employer clients and customers has been overwhelmingly positive. With our proposition staying strongly in an environment where cost of living pressures remain a key concern. Importantly, the feedback gives us confidence that we are building something enduring with a clear and compelling message that continues to resonate, deepen customer engagement, and support sustainable growth over the long term. As we continue to expand our distribution channels and customer reach, we expect the Smart brand to play an increasingly important role in supporting growth across the group. Moving to slide 16.

Speaker #2: Over time, we expect this to drive higher participation and improve client outcomes, as well as support a more scalable platform for the business. Feedback from employer clients and customers has been overwhelmingly positive.

Speaker #2: With our proposition adding strongly in an environment where cost-of-living pressures remain a key concern. Importantly, the feedback gives us confidence that we are building something enduring, with a clear and compelling message that continues to resonate, deepen customer engagement, and support sustainable growth over the long term.

Speaker #2: As we continue to expand our distribution channels and customer reach, we expect the Smart brand to play an increasingly important role in supporting growth across the group.

Speaker #2: Moving to slide 16, Smartgroup is well-positioned and is unlocking value through scale and disciplined investment and execution. As we continue to enhance the customer experience and expand our market reach, we are generating operating leverage that benefits clients, partners, and shareholders.

Scott Wharton: Smartgroup is well-positioned and is unlocking value through scale and disciplined investment and execution. As we continue to enhance the customer experience and expand our market reach, we are generating operating leverage that benefits clients, partners, and shareholders. This reflects the strength of our leading capital-light digital platform, which connects employers, employees, and partners at scale. These outcomes demonstrate that the delivery of the strategic priorities announced 2 and a half years ago are now translating into sustained improvement in efficiency, scale, and financial performance. Our approach to value creation remains unchanged. Firstly, we are focused on winning additional clients to leverage the existing scale of our platform and our relationship management teams that already serve over half a million customers.

Speaker #2: This reflects the strengths of our leading, capital-light digital platform, which connects employers, employees, and partners at scale. These outcomes demonstrate that the delivery of the strategic priorities announced two and a half years ago is now translating into sustained improvements in efficiency, scale, and financial performance.

Speaker #2: Our approach to value creation remains unchanged. Firstly, we are focused on winning additional clients to leverage the existing scale of our platform and our relationship management teams, which already serve over half a million customers.

Speaker #2: In the first half of the year, we continued to grow our customer base to record numbers and welcomed many new clients across all segments, while retaining all major contracts up for renewal.

Scott Wharton: In the H1 of the year, we continued to grow our customer base to record numbers and welcome many new clients across all segments while retaining all major contracts up for renewal. Since announcing our strategic priorities, we have grown our eligible employee customer base by over 300,000. Secondly, we are focused on the organic opportunity to expand the uptake of our packaging and benefits offerings within our eligible customer base to leverage the great work of the operations teams that are already in place to support our clients. We are succeeding in improving our uptake rate. Since announcing our strategic priorities, active customer uptake has had a relative improvement of 13%. Our approach for driving uptake is working well and gives us a clear pathway to further organic growth.

Speaker #2: Since announcing our strategic priorities, we have grown our eligible employee customer base by over 300,000. Secondly, we are focused on the organic opportunity to expand the uptake of our packaging and benefits offerings within our eligible customer base, to leverage the great work of the operations teams that are already in place to support our clients.

Speaker #2: We are succeeding in improving our uptake rate. Since announcing our strategic priorities, active customer uptake has seen a relative improvement of 13%. Our approach to driving uptake is working well.

Speaker #2: And gives us a clear pathway to further organic growth. Finally, we are focused on expanding our products and services to better meet customer needs, as we have already outlined in our strategic priorities.

Scott Wharton: Finally, we are focused on expanding our products and services to better meet customer needs, as we have already outlined in our strategic priorities. This will increase customer lifetime value. We are making good progress, showing a relative improvement in the uptake of our products by 15%. In combination, improvements in total eligible customer base, customer uptake, and product cross-sell have underpinned our growth over the past 2 and a half years. We are making strong progress on each front, and these improvements will drive improved financial returns over the medium term. I will now hand it over to Jason King to talk through the key drivers of our financial performance in more detail.

Speaker #2: This will increase customer lifetime value. We are making good progress, showing a relative improvement in the uptake of our products by 15%. In combination, improvements in total eligible customer base, customer uptake, and product cross-sell have underpinned our growth over the past two and a half years.

Speaker #2: We are making strong progress on each front, and these improvements will drive improved financial returns over the medium term. I'll now hand it over to Jason to talk through the key drivers of our financial performance in more detail.

Speaker #1: Thank you, Scott, and good morning to everyone on the call. I will start on slide 18 to cover our performance in the first half of 2026.

Jason King: Thank you, Scott Wharton, and good morning to everyone on the call. I will start on slide 18 to cover our performance in the H1 of 2026. In the half year, we continued to deliver broad-based growth across product lines and customer segments. The number of active salary packages increased 7% to 518,000. Novated leases under management continued to grow, reaching 91,600 leases under management, an increase of 15%. Our fleet business reached 36,200 managed vehicles, an increase of 12%. Turning to slide 19. Our novated leasing business continues to show strong growth. In the H1 of the year, new lease vehicle orders were up 34%, and total settlements, which include new, used, and refinanced vehicles, reached a record, up 17%. The amount of pipeline increased significantly in the H1 to AUD 22.5 million, reflecting strong levels of customer engagement and effective sales conversion.

Speaker #1: In the half year, we continued to deliver broad-based growth across product lines and customer segments. The number of active salary packages increased 7% to 518,000.

Speaker #1: Innovative leases under management continued to grow, reaching 91,600 leases under management—an increase of 15%. Our fleet business reached 36,200 managed vehicles, an increase of 12%.

Speaker #1: Turning to slide 19, the innovative leasing business continues to show strong growth. In the first half of the year, new leased vehicle orders were up 34%, and total settlements—which include new, used, and refinanced vehicles—reached a record, up 17%.

Speaker #1: The amount of pipeline increased significantly in the first half to $22.5 million, reflecting strong levels of customer engagement and effective sales conversion.

Speaker #1: Delivery timeframes improved slightly in the half, and on average are now 29 days, with significant variability across makes and models. Smartgroup remains disciplined in its approach to yield management.

Jason King: Delivery time frames improved slightly in the half, and on average, is now 29 days, with significant variability across makes and models. Smartgroup remains disciplined in its approach to yield management. Yield from our direct channels increased 2% compared to the H1 of 2025. Direct yield reduced 5% relative to the H2 of 2025, but was associated with strong volume growth and increased market penetration. The group continues to balance growth, customer value, and profitability through volume and yield performance. Moving to slide 12. Demand for novated leasing continued to be strong. In May 2026, the Australian Government reaffirmed its commitment to the Electric Car Discount policy, providing greater clarity for consumers and industry participants. The policy has supported broader access to electric vehicles by improving affordability and reducing the cost of ownership for eligible Australians.

Speaker #1: Yield from our direct channels increased 2% compared to the first half of 2025. Direct yield reduced 5% relative to the second half of 2025, but was associated with strong volume growth and increased market penetration.

Speaker #1: The group continues to balance growth, customer value, and profitability through volume and yield performance. Moving to slide 12, demand for innovative leasing continued to be strong.

Speaker #1: In May 2026, the Australian Government reaffirmed its commitment to the electric car discount policy, providing greater clarity for consumers and industry participants. The policy has supported broader access to electric vehicles by improving affordability and reducing the cost of ownership for eligible Australians.

Speaker #1: The transition towards battery electric vehicles continued to accelerate during the first half, underpinned by favorable market conditions, including fuel price volatility and a broader shift in consumer preferences.

Jason King: The transition towards battery electric vehicles continued to accelerate during H1, underpinned by favorable market conditions, including fuel price volatility and a broader shift in consumer preferences. Consequently, in the half year, BEVs accounted for 68% of all new novated leasing orders, compared with 5% for plug-in hybrids and 27% for ICE vehicles. Turning to the P&L on slide 21. NPATA for the half was AUD 42.4 million, an increase of 11% off the back of sustained revenue growth. EBITDA grew 16% to AUD 73.8 million, and EBITDA margin was 41%, an increase of 1 percentage point. EBITDA margin remains a key focus for management. However, 2026 will continue to be a significant year of technology investment and change delivery for the organization. We continue to target EBITDA margin in the mid-40s during 2027. Revenue growth was driven by novated leasing and new client wins.

Speaker #1: Consequently, in the half year, VEVs accounted for 68% of all new innovative leasing orders, compared with 5% for plug-in hybrids, and 27% for ICE vehicles.

Speaker #1: Turning to the P&L on slide 21, NPADA for the half was $42.4 million, an increase of 11%, off the back of sustained revenue growth.

Speaker #1: EBITDA grew 16% to $73.8 million, and EBITDA margin was 41%, an increase of 1 percentage point. EBITDA margin remains a key focus for management.

Speaker #1: However, 2026 will continue to be a significant year of technology investment and change delivery for the organization. We continue to target an EBITDA margin in the mid-40s during 2027.

Speaker #1: Revenue growth was driven by innovative leasing and new client wins. In the half, revenue grew 13% to $179.5 million. Similarly, net revenue grew by 14% to $174.4 million.

Jason King: In the half, revenue grew 13% to AUD 179.5 million. Similarly, net revenue grew by 14% to AUD 174.4 million. Product costs reduced 15% through a mix of improved supplier pricing and moderately lower attachment rates. Total operating expenses increased 12% to AUD 100.6 million. Staff costs increased 10%, reflecting a combination of wage inflation and additional resourcing to deliver the group's strategic priorities, which included the continued delivery of the transformation program and targeted investments in capability. These outcomes were achieved while significantly growing customer volumes. Non-staff costs increased 18%, largely driven by enhanced marketing and lead generation activities, together with technology investments aimed at accelerating the group's transformation program and expanding digital capabilities. Depreciation and amortization expense increased 64%, mostly driven by capitalized IT development costs to deliver our strategic priorities. We remain focused on delivering our transformation program, which continues to be our highest priority.

Speaker #1: Product costs reduced 15% through a mix of improved supplier pricing and moderately lower attachment rates. Total operating expenses increased 12% to $100.6 million. Staff costs increased 10%, reflecting a combination of wage inflation and additional resourcing to deliver the group's strategic priorities.

Speaker #1: This included the continued delivery of the transformation program and targeted investments in capability. These outcomes were achieved while significantly growing customer volumes. Non-staff costs increased 18%, largely driven by enhanced marketing and lead generation activities, together with technology investments aimed at accelerating the group's transformation program and expanding digital capabilities.

Speaker #1: Depreciation and amortization expense increased 64%, mostly driven by capitalized IT development costs to deliver our strategic priorities. We remain focused on delivering our transformation program, which continues to be our highest priority.

Speaker #1: We are investing to support future growth opportunities across our core markets, strategic partnerships, and expanding customer base, while maintaining strong operational discipline. Slide 22 highlights our continued strong cash conversion at 120% of NPATA.

Jason King: We are investing to support future growth opportunities across our core markets, strategic partnerships, and expanding customer base, while maintaining strong operational discipline. Slide 22 highlights our continued strong cash conversion at 120% of NPATA. As highlighted earlier, 2026 is a significant year for technology investment. During the half, we invested AUD 6.9 million in capitalized technology. These investments are designed to enhance stability, scalability, improve customer outcomes, and strengthen Smartgroup's competitive position over the long term. Our balance sheet on Slide 23 shows that we ended the year with a conservative net debt position of AUD 35.4 million and 0.2 times leverage. During the half, we reached agreement to sell the majority of our self-funded fleet book to Volkswagen Financial Services, and this transaction closed in July. This is an important milestone in our fleet strategy.

Speaker #1: As highlighted earlier, 2026 is a significant year for technology investment. During the half, we invested $6.9 million in capitalized technology. These investments are designed to enhance stability, scalability, improve customer outcomes, and strengthen Smartgroup's team.

Speaker #1: Our balance sheet on slide 23 shows that we ended the year with a conservative net debt position of $35.4 million, and 0.2 times leverage.

Speaker #1: During the half, we reached agreement to sell the majority of our self-funded fleet book to Volkswagen Financial Services, and this transaction closed in July.

Speaker #1: This is an important milestone in our fleet strategy. It reduces the capital intensity of the fleet business, while maintaining our ability to deliver a compelling fleet management offering through external funding partnerships.

Jason King: It reduces the capital intensity of the fleet business while maintaining our ability to deliver a compelling fleet management offering through external funding partnerships. In H2, the group will reinvest the profit from this sale into the acceleration of our fleet proposition. As a result, we expect future growth in vehicles under management to be increasingly supported by third-party funding providers, allowing us to scale the business more efficiently and with lower balance sheet requirements. The business is well-positioned. Our low net debt and strong cash generation provide us the flexibility to invest for growth while delivering dividends to shareholders as per our stated policy, which I will now turn to. As many of you would have seen before, Slide 24 articulates our capital allocation approach to ensure that we deliver long-term, sustainable growth and maximize shareholder value.

Speaker #1: In the second half, the group will reinvest the profit from this sale into the acceleration of our fleet proposition. As a result, we expect future growth in vehicles under management to be increasingly supported by third-party funding providers, allowing us to scale the business more efficiently and with lower balance sheet requirements.

Speaker #1: The business is well positioned. Our low net debt and strong cash generation provide us with the flexibility to invest for growth while delivering dividends to shareholders, as per our stated policy.

Speaker #1: Which I will now turn to. As many of you will have seen before, slide 24 articulates our capital allocation approach to ensure that we deliver long-term, sustainable growth and maximize shareholder value.

Speaker #1: Our strategic priorities provide significant opportunities for Smartgroup's medium- and long-term growth. To ensure we make the most of these opportunities, we will continue to invest in core and digital technologies, as well as customer experience improvement initiatives.

Jason King: Our strategic priorities provide significant opportunity for Smartgroup's medium and long-term growth. To ensure that we make the most of these opportunities, we will continue to invest in core and digital technologies, as well as customer experience improvement initiatives. These necessitate allocating sufficient capital to ensure we can execute well. Similarly, we will maintain flexibility to take advantage of attractive acquisitions, partnerships, and other organic and inorganic growth opportunities. It is our intention to pay fully franked dividends in line with our current policy of 60% to 70% of NPATA, and we will look to return excess capital to shareholders whenever appropriate. As part of our commitment to disciplined capital management, we return excess capital to shareholders where appropriate. In May, we announced an on-market share buyback of up to AUD 20 million, following agreement on the sale of the majority of our fleet lease portfolio.

Speaker #1: These necessitate allocating sufficient capital to ensure we can execute well. Similarly, we will maintain flexibility to take advantage of attractive acquisitions, partnerships, and other organic and inorganic growth opportunities.

Speaker #1: It is our intention to pay fully franked dividends in line with our current policy of 60% to 70% of NPATA, and we will look to return excess capital to shareholders whenever appropriate.

Speaker #1: As part of our commitment to disciplined capital management, we return excess capital to shareholders where appropriate. In May, we announced an on-market share buyback of up to $20 million.

Speaker #1: Following a recent sale of the majority of our fleet lease portfolio, the buyback reflects the board's confidence in the group's strategy of cash generation and long-term growth prospects.

Jason King: The buyback reflects the board's confidence in the group's strategy, cash generation, and long-term growth prospects. For 2026, we have allocated technology CapEx in the range of AUD 13 to AUD 15 million. A small increase on our previous guidance, reflecting the acceleration of our fleet strategy. This investment supports the continued delivery of the group's transformation program, while also establishing the technology foundations required for phase 3 of our strategic roadmap. We expect technology investment to remain elevated as we execute these priorities and position the group for its next phase of growth. Consistent with this capital allocation approach, the board has declared an interim fully franked dividend of AUD 0.215 per share, representing 70% of NPATA. Finally, as a result of our disciplined approach to capital management, you can see from the chart on this page our continued delivery of strong returns.

Speaker #1: For 2026, we have allocated technology capex in the range of 13% to $15 million—a small increase on our previous guidance, reflecting the acceleration of our fleet strategy.

Speaker #1: This investment supports the continued delivery of the group's transformation program while also establishing the technology foundations required for phase three of our strategic roadmap.

Speaker #1: We expect technology investment to remain elevated as we execute these priorities and position the Group for its next phase of growth. Consistent with this capital allocation approach, the Board has declared an interim fully franked dividend of 21.5 cents per share, representing 70% of NPATA.

Speaker #1: Finally, as a result of our disciplined approach to capital management, you can see from the chart on this page our continued delivery of strong returns.

Speaker #1: The last 12 months' return on equity was 31% after tax. With that, I'll hand back to Scott.

Jason King: The last 12 months return on equity was 31% after tax. With that, I'll hand back to Scott.

Speaker #2: Thanks, Jason. Moving to slide 26. In summary, Smartgroup delivered another strong half, with record settlements, continued customer growth, and disciplined execution of our strategic priorities.

Scott Wharton: Thanks, Jason. Moving to slide 26. In summary, Smartgroup delivered another strong half, record settlements, continued customer growth, and disciplined execution of our strategic priorities. We achieved record customer numbers across salary packaging, novated leasing, and fleet, while continuing to strengthen our market position and expand our distribution channels. Importantly, these results reflect more than favorable market conditions. They reflect a business that is performing very well across all meaningful metrics. We will continue to remain focused on driving further growth and scalability through the delivery of our strategic priorities. We remain focused on executing against our strategic priorities and are confident that the platform we are building will support continued growth. Turning to slide 27 and the outlook. We see a supportive environment for continued growth. While we remain mindful of the broader economic conditions and consumer sentiment, demand for novated leasing remains robust.

Speaker #2: We achieved record customer numbers across salary packaging, novated leasing, and fleet, while continuing to strengthen our market position and expand our distribution channels. Importantly, these results reflect more than just favorable market conditions.

Speaker #2: They reflect a business that is performing very well across all meaningful metrics. We will continue to remain focused on driving further growth and scalability through the delivery of our strategic priorities.

Speaker #2: We remain focused on executing against our strategic priorities and are confident that the platform we are building will support continued growth. Moving to slide 27 and the outlook.

Speaker #2: We see a supportive environment for continued growth. While we remain mindful of the broader economic conditions and consumer sentiment, demand for available leasing remains robust.

Speaker #2: This is supported by our large eligible employee base, sustained interest in EVs, and continued awareness of the savings available through salary packaging. In the second half, today orders, settlements, and direct yield all increased compared with the prior corresponding period.

Scott Wharton: This is supported by our large eligible employee base, sustained interest in EVs, and continued awareness of the savings available through salary packaging. H2 to date orders, settlements, and direct yield all increased compared with the prior corresponding period. As previously outlined, 2026 is a significant year for technology investment and transformation. These investments are laying the foundations for greater automation, scalability, and operational leverage. This will position the group to continue capturing the benefits of the strategy we have been executing. Based on current market conditions, we remain focused on achieving an EBITDA margin in the mid-40s during 2027. We also recognize that there are further opportunities to elevate performance beyond 2027, including through continued investment in technology, automation, and AI-enabled capabilities. Smartgroup is executing well, operating in attractive markets and remains well-positioned to deliver sustained, profitable growth and long-term value for shareholders.

Speaker #2: As previously outlined, 2026 is a significant year for technology investment and transformation. These investments are laying the foundations for greater automation, scalability, and operational leverage.

Speaker #2: This will position the group to continue capturing the benefits of the strategy we have been executing. Based on current market conditions, we remain focused on achieving an EBITDA margin in the mid-40s during 2027.

Speaker #2: We also recognize that there are further opportunities to elevate performance beyond 2027, including through continued investment in technology, automation, and AI-enabled capabilities. Smartgroup is executing well.

Speaker #2: Operating in attractive markets, Smartgroup remains well positioned to deliver sustained profitable growth and long-term value for shareholders. A big thank you to Smartgroup's customers, partners, and of course, our team. Thank you also to our investors for your ongoing support.

Scott Wharton: A big thank you to Smartgroup's customers, partners, and of course, our team. Thank you also to our investors for your ongoing support. I will now hand back to Betsy for questions.

Speaker #2: I'll now hand back to Betsy for questions.

Speaker #3: Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2.

Operator: Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you are on a speakerphone, please pick up the handset to ask your question. Your first question today comes from Phil Chippindale with Ord Minnett. Please go ahead.

Speaker #3: If you are on a speakerphone, please pick up the handset to ask your question. Your first question today comes from Phil Chippendale with Ord Minnett.

Speaker #3: Please go ahead.

Speaker #4: Good morning, team. Thanks for your time. A couple of questions from me. Just firstly, on slide 21—just where you walk us through the changes in the revenue and the OPEX lines.

Phil Chippindale: Good morning, team. Thanks for your time. A couple of questions from me. Just firstly, on slide 21, just where you walk us through the changes in the revenue and the OpEx lines. Revenue is up 14%, OpEx up 12% versus the PCP. But when we look at those constituent parts, the other expenses is up 18%. I know on the call Jason King said, yeah, there will be ongoing tech investment this year. I am just trying to understand, where those other expenses are going to be sort of heading in the H2. I guess part of my thinking is just looking at the EBITDA margin overall. Obviously, you have delivered, I think in the last three halves, you have done 40%, 42%, now 41%. So just trying to think about where that margin is going in the H2 of this year, please.

Speaker #4: Revenue is up 14%. OPEX is up 12% versus the prior corresponding period. But when we look at those constituent parts, the other expenses were up 18%. I know on the call, Jason said there will be ongoing tech investment this year.

Speaker #4: I'm just trying to understand where those other expenses are going to be heading in the second half. And I guess part of my thinking is just looking at the EBITDA margin overall.

Speaker #4: Obviously, you've delivered, I think, in the last three halves—you've done 40%, 42%, and now 41%. So, just trying to think about where that margin is going in the second half of this year, please.

Speaker #5: Yeah, absolutely. Hi Phil, good morning. So I think the way we've positioned it is just in terms of the margin target that we've been talking to, and the fact that we're looking for margin improvements during 2027. We're really focused on delivering the program this year.

Jason King: Yeah, absolutely. Hi, Phil. Morning. I think the way we've positioned is, just in terms of the margin target that we've been talking to and the fact that we're looking for margin improvements during 2027, we're really focused on delivering the program this year. I would say we're not giving specific margin targets for H2, but you can expect that we're going to continue to invest in the program, incur the OpEx that we need to deliver the transformation and the technology change. Really a continuation of the current trends.

Speaker #5: So I would say we're not giving specific margin targets for H2, but you can expect that we're going to continue to invest in the program and incur the OPEX that we need to deliver the transformation and the technology change.

Speaker #5: And really, it's a continuation of the current trends.

Speaker #2: Yeah, and I think just to add a couple extra comments there. To Phil, thanks for the question. Obviously, as you know, there are seasonal factors to think about—H1 versus H2 on margin—given the ebb and flow of resourcing requirements in different parts of the year.

Scott Wharton: Yeah. I think just to add a couple extra comments there, too, Phil, thanks for the question. Obviously, as you know, there's seasonal factors to think about H1 versus H2 on margin, given the ebb and flow of resourcing requirements in different parts of the year. The second thing I'd say, we've been consistent over the past few years, being clear that we view the 40% EBITDA margin as a target range to keep around whilst we step through our transformation agenda. That being said, we remain committed to targeting a mid-forties EBITDA margin during the course of next year.

Speaker #2: The second thing I'd say: we've been consistent over the past few years, being clear that we've kind of viewed the 40% EBITDA margin as a target range to keep around while we step through our transformation agenda.

Speaker #2: That being said, we remain committed to targeting a mid-40s EBITDA margin during the course of next year.

Speaker #4: Okay, thanks. I just want to touch on the direct yield. You've mentioned that that's up 2% versus the prior period. I'm assuming that the average value for new vehicles has come down, given the strength in the BEV sector.

Phil Chippindale: Okay. Thanks. I just want to touch on the direct yield. You've mentioned that's up 2% versus the prior period. I'm assuming the average value for new vehicles has come down, given the strength in the BEV sector. But then on the other hand, new vehicles are a high percentage of total orders. Is it sort of those are the two key drivers here and the net is obviously the 2%? Am I thinking about this the right way?

Speaker #4: But then, on the other hand, new vehicles are a high percentage of total orders. So is it sort of those two—those are the two key drivers here—and the net-net is obviously the 2%?

Speaker #4: Am I thinking about this the right way?

Speaker #5: Yeah, broadly, that's correct. I think one of the interesting things is that the movement in average vehicle price is pretty muted. So, if you look at BEVs, they have come down modestly.

Jason King: Yeah. Broadly, that's correct. I think one of the interesting things is that the movement in average vehicle price is pretty muted. If you look at BEVs, they have come down modestly. If you look at ICE, in our book at least, they have gone up. Net-net, there's a very modest effect owing to the NAF. Then you're quite right. The change in mix as we've been doing, as the business has been growing, we're therefore doing more new vehicles. That change in mix has driven a modestly improved yield.

Speaker #5: If you look at ICE, in our book at least, they have gone up. So net net, there's a very modest effect owing to the NAV.

Speaker #5: And you're quite right. The change in mix, as we've been seeing as the business has been growing, means we're therefore doing more new vehicles.

Speaker #5: That change in mix has driven a modestly improved yield.

Speaker #4: Okay, and last question, if I can. Can you just give us some sense of the progress you've made on some of the distribution partnerships that you've got in place?

Phil Chippindale: Okay. Last question, if I can. Can you just give us some sense of the progress you've made on some of the distribution partnerships that you've got in place? Particularly I'm thinking about BMW, BYD, that you've got something with Jaecoo and one or two others. How are you seeing those evolve, and can you talk us through how material those are to your novated volumes at the moment? I imagine they're still pretty early days.

Speaker #4: Particularly, I'm thinking about BMW, BYD, that you've got something with Jaecoo, and one or two others. How are you seeing those evolve? And can you talk us through how material those are to your Novated volumes at the moment?

Speaker #4: I imagine they're still pretty early days.

Speaker #2: Yeah, no, thanks, Phil. As we've talked about for the past 18 months or so, you noted BMW as an example. We've invested heavily into building a digital platform.

Scott Wharton: Yeah. No, thanks, Phil. Yeah, as I talked about for the past 18 months or so, you noted BMW, as an example. We've invested heavily into building a digital platform, generally, but also importantly for our interaction model in dealership, working with dealers and OEMs, the manufacturers. That work's progressing really well. You touched on there a number of other manufacturers that we are partnering with. We continue to develop those relationships, and the progress is really pleasing. As you alluded to, it is early days in overall contribution, but things are evolving very well, and we are pleased with the progress. More to come in future updates.

Speaker #2: Generally, but also importantly for our interaction model in dealerships working with dealers and OEMs—so, manufacturers. That work’s progressing really well. You touched on there a number of other manufacturers that we are partnering with.

Speaker #2: We continue to develop those relationships, and the progress is really pleasing. As you alluded to, it is early days in terms of overall contribution, but things are evolving very well, and we are pleased with the progress. More to come in future updates.

Speaker #4: Okay, thanks, Phil. I'll jump back in.

Phil Chippindale: Okay. Thanks. I'll jump back in the queue.

Speaker #3: The next question comes from Liam Cummings with CLSA. Please go ahead.

Operator: The next question comes from Liam Cummings with CLSA. Please go ahead.

Speaker #6: Hi guys, thanks for taking the question. Maybe just to follow on from Phil's question and ask it in a slightly different way, just on the revenue pipe.

Liam Cummings: Hi, guys. Thanks for taking the question. Maybe just to follow on from Phil's question and asking it a slightly different way, just on the revenue pipe. I think back in March, you might have been sitting at roughly AUD 17 million, and I think you've seen a bit of about a jump of AUD 6 million. Maybe can you give us a feel for where that's coming from and how much some of the broader initiatives that you've been recently talking to have contributed to that lift?

Speaker #6: I think back in March, you might have been sitting at roughly $17 million. I think you've seen a bit of a jump of $6 million.

Speaker #6: So maybe, can you give us a feel for where that's coming from, and how much some of the broader initiatives that you've been recently talking to have contributed to that lift?

Speaker #5: Yeah, thanks, Liam. I think if I just sort of take the two sides of the coin—one is, obviously, demand in March and April in particular was very strong.

Jason King: Yeah. Thanks, Liam. I think if I just take the two sides of the coin, one is, obviously demand in March and April in particular, was very strong, for reasons that had a lot to do with external factors internationally, fuel price volatility. But on the flip side, the investment that we've been making in digital marketing and the digital acquisitions funnels meant that we could convert that demand. So the scalability and the conversion ability has come through, and it was pleasing to see the increase in the settlements and the increase in the pipeline, during what has been a fairly favorable market during the H1. Basically, the way that that played out in the numbers is with a slightly higher pipeline that we're sitting on at this point in time.

Speaker #5: For reasons that had a lot to do with external factors internationally—fuel price volatility—but on the flip side, the investment that we've been making in digital marketing and the digital acquisitions funnels meant that we could convert that demand.

Speaker #5: So, the scalability and the conversion ability have come through, and it was pleasing to see the increase in the settlements and the increase in the pipeline during what has been a fairly favorable market during the first half.

Speaker #5: And basically, the way that that sort of played out in the numbers is with a slightly higher pipeline that we're sitting on at this point in time.

Speaker #6: Great, that makes sense, thanks. And then, maybe back to the lift in the technology spend—just sort of, again, trying to double down on understanding the motivations behind accelerating it now.

Liam Cummings: Great. That makes sense. Thanks. Maybe back to the lift in the technology spend, again, just trying to double down on understanding the motivations behind accelerating it now. Then I suppose understanding, will there be spillover into 2027? Then, I wouldn't mind then tying it back to perhaps slide 16. You're talking about you're currently 21% penetrated on your customer opportunity set, if I can say that. Once you're fully deployed with your technology, what you think an achievable number might be for that 21%?

Speaker #6: And then, sort of, I suppose, understanding: will there be spillover into '27? And then, I wouldn't, sort of, mind then, sort of, tying it back to perhaps slide 16.

Speaker #6: You're sort of talking about—you're currently sort of 21% penetrated on your customer opportunity set, if I can say that. Once you're fully deployed with your technology, what do you think an achievable number might be for that 21%?

Speaker #2: Yeah, great. Thanks, Liam. Maybe just to take a step back, I'd say at the macro level, if you look at the level of CapEx and technology investment that we're making, it's reasonably modest for a business of our scale.

Scott Wharton: Yeah, great. Thanks, Liam. Maybe just to take a step back, I'd say at the macro level, if you look at the level of CapEx and technology investment that we're making, it's reasonably modest for a business of our scale, if you look across the market. But we're comfortable we're investing at the right levels for the future of the business. With respect to the acceleration referred to today, one area in particular that we've accelerated some of our spend is in our fleet management business. As we've touched on in prior updates, we've pivoted to look at steps we can take to strengthen our fleet management capability. As we've understood more about the market opportunity, we've got more excited about that, and indeed identified a number of areas that we can look to make incremental investments in our fleet management related technology.

Speaker #2: If you look across the market, we're comfortable we're investing at the right levels. For the future of the business, with respect to the acceleration referred to today, one area in particular that we've accelerated some of our spend is in our fleet management business.

Speaker #2: As we've touched on in prior updates, we've pivoted to look at steps we can take to strengthen our fleet management capability. As we've understood more about the market opportunity, we've become more excited about that.

Speaker #2: And indeed, identified a number of areas where we can look to make incremental investments in our fleet management-related technology. I should say, though, and this goes to one of the great parts of this business, that the more scale we build within fleet, that obviously helps us with our novated business as well.

Scott Wharton: I should say, though, this goes to one of the great parts of this business, is that the more scale we build within fleet, that obviously helps us with our novated business as well. Because ultimately downstream, we are talking to the same dealer groups and the same manufacturers about vehicle volumes. With respect to slide 16, what I would share on this is obviously, our aim will be to continue working across the page, increasing the level of eligible customers that we can target. Most importantly, this goes to the heart of our digital strategy in particular, and we have been focused on strengthening our account management capabilities, over the past few years. We have been making steady progress on improving our uptake levels, that is the middle chart, and our cross-sell into novated leasing, from salary packaging and benefits more broadly. With that in mind, do we see upside?

Speaker #2: Ultimately, downstream, we're talking to the same dealer groups and the same manufacturers about vehicle volumes. With respect to slide 16, what I'd share on this is, obviously, our aim will be to continue working across the page, increasing the level of eligible customers that we can target.

Speaker #2: Most importantly, and this goes to the heart of our digital strategy in particular, we have been focused on strengthening our account management capabilities over the past few years.

Speaker #2: We've been making steady progress on improving our uptake levels. That's the middle chart, and our cross-sell into Novated Leasing, from salary packaging and benefits more broadly.

Speaker #2: With that in mind, do we see upside on all three charts? Yes. What gives us a level of confidence on that is, if we look by industry segment—so health, education, not-for-profit, government, corporate—we continue to see a spread of levels of both uptake, and also cross-sell, within clients in each of those segments.

Scott Wharton: On all three charts, yes. What gives us a level of confidence on that is if we look by industry segment, so health, education, not-for-profit, government, corporate, we continue to see a spread of levels of both uptake and also cross-sell within our clients in each of those segments. So yeah, by deduction, we know we can actually drive higher levels of performance increasingly by keeping on doing what we have been doing really well for the past few years. Which ultimately is, at the end of the day, improving education understanding amongst our customers of the savings they can take advantage of through salary packaging and novated leasing.

Speaker #2: So again, by deduction, we know we can actually drive high levels of performance increasingly by keeping on doing what we've been doing really well for the past few years, which ultimately is, at the end of the day, improving education and understanding amongst our customers of the savings they can take advantage of through salary packaging and novated leasing.

Speaker #6: Great. Thanks guys.

Liam Cummings: Great. Thanks, guys.

Speaker #3: Once again, if you would like to ask a question, please press star then one to join the question queue. The next question comes from Chen Yuang with MS. Please go ahead.

Operator: Once again, if you would like to ask a question, please press star then 1 to join the question queue. The next question comes from Chenni Wong with MST Financial. Please go ahead.

Chenni Wong: Hey, guys. Thanks for taking my question. Maybe just first one back on yields again. I wanted to just hone in on the H1 versus the H2 of 2025, because if memory serves correct, Q1 2025 yields were higher and Q2 2025 yields were lower. I guess, the yield improvement over the H1 of FY 2026 relative to H1 2025, I guess the Q2 was an easier comp, so to speak. But when we look at H1 2026 versus the H2 of 2025, that yield is unchanged at minus 5% despite having a higher new settlement in the Q2. Yeah, I think earlier on you mentioned also that, the movement in average vehicle prices, there wasn't a lot to call out there.

Chenny Wang: Hey, guys. Thanks for taking my question. Maybe just first one back on yields again. I wanted to just hone in on the H1 versus the H2 of 2025, because if memory serves correct, Q1 2025 yields were higher and Q2 2025 yields were lower. I guess, the yield improvement over the H1 of FY 2026 relative to H1 2025, I guess the Q2 was an easier comp, so to speak. But when we look at H1 2026 versus the H2 of 2025, that yield is unchanged at minus 5% despite having a higher new settlement in the Q2. Yeah, I think earlier on you mentioned also that, the movement in average vehicle prices, there wasn't a lot to call out there.

Speaker #6: Hey guys, thanks for taking my question. Maybe just first one back on yields again. I wanted to just hone in on the first half versus the second half of '25, because if memory serves correct, Q1 '25 yields were higher and Q2 '25 yields were lower.

Speaker #6: So I guess the yield improvement over the first course, first half of the yield improvement over the first half of FY26 relative to the first half of '25, I guess the second quarter was an easier comp, so to speak.

Speaker #6: But when we look at first half '26 versus the second half of '25, that yield is unchanged at minus five, despite having higher new settlements in the second quarter.

Speaker #6: So, yeah, I think earlier on you mentioned also that, with the movement in average vehicle prices, there wasn't a lot to call out there.

Speaker #6: So, yeah, I just wanted to, I guess, better understand what's kind of driven the yield movement, despite higher new settlements in the second quarter.

Chenni Wong: Yeah, I just want to, I guess, better understand what's kind of driven the yield movement despite higher new settlements in the Q2.

Chenny Wang: Yeah, I just want to, I guess, better understand what's kind of driven the yield movement despite higher new settlements in the Q2.

Speaker #5: Yeah, thanks, Jenny. I think there's a bit of difficulty with getting a clean comp out of the quarterly numbers, particularly if we go back into the quarters in 2025.

Jason King: Yeah. Thanks, Chenni. I think there's a bit of difficulty with getting a clean comp out of the quarterly numbers, particularly if we go back into the quarters in 2025, mainly because of the fair impact and what that did for pull forward and things like that. It's not a stable baseline. What I would say is, as we mentioned before, the yield movement this time around has been positively influenced by the mix. If we are comparing to the H2 of 2026, yes, it was down. It was 5% on average lower. We are in a competitive market, and we do look to balance the yield performance across what we're doing on volume. I think we've always been clear that this is a volume business. Volume is first, yield is second in terms of order of priority. It was a very strong market.

Speaker #5: Mainly because of the Fed impact and what they did for Paul Ford and things like that. So that's not a stable baseline. What I would say is, as we mentioned before, the yield movement this time around has been positively influenced by the mix.

Speaker #5: If we are comparing to the second half of 2026, yes, it was down. So, it was 5% on average lower. We are in a competitive market, and we do look to balance the yield performance across what we're doing on volume.

Speaker #5: So, I think we've always been clear that this is a volume business. Volume is first; yield is second, in terms of order of priority.

Speaker #5: And it was a very strong market, so we are comfortable with where yield was in the first half, particularly when you balance that off against the volume and revenue growth.

Jason King: We are comfortable with where yield was in the H1, particularly when you balance it off against the volume and revenue growth. Then as far as an outlook goes, I think we've always maintained, we've managed this in a very disciplined manner. We always look for ways to improve yield where we can. There's nothing specific or special we can point to, but at the ranges of volatility that we're looking at here, I think we're reasonably comfortable that it's in line with our expected range.

Speaker #5: And then, as far as an outlook goes, I think we've always maintained that we've managed this in a very disciplined manner. We always look for ways to improve yield where we can.

Speaker #5: There's nothing specific or special we can point to, but at the ranges of volatility that we're looking at here, I think we're reasonably comfortable that it's in line with our expected range.

Speaker #2: Yeah, innocent to that. In context of what we provided before, around this, we watched it very, very closely. There's a lot of science behind how we manage yield.

Scott Wharton: Yeah. I'll just add to that, comments that were provided before around this. We watch yield very closely. There's a lot of science behind how we manage yield. One of the areas of capability that we've developed over the past few years is much stronger supply chain capability, which is a key enabler of us being disciplined around yield. As we've said before, Chenni, we monitor within a target range and work hard to keep within that. But balancing the market conditions, make sure that we ultimately, as Jason said, focus first and foremost on volume.

Speaker #2: And one of the areas of capability that we've developed over the past few years is much stronger supply chain capability, which is a key enabler of us being disciplined around yield.

Speaker #2: And as we've said before, Jenny, we monitor within a target range and work hard to keep within that, but balancing the market conditions to make sure that we, ultimately, as Jason said, focus first and foremost on volume.

Speaker #6: Got it. And apologies if I have missed this, but just anything to call out on attached rates, especially with, I guess, higher bids?

Chenni Wong: Got it. Apologies if I have missed this, but just anything to call out on attach rates, especially with, I guess, higher BEVs.

Chenny Wang: Got it. Apologies if I have missed this, but just anything to call out on attach rates, especially with, I guess, higher BEVs.

Speaker #5: The attached rates were modestly lower, not materially lower. They're a little bit down, but again, I think within the realms of sort of ordinary variability from period to period.

Jason King: The attach rates are modestly lower, not materially lower. They're a little bit down, but again, I think within the realms of sort of ordinary variability from period to period.

Speaker #6: Got it. And then, just maybe in terms of inquiry levels and what that looks like now, how would you think about that into the second half?

Chenni Wong: Got it. Just maybe in terms of inquiry levels and what that looks like now. How we should think about that into H2, obviously, very favorable market in H1 with several external tailwinds. Yeah, I guess do we need to temper some of our expectations in terms of extrapolating H1 into H2? Yeah, maybe just some color on what those inquiry levels look now will be great.

Chenny Wang: Got it. Just maybe in terms of inquiry levels and what that looks like now. How we should think about that into H2, obviously, very favorable market in H1 with several external tailwinds. Yeah, I guess do we need to temper some of our expectations in terms of extrapolating H1 into H2? Yeah, maybe just some color on what those inquiry levels look now will be great.

Speaker #6: Obviously, a very favorable market in the first half with several external tailwinds. But yeah, I guess do we need to temper some of our expectations in terms of extrapolating the first half into the second half?

Speaker #6: And yeah, maybe just some color on what those inquiry levels look like now would be great.

Speaker #2: Yeah, sure. Thanks, Jenny. As we touched on in the commentary, with the geopolitical situation in the first half of the year and the knock-on impact that had on fuel prices, we did see a heightened level of demand for EVs.

Scott Wharton: Yeah, sure. Thanks, Chenni. Yeah, as we touched on in the commentary with the geopolitical situation in H1 of the year and the knock-on impact that had on fuel prices, we did see a heightened level of demand for EVs. As touched on, though, in the commentary and the outlook, the levels of inquiry, as you put it, and interest right now, it is ahead of where we were at the same time last year, and that is across salary packaging, novated leasing, and also fleet. With that in mind though, we are cautious as we look into the last phases of the year. There is a long way to go yet, and a lot can happen with consumer sentiment in particular, which is very relevant to performance in our sector.

Speaker #2: As I touched on, though, in the commentary and the outlook, the levels of inquiry, as you put it, and interest right now are ahead of where we were at the same time last year.

Speaker #2: And that's across salary packaging, novated leasing, and also Fleet. So with that in mind, though, we are cautious as we look into the last stages of the year; there's a long way to go yet.

Speaker #2: A lot can happen with consumer sentiment in particular, which is very relevant to performance in our sector.

Speaker #6: Got it. And then just one last one from me. Any key contract renewals coming up?

Chenni Wong: Got it. Just one last one from me. Any key contract renewals coming up?

Chenny Wang: Got it. Just one last one from me. Any key contract renewals coming up?

Speaker #2: Over the next year, well, as I said before, year to year, there are always contracts coming up with the large number of employer clients that we look after.

Scott Wharton: Well, as I said before, year to year, there are always contracts coming up with the large number of employer clients that we look after. Every year, there is always a percentage of employer contracts coming up. All the key ones so far this year have renewed as anticipated. We will continue to see contracts come up in the normal course. We remain confident given, again, the strength in our proposition that was talked about today and our really strong relationships with our employer clients. Any renewals over the coming period are in a good position.

Speaker #2: Every year, there's always a percentage of employer contracts coming up. All the key ones so far this year have renewed as anticipated, and we'll continue to see contracts come up in the normal course.

Speaker #2: But we remain confident, given again the strengths in our proposition that were talked about today, and our really strong relationships with our employer clients.

Speaker #2: But any renewals over the coming period are in a good position.

Speaker #6: Got it. Thanks, guys.

Chenni Wong: Got it. Thanks, guys.

Chenny Wang: Got it. Thanks, guys.

Speaker #1: There are no further phone questions at this time. I'll now hand the call back to Mr. Wharton for closing remarks.

Operator: There are no further phone questions at this time. I will now hand the call back to Mr. Wharton for closing remarks.

Speaker #2: Right. Thank you very much, Betsy. And thank you to everyone for joining the call today and for your interest in Smartgroup. We look forward to speaking with many of you in the coming days.

Scott Wharton: Great. Thank you very much, Betsy, and thank you for everyone joining the call today and your interest in Smartgroup, and we look forward to speaking with many of you in the coming days. Have a good day.

Speaker #2: Have a good day.

Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.

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Half Year 2026 Smartgroup Corp Ltd Earnings Call

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