The Smartgroup Corporation Ltd (ASX: SIQ) share price is gaining on Wednesday after the company posted its earnings results for the half year ended June 30, 2024.
Smartgroup shares are currently swapping hands at $7.88 apiece, 4.5% higher on the day as investors react positively to the company's update.
Meanwhile, the S&P/ASX 200 index (ASX: XJO) is down 0.52% at the time of writing.
Let's see what the employee management services company posted.
Smartgroup share price jumps on solid half-year results
Smartgroup delivered a solid performance in the first half, with several key highlights:
- Revenue surged by 27% year over year to $148.5 million.
- Earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 20% to $56.2 million.
- Net profit rose by 16%, reaching $34.1 million for the half.
- Declared an interim fully franked dividend of 17.5 cents per share.
What else happened in the first half?
The Smartgroup share price had an interesting run over the last six months, but on the business side, it was a different story. Growth was the consistent theme.
Revenues of $148.5 million were up 27% compared to the first half of last year, which led to a 20% growth in EBITDA.
It also booked a 27% growth in leasing settlements, whereas electric vehicles (EVs) comprised 42% of new car leases during the half.
Meanwhile, operating costs were up to $85 million for the year as the company increased scale to meet demand.
Additionally, Smartgroup divested two non-core businesses to focus on its core operations of salary packaging, novated leasing, and fleet management.
Smartgroup finished the period with 402,000 active packaging customers, up 17,000 from this time last year.
The company also onboarded the South Australian government's employees who use salary packaging under a long-term contract.
It started providing services to over 110,000 SA government employees in July this year. This could impact the Smartgroup share price.
What did management say?
Smartgroup managing director and CEO Scott Wharton commented on the company's performance, saying:
Overall in the first half of 2024, Smartgroup delivered a solid financial and operational performance, and leasing demand remained robust.
We've made steady progress against our Strategic Priorities, which were announced in February. We established a new operating model and executive team, delivered new digital assets, and divested two non-core businesses.
What's next for Smartgroup?
Looking ahead, Smartgroup remains focused on continuing its growth cycle. It says that demand for new leases "remains robust".
While it didn't provide specific financial guidance, CEO Wharton gave an overview of the broad expectations for the second half:
In July, we successfully onboarded the South Australia Government's salary packaging employees. While we do not expect a material profit contribution from this contract this year, it cements our position as a leading provider of salary packaging and novated leasing to both State and Federal governments.
During the second half, we will be focussing on accelerating the delivery of our digital investments in our leasing and salary packaging products, to further improve customer experience and productivity. We remain focused on cost efficiency while delivering growth through exceptional service to our clients and customers.
Smartgroup share price snapshot
The Smartgroup share price is catching a strong bid today after the company posted its first-half FY24 numbers. However, in the last 12 months, the stock has only increased 0.7%.
