Camplify Holdings Limited (CHL) Earnings Call Transcript & Summary

Good morning, everybody. Welcome to the Camplify Holdings Limited Half 1 FY '26 Results. I would like to pay our respects to traditional owners, their elders past and present. Camplify Holdings Limited is a proud Newcastle originated company built on the lands of the Awabakal and Worimi people. I'm Justin Hales, CEO and Founder of Camplify; and joining me today is Brett Edwards, our CFO. First half of FY '26 has been a period of optimization and stabilization for our business. Along FY '25, we shifted our focus from heavy integration to focused execution, prioritized bottom line results and efficiency. Our management team and Board are pleased with the financial turnaround we have executed in a short period of time. Our focus on expense management delivered a positive $5 million swing in our bottom line compared to the prior corresponding period, reducing our statutory net loss after tax by 62% to $2.9 million. This bottom line focus drive transformed our cash position. We generated $12.18 million in positive operating cash inflows, which is a reversal from the $1.76 million outflow we saw in H1 FY '25. Supported by a successful $3.2 million capital raise, we closed the half with a cash balance of $23.178 million. While gross transaction value decreased to $54.6 million from $65.4 million in the prior corresponding period, our total revenues proved resilient coming in at $19.1 million. This GTV reduction was an active capital allocation decision. We deliberately shed low-margin, high-cost booking volume to eliminate inefficient marketing spend by focusing exclusively on high-value revenue streams. We successfully increased our platform take rate to $26.9 million, up from -- 24.6% of take rate to 26.9%, up from 24.9% and maintained a robust average booking value of $1,612. We have proven that optimizing for margin rather than raw transaction volume is the fastest route to stability and sustainability. As part of this commitment to high-value revenue, we also took a hard look at our supply side. To drive higher quality bookings and better conversion rates, CHL undertook a rigorous program of fleet consolidation. We actively looked at our overall fleet and removed listings that scored poorly in customer engagement metrics as well as owners with historical history of ghosting hirers. Because of this strategic pruning, our overall fleet numbers remained flat compared to the prior corresponding period, but the overall quality score of our fleet has significantly increased. This ensures that the hirers we bring to the platform have a superior, highly reliable experience. Having evaluated the quality of our marketplace, we were able to right-size our customer acquisition cost. We drilled deep into our marketing operations, shifting our focus towards long-tail acquisition and retention strategies. This result achieved a reduction in our marketing expenses from $5.4 million down to $2 million, taking our marketing spend from 27% of revenue to just 10.5%. We achieved this cost reduction while improving our requests through paid conversion metrics by 31% in our core markets. We captured high-margin bookings without the burden of inefficient marketing spend. Furthermore, we streamlined our organizational structure, allowing us to reduce employee benefits from $8.3 million to $6.6 million. By implementing this approach and assisted by a membership-first approach in Germany, we are seeing regional revenue in Germany up 30% to $2.73 million. A key project delivered during the period has been the ANZ Myway Mutual launched in May 2025. It was fundamentally transformed us into a membership-first ecosystem. The Mutual performed well, operating at a sustainable 49.6% loss ratio in H1. Bringing this capacity in-house has expanded our gross profit margin on premium membership from 14.9% to 33.3%, giving us an improved recurring revenue engine that we fully control. I will now hand over to Brett Edwards, our CFO, to walk you through the detailed financial performance and our cash position for the first half.

Thanks, Justin. While we've made some strong improvements in many areas of the business, we took some proactive steps also to get the EU insurance business optimized. It has meant that we had to ring-fence some issues over in Europe give us a clean slate for H2. So we did book a $928,000 prior period adjustment for timing issues around the insurance operations. And also, there's a 624 -- sorry, $0.624 million contingency for some loss-sharing contracts over the [indiscernible] across. But moving to the key operating metrics. So we've had a focus to ensure a more efficient marketplace during this half, and that has resulted in some strong improvements in the take rates that have offset our GTV fluctuations. We also had the revenue from premium membership, it's significantly grown from $2.1 million to $4.3 million as churn has fallen away, and we've got a more stable repeat cash flow business now coming through. And as Justin mentioned, Germany has also been a good key growth driver over in Europe, up 30% to $2.7 million and signaling some strong potential for our European operations. In the income statement, we recorded revenue of $19.056 million, which has maintained overall steady performance whilst we pivoted to higher-margin segments. The focus on expenses has also delivered some significant savings, which has contributed to that bottom line improvement, which includes that disciplined marketing spend, which has optimized our customer acquisition, and that's performing well across all regions. I mentioned the adjustments to contingencies already, but probably also just note that we did book $569 million (sic) [ $0.569 million ] in the current half as cost of sales on that loss-sharing contract with the other $0.624 million still being held as a contingency. That reconciles back to the $1.3 million contingency that we noted in the appendix 4C cash flow statement back at the end of January. So overall, the bottom line improvement is quite solid with net loss post tax for the half year was $2.927 million, down significantly from the $7.8 million for the prior comparative period. Moving to the cash flow position. The group holds $23.178 million in cash at this point, and that reflected really a strong lead up to the Australian and New Zealand summer holiday periods. The high point of cash was across the Christmas period. We did start to pay that out for bookings post-Christmas. But a good thing we saw a positive shift in the operating cash inflows, $12.18 million for the half, which is a big reversal from the $1.769 million outflow in the PCP. We also completed the successful $3.2 million capital raise with the JD Group during the period, which has helped to strengthen the balance sheet. Moving down to segment performance. The Australian market had a few macroeconomic headwinds, which have impacted GTV, but the membership-first strategy plus improvements in our take rates over in New Zealand underlying the dominance of the Australia and New Zealand market to the business overall. The European markets, U.K., Spain and Netherlands and Austria all have really been a focus of trimming as we try to get those businesses back to a better margin. So we are through the back end of that, expecting a lift in the second half. And as mentioned, Germany served as a real growth engine delivering a solid improvement in revenue as the local team worked hard over there to get the benefits of the now consolidated platform. In terms of the market performance, a number of vehicles on the platform grew to 34,449, so represents a fairly stable supply base despite the macroeconomic headwinds. And while the bookings decreased to 33,869, we have managed to maintain a robust $1,612 average per each booking. Also, we're pleased that the top-level AER product has been taken up strongly by customers and the take rate is sitting at 55% on that. The ownership for membership remains strong. There's 5,064 RVs subscribed to premium membership at the moment. And as I mentioned, the churn rate has dropped on that. So we are seeing a much stronger overall annual subscription revenue today. And finally, just quickly on future bookings. Yes, we sitting at $34.2 million in future bookings as of 31st of December 2025, which is quite a strong figure. We did see $11.3 million of that go out the door in January -- bookings in January. But looking forward, there's already $1.5 million worth of forward bookings booked for next summer in Australia and New Zealand. So I think it bodes well that the market is looking to lock in bookings going forward. And the future bookings is a good measure of our pipeline activity. Okay. I'd like to hand back now to Justin to run through the operational update.

Thanks, Brett. Moving on to technology and the drive for efficiency and higher customer satisfaction. Our strategy is underpinned by a technology platform. 18 months ago, we made the strategic decision to become an AI-first organization. This pivot has enabled high-speed deployment of new technologies and allowed us to design our team culture around AI tools and vastly improve how we leverage our data. A standout achievement in H1 was the successful pilot rollout of our AI voice agents, which achieved a 95% first level resolution rate for customer tickets. Following this success, we will now roll this program out across all customer-facing parts of the business, enabling even greater team efficiency and elevating our customer service to new heights. I want to specifically acknowledge our CTO, Jeremy Gupta, who has been instrumental in fundamentally changing how our platform delivers services both internally and externally to stakeholders. Having right-sized our cost base, our focus for H2 FY '26 shift to scaling profitable growth. We are entering our seasonally busiest period with momentum, a unified technology platform and a superior margin profile. Primary catalyst for our next phase of growth is our strategic partnership with the JB Group. Following a highly successful pilot program in Newcastle, we are now expanding Camplify managed service depots to an additional 12 locations across ANZ. This model enables us to directly offer high-margin products to approximately 3,000 JB customers annually and allows us to build a fully managed rental fleet that will rival other large operators at superior margins. Additionally, on the business-to-business front, our temporary accommodation program continues to support communities in need. We're currently working with Homes Victoria to roll out at-home caravan program following the January 2026 bushfires. We have had an initial order placed with us of 50 vans with an expectation to scale it up to 200 across 14 local government areas. To wrap up, we remain committed to our plan. We are highly positive about our ability to deliver long-term profitable and sustained growth. I want to thank our entire team for the disciplined execution and our shareholders for your continued trust as we build the world's largest RV sharing ecosystem. Thank you. Brett and I will now open the question for -- the floor for questions.

Starting out, just a couple of questions that have come in directly through the Q&A. So first question from Steven Sassine is, 10.5% of revenue for marketing expenses. Is this the right level to grow -- to drive growth? Can we talk to our second half '26 thoughts on spend as we roll into a key Northern Hemisphere period? So look, I think we'll probably settle somewhere in the second half around 11.5% to 12% of revenue as we look to accelerate into that second half, which we seasonally see more -- a lot busier than the first half. We've saved some marketing funds obviously from first half to be able to use them in the second half. And now with a more efficient platform, the reviewed fleet that we have, then we're in a good position to be able to see some of that acceleration come in the second half. So I think we've done a great job of being able to make the platform more efficient, focus on areas of friction, improve conversion rate and improve our marketing efficiency so that when we do add those extra spend, our ROAS remains really strong, and we can actually make that marketing dollar work as hard as possible. So I think we're in a great position to be able to execute on that in the second half. Another question that's come in around temporary accommodation. Are we able to get some numbers for this deal? What is the GTV contribution likely to be? And then what will that be when it fully ramps up? So we've seen some -- we saw some indications early on from the government. And firstly, we're in a really great position now that we have contracts in place with both Victoria and New South Wales. The last deployment to New South Wales that we are engaged with didn't end up needing a huge amount of stock to be delivered through that contract. So we saw for the period that our overall temporary accommodation program dropped by just over 30% compared to the previous period. But what we've got at the moment is a deployment going on with the government for, as I mentioned, that first 50 and indications for them are strong that they believe it will sort of reach close to that 200 mark. So for that GTV for the 50, we're looking at somewhere in the vicinity of sort of $3 million to $4 million, and then our take rate expected on that is around sort of 26%. So that's for a 6-month deployment. If they then extend out for a further 6 months, then we basically double that. So if we end up with the 200, then we basically just multiply that out by that same ratio. So potential for that to be quite a contribution to revenue over the next 12 months, but particularly in the second half as we look to roll it out. Just a question for you, Brett, on future bookings. If heard correctly, approximately $11 million bookings have already completed now for ANZ in the January period. So where are we? Just maybe drill into that future bookings number a little bit more.

Yes. So yes, it was $11 million worth of bookings just in January. So the figure that we've quoted, $34 million, so we've already got $11 million come off that. But overall, it does feel a lot stronger than last year, which is good. And I say we'll continue to refine the marketing campaigns. I think for Australia, particularly New South Wales now has the extra Anzac Day long weekend as well as Easter. So we expect a good flow of bookings through the Easter period as always is the case. But now you've got an extra long weekend about 4 weeks later. And certainly, for the main Victoria and New South Wales markets, that bodes well for us. In the meantime, Europe is starting to build. It was a bit of a slow start with a few things in the German market, which slowed things down, but we are starting to see that move towards normal buildup numbers.

Yes. We've definitely seen the Australian market across the industry in general be fairly strong for January and continue into February. So overall, you're seeing that stays in caravan parks are up. And for us, that's a good thing. It continues on as we go through the rest of the region. Another question, time lines when JB Group will extend Camplify services to all managed outlets. So we're looking at -- we've got the first one up and running, as we mentioned, as a pilot program. We started to put a few vehicles into that location. We're now looking to employ a depot coordinator who will actually be on site to manage those vehicles for us and then really ramp that up quite significantly in that particular location. And then we'll look to roll that same strategy out across all of their locations. So certainly, I think by the end of the year, we'll be in a position where we will have those 12 depots fully online. If we look at the approach that we're taking from what that means, it will mean that we will have one of the largest, if not the largest company-owned or company-managed fleet in the Australian market and also looking to extend that to New Zealand. That -- the management of that fleet effectively is customers giving us their vehicle for us to manage on their behalf, which means that we control the pricing, we control the quality and service and delivery of that vehicle. We control what bookings are accepted and when and how it goes out. And it's at a higher margin for us than the other standard bookings that we have on the platform. We also know through consumer demand on the hirers side that we still have more demand in peak periods than we have key supply. So we have enough capacity to be able to service the customer demand that we have with the right type of vehicles in the right location to add to that actual pool. So we see that as a real significant trend moving forward. Just a question coming in from John. John, I'll just open up for you to ask a question.

John O'Shea from Ord. 2 questions from me. Just wanted to clarify what you were talking about the TAP GTV. I know you mentioned a $3 million to $4 million number. Were you talking about that as the contribution in the second half of '26 or the annual number? I guess that's the first question.

Sorry, just repeat. That was the TAP program?

TAP, yes, TAP.

Yes. So we called out what we had in the first half.

Yes. That was normal -- that was on the slide there.

Let me grab it for you, one second.

[indiscernible]

So TAP in the first half was $2.3 million GTV, down 36% on the same period last year.

Yes. And the $3 million to $4 million you mentioned previously, I just wanted to know what that number was. Was that what the second half is going to be or what the overall amount of the contract will be?

So if we deploy approximately the 50 vans that we've had the initial order for Victoria, then that will be around $3 million to $4 million in GTV.

In the second half?

So we're in pre-deployment mode at the moment. So we're basically getting those locations ready to actually deploy those vehicles into. And then if we move into that full deployment of the 200, then basically 4x that for the second half. So that's a 6-month contract for those vehicles. So that's on a 6-month period. If they extend for another 6 months, then we basically double it.

Yes, sure. So just to be specific here, what would you expect the TAP GTV to be in the second half?

So we should maintain in the second half roughly that sort of $2 million number. And then add on top of that, whatever we deploy for the Vic government. So we could be looking at roughly around sort of $4 million to $5 million to $6 million, something like that.

In total for the half?

Yes.

And take rate, I think you said was 26%. Is that right?

Correct. Yes.

That's the first one. The second one was on the insurance product. How are you going to ramping up that globally and exactly where is that at?

So the first step for us was about getting the product into the Australian market and replacing the previously underwritten product that we have. So we've done that. Obviously, as I mentioned, that model has worked extremely well. It's a little bit extra GP margin. The loss ratio has performed really well. We wanted to see that policy really have a year's worth of performance before we went out and dramatically ramped it up. So obviously, we started that in May. Everything looks really good so far. So we've rebranded that product in the Australian market as Club Camplify. And now we're starting to work with the JB Group on distribution of that product to their customers. So that will be a focus for second half. So that's kind of the first rollout stage of getting customers on that product who are not just on the rental platform. So that's certainly a second half target for us. And then also looking at how we start to implement that same model into the European market. We won't be making any changes during peak season. So any changes that we see likely won't occur until the second -- towards the end of the calendar year for 2026. So we wouldn't see any underlying insurance change to a similar mutual style platform in this financial year in Europe. That's more for next year.

Sure. And then I guess maybe a third one, if I could. Given what you said about the nature of the booking, the total number of booking number, the TAP coming through in the second half and the improving margin there, should we be expecting quite a decent turnaround in the second half '26 EBITDA?

Yes, we certainly obviously are a much stronger second half performing business, and you can see that in our previous period numbers as well. Obviously, we've had a significant turnaround in H1, and we are actually in a much better position than we were this time last year as well. So conversion rates are better. Marketing is more efficient. The membership product is working very well. So overall, we would see that flow through to similar ratios, I guess, that we've seen in the previous second half results. So we're certainly expecting improvement on first half as we do normally and at a more efficient level than what we've seen previously as well. Another question has come in around membership insurance. Just asking about if there's any decline in membership. Actually, what we've seen is we saw a churn rate when we move customers from the previous insurance products to the mutual, and that's kind of to be expected because we had to get customers to become members of that mutual. So we saw a big drop-off in that first month, and then it's built back up again as we've come into the end of the year. So we're around about sort of flat on member numbers from the previous period. So now we've got that -- we're actually delivering a better customer service than what we were previously. The pricing is good. The inclusions in the product are better than what they were before. We've got some extra inclusions also coming in that product. So overall, the feedback from customers has been very positive about that product and the experience that we're delivering. And that now we have that in our control for the ANZ market, we do expect it to continue to build member numbers in the future as well as the ability for us to then launch that into the retail market, particularly through our partner with JB. So overall, very happy with what we've achieved through that mutual. And now we've got a great opportunity in front of us to be able to expand those member numbers further. And our churn numbers where we sit at the moment are below where they were previously trending on the old product. So overall, team has done a great job, products performing really well, and it's contributing at a much higher rate to our GP margin, which is exactly what we called out it would do. So overall, we're very, very pleased with the result there. So that's the last question. Thank you very much for attending and look forward to providing next update in the not-too-distant future. Thanks very much.