Harmoney Corp Limited (6DR.F) Earnings Call Transcript & Summary

Good morning, and welcome to the Harmoney Corp. Limited FY '25 Earnings Results Presentation. My name is Michael Pegum from Ethicus Advisory Partners. Presenting this morning is the company's Managing Director, Mr. David Stevens; and the company's CFO, Mr. Simon Ward. As a bit of housekeeping, the company will answer investor questions at the conclusion of this presentation. I would encourage investors and analysts to ask these questions using the Q&A field at the bottom of your screen. I will pass over to Mr. Stevens to commence this morning's presentation. Just bringing up David the presentation there. Over to you.

Thanks, Michael. Hello, and welcome to Harmoney's Full Year '25 Results Presentation. I'm David Stevens, the CEO and Managing Director of Harmoney today. With me today is Simon Ward, our Chief Financial Officer. Harmoney has produced a very strong profit result this financial year, which I'm really looking forward to sharing with you today. This result has been underpinned by the work we have done developing and launching Stellare 2.0 over the past 24 months. This has set us up to capitalize on the huge market opportunity we have in front of us, particularly as interest rates and market conditions continue to improve. We're also upgrading our financial year '26 cash NPAT guidance to record levels. Now turning to Slide 2. Today, I'll begin with our financial year '25 key highlights, then our financial year '26 profit guidance, and then I'll remind you of Harmoney's key differentiators before handing you over to Simon, who will take you through the financial results in detail. Finally, I'll discuss our outlook, strategic priorities and highlight the embedded value in our business before responding to your questions. Now turning to Slide 3 and then on to Slide 4 to highlight our key achievements for financial year '25. This year, we achieved a $5.5 million statutory net profit after tax, up $18.7 million on the prior year, driven by our underlying cash NPAT result with noncash accounting adjustments netting off to less than $200,000. This was primarily driven by our $5.7 million cash NPAT, which is up over $5 million from the prior year, driven by improvements across all key metrics and our continued loan book growth. As a result, we delivered 16% cash return on equity for the full financial year. Cash return on equity is our cash NPAT for the year divided by our average total equity. Furthermore, we exceeded our 20% cash return on equity guidance for Q4 '25, achieving 24% in the final quarter. Our loan book continued to grow, up 9% on the prior year with Stellare 2.0 propelling 40% growth in the Australian new customer lending. And following its deployment in New Zealand, June new customer originations were an impressive 50% higher than the prior June. Our net interest margin on new lending during the year continued at over 10%, raising the average NIM for the entire loan book to 9.3%, back within our targeted 9% to 10% range. Our loan book credit performance continued to strengthen with credit losses down to 3.7% for the year from 4.1% in the prior year. Our high levels of automation drove further efficiency gains with our cost-to-income ratio continuing to fall now down to 19%. With all these metrics heading in a positive direction, Harmoney is well capitalized for continued profitable loan book growth with total warehouse capacity over $1 billion, $23 million in unrestricted cash, plus $14 million in additional accessible cash. This being loans funded by Harmoney, which are available to be drawn down as further unrestricted cash. Now turning to Slide 5. This year's record results are a direct outcome of the successful rollout of our next-generation platform, Stellare 2.0. This slide provides a clear picture of the immediate and powerful impact it's having on the business. In Australia, where we've now had a full year operating on the new platform, Stellare 2.0 has safely increased the number of new customers we approved by 70%. The new platform does this by better assessing a wider range of applications, particularly for smaller loan sizes without changing our prime credit risk appetite, boosting new customer lending by an incredible 40% compared with last year. And this success isn't limited to Australia. We completed the rollout of Stellare 2.0 in New Zealand during the fourth quarter, and the impact was immediate. In June '25, we saw a 50% increase in new customer originations in that market compared to the prior June. Crucially, this new customer growth is the engine for our future profitability. As the graphic on the bottom left shows, our consumer direct model creates a powerful annuity of returning customers. On average, an existing customer will borrow an additional 150% of their initial loan value over time, and they do so at near 0 additional acquisition cost for Harmoney due to the direct relationship we already have with them. So, the investment we make now in acquiring new customers today directly fuels our profitable growth for the years to come. Now turning to Slide 6. At Harmoney, we're committed to our reputation of delivering on our promises to the market. I'm therefore delighted to confirm that for financial year '25, our first year of providing profit guidance, we not only met but exceeded our upgraded guidance with a record cash NPAT of $5.7 million, surpassing our already upgraded market guidance of $5.5 million. We also exceeded our ambitious 20% cash return on equity run rate guidance with fourth quarter cash return on equity of 24%. This performance was underpinned by achieving our key strategic and operational goals for the year. The successful rollout of Stellare 2.0 platform across both Australia and New Zealand is now complete and our net interest margin of 9.3% for the year, firmly within our target range. Now turning to Slide 7 and then on to Slide 8. Our outstanding performance in financial year '25 has set a strong foundation for the year ahead, giving us the confidence to set ambitious but achievable targets for financial year '26. As a result, we are lifting our financial year '26 cash NPAT guidance by 20% to $12 million. As you can see from the chart, this represents a 111% increase on this year's record result and a compound annual growth rate of 320% since financial year '24. The significant growth will be driven by several key factors. First, we expect the full year impact of Stellare 2.0 across both Australia and New Zealand to drive our year-end loan book to over $900 million. Second, we will deliver this growth while maintaining strong margins. We expect our net interest margin to remain within our target 9% to 10% range and our risk-adjusted income to further strengthen to around 6%. This lift in guidance is a reflection of our confidence in the proven scalability of our platform and our team's ability to execute. We feel we're entering financial year '26 with strong momentum. Now turning to Slide 9 and on to Slide 10. I'd like to take a moment here to provide a quick recap of what sets Harmoney apart from others. We are Australia and New Zealand's largest 100% online consumer direct lender. We have a total market opportunity of $150 billion with our current market share less than 1%. So we have a huge total addressable market in front of us. Our algorithms partner with Google to attract prime, high-intent customers at low cost and then our direct relationship with those customers and great customer experience sees them returning again and again for their next borrowing needs at near 0 acquisition cost. We use deep first-party data and AI models to deliver a prime loan book at a 5.7% risk-adjusted income, that being our income after both funding costs and credit losses. We're funded by 3 of the big 4 Australian banks plus public securitizations. Our Stellare automation drives a low cost-to-income ratio of 19% and our cash return on equity for the year was 16%, and we achieved 24% in Q4 '25, exceeding our 20% market guidance. Just a quick reminder of our products on the right-hand side of the page. Our loans are up to $100,000 with an average new loan size of $17,000, which is dispersed to customers within minutes. We offer personalized rates based on borrowers' risk profile. We don't charge any fees other than a one-off establishment fee and all our loans are fully compliant with applicable consumer legislation. Our loans are typically used for renovations, debt consolidation and helping people with life events such as travel, education and weddings. Now turning to Slide 11. To profitably build scale, it's clear you need automation. For that, you need advanced automation and AI capability. And doing that successfully, you need more than just tech. You need massive amounts of quality first-party data. First-party data means the financial information is direct from the customer, not handpicked or prefiltered by a broker. We consistently attract over 10,000 new customers each month. All of this data is used to continually train our AI models. There's a huge number of new customers for any business. This high volume of consumer financial data combined with over 11 years of historical data, effectively supercharges training of our AI learning so that we can optimize for sophisticated, highly efficient marketing with platforms such as Google, giving us the right customers at low cost and risk-adjusted income in excess of 5.7% gained through more accurate risk assessment of customers. This combination of data, AI and automation built into our technology platform has been a core feature of Harmoney since our inception 11 years ago. Now turning to Slide 12. The power of Stellare's machine learning goes far beyond assessing customers at the point of their loan application. It plays a significant role throughout the entire lifetime of our relationship with the customer. Harmoney is highly selective when it comes to audience targeting. We need to ensure our marketing spend is efficient and effective. This is where sophisticated customer acquisition models play a key role and again, where the huge amounts of first-party consumer data is key. When these models are used with powerful digital marketing platforms like Google, Microsoft Ads and Facebook, the result is highly targeted and cost-effective customer acquisition. What this means in practice that we can acquire the right customers for the right price at scale. And critically, we can forecast this with a high level of reliability. Proof of our ability to target the right customer with the right product is reflected in our Google reviews and shopper approved scores with 60,000 reviews at an average score of 4.7 out of 5. Moving to the second column. Naturally, we work hard to ensure we deliver a great customer experience so we can create annuity revenue as satisfied customers return with minimal customer acquisition cost. This experience is underpinned by our automated simple and streamlined 100% online process. And in the third column, our ability to scale remains an important factor in the Harmoney model, and our continued investment in technology remains a key enabler. Already in this year, we have achieved a cost-to-income ratio of 19%, which is exceptional. The diagram at the bottom of the page shows how all of this combined to support the lifetime value of a customer. Our customer acquisition model helps us to attract the right customers. Our application and loan experience is highly tuned to customer satisfaction, so customers return to Harmoney for their future needs. Based on our experience, this cycle is expected to lead to 150% in additional originations to the same customers at minimal acquisition cost. For example, an average customer taking out an initial loan of $20,000 would later return to Harmoney for an additional $30,000. So cumulative borrowings -- total borrowings of $50,000, and that's just our experience so far. Now turning to Slide 13. At Harmoney, we have an experienced and shareholder-aligned leadership team. We have deep fintech experience and have a large personal stake in the business with Board and management owning around 30% of the business. The leadership team has a long-term commitment to the business with an average tenure in Harmoney of over 7 years. We included in our appendix Harmoney shareholder composition and further detail on substantial shareholders and the remaining shareholder makeup. Now turning to Slide 14. I'll hand over to our CFO, Simon Ward, who will take you through our financial results in more detail.

Thanks, David, and hello, everybody. Please turn to Slide 15, summarizing our key financial metrics for the year. As you'll see, this year, we've delivered significant gains across almost every key metric. I'll briefly touch on each of these now before going into more detail on the following slides. Firstly, our loan book continued its strong growth trajectory, up 9% this year to $829 million, continuing its consistency of growing every half since we listed in 2020. This growth drove a corresponding 8% lift in revenue to $132 million. Our net interest margin or NIM improved by 50 basis points to 9.3%. And even more crucially, our risk-adjusted income, which is our margin after both funding costs and credit losses improved by 90 basis points to 5.7% on lower credit losses. Our acquisition to origination ratio saw a slight increase this year to 3.4% as we invested in accelerating new customer growth, taking advantage of the higher customer conversion rates delivered by Stellare 2.0. That investment fuels our future growth pipeline where our customers return for future borrowing, but at near 0 additional acquisition costs due to our direct relationship with those customers. Our cost-to-income ratio continued to improve, dropping another 100 basis points to a market-leading 19%. This is a direct result of the operating leverage achieved from our highly automated platform. These improvements across key metrics have driven our net statutory NPAT of $5.5 million and cash NPAT of $5.7 million, 740% higher than last year and exceeding our upgraded market guidance. Our capital-efficient balance sheet means that this strong profit result translates to a full year cash return on equity for shareholders of 16%. That return on equity has climbed through the year as our book has grown, reaching 24% in the fourth quarter, surpassing our 20% final quarter guidance. On the next few slides, I'll discuss each of these performance metrics in more detail. So, turning now to Slide 16, looking at our loan book and revenue. The successful rollout of Stellare 2.0 is now driving growth in both markets. The group loan book grew by 9% on the prior year to finish at $829 million. This growth accelerated through the year as Stellare 2.0's benefits were increasingly realized with 65% of the growth occurring in the second half. This growth was led by our Australian business, where with the full year of Stellare 2.0, the loan book grew by 19% to $489 million. Australia now represents 59% of our total group loan book. In New Zealand, while the loan book saw a modest 2% contraction over the full year, the rollout of Stellare 2.0 in the final quarter has already reversed that trend. The impact was immediate with new customer originations in June '25 up over 50% on the prior June. Turning to the chart on the right, loan book growth plus an increase in the average portfolio interest rate drove revenue growth of 8% to $132 million. Turning now to Slide 17, looking at our lending margins. A key differentiator for Harmoney is the strength of our lending margins, underpinned by our proprietary credit assessment models, which drive attractive pricing to prime borrowers alongside low credit losses with those low credit losses then unlocking competitive funding rates. Looking at the chart on the top right, you can see the 3 core levers of our lending margin. The top line shows our average portfolio interest rate has continued to climb, now at 16.9% as we originate new loans at higher yields and older, lower-yielding loans pay down. At the same time, our funding rate has remained stable year-on-year at 7.8%. Then crucially, our actual credit losses have improved significantly, falling 40 basis points to 3.7%, back within our targeted range. Next, looking at the chart on the bottom right, you can see the outcome of these positive trends. The combination of higher lending rates and stable funding costs lifted our net interest margin by 50 basis points to 9.3%. With new lending being written at an average net interest margin of over 10%, we expect this portfolio NIM to continue to strengthen. The ultimate measure of our portfolio's profitability is risk-adjusted income. By combining the stronger NIM with lower credit losses, we've delivered a 90 basis point improvement in our risk-adjusted income, which, as I mentioned, now stands at an exceptional 5.7%. When I look around the industry, many focus only on their NIM, not taking into account credit losses, which clearly this is a key part of the story. Our focus is on our risk-adjusted margin, taking into account both funding costs and credit losses. With a risk-adjusted margin of 5.7%, Harmoney is a standout performer in the prime lending market. Next, turning to Slide 18, I'll provide more detail on this year's strengthening credit performance. Our consumer direct model provides us with rich, deep consumer data, unfiltered by brokers or other intermediaries. We use this data to train our AI credit models, and this has enabled us to build a prime loan book of resilient borrowers with 72% employed in either professional office or trade roles and 87% aged 30 years and older. Further demographic detail on the loan book is provided in the appendix to this presentation. Looking at the chart on the top right, you can see again that credit losses have fallen by 40 basis points to 3.7%. This improvement was expected as the impact from an older Australian scorecard replaced several years ago, which temporarily lifted losses last year is now well behind us. The New Zealand loan book has continued to prove very resilient despite tighter economic conditions this year, with losses stable at near historic lows. With the New Zealand interest rate easing cycle reducing pressure on household incomes, we expect New Zealand credit performance to be further supported. Next, moving to the chart on the bottom right, our 90-plus day arrears, which are a forward-looking indicator, remain very low at less than half the Australian market average. The temporary bump in the fourth quarter to 0.7% was operationally driven by the final stage of migrating our loan book to the new platform. And I'm pleased to report was short-lived with July arrears already back down to 0.6%. Next, turning to Slide 19, looking at our operating expenses. A key feature of Harmoney's business model has always been our Stellare platform and the high levels of automation that it provides, enabling us to scale our loan book without proportionately scaling operating costs. This year provided another clear demonstration of that leverage in action. While our loan book grew by 9% and revenue grew by 8%, our cash operating expenses increased by only 1%, well below the rate of inflation. I think this is a case where the dollar amounts provided even better context for the scale of this operating leverage. This year, revenue increased by close to $10 million, while cash operating and costs only increased by $300,000. As the chart on the right shows, this operating leverage has enabled us to continue driving our cost-to-income ratio down from 24% in FY '23 to 20% last year and now to 19% this year. It's a combination of this loan book growth, strong risk-adjusted margins and a scalable cost base that delivered our record results this year. Statutory NPAT of $5.5 million, cash NPAT of $5.7 million and a cash return on equity of 16% with fourth quarter at 24% as our cash return on equity run rate heading into FY '26. Next, turning to my final slide, Slide 20, looking at our capital position. Harmoney has a well-diversified funding program with warehouses from 3 of the big 4 Australian banks and a securitization program. As is typical with warehouse funding arrangements, Harmoney's own money is also invested in its loan book. The strong credit quality of Harmoney's loan book means that we can be very capital efficient with borrowings funding 96% of the current loan book and Harmoney providing the rest. The chart on the left shows in the red section, Harmoney's required cash contribution of $36 million for its current loan book of $829 million. On top of this, Harmoney has an additional $14 million, which is entitled to draw down as cash from funders at any point, plus it has $23 million of unrestricted cash on hand. These together add to $37 million of cash, which can support growing the loan book by over 80% to $1.5 billion today without the need to raise any equity. Then in addition to already being able to support a loan book of up to $1.5 billion, being profitable means Harmoney can reinvest profits for its contribution and growth beyond that $1.5 billion, with every $1 million of profits funding an extra $25 million of loan book growth. So, in summary, we have a profitable, scalable and self-funding business model that is well capitalized for the significant growth ahead. And with that, turning to Slide 21, I'll hand you back to David to take you through our outlook.

Thanks, Simon. Continuing now to our outlook. Please turn to Slide 21 and then 22. On this slide, our vision is clear. We're evolving Harmoney into a customer-centric financial ecosystem. This means moving beyond a single product to a suite of powerful and inclusive financial products. The strategic priorities you see here, product expansion, AI leadership and customer retention are the pillars of this vision. With our new Stellare 2.0 platform now fully operational, we are not just talking about incremental changes. We're focused on significant value-driven initiatives. First, product expansion. Our plan includes launching a secured vehicle loan and a revolving product. These new offerings will expand our market reach and meet a wider range of our customers' financial needs. Next, AI leadership. Our focus here is on agentic lending, which is all about personalization at scale. By leveraging our deep data and AI capabilities, we will deliver a truly tailored experience for each customer from the moment they apply right through their entire experience with Harmoney. Finally, customer retention. We are committed to rewarding loyalty and driving even stronger repeat business. Key initiatives here include developing loyalty offers and rewards, launching a mobile app for iOS and Android and unlocking a one-click application process for our existing customers. This is a forward-looking strategy that leverages our core strengths in data and automation to drive a new era of growth and innovation. Now let's dive a little deeper into these priorities on the next slide. Now turning to Slide 23. This slide provides more detail on our immediate product focus for financial year '26. Let's start with product expansion, auto. The goal is to redefine auto finance. Our ambition is to not just offer a loan, but to provide a seamless integrated buying experience. We'll differentiate ourselves with offers like no deposit loans, cash before you buy, compelling rates and money in seconds. We'll attract customers early in their journey with value-added services like free vehicle reports and valuations. Ultimately, our vision is a hyper-automated platform that makes car transactions effortless from browsing to driving. Moving to customer retention. Our focus is on evolving from a transactional lender to a company that's always on for our customers. We will reward loyalty and drive repeat business by transforming the experience of our existing customers. This will be achieved through precision personalization. We'll use dynamic data-driven underwriting to provide highly relevant and competitive offers to our loyal customers. Instant access, our new mobile app will enable instant access with features like one-click application and always-on loan limits for eligible customers. Rewarding loyalty, we will launch a loyalty scheme with specific features and offers to show our existing customers how much we value their business. This focused approach in financial year '26 will lay the groundwork for our broader strategic vision, ensuring we continue to accelerate growth and enhance profitability. Now turning to Slide 24. Next, I wanted to take a moment to again highlight an important insight, which is a significant value that is embedded within Harmoney's existing loan book, which may not be well understood. You can see in the chart on the left that Harmoney's own equity and loans on its balance sheet, plus its net cash being our cash less corporate debt totals $50 million. Then on top of this, the expected risk-adjusted income from that existing loan book is at least an additional $75 million. Risk-adjusted income is our net income after deduction of funding costs and credit losses. Importantly, that $75 million of risk-adjusted income is based on our realistic typical repayment experience with most borrowers paying off their loans ahead of schedule, as we do not impose any fees or penalties on them doing so. If we calculate it based on the contracted repayment schedule, the embedded risk-adjusted income would be significantly higher than $75 million. Finally, that $75 million is a discounted value of the risk-adjusted income having already been discounted back to today's money at a 12% discount rate. This takes the total value embedded in just the existing loan book to at least $125 million. Another way to think of this is that the $125 million is essentially the minimum sale value of just the existing loan book cash flows. Then moving to the right-hand side of the page, there is the additional value embedded in Harmoney's business model. Our proprietary platform and processes, which enables us to build -- to further build this loan book every day. We have a proprietary highly automated customer acquisition and credit assessment engine in Stellare 2.0, which delivers over 10,000 new applicants creating an account every month. Our great customer experience and sees those customers returning again and again for their future borrowing needs at next to 0 additional cost to Harmoney due to that direct relationship with those customers. Our AI models attract prime borrowers at a net interest margin of over 10% and a risk-adjusted margin of over 6% and does this at a 19% cost-to-income ratio. We also have an established and diversified funding program in place with warehouse funding from 3 of the big 4 Australian banks and ABS program with existing total capacity of over $1 billion for immediate growth needs and the market confidence to expand beyond this when required. Now turning to Slide 25. We're about to move to answering your questions that have been raised during the presentation, but I'd first like to take the opportunity to remind you that Harmoney has set up Investor Hub, which is a dedicated platform for investors to learn more about us and engage directly with Harmoney's leadership team. I'd encourage you to sign up as this is where we regularly post the content, including videos accompanying our ASX announcements, interviews, research reports and webinars. You can join that whether you're a shareholder or not. Now turning to Slide 26. And as I wrap up, just a reminder from our earlier slide, we have upgraded our financial year '26 market guidance from a cash NPAT of $10 million to $12 million. From tomorrow, we'll also be resuming our share buyback program announced in April '25, which has been paused between the end of financial year and these results. Under this program, Harmoney is authorized to buy back up to 5% of its ordinary shares on market. The buyback commenced on the 13th of May 2025 and will end no later than the 29th of April 26. The Board and management continue to see significant value in the company's equity at current levels and believe it's in the best interest of all shareholders for the company to continue buying back its own shares. That concludes the results presentation for today. We'll now turn to answering your questions. Just a reminder, you can submit a question at the bottom of your screen.

Thanks, David. There's several questions have come through in the Q&A box. So some of those questions have been asked and answered throughout yours and Simon's presentation. Obviously, questions around projected $12 million cash NPAT for '26. Is there intention to 100% growth from profits and therefore, not require any future fundraising. That was answered by Simon. So we'll move on from that. Next question is, if you were to project the CAGR for net profit forward for the 5 years, would you disagree with an ongoing CAGR of 30%, noting that next year's guidance is effective more than doubling of the NPAT.

Yes. So, I've given guidance for next year. I'm not sort of going to give any further profit guidance beyond that. Obviously, hopefully, you can see from the result that the performance that we're getting out of the new platform is really revolutionary for us and really is helping drive the top line and also keeping the cost line under control as well. So, look, we're very bullish about the future. But yes, obviously, I think 111% profit growth year-on-year from this year to next, we're pretty pleased with, and we'll continue to -- continue to grow the business at a 20% plus return on equity. So I think that delivers a great result for shareholders.

Great, David. Next question, I think this has been answered also about benefits from the current AI developments, which may have a positive impact on Harmoney operations, I think we've touched on that. A question here from Glen Wellham from Trim Capital. Great result. What was the reason for the development and launch of new credit products, i.e., secured auto lending and revolvers? Was it to improve the Harmoney's diversification or drive further growth or both?

Yes, it will definitely both. We actually did launch a car product probably 3 years ago. And when we moved to developing Stellare 2, we parked that product actually performed quite well. So we've got to sort of refresh that product and we'll be launching that again on the new platform with significantly enhanced technology and customer experience around that. So -- and yes, look, it's a big market. It's a $150 billion market just in Australia in the consumer lending market, sort of excluding mortgages. So, getting into that car market is important to us. And yes, absolutely to drive diversification, drive loan book growth and profitability.

Right. Next question is from Lic from MST Financial. Just want to unpack the FY '26 guidance upgrade in a little more detail, please. Does this include much for the first New Zealand Stellare 2.0 launch? And secondly, the pending product expansion; and third, the loyalty efforts to accelerate returning customers.

Yes. Look, the -- obviously, the New Zealand, we launched successfully in the last quarter. I spoke about the great results we had in that in June. It's 50% up on the prior year. That will probably moderate a little bit. I don't expect that to be consistently that, but it's still going to be significant growth up on prior year. So, there's obviously some run rate build in to '26 for that. As for the new products, we haven't really built a big assumption in around new products, certainly not into the profit guidance number. We expect to launch the card product in this calendar year. But due to the way we recognize income over the life, you obviously depending on when that goes in the year, you don't get a huge P&L benefit from those. But obviously, that drives future years. So, we haven't built a big number into '26 to drive that profit result from new products. Certainly, there's a focus on retention. I so much so I moved a few roles around and brought a new executive in to run the retention area of the business. That's the focus I want to have on that. Obviously, whilst we've been building the new platform, it probably hasn't had as much attention as I would have liked. And now we've got the platforms all built. There's a great runway for that and building some simple things in that we haven't been able to do in the past around loyalty and rewards, around having a customer app that's relevant and useful to customers, our existing customers is very important. As I said, we're a direct model. It's really important. Our customers do like us. So, it's important they get the best experience we can possibly give them. And I'm confident the way the platform is structured now and the way the team is structured, I think we'll get the best out of that.

Thanks, David. Just a further question from [ Laf ] just around -- I think you probably answered this over the next 3 years. Your key priorities for R&D given the success of Stellar 2.0 -- and is the focus from a BAU perspective tweaking the platform performance?

Yes. Look, that's part of our business, right? I'll answer the second part of the question first. So, the BAU, we are continuing -- this is our business. So, we -- other businesses have broker team sales teams that bring in deals and work there. We don't have that. We don't have a sales team in Harmoney. Our sales team is our platform. So, we continue to tweak that. And it is our one main asset of this business. So, we continue to tweak that continually, and we will do that forever. As far as the R&D, yes, I think I called out the main things that we're doing there around secured car loan, revolving product. We effectively kind of have -- customers do come back to us, as I mentioned, for 150% more of their original drawdown amount. but it's not done in a sort of always on revolving type way, and we know that's what customers would prefer. So again, it's aligning the product there. So, if we can -- in financial year '26, if we can really get the card product working well, get the revolving product done and really have that focus on the returning and retention, as we call it, RRR internally, where we'll have a really good result and set the business up really well for future years.

I got another question from Glen Wellham from Trim Capital. One of the highlights of the result was the ability to grow without extra costs, improving the cost-to-income ratio. How long can this ratio go in the medium to long term? And how should we think about costs going forward? Will Harmoney reinvest for growth?

Yes. Look, we'll always -- you're always pretty prudent with managing costs. We'll always maintain a manageable cost line, but really, we'll get the growth from the top line now. So, I'm not going to forecast what that looks like, but we certainly expect it to continue to come down. Where will we – yes, we've got -- this is the beauty of a platform-based business. We operate nearly all staff are based out in New Zealand, with 6% of our loan books in Australia now. So, it gives you a bit of a feel for we can grow that book to double, triple and we're not really having to add much people cost to it. Obviously, some more collectors and a couple of credit offices and that would be -- you'd need for that sort of level, but you don't need significant operating costs growth, which is really key. And we've sort of been saying this for quite some time that we are a platform business, and we are scalable. And I think our numbers really prove that. And as we bring on these new products and variations of our products, we're really bullish on the profitability of this business.

Okay. A question from James Nicolaou from PAC Partners. Given the total addressable market opportunity, I think you just touched on that in your last response about loan book growth. And the strong organic growth profile, do we assume that M&A isn't an avenue of growth in the medium term? If you were open to M&A, would it be for geographic expansion or entering a new market with new product lines?

Yes. It's a great question. Yes, personally, my personal experience with these companies and a lot of M&A when I was at Flexi. And it can be great, can give you the diversification. We feel we have to be very opportunistic. We -- our business has enormous organic growth in front of it, just in Australia and New Zealand, which we're both well established in. Going further a field, you would look to M&A, but that's not something that's on our short to medium-term strategy going beyond Australia and New Zealand. As I said, there's $150 billion market that we want to get a bigger piece of. And M&A can be a distraction, particularly if it's offshore or it's outside your core and having done a lot of M&A right from sort of just taking the keys and giving some capital right through to fully integrating acquisitions. There's a lot to learn in there. There's a lot to be aware of before you sort of embrace that. We're just excited at the moment about having a new platform. What the new platform does do for us, it opens up white label opportunities and it opens up a lot more things that we just didn't have the ROI on building some things in the past just wasn't there, whereas now we're able to release products, variations of products really quickly. And that facilitates broader discussions around when we come to M&A loan books, that sort of stuff. We probably weren't in that position in the last few years where we are now. So, we'll obviously keep our eyes open and be open to these things, but it's certainly not part of the core growth strategy. But obviously, you've got to be opportunistic to.

Thanks, David. Another question from Laf from MST. What does the revolving product look like? Is it an overdraft? Or is there a limit set and the user can keep coming back and tapping into that limit?

Yes. So, we haven't launched the product yet, and it's got some final sort of product tweaks to go. And we get a lot of feedback from customers to work through that. But it will be more like the latter. It will be more where they have a limit and they can keep coming back to tap that limit. That's sort of how we envision it. Kind of what we do today already. We have customers that come to us for a loan, they come back to us for a repeat loan as we call it. So, they're kind of doing that today. It's just in a bit more -- it's a bit of a clunkier way than what we would like. We'd like it to be where it's in an app and people can always see how much money they've got there and they can draw that down in Australia that can be in their account within 60 seconds. So that's how we want to run it. So again, just really focus on that customer experience on.

With the – will the development of the mobile app be a large expense or drive growth significantly in FY '26 or '27? Or is it primarily for a better customer experience?

Look, it touches quite a few parts of the business, to be honest. It's not a large expense. It's built within our normal teams and the CapEx that we run. But it touches right across certainly from a retention side. So, we wouldn't build the app into the actual application process of a customer doing a loan because that creates friction. But after they've taken out the loan, obviously, there's benefits then of having it there from the revolver product, the repeat loans we do. Also servicing. There is a lot of people prefer to update their address or their payments or whatever through an app rather than having to call someone. So -- and it touches a lot of different points there. So yes, absolutely. I think it's a little bit overdue. But again, it was -- we had to wait for the new platform to be built before we're in a position to build the app.

Right. Question here from Scott Cooper. Around recognition of the equity value of the business shares being undervalued rather than using buybacks to try and sort of enforce that recognition, would it deliver more sustainable value to deploy that capital into the loan book and let the market rerate the company on the strength of its results.

Yes. Look, it's a good question, Scott. It's always the decision around capital is always important. But where the -- for our earnings profile, where the share price was and still is, it was just at a level where we felt it was the best interest of shareholders to buy some of that back. It is only up to 5%. We don't have to buy a whole 5%. We can stop at any point. We feel we're getting good capital growth already sort of good loan book growth and profit growth. So just getting that mix right is obviously a balancing act, and it's a little bit obviously made judgment call on it. But yes, look, we're committed to that. Obviously, share price moves too much, we might appropriate to put in the loan book, then that's fine as well. I don't think either way, it's going to change our world too much.

Fair enough. Question here from Jack Hu from Phoenix Growth Fund. Are the new products auto loans going to be funded gradually? Or are you considering M&A to speed things up?

Yes. Look, I think it goes back to my last point. No M&A is factored into any of our sort of guidance or forward-looking statement. We can do this organically. But obviously, we've got the capability, both from a management perspective and a platform perspective now to be able to do M&A, but it's -- the strategy is not dependent on that. But obviously, we keep our eyes open on this sort of thing.

Great. I think we're sort of coming to the close of questions, David. Question around budget numbers for car loans in FY '26 or other home loans like other loans like home renters.

Sorry, just for the budget numbers for what, sorry, the budget numbers for car loans. Look, we…

This is other loans, like home renovations, just as in your -- the mix.

If you go to the appendix, the first slide in the appendix, that shows a mix of our product uses, what people are using the loans for. That's pretty static to be honest. If you compare that -- those pie charts back for last 2 years, it'd be probably very minimal change to those. So, the loan purposes stay pretty similar. Obviously, when we push the auto product more, that should start to become a bigger percentage. But yes, there's not really any material change building there.

A question here from Mark [ Hancock ]. Can you please comment on the recent cost control on capitalization of development expense and cost pressures going forward?

Yes. So, we -- unlike a lot of businesses when they do a massive platform build, we didn't bring in externals to do it. We basically diverted our existing engineering teams on to the new products. So, we kind of put the old new platform. The old platform was sort of left in sort of lights on mode. And so that team has now rolled off that, and now they're working on the new product innovation. So, we didn't increase numbers while we were doing the build, and we're not planning to reduce numbers since we've completed the build because there's still lots to go. So, we expect those numbers to stay pretty static with year-on-year. And cost pressures, we've -- I think inflation is starting to ease, and that's all been built into our numbers already in our actual results. So yes, we're not seeing more cost pressures other than sort of a fairly moderate inflation right now.

Okay. We're coming down to the final question, David. Steve Darby, is the 150% additional loans from existing customers slightly upgraded from previous assumptions, i.e., is this a powerful metric even better than thought?

Look, we just have longer -- we actually have longer time with those customers, to be honest. It was 140, I think, in our last presentation. It is something we do annually when we don't do it every -- when we count that number. So yes, and I guess it's gone up another 10% from -- because those customers have been on book for longer and come back to us for more needs. So -- and I think with the changes I've made to the platform and the team, I think that's an area we will continue to grow. It's very lucrative for us. It's good for customers. It's good for Harmoney. That's why it's called out such a key focus around that loyalty and retention.

Right. Final question, Mark Hancock, are you proposing auto finance of new cars or second-hand cars? And how would you manage the residual value risk?

Yes. So, it's predominantly be second-hand cars, and we don't take any residual value risk. It's a consumer loan. There's no balloon payment or anything like that in the model. So, it just runs the same as our unsecured personal loan. It's just secured for a car, which gives a customer a lower rate. So, the actual loan terms are effectively exactly the same.

Well, now, David, that does now conclude our Q&A session. I would like to throw back to you for closing comments, David.

Thanks, Mike. Well, thank you, everyone, today for listening to the presentation and taking the time. Hopefully, you learn something from it, and you can see the prospects of Harmoney, particularly now with such a huge investment on that new platform. They've got some really exciting things to come ahead. Obviously, the 20% increase on our guidance as well for '26 is really pleasing and something we really want to continue to grow and get a great return for all shareholders. So, with that, we'll close the call on behalf of Simon and myself, have a great day.

Just one addition. In mid-September, the company will be undertaking a formal roadshow across Sydney, Melbourne. Feel free to reach out to Ethicus Advisory Partners or directly to the company if any meeting needs to be coordinated. Again, thank you for your time, and have a pleasant day.