Plenti Group Limited (PLT) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to Plenti Group Limited's First Quarter FY '26 Results Update. [Operator Instructions]. Today's presenters are Adam Bennett, Chief Executive Officer; and Miles Drury, Chief Financial Officer. [Operator Instructions]. I will now hand over to Adam Bennett, Chief Executive Officer of Plenti. Please go ahead, Adam.

Thanks, Tom, and I'm here with Miles Drury, our CFO. So hello, and thanks for joining the call. I'm delighted to once again be sharing an outstanding set of results for Plenti for the first quarter ended 30 June 2025. And I know most of you know who we are, but for those who may be on the call and don't know who we are, just maybe a very quick recap. So Plenti is one of Australia's fastest-growing fintechs. We deliver market-leading customer propositions across automotive, renewables and personal loans, and we really use our proprietary technology platform to deliver very fast, easy and consistent customer journeys. We only lend to prime borrowers. We've got a very strong funding platform, and we're very focused on the creation of shareholder value. So the quarter just passed. So the entire Plenti team across all aspects of our business has worked extremely hard on all fronts to deliver great results for our customers, our strategic partners and brokers and for you, our shareholders and investors. And pleasingly, we've been able to build and maintain the momentum that we created through quarters 3 and 4 last year and really started quarter 1 with some pleasing outcomes. So we'll talk you through our results, and we'll ensure we leave some time for questions for people on the call. So let's just jump straight into it. So we had an outstanding quarter on all of the metrics that matter, especially pleasing with the growing momentum in our loan originations. So investors may recall, we hit an all-time record of $383 million in quarter 3 last year. We then beat that in quarter 4 with $407 million. And I'm delighted to share with you that we smashed that out of the park in quarter 1 and delivered $437 million worth of loan originations, which is up 44% on PCP. This takes our loan book to $2.68 billion, which is 21%, increase on PCP. And all 3 of our verticals went well during the quarter. So automotive, we went to $229 million of originations, which was up 50% on PCP. Our renewables business did $49 million, which was 13% up on PCP. And our personal loan business did $160 million, which was 48% up on PCP. So some really good results. And I'm really pleased with that loan book growth and how we've built on that momentum. And it's a clear signal that when all parts of our company, our business development, our originations and underwriting and credit decisioning and our technology, when all of that works well together, we deliver a really good result for our customers, our brokers and importantly, our shareholders. So this growth is the result of a couple of active decisions we've made as a result of refreshing our corporate strategy. So number one, we've continued to invest in our proprietary technology platform. So this is at the heart of Plenti, and we are always continuing to look at how we remove friction, make it faster, easier, simpler for our customers and also importantly, our brokers. Number two, we've invested in more operations and underwriting staff to make sure we can hit very strict internal SLAs on making sure we can credit decision the work and the deals that's coming in and give everyone confidence that we will get to the deals when we say we will get to them. Number three is evolution of our business development team. So we were naturally organized around products previously. So we went to market via PLs or auto and what we've evolved to is now we've got a very much a broker-centric model where we're going to market to the brokers and talking to them about PLs and auto, for example, with the same teams. And lastly, number four, is the power of a very clear target. So we've been very clear to make sure all of our staff understand that our target for the year is a $3 billion loan book by March 2026. And we've lined up and aligned every resource in the company around achieving that goal. Let me share also share some detail on 2 developments that I'm very excited about to share with you. One is our strategic partnership with NAB. So as we've flagged for some time, we spent the first 6 months really bedding down that solution. And the first quarter was one where we were thinking that we would see the first meaningful set of origination volumes. And very pleasingly, that's exactly what we've seen. So obviously, the daily origination run rate growth is growing, but because that's coming off a very low base, what we look at is the absolute level of originations and that's really going well. And you don't have to be a mass Nobel Prize winner to figure out that we're sitting in the double-digit millions in terms of originations per month now, and we'll share more when we get to the half. And our focus on NAB for the coming months is really to continue the marketing effort from NAB and really sharpening our pricing and also from our perspective, making sure we're managing it and pulling everything and converting everything through the funnel that we can. And given the size of the customer base of NAB, which is many millions of consumers, we remain very confident and excited about the potential of this product in coming quarters and halves. Second, I'd like to -- delighted to share that we won the WA government's home battery rebate scheme tender. So it was a very highly competitive tender, and we won the right to administer that on behalf of the West Australian government. And it's pretty much in line with our shared strategy of having very diverse and complementary distribution channels to market. We don't want to have all of our eggs in one basket, and it's yet another example of how we've got a very commercially collaborative culture, and we can work very closely with large third parties to make sure we can deliver very, very good outcomes for them. Now that will give us the program to administer over 100,000 battery rebates to households over coming years in West Australia and provision of around $200 million of interest-free lending. Now as much as winning it was a highlight, one of the things that really stuck out for me was the speed at which we were able to move from when we were announced as the winner. We had 6 weeks to the 1st of July to deliver on the government's election commitment to then deliver an up and running scheme, and that's what we're able to do. So we were able to kind of unify our technology, our operations and our people and really deliver a great result for the WA government on the 1st of July. Now, we have some work to do, obviously, to fine-tune that, but there's not many organizations to be able to move at that speed and deliver such a great result. So that's something that's making me very pleased. Now you will see limited impact of this, obviously, on Plenti's overall loan book in coming quarters. But one of the most important things is the strategic value of this to us in terms of our renewables business and forging even stronger relationships with national solar installation partners and also in WA being able to then sell and cross-sell things outside the program around the rest of Australia. So we're very excited about it and you'll see more about that. So let me pause there now, and I'll pass to Miles to talk to you through our margins, credit performance, our funding for the quarter and also update you on the progress against our FY '26 objectives.

Thanks very much, Adam. And again, I echo Adam's comments about how pleased we are to deliver these overall results. Look, touching briefly on margins. We disclosed at the full year FY '25 result, we've seen some strong margins in April. And this was because the market element of our funding costs had dropped off the back of, obviously, some interesting developments in the U.S. that encouraged people to expect some RBA rates to come down. We flagged that this impact had abated through in May. Market funding costs have risen a bit there been some competitive pricing and by June, we were broadly back to sort of more in line with sort of historic averages, maybe even a little bit lower. June tends to be pretty strong in auto, which has tighter margins. Overall, the quarter saw an uplift in margins versus the prior quarter, which is a good thing to see. But look, overall, in the blended portfolio, not a huge, huge impact. Moving to credit. I mean, I guess, given our low arrears position of 43 basis points at the end of March, you could have expected the quarter to be pretty strong from a credit point of view, and it was at 94 basis points of annualized losses. Having said that, I'd be lying if I said that even I wasn't surprised by just how strong the credit result was for the quarter. There's not a huge amount to call out in that sort of beyond, obviously, the underlying high credit quality of the Plenti portfolio and the fact that all the customers we lend to, I know they're still in a good credit position. We did have slightly higher than usual collections in the period. There were a couple of larger loans that came through, which bumped it up and it helped a little bit, but that was probably more of the margin and just the overall strength of credit in the book was really what's shown through. 90-day arrears ended the period up slightly at 49 basis points, although down actually quite a bit from where it was PCP at 59 basis points. So still in a really good position on the credit front going into the second quarter. In terms of funding, the quarter saw the Plenti treasury team completed another very successful ABS with a $400 million PL and green issuance. Given the market volatility we saw in April where credit spreads globally pushed out pretty significantly off the back of those U.S. tariff announcements. It was really pleasing to see how strongly both credit and pricing came back and enabled us to execute a very strong deal, which really is a testament to the strength and investor interest in the Australian structured credit market. I mean while the quality of our credit book should get investors interested, and we've now got a pretty strong track record, 10 issuances over $3.8 billion of ABS completed. Again, I would say -- and our treasury team executed that deal very well. I was still surprised again by just how much money there was and that allowed us to both upsize the deal from the original amount size and also ultimately deliver margins that were inside that same deal in November 2024, which is a pretty remarkable outcome given everything we've seen in prior months. We've now got a couple of months to do internal treasury projects before we likely to return to the market in around the third quarter with our next auto ABS. And then finally, touching on our FY '26 objectives around growth, profitability and efficiency. We set an objective of achieving a $3 billion loan book by March 2026. And clearly, the origination momentum from the current quarter puts us in a really good place to deliver on that outcome. Equally strong portfolio growth, low credit losses are very supportive of the objective we've set in terms of driving meaningful cash impact growth for the FY '26 year. And we also remain focused on delivering operating efficiency as we scale to deliver on our efficiency targets. So overall, the first quarter of 2016 has set the Plenti business up really, really well for the coming financial year. But we remain really focused on delivering on that refreshed strategy to grow the business and grow value for our shareholders. And with that, I'll pass back to the moderator for...

Well, yes, I guess pass back to me. So in closing, I'm extremely pleased with Q1's performance. So very good momentum on all fronts, on all of the metrics that matter. And personally, having just clicked over a year in the job yesterday. I'm pleased that we've refreshed the corporate strategy. We've got very clear goals across the company and aligned our people. And we're starting to see just that increased momentum off a really great foundation that's been built up over many years by the team to continue to deliver a really good set of business outcomes. So again, it's a great example of when the business operates as designed, the operations go well, business development goes well. We're making smart credit decisions. We will continue to scale the business. So I'm delighted with the progress. So Tom, back to you and we're happy to take questions.

[Operator Instructions] Our first question comes from James Bisinella.

Congratulations on the results. Maybe just a couple for me. Firstly, just around the annualized loss rates that was down 28% year-on-year. And I think, Miles, you noted that was obviously a very good result. Just on that sort of that's an aggregated number across the book. So I just came to dig in a bit further and perhaps are you seeing any strength in any particular segments? Or is it pretty broad in terms of the strength that you're seeing there across the loss rate coming down?

Look, I would say it's been pretty strong across the entire book. If I drill into it by segment, look, the one that was probably interestingly, the strongest in the period was actually PL and probably drove the greatest part of the benefit. Having said that, all 3 channels looked pretty good. But as I say, there's -- I think there's probably a macro piece there. I think there's probably also -- if I look at some of the detail around some decisions we made, probably going back 18, 24 months in terms of just some small tweaks to our credit policy, and therefore, the quality of originations that have come on to the book and some of the early indicators of credit stress have generally been trending down, particularly in the PL book over the last 18 to 24 months. And I think that's been beneficial as well. Having said that, I generally talk in the sort of the 1 to low 1s number for the business. And while 94 basis points is a fantastic number, I still probably think that for the medium term, I mean more the type of number I'd be thinking about. But yes, great to see such a strong performance in the period.

And then just switching gears to originations as well, just keen to unpick a bit further in terms of seasonality. So June was a record and it's obviously hard to continue to keep doing records. So I mean it sounds like we should see some growth in renewables perhaps next quarter, but broadly, how should we think about sort of the run rate and originations for the group moving forward?

Look, we obviously just try to focus on the results we've delivered. Our ambition is obviously to keep growing things. I mean I think renewables is in a good place given some of those programs. again, we've got to work through exactly how much the impact of subsidies to size of loan plays versus volume of loans, but amazing to see the level of top of funnel demand that we're seeing coming through there. I mean automotive, again, was strong in June, given you've got that end of year impact. Having said that, our objective is particularly to grow all the business, but we do particularly want to see that NAB momentum coming through, which was a contributor to the growth that we saw. And then on personal lending, again, you can see that move around a little bit. But we want to keep on doing what we can to drive growth in that channel, but maybe a little bit more challenging to keep pushing those numbers up in the same way as the other channels.

Yes. And on the renewables, too, we did see some applications pausing ahead of the 1st of July, where customers and installers were pausing to make sure they could take advantage of the various federal and state government rebates that are in market now. So we think some of that will fall. But James, the other answer to your question is we're very pleased with the momentum and the growth that we're putting on, but let's not forget we have very, very small shares of very, very large markets. And so in auto, we're only 2% of the market. In renewables, we're about 24% and in PLs we're about 4%. So certainly, my view is we need to continue to drive the business forward with the confidence and enthusiasm that we can continue to build meaningful numbers in those large markets. So that is the task ahead of us, and that's what we're kind of gearing up to make sure we can get at.

Our next question comes from Lachlan Woods.

Just the first one, just on renewables. Just is there any investments given the opportunity that you guys are making, just like to kind of front run it in terms of like marketing or additional, I guess, staff to get more market share in terms of brokers?