Superloop Limited (9SL.F) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. My name is Peter O'Connell. I am the Chair of Superloop, and thank you for joining us today at our 2025 Annual General Meeting. I would like to acknowledge the traditional custodians of the land on which we meet today, the Gadigal people of the Eora Nation. We pay our respects to their elders, past and present. I'm looking forward to engaging with you during the course of today's meeting. It is now well past 2:00 p.m. Sydney Time, the nominated time for the AGM. I have been advised by our Company Secretary, that a quorum is present, so I am pleased to declare our 2025 AGM open. As this is a hybrid meeting, shareholders can participate either via the online platform or physically at our venue today. It's good to recognize some old faces coming back to the AGM, welcome. The first item is the Board of Directors, so I'd like to introduce them. So with me in Sydney and I'd ask each director to put up their hand because they're not in the order, I'm going to call them out. I have now CFO; Paul Tyler, our Managing Director and Chief Executive Officer, Vivian Stewart, a Non-Executive Director; Drew Kelton, Non-Executive Director; Tony Clark, NED; Helen Livesey, Non-Executive Director; Gareth Turner, Non-Executive Director; Alexandra Crammond, Non-Executive Director; and Tina Ooi, our Company Secretary. We've also got, at the end our Hansen fellow, Dean Tognella right up there is our CFO, so we welcome him. Puja Patel representing our auditor is present. She's from Deloitte. Since she's here in person, welcome. We also have Derek Pocock, and Adrienne de Bruyn from Baker & McKenzie, our external solicitors, thank you. Puja is available to take questions on the conduct of the audit and the preparation and conduct of the independent external auditor's report at the end of the meeting -- during the meeting as well, the afternoon, I'll make some introductory remarks regarding the company's performance in the 2025 financial year and then comment on more recent achievements. I will then hand over to our Managing Director and Chief Executive Officer, Paul Tyler, who can provide a more detailed review of Superloop's activities during financial year '25 as well as some commentary on the outlook for the company. Following Paul's presentation, we will conduct the formal business of the meeting. Financial year '25 has been another significant year for Superloop. And I'm pleased to report growth continues across all segments, consumer business and wholesale. We have now completed the second full year of our Double Down strategy. As we outlined in front of you last year, this strategy is aimed at delivering accelerated growth in both revenue and profitability by maintaining cost leadership, deepening and broadening our market penetration, and pursuing targeted acquisitions that enhance scale and capability. I'm pleased to report that in year 2, that strategy continued to deliver results. Revenue increased by 31% to $547 million. Underlying EBITDA grew by 70% to $92.2 million. And once again, we achieved strong growth in new customers, up 60% to 731,000. Pleasingly, Superloop delivered a positive net profit after tax, a result for the financial year. The first such result for the company since the turnaround began in 2020. Superloop's performance in FY '25 also attracted multiple accolades. Superloop was awarded Ookla's Speedtest Award for the Fastest Fixed Network, the Canstar Blue Award for Innovation Excellence for Refreshify, the Australian Growth Award for Business Services. In addition to inclusion in the Australian Financial Review's Fast 100 List and Advertising Effectiveness Award or Effie as it's known, and Customer Satisfaction Awards courtesy of WhistleOut. These awards recognize Superloop's absolute commitment to achieving outstanding performance, reliability and speed for customers, resulting in its strong growth. Since our last AGM, we have entered into the S&P ASX 200 Index. This inclusion of our company in the ASX 200 is a significant milestone, and further highlights Superloop's success in delivering sustained value to its shareholders. Entry into the ASX 200 also reflects Superloop's position as a mature market participant. This is a position that is supported by successive business and wholesale contract wins throughout FY '25. An example is Superloop's appointment as the sole statutory infrastructure provider for the new city of Bradfield in Sydney, the first such city to be built in Australia in 100 years. In addition to impressive financial results, Superloop has made great strides in our ESG initiatives. Superloop is continuing to reduce the gender pay gap now at 5.7%. And enabling free Internet under the school student broadband initiative with more than 3,300 households connected and continuing our meaningful partnerships with the Humpty Dumpty Foundation, DV Collective and Avinya Foundation to name some of the many organizations the company supports. We also avoided 1.93 tons of landfill through the implementation of circular economy practices. And all Eastern seaboard core routers were upgraded to more efficient models. We continue to work towards reducing our carbon footprint, and the Superloop Sustainability Council meets regularly to ensure enhanced governance of environmental initiatives across the company. As we look forward into financial year '26, the final year of the Double Down strategy, Superloop will continue to focus on driving strong organic growth, making prudent investments that deliver value to shareholders and building both the Superloop, and the Exetel brands by providing an experience that customers will not only respond to, and want to stay with, but also invite friends and family to join. I'd now like to make a couple of comments on the resolutions, which we are putting to shareholders today. Our first resolution is the adoption of the remuneration report. Our approach to remuneration went through an extensive refresh ahead of the 2024 AGM. This year, we have continued to further strengthen and refresh our approach to our remuneration framework. This includes the introduction of STI deferral, the introduction of a minimum shareholding requirement policy, and adjustments to our LTI scheme to better align with our position within the ASX 200. Such changes ensure our remuneration practices remain both competitive and transparent. As such, we ask that you support the resolution. Resolution 2 today relates to my reelection as Director. It's always a bit of an odd feeling to have to deliver your own bio, but I'm going to do my best. As you know, I was elected Superloop Chair 4 years ago in 2021. I have more than 40 years' experience in leadership starting and building businesses, corporate and international business law, product and business development, marketing and strategy. I have extensive Board experience, and as you know, a position a passion for telco, tech and digital innovation. Resolution 3 relates to the election of Ms. Alexandra Crammond. Alex is a senior legal and commercial executive and deep experience in the technology telecommunications and digital media sectors. Alex has an extensive experience in growing new businesses, driving transformation and improving business performance and growth. Resolution 4 relates to the issue of shares to Origin Energy, as per the agreement between Superloop and Origin Energy announced on 13 March 2024. The Origin Energy agreement represents a significant step change for Superloop. We remain confident that the number of Origin customers will continue to grow and deliver increasing revenue for Superloop. Resolution 5 proposes a modest increase in the Non-Executive Director fee pool to allow for temporary fluctuations in the size of the Board. If and when appropriate, in its orderly management of Board renewal and succession planning. Resolution 6 relates to the approval of a grant of performance rights to our Managing Director, Chief Executive Officer; Paul Tyler. Resolution 6 is aligned with Paul's long-term incentive. The Board believes that it is in shareholders' interest to provide the MD CEO with a market competitive equity-based long-term incentive to ensure there is alignment between shareholder outcomes and MD CEO reward and retention. On behalf of the Board, we ask that you support all of these resolutions. I would like to thank my Board colleagues for their continued contribution and commitment. Each Board member is committed to ensuring that the Board maintains the relevant skills, experience and attention to detail that is expected of public company directors. On behalf of the Board, I would like to thank each and every member of the incredible team at Superloop for their contribution to such successful financial year '25. Finally, I would like to thank you, our shareholders, for your continuing feedback and support. I'll now hand over to Paul for a review of financial year '25 and financial year '26 business update before moving into the formal business.

Thanks, Peter. And thanks to the Board more generally on a great year. So I'd like to start with saying how proud I am of the group's achievements in FY '25, and the operational and financial performance that we've been able to deliver for our shareholders. The Superloop share price has experienced a 60% increase over the last 12 months, I probably should move to the right slide. A 6% increase over the last 12 months, significantly outperforming the market. This strong share price growth saw the company enter the ASX 300 Index in September 2024. And just a year later, as Peter mentioned, we entered the ASX 200 Index. . The company performance is a testament to the strength of our simplified business, our low-cost operating model, our brand strategy and the entire Superloop team. Some of the 2025 highlights include the growth in customer numbers, which has been outstanding, growing approximately 60% in FY '25 to over 731,000 customers, a 31% year-on-year growth in revenue to $546 million, and delivery of the first net profit after tax since the turnaround plan was launched 5 years ago. Underlying EBITDA grew faster than revenue, up 70% year-on-year to $92.2 million, and we generated gross operating cash flow of $88 million, representing a 95% conversion rate of our underlying EBITDA into cash. If we jump to Slide 8. You can see here a graphical representation of the exceptional performance we achieved in customer numbers, revenue, underlying EBITDA and NPAT in the 3 years since the end of FY 2022. In the earlier years, our focus was on simplifying the business model, improving the cost base, adding capability where required and building brand awareness. The results of this heavy lifting have become evident in the recent years, with customer growth and profitability accelerating substantially in FY '25. Our strategy has delivered clear operating leverage with EBITDA margins expanding and underlying EBITDA growing at a faster rate than revenue. This has resulted in positive NPAT of $1.2 million in FY '25, as mentioned, an improvement of some $16 million on FY '24. Our current 3-year strategy set a positive NPAT target for the end of FY '26, pleasing that we've been able to deliver that some 12 months ahead of the plan. Jump to Slide 9. Superloop Group achieved record NBN adds in FY '25, adding an additional 243,000 customers. As you can see from the chart on the left, we significantly outperformed our peers on this metric. Through our retail and wholesale offerings, we ranked #1 on NBN net adds for the 12 months to 30th of June 2025. The chart on the right shows our increasing slice of the NBN market. The challengers in the broadband space continue to increase their market share at the expense of older legacy brands and now represent more than 22% collectively of the NBN market. We see no signs of this trend slowing, and it's expected to provide a tailwind for our own brands and for our wholesale customers for years to come. We jump to Slide 10. Importantly, in parallel with our strong financial performance, we've continued to drive new initiatives in each of the areas of environmental, social and governance, as we seek to operate the business in a sustainable and transparent manner that meets the expectations of all of our stakeholders. We're proud of the progress we've made over the last 12 months and we'll continue our ongoing efforts to uplift ESG principles across the business. Now looking forward to FY '26. Trading performance in the first quarter has been strong and validates the decisions we took during the tail end of FY '25 to position ourselves for a fast start to FY '26. The Consumer segment in particular, continues to perform very well with 26,000 new customers added in the first quarter alone. This is equivalent to our total net new adds for the whole of the second half of FY '25. Year-to-date, we now have 33,000 net adds within the Consumer segment. As planned, trading volumes are dominated by our primary brand, Superloop with the relaunched Exetel One 1 product normalizing after the encouraging first quarter. Our Consumer segment is on track to deliver impressive market share gains in the first half of FY '26. Pleasingly, we continue to perform particularly well with high-speed plans, which sets us up for growth as NBN continues to execute on its Fiber Connect program with 4.6 million homes now eligible to upgrade to fiber. The much discussed NBN, so-called Accelerate Great product changes came into effect in September, bringing increased speeds to those on fiber and HFC. As we expected, following a brief flurry of immediate activity after the event, industry churn has now settled back to levels closer to normal. We expect the overall migration to the new 500 meg speeds to be a positive trend for us that plays out over a period of years rather than months. In the Business segment, we added approximately 4,000 customers in the year to 11th of November. Pleasingly, we've had significant large network and security wins with businesses such as ARB and MyCar and order volumes to date have stepped up strongly in FY '26. Smart Communities has again delivered on sales targets with some 10,000 new lots signed in the period to the 11th of November, continuing to build the forward-contracted book that underpins our future growth in this critical market. As expected, our wholesale numbers in the first quarter have been influenced by the timing of marketing and campaigns of some of our key wholesale customers. Following the anticipated slower first quarter, in the 6 weeks to 11 November, we've seen a significant uplift in order volumes and activations, adding over 4,000 customers in that 6-week period, as our wholesale partners have pushed harder into the market with marketing and compelling offers. Much like last year, our expectations are for our Wholesale segment to largely be a second half growth story. And we're pleased that we are now starting to see the acceleration in customer adds to support that expectation. If we jump to Slide 13. A significant achievement in FY '26. In early FY '26 has been the completion of our debt refinancing, which now provides us with a new $300 million facility. Substantial improvements in terms and conditions have been achieved, including a material reduction in interest margins, demonstrating just how far the business has come over the 3 years since our last refinancing. The increased size and flexibility of our oversubscribed new facility supports future strategic deployment of capital and, of course, M&A. We're also pleased to announce that we completed the acquisition of Frontier Networks on the 31st of October. This acquisition will add 10,500 secure fiber lots to our Smart Communities business -- sorry, secured fiber lots to our Smart Communities business, of which 4,700 are already connected and a book of further 5,800 contracted lots to be built. The new lots are in the burgeoning retirement living sector with key customers, AVO and Aura Holdings. Complementing our market leadership in the tertiary student accommodation sector as well as build to rent. As stated earlier, we have organically added more than 10,000 lots to the Smart Communities contracted book since the start of FY '25. With those 10,000 new lots 1, and the acquisition of Frontier networks, we have now added more than 20,000 new lots to our contracted book in FY '26, so far. We are continuing to execute strongly on our ambitions for the Smart Communities business, which brings me forward to the progress of our Double Down strategy. As mentioned, our 3-year Double Down strategy is now in its final year of delivery. And pleasingly, we're able to confirm we are on track with our ambitious targets of more than doubling revenue whilst expanding underlying EBITDA. Notably, exceptional organic growth has run significantly ahead of our plan, the plan, which was originally anticipating inorganic activities to do more of the heavy lifting. A product of this is, we've been able to achieve that positive NPAT position materially ahead of the plan. And lastly, moving to guidance. We're pleased to provide FY '26 underlying EBITDA guidance of between $109 million and $117 million, representing a year on growth -- a year-on-year growth of between 18% and 27%. Underlying EBITDA is skewed towards the second half of FY '26, reflecting higher marketing and OpEx spend in the first half, consistent with prior years. Our CapEx guidance range for FY '26 is between $32 million and $35 million, excluding the IRU payment. With the increase on FY '25, including the increased delivery of FTTP lots, and the additional CapEx required to connect services onto our new -- our recently acquired UECOM network. The IRU with Unit -- the IRU with Unity was renewed in October 2025 with an investment of $26.4 million, covering a renewed 3-year period. With that, I'd like to take this opportunity to again thank you, our shareholders, for your support, and I'll hand back to Peter for the formal business of the meeting.

Thanks, Paul. Before we move on to the formal part of the meeting, there are a few housekeeping matters that I need to address, and they concern I'll now summarize the shareholder questions and voting procedures, which apply to the meeting. As set out in the Notice of Meeting, there are 6 resolutions to be considered today. The resolutions have been outlined and explained in the explanatory memorandum that was included in the Notice of Meeting. Each resolution will be put to the meeting, with the exception of any that are not required to be dealt with them in this way. Shareholders' questions, which are submitted online or over the phones, which are relevant to the resolution will be read out by Tina Ooi, our Company Secretary and addressed by either myself or Paul Tyler. I will then advise the number of proxy votes received on each resolution before moving to the next item of business. Any questions that come through relating to the general business of the company will be noted and addressed after the formal proceedings have been dealt with and the meeting is closed. Ladies and gentlemen, may I remind you that only shareholders, their appointed proxies or corporate representatives of shareholders are entitled to ask to make comments or ask questions or vote. For shareholders joining us online, instructions on how to lodge a question in writing or orally through the platform is set out in the online guide, which is at the bottom right of your screen. I encourage shareholders who have joined in today via the virtual meeting platform to submit their questions in writing as soon as possible. Instructions on how to ask an audio question are set out in the online guide. All questions should be directed to myself as Chair of the meeting, and I will then invite either directors and/or relevant persons to respond as appropriate. We will address questions received from shareholders attending the AGM in person here in Sydney first, before moving on to shareholders' questions on the phone, and find the questions received through the virtual meeting platform. The proxy votes received are reflected in our presentation slides today and will be displayed on screen at the appropriate time. All resolutions we put to the meeting today will be determined by a poll. As disclosed in the Notice of Meeting, all undirected proxies given to the Chairman of the meeting will be voted in favor of each resolution. Shareholders here in Sydney who hold a white voting card can mark their votes for each resolution as we consider them today. Representatives from our share registry, MUFG Corporate Markets will collect them from you at the end of formal business. Shareholders participating online may submit their votes at any time by clicking the Submit Vote button at the bottom of their online voting card. And if you need further assistance, please refer to the instructions in the in-line guide available on the virtual meeting platform. All of the resolutions that we considered as ordinary resolutions and, as such, must be approved by a simple majority of voting cast by shareholders entitled to vote and voting on that resolution. Shareholders can submit their votes online until 5 minutes after the voting closes. Once the voting has closed, our share registry provider will tabulate the results which will be released to the ASX as soon as possible today. The Notice of Meeting and explanatory memorandum has been released to the ASX was published on our website on 14 October. It sets out the details of each resolution being considered at today's meeting. Superloop has released a correction of the notice of -- on 28, October 2025. The correction was in relation to the explanatory statement of Resolution 6. If there are no objections, I will take the corrected Notice of Meeting as read. The first item of business is to receive and consider the company's financial report. The directors' report, and the auditor's report also for the year ended 30 June 2025. There is no vote on this item of business. A copy of the statements and reports were published in our 2025 annual report and sent to those shareholders who requested hard copies. Shareholders have also had the opportunity to view statements and reports on our website. The purpose of this item of business is to provide an opportunity for shareholders to ask questions and make comments about the company's performance, operations and arrangements and management. For those who may wish to make a comment or ask a question regarding remuneration, please bear in mind that we have a separate item being our remuneration report, which will follow next. I will now invite questions and comments on the financial statements and reports. Questions may also be asked of the auditors about the conduct of the audit, the content of the audit report, accounting policies adopted by the company and the independence of the auditor in carrying out the audit. Questions that have been submitted regarding other items of business will be held over until we come to those items at the general business of the company will be addressed after the meeting has closed. I will now take questions from shareholders that are here in Sydney today. Are there any questions from the floor? Thank you. Are there any questions from shareholders joining online or on the phone for this item of business?

There are no questions from shareholders joining online or on the phone.

Thank you, Tina. Thank you. There are no further questions, we will now move to the formal resolutions. As a reminder, you can place your vote -- with respect to the resolutions put to the meeting and at any time using our physical or virtual voting card. Resolution 1. We will now proceed to Resolution 1, Adoption of the Remuneration Report. Resolution 1 is to consider the adoption of the company's remuneration report for the financial year 30 June 2025. The remuneration report is set out in the directors' report in Superloop's 2025 annual report. Please note that the vote on this resolution is advisory only and does not bind the company or its directors. Voting exclusions apply to this resolution as set out in the Notice of Meeting. The directors abstained from making a recommendation in respect of the resolution, and I now welcome questions with respect to the remuneration report. Are there any questions from the floor? Thank you. Are there any questions from shareholders joining online or on the phone for this item of business?

No, there are no questions.

Thank you. As there are no further questions, I now firmly move the rest of the motion that Resolution 1 be put to the meeting in the form set out in the Notice of Meeting. Proxy votes received in relation to this resolution are being shown on the screen. Please mark your votes for the resolution now. [Voting]

Moving on Resolution 2, which is my reelection as a director. Given that this resolution relates to my resolution as a director, I'll pass the role of Chair to Helen, who is Chair of our Remuneration and Nomination Committee.

Thanks, Peter, and good afternoon, everybody. So Resolution 2 relates to the reelection of Mr. Peter O'Connell, as a Non-Executive Director of Superloop. Mr. O'Connell retires in accordance with rule 19.3(b) of the Constitution and ASX Listing Rule 14.4, and being eligible, stands for reelection as a director. Details of the resolution of Resolution 2 are set out in the Notice of Meeting, which we have taken as read. The directors, with Mr. O'Connell abstaining, recommend this resolution be approved by shareholders and I now welcome questions with respect to this item of business. Are there any questions from the floor? Thank you. Are there any questions from shareholders joining us either online or via the phone?

No, there are no questions.

Thank you, Tina. As there are no further questions, I now formally move the motion that Resolution 2 be put to the meeting. in the form set out in the Notice of the Meeting. Proxy votes received in relation to this resolution are now being shown on screen. Please mark your votes for this resolution now. [Voting]

Thank you, and I'll now pass the chair back to Mr. O'Connell.

We will now proceed to Resolution 3, which is the Election of Ms. Alexandra Crammond, as a Non-Executive Director of Superloop. Ms. Crammond retires in accordance with Rule 19.2(b) of the Constitution and ASX Listing Rules 14.4 and 14.5 and being eligible stands for election as a director. Details of Resolution 3 are set out in the Notice of Meeting, which I have taken as read. The directors with Ms. Crammond abstaining, recommend this resolution be approved by shareholders, and I now welcome questions with respect to this item of business. Are there any questions from the floor? Thank you. Are there any questions from the shareholders joining online or on the phone for this item of business?

There are no questions.

Thank you. As there are no further questions, I now formally move the motion that Resolution 3 be put to the meeting in the form set out in the Notice of Meeting. Proxy votes received in relation to this resolution are being shown on the screen. Please mark your votes for this resolution now. [Voting]

I'll now move to Resolution 4. We will now proceed to Resolution 4, approval to the -- of the issue of 2,162,350 Superloop Shares to Origin Energy. Resolution 4 seeks approval that for the purposes of ASX Listing Rule 7.1, and for all our purposes, shareholders approved the issue of 2,162,350 Superloop shares calculated by dividing $5 million by the 30-day VWAP. As of the date, Origin Energy achieved 200,000 of its broadband services customers on Superloop's broadband platform, being $2.3123, we go to a lot of decimal places there, to Origin Energy, as described in the Notice of Meeting, which we have taken as read. The directors unanimously recommend the resolution be approved by shareholders. And I now welcome questions with respect to this item of business. Are there any questions from the floor? Thank you. Are there any questions from shareholders joining online or for -- or on the phone for the purpose?

There are no questions.

As there are no further questions, I'm formally -- I formally -- I now formally move the motion that Resolution 4 be put to the meeting in the form set out in the Notice of Meeting. Proxy votes received in relation to this resolution are being shown on the screen. Please mark your votes for this resolution now. [Voting]

Resolution 5. We will now proceed to Resolution 5, Approval of increase to non-executive Director fee pool. Resolution 5 seeks approval that for the purposes of ASX Listing Rule 10.7, Rule 19.5(a) of Superloop's constitution and for all other purposes, the maximum aggregate amount of directors' fees that may be paid to Superloop's Non-Executive directors per annum, as remuneration for their services fee increased by $100,000 from $1.2 million per annum to 1.3 million per annum. Details of Resolution 5 are contained in the Notice of Meeting, which we have taken as read. The directors abstained from making a recommendation in respect to this resolution, and I now welcome questions with respect to the remuneration report. Are there any questions from the floor? Thank you. Are there any questions from shareholders joining online or on the phone for this item of business?

There are no questions.

Thank you. As there are no further questions, I now formally move the motion that Resolution 5 be put to the meeting in the form set out in the Notice of Meeting. Proxy votes received in relation to this resolution are being shown on the screen. Please mark your votes for this resolution now. [Voting]

Resolution 6. We now proceed to Resolution 6, Approval of grant of Performance Rights to Mr. Paul Tyler, our Managing Director and Chief Executive Officer. Resolution 6 seeks approval that for the purposes of ASX Listing Rule 10.14, and for all other purposes, shareholders approve the grant of 305,693 Superloop performance rights, and the issue of up to 305,693 Superloop shares on vesting and exercise of those Superloop performance rights, should the Board opt to satisfy the award by way of a new issue of Superloop shares in respect of the long-term incentive for the financial year 30 June 2026 to Mr. Paul Tyler, under the Executive Performance Rights Plan, as described in the explanatory memorandum. Details of Resolution 6 are contained in the Notice of Meeting, which we have taken as read. The directors, with Mr. Tyler abstaining, recommend that this resolution be approved by shareholders, and I now welcome questions with respect to this item of business. Are there any questions from the floor?

I would like to know what are the conditions to be met for the performance rights.