Let's progress and provide some oversight into Credit Clear, what we do, what we stand for. For those who have been with us, be patient, but those who are new to the story, I look forward to informing you what we're all about. Credit Clear is an early-stage, white-labeled, commercially-driven AI technology platform supported by a third-party contingent business. It leverages AI technology to deliver better outcomes for our clients and their customers involved in accounts receivable and debt recovery. We work with some of Australia's largest companies, including telecommunications, banking and finance, insurance, and large business-to-business organizations as well. There are strong trading conditions currently with lots and lots of debt out there, very high debt levels due to cost of living pressures, relatively high interest rates, and certainly fiscal pressure.
I think that's all underpinned by what is a net promoter score of +40, showing that not only do we deliver better outcomes for our clients and their customers, it's done in a way that's in a more collaborative way that is customer-centric. Over 550,000 respondents have given Credit Clear a net promoter score average above 40, which for those who aren't aware of what a net promoter score is, that's an exceptional score considering Apple has something like 50, and a lot of the major banks are in their teens. A very, very strong endorsement from the users of the platform as to how much they value it. Now I'll throw to Victor to sort of give the highlights page financials.
Thanks, Andrew. Look, as we can see on this slide, all key performance indicators continue to head in the right direction. It's been consistent for the last five years. We're quite pleased with past performance and expect that to continue going forward. If we go to the left, we can see revenue has increased 12%. What's pleasing is that the growth has come from both new clients as well as existing clients where we continue to increase share of wallets. We moved to underlying EBITDA, which is up a significant 76% on the prior year. Again, an excellent result there. We've spoken about operational leverage in the past, and we can see that really coming through with growing revenue flowing through to underlying EBITDA. I'll go into a little more detail further into the presentation on that point. To the right, cash at bank of $15.6 million.
You can see cash from operations continuing to improve as well. The important point here is obviously that business is performing, but we are converting that to cash. All in all, business fundamentals are performing very well. Next slide here, we've got underlying EBITDA as a margin of revenue has improved from 10%- 16%, which is again a significant improvement. I'd like to think with the clients we've currently got on board and the health of the pipeline, we can get that up into the high teens moving into FY 2026. That would be coming from a long way there, 10% FY 2024, 16% FY 2025, and then high teens for FY 2026.
In terms of cash generated, touched on that earlier, with $15 million in the bank, what is particularly comforting is that we've got the flexibility, the ability, and the ability to invest in growth, be it organic or inorganic, without the need to raise capital. That's an important point there. We've also received quite a bit of interest from a couple of the banks who are very interested in providing debt financing there. That's something they've refused to do in years past, but very, very interested at the moment with the state of the company, the performance, and where we're heading. That's quite pleasing as well. Gross profit margin, look, that did remain flat year on year, and that's mainly due to the onboarding of major clients that we've put on. We've put on some blue-chip clients there, and it's always a little more challenging to bring them on.
Remembering, as I've mentioned in the past, the system integration is a lot more complex. Their reporting is a lot more detailed and extensive, and their data security is much more stringent for good reason. All in all, we're happy to invest in all of those elements because these larger clients are quite lucrative going forward. All good numbers on this slide as well, heading in the right direction. With that, I'll hand back to Andrew.
Yeah, just to go back to slide four for a moment, I think that I just wanted to really reinforce how far Credit Clear has come, certainly in the last four years since ARMA was acquired by Credit Clear. The market really made demands of us to bring about really good fiscal discipline, focus on organic growth and profitable organic growth. To have looked back at that consistent improvement that we've made across every financial area of the business that we assessed on, whether it be growth, strong organic growth, improving the cash flow generation or improving EBITDA or gross profit margin, I think the business is completely transformed from where it was to where it is today. It's really set us up for an incredible FY 2026 and beyond. I think that should give a lot of those long-term investors confidence that they're being rewarded for sticking with us.
I think that there's a lot of upside in the future, especially considering you overlay the share price against these charts. I don't think it's a true reflection of where the business is at today or where it's going to be at in the future. A little bit more about the company. The company has really carved out an image for itself as an innovator in debt resolution. That's done through three different service offerings. The first is through the Credit Clear Software as a Service digital solution, which is once again proprietary to Credit Clear. It's powered by our own AI engine that delivers better outcomes through things like next best actions, which delivers higher collection rates, faster recovery. We've seen up to 22% improvement in overall collections through that software.
It also helps streamline and deliver high profit margin to our clients through reducing call centers and moving a lot of that work through to an AI-automated agent. The second stream of work is through the ARMA Debt Resolution business. Now, that previously being a traditional debt collector, having now moved to a very much digitally- led hybrid offering where we operate as a third party. For those organizations that can't integrate and deploy software, but still want to use, you know, cutting-edge accounts receivable technology, they can outsource that work to ARMA either through a first party or a third party solution where we leverage the Credit Clear technology and support that through call center operators both here and in the Philippines to allow organizations to get the best of both worlds, not just digital treatment only, but supported by people.
The third line of business that we offer is through the Oak Ridge Legal Services. Now, whilst this isn't necessarily the most sexy part of what we do, it is still very much a critical component of any debt recovery strategy where if someone doesn't pay, let's think a large commercial account that's with a, you know, concrete or a, you know, a council, for example, and they need to enforce that debt through litigation, being able to do that seamlessly through automation and leveraging the legal process, that's where Oakbridge Lawyers fits in. Three distinct clear offerings, usually moving from early stage through to late stage. All right, I'll pass to Jason, who can talk to the more exciting stuff around what's happening in our world from a digital perspective.
Yeah, thanks, Andrew. Digital, very close to my heart. It's digital that underpins a lot of the results that Victor took you through because it drives out both improved sales because our clients are very excited about what we're doing with digital and the results that we can get, and improved margin because it has a big impact on our bottom line. Digital is really proving to be very transformative. We see increased collections, we see faster collections, we see reduced load on our call center because through our digital platform, we automate engagement with customers and we provide very sophisticated self-service tools for our customers so that they can set up a payment plan and resolve their debt in the comfort of their own home on their phone without the embarrassment of a phone call. That leaves our teams to deal with the more challenging circumstances.
This chart shows payments taken digitally across the group and you can see this shift to digital quite dramatically with sustained growth of 55% year- on- year. You can also see the shift in the figures there in the bullet points because there's been an 11% increase in active debt files referred year on year, but we've seen a 20% growth in digital payments as more and more of that business shifts over to digital. Next screen. Another way of looking at things, we have a very sophisticated approach to data. We have a very sophisticated data platform. We have a team of data scientists that are constantly trawling through the data to get insights from it. One of the things that we do is we look at every payment we receive and the actions that have taken to trigger that payment.
If we've only sent digital communications to a customer before they paid, we'll call that a digital payment. If we only made a phone call, that's a traditional payment. If it's a mix of the two, we'll attribute the payment based on the most recent contact getting priority, but we'll give some weighting to the other contacts as well. On that basis, what we're presenting here is a case study around our consumer portfolio. This is our largest portfolio. Consumer is our business to consumer, so it comprises utility debt like water and energy utilities, etc. Finance, personal finance, buy now, pay later, tolls, etc. This portfolio is the best portfolio really for digital. It's very well suited to digital. Using that attribution, you can see very, very strong growth over the years with digital accounting for over 80% of all payments that are made today.
To provide you a bit of context though, if you look back at FY 2021, this was ARMA before we rolled through the full Credit Clear digital platform. ARMA was pretty progressive. ARMA sent SMS and email reminders, had an online payment form for people to make a payment in full, and it's probably more progressive than any of our clients are even today. ARMA was getting a bit less than 50% of payments through digital. We rolled out in FY 2022. In March, we had three months in March. We already saw a significant uplift in the impact of digital. If you look in FY 2023 there, you can see a full year of impact of the Credit Clear digital approach and, you know, very significant increase resulting in a 75% increase by FY 2024 and FY 2025. What does that mean to us?
What it means is we can leverage this digital arbitrage between where our customers will be before they come on board and the capabilities we have on the platform. They might be at 30%. We know we're going to get them to 80%. Using that competitive advantage means that we can go in, you know, very competitively into this market knowing that we are going to be able to deliver a high-quality outcome in a very cost-efficient way. Back to you, Andrew.
Yeah, thanks, Jason. This sort of talks to our organic growth and, you know, the fact that the organization is winning lots of new customers. Some of the key reasons around that is the fact that we've got the most innovative solution out there in the market. I think that we've got a very strong reputation now across multiple sectors underpinned by high recovery rates, great net promoter scores, and very good service from our team. What we've seen is 182 new clients on board in FY 2025, some of which are highlighted below in Optus, TPG, Alinta Energy, and, you know, a raft of new other accounts. That's underpinned our growth from an organic perspective. What we saw, despite a reduction in our Tier 1 customers from 20- 19, that wasn't a lost customer.
That's just a client that hasn't generated the same amount as what they did in FY 2024, mainly because of a data migration system issue. What we've seen is still some really great growth. For those who can remember, Q3 wasn't a great quarter for us. That saw us, you know, wind back our guidance, but we've come through extremely strong in Q4 and delivered an exceptional result off the back of new client acquisitions and expansion of the clients that they give us already. 52 Tier 2 clients up from 44 in FY 2024. Once again, that's our future growth that we're going to be relying upon for FY 2026. Some really, really good results, I think, from a client acquisition perspective, which sets us up for fantastic growth in FY 2026 and beyond. Now, this is a case study which looks at one of our large clients within the insurance space.
Whilst Jason highlighted that, you know, the business to consumer space is where we have the greatest success in terms of digital transformation, I think the insurance sector is one that is probably ahead in terms of its adoption of digital technology. It's where we've had the most success in deploying our software as a service, where our clients use that software internally to solve problems. What we've seen with this case study is from when we were first awarded the contract in 2023, August 2023. What we've seen is that a real-life example has as we onboarded a client, then we started to get some early work. We proved ourselves during that early work. We start to determine how much can be solved through that AI software internally, and then we get awarded a greater share of the wallet.
What you've seen is, you know, the onboarding phase yields very little in terms of revenue. That's where our costs are very high. In the following six months, what we've seen is doubling the business. The prior 12 months, the next 12 months, we've seen an increase of 90% of the business and look to generate ongoing recurring revenue of something like $150,000 per month from this client. That's a really good example of how you can win a client, outperform your competition, increase the share of the wallet, and then develop a client up to a really sort of major tier one client. A very, very clear illustration, I think, of what we've tried to do historically by talking about the onboarding, the ramp up, the expansion of the wallet. It's a very good example.
I think back to you, Victor, to go in a little bit more deeper from a financial perspective.
Thanks, Andrew. This is the same layout I've used in previous years where we show the bridge between underlying EBITDA and statutory EBITDA. I think it's worthwhile going row by row on this particular slide. Revenue we've mentioned up 12%, a combination of existing and new clients there assisting with that growth. Employee benefits up 8%. We did record a few months ago the cost outs, which has significantly helped this expense category, although only for Q4 2025. With that, we expect to see a full year benefit rolling into FY 2026. That's come about by an improvement in efficiencies and system consolidation, which I'll touch on earlier when I get to non-BAU expenses. We're always looking out to try and run as lean as possible on the employee front, particularly with digital starting to carry a lot more weight in the businesses Jason mentioned earlier.
Tech development OpEx, we report this as a separate item. We find that a lot of investors are interested to see how much we're investing in that digital platform. Although we've continued to invest in digital collections, the system that is, we did reduce headcount in Q3. That said, we'll continue to enhance, analyze data, and invest in this part of our business because we consider that to be our point of difference relative to our competitors. Other expenses increased only 5%. I think we've managed expenses in a very disciplined manner for a number of years, and we'll continue to do that. Notwithstanding, we're going through a growth phase, and we continue to invest. We always look at the cost-benefit of the expenses that we incur to ensure we are getting a return. All that leads to the underlying EBITDA result there, which is the second green row.
I've already mentioned that that's increased 76% year- on- year, which is exceptional. I think one of the key numbers on this slide is the 65% of additional revenue, which has flowed through to underlying EBITDA, which surpasses the prior year by 57%. Over the last couple of years, we've been talking about digital and how that leads to operational leverage. We are now starting to execute on that, and it's really coming through. If you keep that in mind and consider the growth that's still to come, whether it's organic or inorganic, that's where you can visualize that underlying EBITDA really starting to take off. Okay. You know, I've mentioned the benefits of digital, and as we grow, we achieve the economies of scale. I've touched on the larger clients that we've been onboarding, and with that comes a higher profit margin per client as well.
Moving through the other items here, we've got some revenue from a government training grant, which has since been phased out. We've never included that as part of our core business, so always below underlying EBITDA over the last three or so years. Expenses BAU, you can see that has increased year on year, and the reasons are due to FY 2025 and FY 2024 to an extent being a year of transition. For those that followed our story, you're aware that we've made three acquisitions over the last five years. That led to multiple systems being carried, and with that comes cost, costs, and process inefficiencies. We have largely completed now the consolidation of systems from multiple to a primary system. That required the migration of clients from old systems to new systems. Very large task, considerable time, effort, and cost, which has been charged to this line.
That expense row also includes the redundancies, the cost outs I referred to earlier, as well as some risk and compliance enhancements, which are a one-off system development type expense that we've had to incur in order to accommodate and prepare for more large major clients coming on board. Although large for FY 2025, we expect that to reduce significantly going into 2026. Share-based expenses, I always like to show that separately because that can be volatile from year to year depending on what vests and what does not vest. What I will say though is that they are conditions based, based on earnings and aligned to shareholder interests. That all leads us to or brings us to EBITDA as per the state accounts there. Very transparent in terms of reconciling the two EBITDA lines there.
We move to depreciation, which relates to tech development, which is capitalized this time as opposed to OpEx, as well as right-of-use office leases. We've got some interest in cash reserves and then tax. You can see there there's a $5.5 million benefit. This represents the tax losses that have accumulated since we started business seven years ago. We've finally got to the point where the board, the executive, are very confident that these losses can be utilized going forward, and we expect to do that within three years. Hopefully, you know, that recognizes and demonstrates the confidence that the executive has in future earnings. $5.5 million has come under the balance sheet as a tax asset and correspondingly as a tax benefit. That gives us an NPADA of $6.8 million, again, significantly higher than prior year.
Amortization of acquisitions there, $3.2 million, mainly relating to the ARMA Debt Resolution acquisition, which will fully amortize in January of 2027. Another 18 months to go. After that, we'll see around $3 million a year drop off the P&L. Lastly, net profit after tax of $3.5 million, again, way, way better than the prior year, $4.4 million loss. Year-on-year results looking extremely good. Overall, just to finish up on this slide, you know, and I've said it 12 months ago, six months ago, the business model is working effectively. I think we validated that well and truly 12-18 months ago. Importantly, that model is translating to very strong financial results. A good set of numbers on this slide, and we expect that to continue going forward as I've said. I'll now pass back to Andrew.
Yep, hold on that slide for one minute, please. Yeah, look, I think that this slide really highlights a couple of key items for me personally. One is it's a real inflection point for the business. The fact that we're now really confident that we can start to eat into those tax losses that we've accumulated over the last 10 years is a real message to the market that we're a fundamentally strong business financially. I think that's really critical to note. I think the second thing that's really important is that 65% of additional revenue flowing through to the underlying EBITDA number highlights the connection between what Jason was talking about, the adoption of digital, the use of software, the growth of software sales, and how that's contributing to the overall gross profit margin within the business.
I think they're really two key points that I've seen from this slide that I wanted to highlight again. I know Victor pointed them out, but I just thought those are the two for me that really were fundamental. All right, let's look forward to FY 2026. Hopefully, some exciting pieces of information on here for those investors. I think trading conditions are very supportive. There's still a lesser amount of debt being sold than to five years ago, pre-COVID. We're seeing growth in the partnership space. We're also seeing a significant growth in those organizations looking to harness technology. What I mean by that is I think AI is here now to stay. People are looking for ways in which they can harness the capability of accounts receivable technology.
I think its very early adopters were in sales and using AI in sales, but now we're really focused on how we can convert technology into a SaaS solution internally and how we can use that to collect debt, collect accounts receivable. We've seen a big, big shift to that over the last couple of years, and Credit Clear are really poised to take advantage of that. I think it's a huge tailwind for us. I think the average amount of personal debt in Australia, it continues to be on the rise. More debt, and if we go into a rate cutting cycle in the next couple of years, what we'll see is people being able to pay that debt down. Being that a large chunk of Credit Clear's revenue is through commission when debt is collected, that means that we're really well positioned to take advantage of that.
I always like to point out the ATL as the largest example of debt levels within the sort of business community, and they're sort of over $100 billion of the debt sitting in the ATL at the moment. Think about that from a smaller level with organizations in telco, ANZs, the banking and finance, you know, and Credit Clear. I think being at the very pointy end in terms of innovation and performance that they're looking to partner with to drive down those debt levels. Organic growth is certainly supported by a very strong sales pipeline. I think we've only scratched the surface of government. They're really being late to move in terms of addressing very high debt levels. Credit Clear, once again, very strongly positioned there from a pipeline perspective.
We continue to integrate and develop the AI technology and the SaaS platform across the company's debt resolution teams, and that's driving performance and also increasing underlying EBITDA profit margin. We've got really high potential for margin growth across controlled cost space. As Victor mentioned, in Q3 or Q4 last year or FY 2025, we made some significant cuts across the business, consolidating management teams, technology, and also operational teams, which has really positioned us strongly for FY 2026. That's where we'll see the real benefit because we'll have four quarters of those cost savings. We've got obviously a strong cash position, which means that we're no longer, you know, dependent on the market to raise money.
I think that unless we're trading at a share valuation that makes it substantially accretive for us to go and raise money or acquire assets, then I think that our focus is going to be what we can do internally organically or utilize our cash reserves to do other, you know, initiatives. One of which I'll talk about in a minute. FY 2026 guidance, our revenue guidance for FY 2026 is going to be $50 million-$52 million in terms of revenue with an underlying EBITDA guidance of $9 million-$ 10 million. I think once again we want to really set those targets to be achievable. Given our momentum in Q4 and the beginning of FY 2026, I think that those are certainly targets that are very achievable for FY 2026.
We've made the decision to do an on-market share buyback of up to 10% of the company's issued capital as part of the company's capital management strategy. Once again, I think that really ratifies the fact that we think that the company's trading at a share price which is undervalued, and we're prepared to buy at least 10% of that stock back in order to use our capital in the best use for the shareholders. There is lots to look forward to. I think that, given the company's position, the board and the management team are very, very happy and proud of not only the FY 2025 result, but moving forward, I think we're the best position we've ever been starting a financial year.
All right, we had a few questions online, so I might just start with them. Victor, you had mentioned this, but when do you anticipate the depreciation and amortization of ARMA will conclude?
Yeah, that will fully amortize in January of 2027, so another 18 months to go, which will mean $3.3 million will come off the P&L there, favorably.
Thanks. Regarding company acquisitions, if there are significant costs associated with system integration, would it be more beneficial to prioritize organic growth instead?
I think we've done that over the last couple of years for sure. I mean, we've only made a very small acquisition. I think in FY 2023 was our last acquisition. We did that with cash and script, and it was not hugely costly in terms of the integration of those systems. I think we've prioritized organic growth, and that's been demonstrated through the high number of new clients that we've acquired and sets us up for, you know, I think more profitable growth in the future.
Thanks, Andrew. Does Credit Clear have plans to develop more AI technology beyond debt collection in the future, particularly once the current AI becomes profitable?
Look, I'll answer that, although it's Jason's area. I think the Board and the exec are focused on doing one thing really, really, really well, rather than try to do too many things. We were fortunate enough that someone had a really great vision to invest in AI long before it was a really popular thing. Hence, we've won a couple of awards over the years. That's meant that it's given us a really good advantage. I think that what we're trying to do is invest in that advantage rather than use it across other areas that might be a bit sexier than accounts receivable or debt recovery. I think the competition that we've got in this sector gives us an even better advantage as well.
Thanks, Andrew. We just actually have Larry from Shaw s on the line who would like to ask some questions. I'll let Larry ask those questions.
Excellent. Look forward to hearing them. Going to take yourself off mute, that's all.
Larry, are you there?
Can we take him off mute?
He was off mute. Let me see where he's... He seems to have dropped off.
Larry, Shaw and Partners Analyst that covers Credit Clear.
We'll come back to Larry. We've had a few other questions. Andrew, can you tell us how does Credit Clear fit into the debt collections industry compared to traditional debt collectors like Credit Core? Are you competing for the same customers or do customers see Credit Clear as a different type of option?
There are two fundamental differences between us and Credit Corp. One is that we don't buy books, so we don't buy debt books. Therefore, we don't collect money for ourselves. We also don't lend to our customers either. We're effectively an organization that assists our clients resolve debts with their customers through various methods, as I said, whether it be early stage software that we deploy within our client's environment where they can engage with their customers, or doing it as a third party either via the ARMA Debt Resolution brand or the Oakbr idge brands. Effectively, we're just trying to assist our clients getting paid or resolving overdue debts where Credit Corp, the majority of their business is in debt acquisition or lending. They do have a large component of their business, which they report obviously as other business within their annual reports. That's where we compete.
They've got a number of brands that have been either acquired over many years. NC Mills is an example, BAE Corp is an example, Collection House is an example, which was a former standalone listed business. We do compete against Credit Corp in that area, typically as a third party collections business under the ARMA Debt Resolution brand.
Thanks, Andrew. Let's try Larry again. Larry, are you there? Larry, you just have to unmute.
Yeah, can you hear me now?
Certainly can.
I just want to let you know I asked a 20-something how to unmute and they couldn't figure it out. Anyway, I don't feel too embarrassed. Andrew, Victor, well done on the result. Just a question with regards to the acquisitions that you were exploring. Maybe you can give us an update as to where those are. Do they fall away and that's why you announced the buyback or are they still work in process? Yeah, look, certainly one of the opportunities we were looking at in New Zealand has fallen away. Probably a couple of key factors there. One was the performance of that business in the four months that we'd been looking at it hadn't been at the level of which that we felt it was accretive enough for, you know, Credit Clear from two perspectives.
One, that it wasn't delivering what we expected to deliver from an annualized basis. Secondly, you know, the share price is at a level where for us to go to the market and raise money, it would need to be substantially accretive. I think there's much better things we can do internally driving organic growth or focusing on, you know, other uses of capital, which is a buyback, or identifying assets where we are not relying on the market to go and raise money as well. We've got lots of cash in the bank. We've got a business that is generating free cash every month now, given the tax losses that we've got. I think that wouldn't be long before we're in a position where we can deploy that capital in a way that doesn't require, you know, any or much dilution of the shares.
Yeah, Andrew, I'll just add, as I mentioned earlier, there's a couple of banks there that have a strong willingness to provide debt financing as well. They're very comfortable with cash flows, future earnings, which is a contrast to where we were 12 months prior.
Yeah, I think it does really reinforce that inflection point that we're at. We've got Big Four banks willing to lend us money to support acquisitions of profitable businesses.
That's a good point, actually. Big Four banks, we're not going to these mezzanine type funders, second tiers, so quite attractive cost of funding.
Yeah, that's a real credit to Credit Clear's development. Just on the acquisitions again, I know one of your sort of competitors, adjacent peers, bought a business in New Zealand. I'm just wondering, is there a risk? Is the acquisition that you were perhaps eyeing still available? Is there a risk that you miss out in securing a market position in a geography that's fairly close to Australia? Look, there's always risk and reward. We do have a business in New Zealand. It's a business that supports a lot of clients from Australia that have operations in New Zealand. We can always deploy capital to grow that market organically, leveraging relationships with ANZ for a great example. Vodafone is another great example, and lots of other utility companies or insurance companies that we have relationships across two borders. That's always an opportunity.
Unless non-organic growth makes sense from an accretive perspective, we won't be pursuing it just for growth's sake or pushing into a new market. We're still a business that's focused on our financial metrics and ensuring that if we're going to add something that has a risk associated with acquiring it, then it's got to be accretive.
Okay, great. That's really good, Andrew. I just had one other question, if I can, with regards to the sort of macroeconomic environment. Andrew, can you kind of go through what you're seeing with your collections, whether you're seeing customers push payments out, making smaller payments, or perhaps that trend has kind of stopped now and things are improving? Yeah, look, I think that six months ago or 12 months ago, we saw an increase in the time it was taking to pay down an overdue account, both externally and internally.
What we've seen is that probably flatline, so it's not increased too much beyond that sort of 16-week average time. I think as we see that interest rate cycle hopefully continue to come down, we should see people's available cash be able to deploy to pay down debts in a quicker manner. Now that the total debt, on average debt that we're looking at as well has sort of remained a bit stable as well. We certainly watch those factors closely. As I said earlier, the debt levels are very high. The average payment arrangements are remaining pretty stable, and the average debts that we're managing are remaining pretty stable as well. Overall, I think it does really position us well for FY 2026 and beyond. Okay, thank you. Well done on the result, guys, and I'll leave it to somebody else. Yeah, thanks, Larry.
Andrew, the next question from Daryl is, why a share buyback and not pay a dividend?
I think that we still want to preserve cash in case there's an opportunity to make an acquisition. We feel like the return on investment for our shareholders is best placed by investing in Credit Clear as a company, and that's through a buyback. I think we've still got some ways to go before we become a company that sort of pays dividends, and we don't want to go through the process of starting to pay a dividend and then not paying it if we're going to go through maybe some non-organic growth strategies in the future should the share price recover to a level that we think is appropriate to either raise money or to issue capital as part of our acquisition.
The other point I'll make there, Andrew, is a buyback can be executed over a period of time, so we can manage the outflow of cash there. Therefore, in the event of an acquisition or an opportunity arising, we will cease buyback. However, a dividend, once it's declared and paid, it's done, it's gone at one point in time. A buyback provides more flexibility there.
Yeah.
Thanks, Victor. Thanks, Andrew. We've got a few questions here on FY 2026 guidance and just trading. Could you provide a trading update in terms of new client onboard in FY 2026 to date?
We're talking about in the last month and three quarters?
I believe so, the last six weeks.
Yeah, okay. We've certainly signed some really great customers, but probably more excitingly is that some of the customers we signed late in FY 2025 have gone live and have started to generate really significant revenue. A large telco, a large energy company, and certainly another insurer. We've sort of hit those three major customer segments in that first six weeks. You know, without sharing too much, it's started the year very strongly for us from a revenue perspective and an EBITDA perspective.
Thanks, Andrew. Just on FY 2026 guidance, Simon says it seems conservative. Have you assumed no new clients to get to the FY 2026 revenue guidance? He expects that the development of his existing clients should account for a $50 million revenue target.
I think we've learned our lesson once again in FY 2024 that the best approach is to under-promise and over-deliver. Certainly, whilst this guidance might seem conservative, you know, we don't know what could happen in FY 2026, right? We should have a fair amount of new business baked into that FY 2026 number, growth from existing baked in. We want to make sure that we don't get to Q3 like we did in 2024 and have to wind back our guidance and then come home strong in FY 2024 and exceed it from an EBITDA perspective. Let's just monitor how we're performing from a guidance perspective. Once we are certain that we're going to over-exceed it, then we'll release an updated guidance. Until then, I think that it's a good discipline to make sure that we said something that we can certainly step over.
Thanks, Andrew. Mark from Petra has asked, can you talk to why June was so strong and what has been the experience post-June 25? Can you talk to some areas where you have reset the cost base?
Okay, there's a couple of items there. Just make sure I tick them off all. Then Mark's another analyst from Petra Capital. Thanks for the questions. In Q3, we had two or three major utility companies put their work on pause or reduced the amount of work through two reasons. One was going through a major transformation of systems. They're still not back live. The second was a budgetary issue where they were being funded by the federal government in Perth and, I don't know, federal government, the state government in Perth, and had run out of budget for this type of work. Both of those clients sort of dropped off from a collections perspective and left a pretty big hole in our Q3 number.
What we were able to do in Q4 and accommodated obviously in a great result from a June perspective is to recover from new business acquisition and growth of wallet with existing customers as well. That's set us up once again really strongly for FY 2026, being that those large customers that I mentioned, the utility space that put things on hold are still on hold. Whilst we haven't lost them, they're just on hold. This does happen from time to time, which is why we're probably conservative in our guidance from FY 2026 perspective. What we've seen is the momentum in that new business and growth from existing carry forward to FY 2026. What was the second half of that question, Mel?
Yeah, could you talk to some of the areas where you have reset the cost base?
Yep, yep. Look, we did use that opportunity in a sort of depressed revenue state in Q3 to really look at scenarios that we can bring forward. We usually do that annually. What we did is, you know, streamline the operational team. We streamlined the technology team, and we brought the management teams into one structure as well. A combination of, you know, redundancies across sales, technology, and management.
Mel, I just want to go back to Mark's question about a strong June. It wasn't just the month of June. If you could see the trend, it started improving in April through to a very good May, and then an extremely strong June. It was a gradual improvement through Q4, not just the month of June in its own right.
Thanks for calling out. It just reemphasized what you said there, Andrew. We pulled together the, as part of that rationalization of the structure, it also brought the digital and operational teams really close together, and they're working very, very tightly now in terms of continuing to improve collections at a level that it never had achieved before. We hope that those improvements will continue and are sustainable.
Thanks, Jason.
Sorry, we should point out, and that's why Jason is a point in Head of Operations and Technology. We found that operations was becoming so tech-focused. It just made sense to overlay technology over the operations department. There's so much of a blend now, and from that structure, we're just finding many more efficiencies there.
Yeah, just glad it saved us money at the same time. You know, improvement in efficiency plus cost savings, you know, win-win.
Thanks, Andrew. Larry from Shaw s has a couple more questions to ask. Larry, I'll just ask you to unmute.
Now I'm unmuted. Can you hear me?
Yes, we can.
Great, okay. Just with our digital, I think you called out $140 million as digital collections, is that right? Did you say what proportion that is of the overall group?
No, we didn't, and that's our internal collection. That doesn't include customers that are using our software to collect money under their own environments or being paid to their own gateway. This is just a measure of typically when ARMA are collecting it internally for us. It is just one piece of the overall collections pie, and some of that data we don't know because our clients don't necessarily share it with us. It is very hard to sort of pin down exactly what percentage of that overall collections pie it is.
Okay, that's interesting. Andrew, how would you kind of characterize where you guys sit in the market?
I always kind of measured you guys as having about a 10% share of revenue and collections. Can you kind of see that still the case? What's happening in the kind of competitive landscape? Yeah, look, I think that that's growing. If it was 8% last year, it might be 10% now. We need to move to sort of 12% or 13%. I still think that we've got plenty of opportunity to sort of push forward to 30% or 40%, which would well and truly push us above that $100 million revenue mark. I think plenty of runway still to go in Australia from a growth perspective. Where do we sit in terms of, you know, comparatively to our competitors? I think our competitors are still going through some pretty big transitions over the last couple of years, and they're dealing with that.
Credit Corp, you know, being pushing into the U.S., and then that's where their focus is, their agency business that we seem to compete against. I think we're winning market share from them for sure. The next biggest competitor being the Recoveries Corp, Milton Graham business, amalgamation that's now owned by Allegro. I still think that we're ahead of them in terms of innovation and technology, certainly reflected around our performance on panels as well. I think that we're leading the way in Australia, and global competitors like Indebted seem to be focused on other markets in a greater way than certainly Australia, despite the fact that they acquired an asset in New Zealand. Okay, great. Thanks, Andrew.
The next question we've received is in regards to the weather events in the first half. Rhys asked, you overcame adverse weather events in the first half. Can you please explain how much earning you think that has cost you over the year?
Look, it's a hard one to measure, and Victor and I, you know, he's probably coming at it more from an analytical perspective. I'd come at it from more of a big picture perspective. I certainly think in relation to two or three of our major clients in the Queensland area, which were mostly affected by that cyclone, it was probably $300,000 or $400,000 worth of lost revenue, some of which is deferred to FY 2026, some of which is just lost. Victor?
I would agree with that. Yeah, two large clients in our top five lists, so $400,000- $500,000.
All our insured clients were.
Yeah, one of our largest clients ceased sending files, I think it was in excess of two months, which is material. It slowly then ramps, builds up again. $500,000 at least.
Thanks, Victor. Just in regards to your comments on the Big Four banks being willing to lend, this obviously has a very positive impact on the company if high-grade lenders are happy to lend to you on your earnings. Can you just provide some more context around that comment?
Yeah, I can take that, Andrew, if you like. Look, I think most of us know what the banks look for. I've got to say I've spent the last two months with two top four banks. The level of DD is to the nth degree for good reason. If we're considering an acquisition, they'll do extensive DD on the target as well as our own business. They go from policies to financials to people to, it's akin to us doing a DD on an acquisition target. That gives us confidence though that we are ticking all their boxes, and I'm still engaged with two of them currently. Hopefully, Al, that answers most of your question.
Thanks, Victor. We just have a few questions on customers. One, Joe has asked, is Credit Clear expected to have a positive benefit from the end of the government energy bill relief?
I'm not sure I can answer that one. I would be shooting a little bit from the dark. We've got a sales director out of Victoria that's highly connected to that sector, presents at lots of the forums around energy, attends and hosts a lot of webinars in relation to that sector. I'd need to get back to you with an accurate answer rather than try to give you my best case.
I'll give you a theoretical answer. Firstly, we have quite a few clients in the energy sector. Yes, they're, and once that relief ceases, in theory, the level of arrears in energy bills will increase, which in turn may give us additional volumes of files to collect on is where it may occur.
Thanks, Victor.
Financial hardship issues, you know, which we help our clients with, could push up a whole lot of, you know, challenges that we're well- positioned with, being that we deal with Alinta Energy, EnergyAustralia, and a lot of the majors.
Thanks, Andrew. Just a couple of questions came through via email as well. Can you provide an update on the progress and success you've had with winning councils?
Yeah, look, we've had a very strong footprint in councils in Adelaide, and we've branched into Victoria more recently and have had some really good success with larger councils there. There have been some regulatory changes within that space, specifically within Victoria, which we've, I'm going to say, weathered for the last two years. Now we'll come out of those restrictions, and that market does prove a very good area where we can expand not only our traditional offerings, which have typically been where we've serviced councils, but that digital offering as well. We've seen a number of councils take up our Credit Clear Software as Service digital platform more recently within that sector. That's probably one of the greatest opportunities for us to grow the software component of our business sales.
Thanks, Andrew. The next question from via email was, overdue school fees are a bugbear of many a school. Is Credit Clear actively marketing their product to schools?
The short answer is no. We do have a number of schools that we, you know, private schools that we service. I think from a legacy position, they typically have a high volume of accounts, and it's not necessarily an area that is best placed to deploy our digital solution at a substantially accretive contract value. It's not been a very strong focus for us to grow that area, even though we do get contacted by media to provide our insights on that sector, given we do work for a bunch of those private schools.
Thanks, Andrew. Victor, we've just had a question on costs. It says second half costs were $19.15 million, down from first half of $20.3 million. Where do you expect the cost base to be in FY 2026 versus FY 2025?
Look, I think we'd use the second half as a base and expect what I'd call, you know, normalized increases. Salaries have increased 1 July in line with the market, but otherwise, most of our other overheads will stay, you know, under the 5% mark. I'd like to think there's always something that comes out of left field, but there are other opportunities that we normally locate to reduce expenses.
Absolutely. I mean, it's a balance between focusing on more aggressive organic growth. That requires a greater investment in sales and marketing, for example. That's something that I think the board and certainly exec are strongly considering, especially if we're going to push into new markets organically. They're balanced by managing cost discipline internally.
Thanks, Andrew. We've just reached our final question. Rhys just asked, have you had any further interest from private equity over the last few months?
Certainly nothing worth talking about. You know, there's still the occasional conversation with private equity. I think that whilst that was, you know, something we felt needed to be disclosed, it's certainly not progressed at any level that's worthwhile giving an update on.
Thanks, Andrew. That ends the Q&A for today. I might pass back to you for final comments.
Thank you, everyone. It was wonderful to see close to 100 people on the call, and we had about 90- 95 up until 10 minutes ago. For those who are long-term holders of the stock, thank you for your patience. The board and I are certainly very confident that we're substantially undervalued and are set up for a great FY 2026, not just in terms of our internal performance, but regaining the confidence of the market and hopefully driving up the share price. Thanks for everyone's time and those who have worked closely with us, like Larry, Mark, Callum, who have covered us as a stock as well. Thank you very much.