I would now like to hand the conference over to Mr. Paul Tyler, Chief Executive Officer. Thank you. Please go ahead.
Thank you very much. Good morning, everybody, and welcome to Superloop's 2025 first half results briefing. My name's Paul Tyler. I'm the CEO of Superloop, and I'm joined here by Dean Tognella, our Group CFO. I'm pleased today to be delivering our results for what has been another exceptional period of growth in the business. And with these results, we continue to demonstrate that we have the right strategy, driving continuing gains in market share, revenue, and earnings. If we jump to Slide 3, we'll start with some highlights for the half. So we're now halfway through our three-year Double Down strategy. I'm pleased to say we're tracking well to deliver on the three-year targets we set some 18 months ago.
By the end of the first half, our total customers surged some 63% to over 664,000, off the back of continued growth in our Consumer segment and the successful completion of the migration of Origin customers within our Wholesale segment. Income for the half increased 31% on the prior corresponding period to AUD 258 million, and reflecting the operating leverage that's in the business, underlying EBITDA grew at a much faster rate than revenue, up some 66% to over AUD 38 million. The net loss after tax narrowed to AUD 7.8 million, which is an improvement of AUD 10.9 million on the prior period. Importantly, growth in earnings translated to cash flow, with gross operating cash flow of AUD 37.3 million in the half, which represents a 98% conversion of underlying EBITDA.
If we jump to Slide 4, looking beyond the headline numbers, across the group, we had a half that was packed full of highlights. Our NBN market share increased by over 50%, ending at 6.3% of the market as of December 31st, 2024, with subscriber growth coming from all three segments. Notably, the half included the successful migration of over 130,000 Origin broadband customers. This project required strong collaboration between the Origin and Superloop teams and was delivered on time and with minimal customer disruption. As Origin moves past the migration, we are looking forward to supporting their continuing growth ambitions. In the half, we also put pen to paper on the acquisition of Uecomm, which will be a fantastic acquisition that expands our infrastructure reach and supports our continued growth aspirations. This transaction is expected to complete by the end of this current quarter.
The Consumer segment continued to go from strength to strength. We added 37,000 new customers during the period and generated a 43% increase in revenue. Consumers associate our product with being high performance and great value for money, traits which definitely continue to resonate in the market. In the business segment, growth in volumes and new customer wins were offset by price erosion on corporate data products. This sector-wide headwind led to revenue being flat. Highlights included the substantial new wins in Smart Communities, which will generate significant high-quality earnings in the business for future periods. Wholesale revenue was up 52%, largely due to the new Origin customer base, as well as revenue streams from new customers, including AGL and Launtel. And finally, across the group, we achieved revenue growth of 31%.
With that, we're tracking positively to our three-year Double Down plan and have demonstrated an acceleration in growth of our customers, our earnings, and revenues. Jumping to Slide 5. In the half, we performed strongly across all key metrics in the business and continue to demonstrate the profitable growth that has been a feature of Superloop over the last four years. Customer numbers are up 63% to 664,000. Revenue was up 31%, as mentioned. Most pleasingly, though, this was all organic. Underlying EBITDA was up 66%, again, as mentioned, to AUD 38.2 million for the half. Our underlying EBITDA percentage has increased now to 14.8%, and it's now approaching the mid to high teens target that we set as part of that three-year Double Down plan. If we move to the segments on Slide 6, both Consumer and Wholesale experienced substantial revenue growth in the half.
Consumer revenue increased by a record AUD 51.4 million, which was an increase of 43% to AUD 170.3 million in total. Wholesale delivered a record half, seeing revenue growth of 52% to AUD 35 million. The growth was, of course, dominated by the company's contract win with Origin, in addition to those new revenue streams from AGL, Launtel, and others. Revenue from the business segment of AUD 52.2 million for the half was flat, as mentioned, against the prior two periods. The trading activity in the half saw growth in volumes and new logos, unfortunately, offset by price erosion on those traditional data products. We can see these sector-wide challenges boosting in the second half of 2025, although we're very encouraged by the new wins we're achieving within this segment. Next slide reflects on our NBN market share as a group.
So across the group, Superloop achieved record NBN adds of 191,000 for the half, which increases our NBN market share to 6.3%. Through our Wholesale and retail offerings, we ranked number one and two in NBN net adds across the 12 months to September 30th, 2024, which is the latest period where publicly available data is there. We're proud that our own brands, those being Superloop and Exetel, continue to perform well and that people choose our internet products to enable their daily lives. That said, we're equally proud that we're able to support our Wholesale partners, including Origin, as they realize their own broadband ambitions. Challenger RSPs collectively continue to grow market share at the expense of the older established brands. As of the end of September, collectively, Challengers made up some 19.8% of the market. We believe this multi-year trend has plenty of runway left.
And now see our long-term vision of the Challengers as a group reaching 30% is perhaps understated. Superloop is uniquely positioned to benefit from this megatrend through our Wholesale and retail offerings. The next slide, Slide 8, reflects on customer numbers, where more than 209,000 new customers were added over the half. Of course, another record for Superloop. As mentioned, 37,000 of those customers, those new customers, were added in the Consumer segment, which represents an increase of 9% on the prior comparable period. This included a strong finish to the half, with 18,000 customers added in November and December alone. Wholesale customers grew by some 165,000 over the period, largely reflecting the impact of the subscribers migrated under the Origin contract. The Wholesale segment added 7,000 total customers across November and December.
Now, with early trading now in the second half, we are seeing an acceleration, with customer growth to date tracking at more than double the November to December rate. In the business segment, customer numbers increased by 7,000, which included 5,000 small business NBN customers. Move to the next slide. It's on our operating model. And we see our operating model as simple. We have a great domestic and international fibre network, a modern integrated digital stack, and a global resource base. These three components support the efficient delivery of our products across our three market segments, being Consumer, Business, and Wholesale. And they form the basis of our competitive advantage as a low-cost, efficient operator delivering flexible, high-performance products. Another key highlight for the half, of course, was the announcement of the acquisition of Uecomm.
We're excited about that acquisition, which we announced in December and we expect to complete later this quarter. This acquisition will add substantial scale to our domestic infrastructure, adding some 2,000 km of strategically located metro fibre, 800 km of owned duct, and connecting over 1,900 buildings across Sydney, Melbourne, Brisbane, and the Gold Coast. Post-completion, we see this asset being integrated into the business in two stages. First, we will transition operations to our business and deliver synergies from the increase in the number of on-net buildings. And secondly, we'll productize the asset and make it available across our customer portfolio. These assets are particularly well aligned with our Smart Communities division, and we see this infrastructure ownership conferring an advantage on us, both in differentiating our offering for customers and in reducing the CapEx requirements for delivery of those projects.
We're setting modest expectations for the asset while we work through the transition. We expect net EBITDA and cash contributions to be neutral within the first year. Finally, reflecting on our network, this slide on Slide 11 is a simple representation of our substantial asset base. We've made a significant investment in physical and digital assets, which enable us to deliver our services at a lower cost and sets us up to benefit from operating leverage as our business grows. The Uecomm acquisition will further extend our infrastructure reach and cement our position as an owner of domestic and international telecommunications infrastructure. And with that, I'd like to hand over to Dean to provide some more detailed overview of the financial performance.
Thank you, Paul. It's great to be presenting Superloop's half-year results. As previously noted by Paul, year two of our three-year Double Down strategy is progressing well. It's been a strong start for financial year 2025. I will step you through our high-level results before I drill down into more detail on the following slides. We are seeing continuing positive momentum in operational performance across the group, and this is driving strong revenue growth, up 30% to AUD 258 million.
As Paul has already noted, the Consumer and Wholesale segments delivered impressive growth in revenue. Our revenue growth reflects the continuing market share gains we are achieving and the successful delivery of the landmark Origin contract. The group delivered gross margin of AUD 88 million, an increase of AUD 19.3 million, with growth in the Consumer segment resulting in a slightly lower blended gross margin of 34.2% for the group. Operating expenses increased 12.4% overall, largely driven by a 21.6% increase in marketing investment.
We are pleased with the returns we are achieving from our marketing spend and have remained disciplined around the cost to acquire in our Consumer segment. As a percentage of revenue, operating expenses decreased from 18.2% - 15.3%, demonstrating the operating leverage we have seen now over a number of years. Underlying EBITDA grew 66% to AUD 38.2 million. NPAT-A is positive at AUD 8.6 million, and while we are still delivering an overall bottom line loss, we saw a significant reduction in the loss over the prior year, and we remain confident of being NPAT positive in FY 2026, in line with our three-year strategy. The company continues to generate strong free cash flow of AUD 16 million, an increase of AUD 3.4 million on the prior corresponding period. Moving to Slide 14. Group gross margin was AUD 88 million for the half.
The group gross margin percentage of 34.2% was stable compared to the second half of financial year 2024. The chart on the right bridges gross margin from first half 2024 to first half 2025. Consumer gross margin increased by AUD 12.3 million as a result of very strong revenue growth. This revenue growth has been achieved through strong trading volumes and ARPU expansion. The Wholesale segment gross margin increased by AUD 7.5 million, primarily as a result of the transition of Origin's customers. Moving to Slide 15. This slide really demonstrates the leverage in our business as we scale. Operating expenses increased AUD 5.7 million to AUD 51.9 million, including an additional AUD 2 million in marketing to drive brand awareness and growth. Additional employee costs were required to support the regular customer numbers and increase scale of the business.
However, as you can see in the chart on the right, our operating expense-to-revenue ratio improved by 2.9% over the prior corresponding period, and it continues to show a strong downward trend, having reduced nearly 6% over the last two years. Our low-cost operating model continues to be a key to our success. Moving to Slide 16. Superloop has been disciplined in its investment in network capacity and infrastructure to support our growth, with AUD 3.3 million invested in digital and transformation activities, AUD 7.4 million on network upgrades and expansion to support growth, and AUD 3.3 million on customer-related CapEx. We now have capacity sufficient to support more than 1.2 million internet customers across our highly redundant domestic and global network. The agreement to acquire Uecomm will provide substantial domestic fibre and complement the investments we are making in active equipment.
CapEx spend was AUD 15 million for the six months and is on track for FY 2025 guidance of AUD 28-AUD 30 million. Moving to Slide 17. The business is generating strong gross operating cash flow, which continues to grow year on year, and the company has a net cash position of AUD 10.9 million. Underlying EBITDA to gross operating cash flow conversion was 98%, and we expect to see this settle between 85% and 95% for the FY 2025 year. The company maintains a conservative debt position, with debt covenants all within very comfortable levels. During the half, Superloop reduced the drawn debt by AUD 3 million. Our significant debt capacity provides us with funding flexibility to pursue M&A that is aligned with our strategy and supports accretive growth. I will now hand back to Paul.
Thanks, Dean. So we move to the segments now.
Now, we'll start with the Consumer segment on Slide 19. So, as I've already noted, this segment continues to achieve outstanding results over the six months, increasing revenue by some AUD 51 million -AUD 170 million in total. We added 37,000 customers in the half, including 18,000 in the last two months. Gross margin percentage was 27.1%, remaining comfortably above our 25% long-term target. We continue to add high-value customers, and I'm confident we'll see this trend continue as consumers demand higher internet speeds, reliability, and value. Customer churn remained in line with our expectations. We move to the business segment on Slide 20. As you can see, at a revenue and gross margin level, we were flat compared to the previous two halves. Revenue came in at AUD 52.2 million and gross margin at AUD 20.7 million.
Gross margin percentages declined slightly to 39.7%, but remained in line with our long-term target of 40% for the segment. Sector-wide challenges in the corporate data market remain a feature of this segment, and that was reflected in price erosion, which offset the volume gains we had in the half. Small business had another strong half, adding some 5,000 net customers and building on momentum from the previous years. A highlight for the half in the business segment continues to be our smart community aspirations, where we had a standout sales performance, signing customers such as Resimax, AV Jennings, and others. In total, signing more than 5,000 new fibre-to-the-premises lots, and they were in addition to our continuing leadership in the student accommodation sector, where we put pen to paper on a number of new buildings.
We've built an impressive sales pipeline across both our FTTP and Wi-Fi offerings and expect momentum to continue to build in future halves. As we've spoken about in prior periods, our smart community aspirations have long lead times. Pleasingly, though, we'll start to see meaningful revenue turn-on over the course of this calendar year as we progress through our significant build pipeline. On Slide 21, you can see some example logos of new wins we've had in the business segment that were signed during the half. So if we move to the Wholesale segment, revenue was up over 50% to AUD 35 million, driven by the new revenue streams from Origin, AGL, Launtel, and others. Gross margin was AUD 21.1 million for the half, with margin percentages increasing by 1.2 to 60.3%. A further contribution uplift is expected in the second half from the full six months of Origin customers.
On the new sales front, the highlight was signing a new NBN backhaul deal with Leaptel that will contribute AUD 4 million-AUD 5 million over its three-year contract life. Finally, as discussed earlier, the new Uecomm acquisition will add a further 2,000 km of metropolitan fibre and 800 km of owned duct to our network, and as we move into FY 2026, this acquisition will enable further new products to be launched within the Wholesale segment. Slide 23 shows some logos of successes we had in the Wholesale segment during the half as well, so now, if we move to the outlook, and we'll start with FY 2025, focus on Slide 25, so as we move into the second half of the year, we'll continue to expand on the strong foundations already laid.
There are three pillars driving growth for Superloop: a laser focus on maintaining our position as a cost leader, continued initiatives to drive organic growth, and disciplined M&A. To support our cost structure, we'll continue to invest in digitization and automation and focus on maintaining a low cost to acquire customers. A number of our early AI use cases are showing promising signs, and this continues to be an area of focus for the business. We'll drive organic growth through investing in brand awareness. In parallel, we'll support Origin's growth aspirations. And of course, we will deliver our Smart Communities' contracts. M&A remains a focus for the business, and while we see plenty of opportunities, we'll continue to take a disciplined approach to what we'll consider and pursue.
Any opportunities we pursue must have a strong strategic alignment, allowing tight integration with our existing business and create long-term value for our shareholders. We reflect on our three-year plan on Slide 26. You can see that we're at the halfway point now. Pleasingly, even absent M&A, which was a feature of the plan, to date, we are tracking at or slightly ahead of the plan and confident of reaching our ambitions by the end of FY 2026. This on-target performance to date has been driven almost entirely by organic growth. M&A is still a part of our plan, and as noted earlier, we have significant debt capacity to support such activities. Moving to Slide 27 and the outlook for FY 2025, our cost structure, our efficient operating model, and our digital capabilities provide a strong competitive advantage, and this continues to translate to earnings growth and cash generation.
Trading conditions in the first seven weeks of the second half have been encouraging, and in particular, we're pleased to see the strong growth in customers coming through our Wholesale segment. We are affirming our FY 2025 guidance, that is, underlying EBITDA in the range of AUD 83 million-AUD 88 million, which is an uplift of greater than 50% on our FY 2024 performance. CapEx spend will remain in the range of AUD 28 million-AUD 30 million as guided to enable our continued growth and support our burgeoning Smart Communities business. We're proud of how we continue to deliver profitable growth in the business achieved through both operational and strategic success, and are strongly positioned to continue to deliver this growth into the future. That concludes my formal remarks, and I now welcome questions. Thank you.
Thank you. If you do wish to ask a question, please press the star key, then one on your telephone, and wait for your name to be announced. If you wish to cancel your request, press the star key, then two. If you are on a speakerphone, please pick up the handset to ask your question. Thank you. Your first question is from Nick Harris from Morgans. Go ahead. Thank you.
Hey, guys. Thanks for taking my call and another great result. I've got a lot of questions. I'll just ask two, and then I'll jump back in the queue and let others ask. So easy one and then a slightly tricky one. Just confirming the easy one, your Superloop branded subs. I think you said twice you added 18,000 net Superloop branded NBN subs in November and December, and then that you're running at double that rate in January and February.
So I'm just trying to make sure I can do the math. So you added at least sort of 40,000 subs already. Is that right?
I think we might be mixing Consumer and Wholesale there, Nick. The comment about doubling the run rate was in the Wholesale business.
Got it. Okay. In Wholesale. Gotcha. So yeah, my interpretation of Origin's really put their foot to the floor on sales and marketing, and that's starting to kick in. Is that what you're kind of suggesting?
As you know, we don't comment on Origin's retail performance specifically, but if we look at the Wholesale business as a total, yes, we see an acceleration in the first seven weeks of the half over what we saw in the first half.
Excellent. Thanks, Paul. And then just my second one, the FY 2026 EBITDA margin sort of run rate target. You're at a 15% EBITDA margin now. The slide sort of suggests you'll hold at a 15% EBITDA margin despite, sorry, a bit noisy here, despite double-digit margin expansion for the last couple of quarters. I think your target's mid to high teens, and 15, on my readings, mid teens. I'm just curious, is that a fairly conservative number, or am I missing something in terms of you guys might be layering in a few more costs in FY 2026 that I'm missing?
We're not at 15. We're at 14.8, just to be clear. The three-year plan was to take the business to, as you suggest, mid to high teens, and that's our target. That's what we're shooting towards. Of course, if we can do better, we will. We haven't guided what our EBITDA would be in FY 2026.
The Double Down plan had its aspiration, and that's sort of the only long-term view that we've put into the market. Obviously, we're tracking well, and we continue to try and drive profitable growth in the business. It is quite encouraging to see how we've been able to bring OpEx as a percentage of sales down. We did say we wanted to get that kind of the 15% level. You can see we're trending very well towards that. Can we go a little bit further? Well, time will tell.
Well, yeah, obviously, they're great numbers, so thank you. Just trying to dissect that. Appreciate it. I'll jump back in the queue. Thanks.
Thank you.
Thank you.
Thank you. Your next question comes from Ross Barrows from Wilsons Advisory. Go ahead. Thank you.
Hi, Ross.
Hey. Hey, Paul. Hi there. Good morning. Thanks for taking the question. I've got a couple.
The first one is just you did call out that 18,000 of the 37,000 Consumer ads were in November and December. I think you may have said in the past that Superloop generally doesn't spend a bunch of marketing or on marketing, I guess, in that December quarter, given it's quite a competitive time. I guess in this deck, you have called out an additional AUD 2 million of marketing spend. So yeah, just wondering if you could talk to that a bit. Is this a bit of a change of strategy, or maybe just elaborate on this a bit more? And any references to Black Friday traction might be handy as well. Thanks.
I'm happy to take that one. What we're seeing really is every year, Black Friday events seem to become larger.
We took the opportunity this year to actually put some pricing in market for the Black Friday events. We had good volumes through that period. What we typically see, whenever there is some change in the market, we benefit from that. Prior 12 months, we really didn't have a Black Friday special. This year, we did. We came in for about, I think it was around 30 days. We sort of pulsed in, and we took some volumes. We're happy with the run rate we achieved, and then sort of popped back out of the sort of specials in the December month. A lot more successful than.
That's great colo r. Thanks. The other one that I had was just around the first half.
As you've mentioned, the result's pretty, it's a strong set of numbers and pretty much all organic, if not totally organic. I guess if we look at that half, I guess during that timeframe, you had some additional workloads. You had, I guess, the DD process for Uecomm, the Origin migration. You also had the legal process related to ABB. So kind of a balance of positive and negative distractions. Not really distractions, but efforts there. With those kind of not being in the second half, kind of frees up some management time and effort. I'm reading the tea leaves a bit too strongly, but any comments just around being able to do even better in the second half?
Look, I think we'd have to separate market conditions from some of the internal challenges or workload in the business. We have an excellent team.
I think the executive team is really strong. It's a very stable team. We've been able to compartmentalize some of those peaks of workload into various parts of the team and still maintain a strong focus on the marketplace, as you see in the first half performance. So I don't think it would be fair to say that we suffered in the market because of distractions. We were able to manage both pretty well, I think.
Yeah, no, really well. I guess that was the point I was highlighting. That's a great result given the extra effort. Maybe just a one-liner if I can. I know it's an extra question, but just AI use cases. Could you just mention one or two of those in terms of opportunities you see ahead?
We have a very public one, which we announced a number of months ago around a chatbot-related activity, which we call Teddy, using a number of different elements of AI, typical LLM interface into it, which has immediately diverted quite a lot of chat volumes away from our human agents. Interestingly, the customer satisfaction that we're measuring from that are at or above the same satisfaction levels we're achieving with human agents as well. That's showing some encouraging signs, and we're bringing more and more functionality into that. There's a whole range of other use cases we have in the business, from self-help around network challenges, sentiment analysis. We're doing all sorts of modeling of churn propensity and various other things across the business. It's not new for us, Ross. AI is really just automation, and we've been investing heavily in automation for a number of years.
I think there's a new brand name for it, but it has and will continue to be a focus of the business.
Very helpful. Thank you.
Thank you.
Thank you. Your next question is from Liam Robertson from Jarden. Go ahead. Thank you.
Hi, Liam.
Morning, Paul. Morning, Dean. Just two from me. Firstly, in Consumer, we saw gross margins tick down sequentially in the first half in an environment where price competition, I'd say, was highly rational, obviously evident by your strong APU growth. Can you talk to some of the moving parts there, please? I know you've quantified the Fibre Connect rebates in the first half of 2025 at about AUD 900,000, but any color on what that was in the prior period across the first half of 2024, second half of 2024? Obviously, safe to assume that rebate goes to zero in the second half.
So if we remove that rebate in the second half, should we think about that as the new base for margins? And then my second question actually related to Fibre Connect as well. That AUD 900,000 that you've disclosed there from Fibre Connect rebates, I think in the first quarter rebates were AUD 60 for upgrades. So that sort of implies you did 15,000 Fibre Connect orders in the first quarter, given the rebates went to zero in the second quarter. That's obviously a really strong number. Are you seeing an acceleration in upgrade activity and therefore an acceleration of subscribers moving to high-speed tiers? Thanks.
Thanks for that question. There's a few parts to it. Maybe I'll just start with the last part first. Superloop does very well on the high-speed plans. The whole market position is very much around high speed and good value.
So we do well in terms of the 100 Mbps +, and particularly, we have a very strong share of market in the 1 Gbps plan. So the focus on high speed means that we do well on the Fibre Connect programs because the Fibre Connect programs allow us to move to a fibre connection and take advantage of the high speed. So that's been a part of our strategy over the last three years. The question on the NBN rebates or funds we receive from them, NBN rolls out various programs, and they provide incentives, and the amount per sub or per home does change. So we've given you an indication, I think it's in the Consumer segments slide. Fibre Connect rebates in the first half of 2025 are less than AUD 900,000. So they're not a material element of the Consumer GM.
The AUD 900,000 was what we had in the first half of 2025. If you look back to what it would have been in the prior corresponding period, it obviously would have been a higher number. And my guidance I would give you is sort of the rebates would have been approximately double the AUD 900,000 in the prior corresponding period. So NBN dollars will change, but as I said, going forward, it doesn't represent a significant amount of our GM.
Great. Thanks.
Thank you. Your next question is from Bob Chen from JP Morgan. Go ahead. Thank you.
Hi, Bob.
Hey, Paul. Hey, Dean. A couple of questions for me. Maybe just following on the Consumer segment. Obviously, pretty strong performance in the first half. How should we be thinking about that run rate into the second half? Just noting that second half 2024 was also sort of a record period for you guys as well. So do you think you can top that?
Look, we haven't given an outlook for subscriber numbers ending the year. We've given our aspiration for the three-year period, and we're tracking well to that. We've affirmed our guidance for the year, so you can read into that as well. The opening part of the first seven weeks have tracked well. We're happy with the performance, but the Consumer business market conditions can change. We'll continue to adapt with that change. We're happy with the way the conditions have started, and we'll continue to operate within our margin envelope. And yeah, I think I've sort of danced around the question. I know I haven't given you the answer, but yeah, we feel okay about the way that the half has started.
Thanks for that. And I guess with the NBN pushing sort of higher speeds later this year, how do you think that sort of impacts your Consumer subscriber momentum there?
Look, any discontinuity in the market is good for us. So anything that shakes up rusted-on customers from the sort of old, tired, stale brands is great, and we typically do very well through those moments of discontinuity. This particular discontinuity is all around high speed, and high speed is our sweet spot. That's where our brand is focused. That's what our execution is focused on. That's what our network supports. So we're bullish about the future.
Great. Thanks for that. And then maybe just a final one just on M&A. I think you've called out, obviously, you're tracking well towards your FY 2026 Double Down targets, but it looks like you're still leaving room for some inorganic, maybe accelerators there. What sort of potential targets would you be looking at, or what types of businesses would you be looking at to bolt on?
We look across all three segments, and obviously, the Uecomm announcement is an example of an infrastructure purchase that we're. It's not a particularly big acquisition, as you know, but it's highly strategic, and it really does bolster some of our fibre assets, particularly in the metropolitan areas. We will look in Consumer, Business, and Wholesale for opportunities that, exactly as I said, are strategically aligned, that are not full of too many skeletons, something we can integrate very quickly, and most importantly, are appropriately priced. We haven't done a lot of M&A over the last 12 months, as you know. We have participated in a lot of processes, but we haven't concluded anything because we haven't reached terms on value, and we will only buy well.
Frankly, I'd prefer to miss the long-term target, the three-year target, than do a bad deal. So we're quite pleased that despite not doing any material M&A over that period, we're actually tracking at or ahead of our three-year aspirations simply through organic growth.
Great. Thanks, Paul.
Thank you. Your next question is from Kane Hannan from Goldman Sachs. Go ahead. Thank you.
Hi, Kane.
Good morning, guys. Maybe just the business price erosion impact that sort of came through this half and then you mentioned would impact the second half. I mean, is that the price pressure sort of just carrying forward into the second half, but now largely stable, or do you think things are continuing? Are you continuing to see pressure on pricing, and then maybe it carries forward into 2026 as well?
It's a bit more nuanced than that. It's not just price erosion of a like-for-like product. It really is this feature of the market that's been there for several years, which is the shift of businesses away from kind of dedicated networks or private fibre networks to basic internet networks and then putting the applications and security into the cloud. Really, it's a once-in-a-generation event, and you'll see it being a feature of everyone's results, not just Superloop's results.
Now, typically, businesses operate on a two- to three-year contract, and so most businesses will go through that cycle, moving to more sort of NBN or TC4-based services and then putting security wrapper on top of it. And that shift from those traditional fibre networks or MPLS networks to the internet-based links is at a very different price point, and that's the price erosion I'm talking about. But it only happens once.
Once the businesses have moved to that cloud-based technology, then that's where they stay, and there's not the same feature of price erosion within like-for-like basis. So on the renewal of the cloud-based links, you're not going to see the same kind of price erosion. So we're encouraged by the fact we are getting volume. So we're taking share. And once that feature has washed through our books, and we're coming to kind of the end of that cycle, we think it's largely washed out by the end of FY 2025. There'll be some in FY 2026, but it should be a declining feature for everybody, not just for us. We'll start to see a return to growth where the volumes are not being offset by that kind of discontinuity.
Yep, that's helpful. And then I think you've just created a new group exec role for corporate development, Smart Communities . I mean, I appreciate the commentary before around M&A, but is there anything we should be reading to that in terms of your focus on Smart Communities or the cadence of M&A picking up from here? Would it be helpful?
Look, the Smart Communities division has been an exciting addition to our business. Obviously, we acquired the Vostronet assets a couple of years ago in addition to the existing Superloop business in the space. It's had a lot of focus, and it continues to have a lot of focus. We've been doing very well on the sales side. We're now getting to the point where we've actually got to build a material amount of infrastructure. And so, yes, there is an increasing focus on the business simply because of the volume of work that we're having to tackle.
So that new role is really a reflection of that shift from an acquisition phase into a build phase, monetization phase, but also the reality that our exec team is pretty stretched, and we just need to bring some more horsepower into the team. And we're excited to have Jason join us. He's obviously an industry stalwart, and yeah, that'll be a great addition to the team.
Yep, perfect. Thanks very much.
Thank you. Your next question is from Joseph Michael from Morgan Stanley. Go ahead, please.
Hi, Joe.
Hi, Paul. Hi, Dean. Thanks for taking my questions. Just first one, just around your FY 2025 EBITDA guidance. So if I look on Slide 26, you're tracking well ahead in terms of a run rate basis, in terms of ahead of your FY 2026 targets. My question is, what sort of EBITDA would you need to be doing on a run rate basis to hit your FY 2025 guidance of AUD 83-88 million? What would the run rate look like at the end of June 2025 to hit that guidance?
It sounds like a highly numerical question that I'll let Dean dust off his spreadsheet.
Yeah. I'm not sure we want to go into these specifics of what the number looks like at the end of June 2025. What we're guiding, though, is that to achieve AUD 105 million, that will be the run rate at the end of June 2026 times 12 million. I think Paul has given you a strong indication that we feel confident in terms of how we're tracking to date, and we've just reaffirmed the guidance for FY 2025 as well.
Okay. Got it. Next question I had just around price increases. So I got a 7% price increase on my Superloop 100 Mbps plan just before Christmas. So my question is, were these prices across the board in terms of across all your plans, and have you seen any sort of changes in terms of customer acquisition or churn on the back of price increases?
Yeah. Thanks for that question, and thank you for being a customer. What we've gone through over the last sort of six-month period is we went through a price change initiated by NBN that came into effect. So we put the prices up on a number of our cohort base, and then the Consumer team has been going through and having a look at anybody that is on a lower rate than our sort of backbook and adjusting them upwards.
So yes, we've been pleased with the results we've achieved as we've gone through and migrated the pricing up to a more consistent approach for all of our backbook to make sure they're all sitting at the same level. The results we see now, we've got quite a good formula for understanding the impact of a price change in terms of the churn. The net result was that was positive by the cohorts, so we made changes to in November and December as well.
Okay. Great. And then last question I had was just around the Origin paid options. I think they expire next month. So just wondering if you've had any further discussions with Origin around those options.
Look, we've announced the option when we did the deal. You're right about how long that option is valid for. Whether Origin chooses to take it up or let it lapse is really something for Origin.
Okay. Great. Thank you.
Thank you. Your next question is from Evan Karatzas from UBS. Go ahead. Thank you.
Hi. Okay. Hopefully, you can hear me okay. I'm just sort of coming back to that Consumer TP margin. Maybe can you just give some idea? Is this now a new base that we can expect going forward? I acknowledge there's obviously some rebate headwinds that are still coming, but just trying to understand, yeah, the outlook for that and maybe some of the, I don't know, the key swings and roundabouts or puts and takes that we need to be also monitoring for that Consumer GP margin going forward, please.
Yeah. Look, let me answer it sort of at a high level, and then ask Dean to comment about the specific levers. But we've architected the business to generate good cash at our target gross margin of 25%, and that is telegraphing to the industry where we would go should conditions change. No change to that. We've held that target for several years now. We are operating ahead of that. We have been operating ahead of that for the last number of halves, and we'll continue to do better where we can.
But we are ready and prepared, and we have a business structure that will allow us to be more aggressive should we need to, to respond to the market. We won't lead the market, but we are able to respond. But to the specific question, Dean, about the levers?
Yeah. So obviously, subject to no sort of material changes in the trading conditions, we don't see the second-half Consumer GM margin declining. We see it sort of holding or might be a slight improvement. So that would be the sort of guidance that I would give you. And obviously, that's subject to nothing dramatically changing in market conditions, but we don't see it deteriorating further in the second half.
Yeah. No, okay. That's good. That's really helpful. Thanks for that. And then maybe just finally, just on your Wholesale or white label specifically, any, I don't know, larger opportunities out there that you're working on or looking at? Just trying to understand, yeah, the additional, yeah, white label opportunities that are out there for the second half and going forward as well.
Yeah. Thanks. Look, we identified the utility or the energy sector as a very obvious and close adjacency, and we put in place a plan to be aggressive in trying to secure that sector, and I think we've done pretty well in doing so. There's not another immediately obvious large sector that we think is about to be announced, but there are a number of sort of nascent adjacencies that we think could become attractive to us. So that's a really convoluted way of saying nothing in the short term, but some interesting prospects.
Yeah. No, good one. That's all, guys. Thanks.
Thank you. The next question is from Nick Harris from Morgans. Go ahead. Thank you.
Hey, Nick.
Thanks. Yeah. I'm just circling back. Just on the Smart Communities side, obviously, you've done a lot in that space, and there's a lot of potential contracted, but yet billing still in that business. Will you give us some more kind of consistent updates on the beds, the active, the work in progress, the Wi-Fi versus FTTP beds, so we can better sort of plug it into our models or maybe help us understand it? If you're able to give us some high-level commentary on what's kind of billing now or what it might look like.
Yeah, we will, Nick. We're thinking about how we want to what kind of disclosures we want to make for the whole of our Smart Communities division as we go into FY 2026. We haven't landed exactly what that looks like, but we'd certainly welcome your inputs as to the sort of things you'd like to see.
Gotcha. Okay. That'll be great. Thank you.
Thank you very much, sir. I have no further questions at this time. I'll now hand back to Mr. Tyler for closing remarks.
Thank you very much. And thanks, everyone, for joining the call. As I said, we're very proud to have delivered these results. We think they are a really solid set of results and encouraging for where we're taking the business from here. Thanks for your time. And with that, we'll close the call.
Thank you. That does conclude our conference for today. Thank you all for participating. You may now disconnect your lines.