The Agency delivers 199% EBITDA growth as operating leverage takes hold
The Agency Group Australia Limited has reported its 1H FY26 results, with underlying EBITDA surging 199% to $2.06 million whilst delivering positive operating cash flow of $1.81 million. The result marks an inflection point for the national real estate platform, where years of network building and infrastructure investment are converting to meaningful earnings growth.
The half-year report demonstrates the business has transitioned from investment phase to earnings phase. Revenue grew 18% to $57.1 million, whilst Gross Commission Income (GCI) increased 34% to $81.6 million. The net loss reduced to $0.83 million, down from a $2.30 million loss in the prior corresponding period.
The EBITDA growth dramatically outpacing revenue expansion illustrates operating leverage taking effect. As the platform scales, incremental commission income flows more directly to the bottom line. Cost of doing business compressed to approximately 30% of revenue, reflecting disciplined overhead management across the national network.
Chairman Andrew Jensen
“This result demonstrates that the strategic work undertaken over the past several years is now delivering tangible financial outcomes. We are seeing real operating leverage in the model, stronger productivity from our network and improving earnings quality.”
The Company reached a record 474 agents nationally, up from 442 at 30 June 2025. Importantly, management highlighted that the majority of GCI growth stemmed from improved productivity among existing agents rather than headcount expansion alone.
Understanding operating leverage in real estate platforms
Operating leverage describes the mechanism by which revenue growth translates into accelerated profit growth once fixed costs are covered. For The Agency Group (ASX: AU1), this concept explains why EBITDA expanded at more than ten times the rate of revenue growth during the period.
The platform business model functions through three distinct layers:
- Fixed infrastructure costs including technology systems, head office operations, brand marketing, and corporate overhead remain relatively stable regardless of transaction volume
- Variable commission costs to agents scale proportionally with sales activity, maintaining consistent percentage relationships to revenue
- Margin expansion accelerates as GCI grows, because each additional dollar of commission income carries substantially higher contribution after covering the fixed cost base
At the current GCI run rate of approximately $150 million, the business operates EBITDA positive whilst generating positive operating cash flow. This validates the national platform strategy, where earlier investments in brand infrastructure and technology now support margin expansion without proportional cost escalation.
The cost of doing business metric compressing to approximately 30% of revenue provides quantifiable evidence of operating leverage. As transaction volumes increase, corporate overheads spread across a larger revenue base, improving efficiency ratios and bottom-line contribution.
Amortisation headwind removed, statutory earnings trajectory clears
The majority of rent roll amortisation concluded in September 2025, removing approximately $3.1 million in annualised non-cash expense that previously impacted statutory net profit. This represents a structural change to the earnings profile rather than a one-off accounting benefit.
Rent roll assets acquired through property management acquisitions required systematic amortisation under accounting standards. Whilst this treatment reflected the consumption of economic benefits over time, it created a persistent gap between underlying operational performance and reported statutory profit. With amortisation substantially complete, the Company’s statutory earnings will more accurately reflect true earnings power going forward.
The amortisation context includes:
- Rent roll acquisitions previously required scheduled amortisation charges
- Non-cash expense of approximately $3.1 million annually masked operational progress
- Completion of amortisation schedule strengthens reported NPAT trajectory
- Future results will demonstrate closer alignment between operating and statutory metrics
This structural improvement positions the business for sustained progress toward bottom-line profitability. The removal of the amortisation drag means incremental EBITDA growth will translate more directly to net profit improvement in future reporting periods.
Scale metrics demonstrate platform growth
The operational metrics underpinning the 1H FY26 results demonstrate consistent market share gains across the national network. Properties sold increased 12% to 3,703 transactions, whilst gross sales volume surged 36% to $4.9 billion, reflecting higher average sale prices in key markets.
Agent headcount reached a record 474 at period end. New agents recruited within the previous 12 months contributed approximately $5.9 million in GCI during the half year. However, management emphasised that the majority of overall GCI growth derived from improved productivity among existing agents, validating the quality of the network rather than relying solely on headcount expansion.
| Metric | 1H FY26 | Change |
|---|---|---|
| Gross Commission Income | $81.6m | +34% |
| Revenue | $57.1m | +18% |
| Properties Sold | 3,703 | +12% |
| Gross Sales Volume | $4.9bn | +36% |
| Agent Headcount | 474 | +32 agents |
The Company continues prioritising selective recruitment of high-performing agents whilst supporting them with national brand infrastructure, marketing capability, and technology systems. This strategy focuses on quality over quantity, targeting agents and established offices that enhance earnings per agent and long-term platform value.
Property management provides recurring revenue foundation
The property management division manages 12,413 properties nationally, generating revenue of $7.1 million during the half year, an 11% increase. This division provides stable recurring income that supports cash flow resilience regardless of transaction market conditions.
The portfolio structure includes:
- 5,499 owned management rights generating direct recurring fees
- 6,914 properties managed under service arrangements
- Independent valuation of owned rent rolls at approximately $37.4 million (conducted June 2025)
The property management asset base represents embedded balance sheet value whilst delivering predictable cash flows. An independent valuation conducted in June 2025 assessed the owned rent rolls at approximately $37.4 million, reinforcing the substantial embedded asset value within the business model.
Property management revenue increased 11% to $7.1 million for the period, providing a defensive income stream that partially insulates the business from transaction volume volatility. This recurring revenue base contributes to operating cash flow stability and supports the platform’s capacity to invest in growth initiatives.
Banking facilities extended with improved terms
Macquarie Bank extended The Agency’s banking facilities to 30 June 2028 with materially improved covenant terms. The refinancing demonstrates lender confidence in the business trajectory and provides capital structure stability to support ongoing growth initiatives.
The facility improvements include:
- Extension to 30 June 2028, providing three-year term certainty
- Interest margin reduction, lowering cost of capital
- Additional $1.6 million growth facility established for strategic opportunities
- Interest cover covenant removed, providing greater operational flexibility
- Minimum liquidity covenant introduced, replacing the previous interest cover requirement
The Company remains compliant with all banking covenants. Cash at bank stood at $4.47 million as at 31 December 2025, with the business generating positive operating cash flow of $1.81 million during the period.
The convertible note facility with Peters Investments Pty Ltd was extended to 31 December 2028, aligning maturity dates and providing capital structure stability. The extended facilities with improved commercial terms reflect lender confidence in the earnings trajectory and provide working capital flexibility for the business to execute growth strategies without near-term refinancing pressure.
Service Plus model positions for next growth phase
The Company refined its services-based model following market feedback during the pilot phase. Rightmove and other minor brands were consolidated during 1H FY26 into a streamlined Service Plus structure, focused on supporting established offices with dedicated operational infrastructure whilst maintaining separate brand identity.
Service Plus targets office-based operators who want platform benefits without full brand integration. The underlying technology platform developed through the Rightmove initiative remains fully operational and has been rebranded and integrated into the Service Plus offering. This approach addresses a distinct market segment where established offices seek operational support, technology infrastructure, and back-office services whilst retaining their existing brand presence.
The refined Service Plus model is launching imminently, supported by the appointment of a dedicated East Coast recruiter. Early engagement from office-based operators has been described as encouraging by management. This represents an additional growth channel beyond direct agent recruitment, potentially capturing revenue from operators who value platform infrastructure without requiring brand consolidation.
Outlook and path to $175 million GCI milestone
The Company reported being on track to achieve the previously stated GCI run-rate milestone of approximately $150 million. Management expressed confidence in progressing toward the next stated milestone of $175 million in GCI in the coming years, supported by a strong recruitment pipeline and active sales pipeline across key markets.
The outlook commentary noted that second half performance is typically influenced by normal market seasonality and higher commission payouts to agents as annual sales targets are achieved. These structural dynamics remain consistent with the Company’s remuneration model and are factored into management’s expectations for the period.
Key Milestones
Current GCI run-rate: approximately $150 million (on track)
Next target: $175 million GCI in coming years
Management remains focused on productivity growth, market share expansion, and further margin improvement as it executes the national strategy. The combination of positive operating cash flow, disciplined cost control, and a stable recurring property management income base positions the business to continue strengthening statutory profitability.
The Agency enters the second half of FY26 with strong earnings momentum and improving operating leverage following the removal of legacy amortisation. With the fixed cost base now supporting a substantially larger GCI base, incremental revenue growth should continue translating to accelerated EBITDA expansion, demonstrating the platform economics that underpin the long-term investment case.
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