Enero Group posts 54% net profit surge on AI-driven efficiency gains

Enero Group's financial year ended with a paradox: the company posted a statutory net loss of $37.4 million while simultaneously reporting a 54% surge in net profit on an adjusted basis. The gap between these numbers tells the story of a business in transition, shedding weight to move faster.

The headline numbers mask what actually happened. EBITDA grew 9% across the group, and operating margins expanded from 10.2% to 11.8%, a gain that came not from revenue explosion but from disciplined cost management and the strategic deployment of artificial intelligence across the business. The statutory loss was driven almost entirely by noncash charges: a $39.8 million impairment and write-down related to ROI-DNA, the company's struggling performance marketing division, plus $3.8 million in restructuring costs tied to transformation efforts at Hotwire and BMF. Strip those out, and the underlying business performed solidly.

The real story lives in the two Australian agencies that form the core of Enero's operations. BMF, the media and creative shop, achieved record EBITDA of $8.8 million with a 23% margin, up from 20.1% the prior year, on the back of 11% revenue growth and a fundamental redesign of how it works. Orchard, the healthcare specialist, posted record revenue of $28 million and record EBITDA of $6.1 million with a 21.8% margin, up from 19%, lifted by a major win: being named agency of record for Eli Lilly's GLP-1 portfolio across Australia and New Zealand. Both agencies are now running leaner and faster than they were a year ago.

The efficiency gains came from AI, but not in the way most companies talk about it. Enero's AI Lab operates on a simple principle: any AI initiative must deliver either an efficiency gain or an effectiveness gain, ideally both. The lab itself generates commercial revenue—three times higher in the fourth quarter than in the first—and when embedded into client pitches, these AI capabilities lift win rates by 30%. Across the group, the staff cost ratio fell from 78% to 75%, a meaningful compression that reflects both better pricing and smarter deployment of people.

At BMF, the transformation is tangible. The agency deployed two AI agents for a major client that reduced image production delivery time by 36% and cut processing time for complex briefs by 93%, collapsing days of work into hours. An internal AI tool called Noggin, loaded with 30 skills and designed to capture institutional knowledge, has accelerated end-to-end retail production by 31%. At Hotwire, AI-enabled research has cut the time from brief to insight by 50%, and the company is seeing a 45% reduction in time spent on analytical drafting for quarterly client reports.

But the year ahead carries real headwinds. BMF is planning for a 10% to 15% revenue decline in the second half of FY27, a consequence of portfolio changes including the loss of Westpac and Endeavour. The company has won new clients—Asahi and Superloop among them—and is building out a full-service capability in Melbourne to serve Asahi and chase new business. Management expects margins to keep improving even as revenue contracts, a bet that the operating model transformation will hold. Orchard, by contrast, is positioned for growth. The company has strong momentum and plans geographic expansion in both healthcare and consumer sectors, rolling out what it calls an "Agentic by default" AI-led delivery model to capture further efficiency gains.

On the balance sheet, Enero ended the year with $24.5 million in net cash and zero leverage, with $11.4 million of its $15 million bank facility undrawn. Cash conversion was 62% of EBITDA, held back by restructuring costs and a $3 million negative working capital swing tied to client-held cash. Free cash flow came to $1.1 million. The company declared a fully franked dividend of $0.014 per share, representing a 31% payout ratio of adjusted earnings, consistent with its historical 30% to 50% range. The bank facility was extended through October 2026, giving the company runway to execute its transformation.