Superloop’s Comeback Post FY25 Disappointment

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Superloop's FY25 results triggered share price weakness, but analysts see plenty of catalysts and growth ahead for the challenger telco.

-Superloop’s FY25 release triggered share price punishment in August
-Analysts suggest performance was better than market's response suggested
-NBN lifting wholesale household internet speeds seen as a benefit
-Smart Communities business thriving
-Growth expected to re-accelerate in FY26, with plenty of catalysts

By Mark Woodruff

The share price of challenger telco Superloop ((SLC)) has regained most of the ground lost after initial investor disappointment with FY25 results in mid-August, as attention turns to a catalyst-rich FY26.

While FNArena’s corporate results monitor labeled the FY25 performance as a ‘miss’ against expectations (also underpinned by a negative share price response), several analysts contend the FY25 outcome was actually stronger than the market acknowledged in August.

Superloop provides broadband and connectivity services using its own fibre network and platforms, enabling management to deliver high-capacity and control quality end-to-end service for customers.

The company’s assets include fixed wireless towers and radios for last-mile connectivity in select areas, alongside extensive underground duct infrastructure to support future fibre expansion.

In February, Superloop further strengthened its domestic network with the acquisition of Uecomm Pty Ltd, adding around 2,100 km of fibre-optic cable and 800 km of company-owned duct.

Macquarie described the post-result share price weakness as an entry opportunity, citing potential FY26 upside via market share gains from the NBN Speed Bestowal Event, the prospect of capital returns or M&A activity, and possible ASX200 inclusion.

The broker also sees the Business segment approaching an inflection point for average revenue per user (ARPU).

This month, the NBN lifts many wholesale household internet speeds by 3-5 times, for no additional cost, which Morgans suggests should be beneficial for Superloop’s growth prospects.

Perceived disappointments explained 

Areas of concern within FY25 results included a potential slowdown in the Consumer segment, partly ameliorated by a stronger trading update for early FY26 trading, and a slight gross profit miss in Wholesale.

Morgans is comfortable both are “non-events”.

To explain further, Citi points to the “standout” addition of 17,000 new Consumer customers in the first six weeks of the new fiscal year, equating to around 11,300 net adds per month. It’s felt Superloop is well positioned to sustain elevated net adds through FY26.

Jarden also notes Superloop led the NBN reseller market in implementing early price rises, which likely weighed on net subscriber additions in the second half.

The analysts remain confident growth will re-accelerate in FY26 as churn has normalised and structural tailwinds, including the NBN speed bestowal and NBN Fibre Connect (an upgrade initiative by NBN Co), continue to support challenger brands.

In Wholesale, Citi expects the Origin Energy ((ORG)) contract to remain a key driver of earnings growth. The influx of Origin’s Wholesale customers assisted FY25 results, with the migration from Aussie Broadband’s ((ABB)) platform completed by October 2024.

In March 2024, an exclusive six-year agreement was signed to migrate about 130,000 of Origin’s broadband customers onto Superloop’s network.

The August miss versus consensus expectations in Wholesale was largely accounting treatment driven, explains Jarden, centred around an Origin contract share consideration adjustment.

Citi highlights management re-iterated every target outlined in its FY24 Double Down Strategy, which should be sufficient to dispel any concerns of slowdown in earnings growth momentum.

At the time, this strategy aimed to double the size of the business by the end of FY26, with growth measured by both revenue and profitability.

Cashflows and margins

Analysts were generally impressed by both cash generation and business operating leverage. FY25 operating cash flow was $88m after 95% conversion of earnings (EBITDA). Cash earnings (EBIT) margins also expanded by 470bps to 11.7%.

Jarden suggests the 16.9% underlying earnings margin highlights ongoing cost discipline and solid operating leverage.

Management explained “strong cash flow generation enables us to further invest in the consumer and Wholesale businesses that focus on the NBN broadband market in existing premises. On a longer-term basis, it enables investment in our smart Communities business which delivers connectivity for new property developments”.

Superloop now serves over 731,000 active customers/services across its Consumer and Wholesale channels, more than double the count 18 months earlier, highlighting the success of management’s strategic initiatives ranging from wholesale customer wins to targeted acquisitions.

Overall, the company swung to a profit of $1.2m in FY25, an around $16m improvement from the previous year’s loss, driven by a 37% surge in Consumer segment revenue, adding 63,000 net new home broadband subscribers during FY25.

The Superloop business

Superloop offers services across consumer, business, and wholesale markets, with household subscriptions, business contracts, and carrier wholesale agreements providing a balanced mix of income streams.

Headquartered in Sydney, the company has built a significant presence in Australia while extending its footprint into Asia, notably Singapore and Hong Kong, with company-owned network infrastructure connecting data centres and commercial sites across the Asia-Pacific region.

Superloop is part of the consortium for the Indigo subsea cable system, giving it high-speed links between Australia and Asia.

The company’s business model centres on providing internet access and connectivity solutions to multiple customer segments. Divisions are split across Consumer, Business, and Wholesale.

In the Consumer segment, Superloop (along with its acquired Exetel brand) provides retail broadband services over Australia’s NBN and mobile phone plans to residential customers. Revenue here comes from monthly subscriptions for home internet (including high-speed NBN plans) and mobile SIM plans.

The Business segment targets small, medium, and large enterprises with solutions such as business-grade fibre internet (including NBN Enterprise Ethernet), fixed wireless access, cloud connectivity, SD-WAN, managed Wi-Fi, and cybersecurity services.

These corporate clients typically sign contracts for dedicated bandwidth and value-added network services.

Commenting on FY25 results, UBS notes the return to growth of Smart Communities and the Business segment.

Meanwhile, the wholesale segment serves other telecom carriers and service providers. Superloop sells capacity and backhaul (e.g. dark fibre links, international bandwidth on subsea cables, and aggregated NBN access) to ISPs that lack their own infrastructure.

Smart Communities

Recently, in a comparison between Superloop and Aussie Broadband, UBS stated a preference for Superloop given a stronger organic growth profile and Smart Communities upside.

The 2022 buyout of VostroNet (a fibre-to-the-premises provider for new apartment developments) expanded Superloop’s capabilities, helping launch Superloop’s Smart Communities business, which partners with property developers and governments to wire up new residential estates with fibre.

In FY25 the company signed a record 18,000 new premises into its Smart Communities pipeline, including a landmark win to deliver fibre for 10,000 new home lots in a Sydney greenfield city, bringing the total contracted new-development lots to 97,000 as of mid-2025.

Outlook

Canaccord Genuity expects gross margin tailwinds in FY26, with subscriber growth likely to accelerate partly from NBN speed changes. It’s anticipated Smart Communities will begin contributing through FY26 and FY27, while ongoing revenue growth should deliver further operating leverage.

Morgans highlights additional upside for Superloop, both organically and via acquisitions, supporting continued earnings growth and share price momentum.

There are five daily covered brokers researching Superloop in the FNArena database of which four are Buy-rated, while Morgans is pitched between Buy and Hold on Accumulate.

Following those results, the average target rose to $3.64 from $3.50, implying circa 13.6% upside to the $3.21 share price on September 18.

Outside of daily coverage (utilising a similar ratings system to Morgans) Jarden has an Overweight rating, while Canaccord Genuity and Wilsons are Buys.

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