Kelly Partners Group (ASX:KPG) reported first-half FY2026 results highlighted by double-digit revenue growth, continued expansion through acquisitions, and further progress on its international strategy, while management also addressed the company’s approach to AI, capital allocation, and balance sheet positioning.
Financial results and operating performance
Chief Financial Officer Kenneth Ko said group revenue rose to AUD 76.0 million for the half-year ended 31 December 2025, up from AUD 64.9 million a year earlier, representing 17% growth. Underlying EBITDA for operating businesses increased 15.2% to AUD 21.0 million, with margins described as comparable to last year.
Revenue growth was attributed to a mix of 4.2% organic growth and 12.8% acquired revenue growth, with Ko emphasizing that acquisition timing limited the contribution in the half. The company completed six acquisitions during the year—two in August, two in October, and two in December—meaning some acquired businesses contributed only a few months of revenue and profit.
Management cited continued strength in cash conversion. Ko said cash conversion was 101.1% for the half (versus 103% in the prior half), in line with the group’s expected range of 85%–100%. He also highlighted a reduction in lockup days to 49.8 days, which he said reflected working capital discipline.
Acquisitions, run-rate growth, and the revenue growth question
On the call, management addressed an investor question about the apparent moderation in revenue growth from 24% to 17%. Ko pointed to the company’s revenue run rate of AUD 164.2 million, which he said represented a 22% increase compared with FY2025 revenue of AUD 134.6 million, and reiterated that acquisition timing drove the difference between reported half-year growth and run-rate growth.
Founder and CEO Brett Kelly said demand from firms seeking to join the group “has never been stronger,” noting that six firms joined in the past six months. When asked about the M&A pipeline and whether the market had softened, Kelly said the pipeline was “very, very strong” and “as strong as it’s ever been,” adding that seller decisions are typically driven by retirement readiness or a desire for a partner that can add value, rather than the company’s share price.
Balance sheet, debt, and liquidity
Ko said net debt increased by AUD 18.6 million since 30 June 2025 to AUD 77.1 million, primarily to fund the in-year acquisitions and other requirements such as partner buy-ins and loans. Net debt to underlying EBITDA increased to 1.79x from 1.42x at 30 June 2025.
Ko also explained a rise in working capital debt to AUD 15.2 million from AUD 7.7 million, attributing the increase to temporary overdrafts from Westpac used to complete two acquisitions late in the half. He said both facilities had been refinanced and converted to long-term debt “as of today.” Scheduled principal debt repayments totaled AUD 7.0 million for the half, plus an additional AUD 0.8 million, which Ko annualized to about AUD 14 million.
Kelly described the company’s “Fortress Balance Sheet” mindset as keeping gearing conservative and operating the business to be resilient across cycles, citing performance through the global financial crisis and the pandemic.
International expansion and the “global firm” strategy
Kelly emphasized the company’s aim to build “an Australian global firm” focused on private business owners. He highlighted expansion into a new country, Ireland, which management said was performing well. Kelly also referenced the group’s 51% ownership in the Kudos network, which he described as comprising 60 firms in 48 countries, and said the company believes “many of those firms will become Kelly Partners firms over time.”
Management also cited the firm’s presence in India, Hong Kong, the Philippines, and the United States. Kelly said the group is “the only firm” he is aware of from Australia to have had an equity interest in a U.S.-based firm. He argued that cross-border work for private companies and families is differentiated and less susceptible to disruption.
Kelly also reiterated the company’s ambition to become a top-10 accounting firm in Australia (excluding the Big Four and other firms he said are not “pure play accounting and tax firms”), and he contrasted KPG’s audit exposure with peers. He said audit services are 5% of revenue or less at KPG, compared with 25%–40% for many comparable firms.
AI, software investment, and capital allocation priorities
Kelly said the company has been building internal software development capability since 2021, supplemented by external resources, and described applications including a “single point of truth” tool for directors, niche-focused tools for teams, and an audit platform intended for Kudos firms. He said the company is balancing transparency with protecting “trade secrets.”
Addressing a question about a previously mentioned AI joint venture, Kelly said the company chose not to proceed with joint ventures and instead continue with internal development and partners within the business. He said proposed terms and pricing “didn’t make any sense” and that many AI tools are being duplicated quickly.
On whether AI-driven efficiencies could translate into higher organic growth, Kelly said he does not expect higher organic growth and described being comfortable with organic growth around 5%.
On capital allocation, Kelly said acquisitions remain the company’s “first and best” use of capital and that “nothing has changed” besides share price movement. He also said the company intends to take advantage of recent share price weakness through buybacks via its employee share scheme to provide team members long-term exposure. Asked about buybacks versus acquisitions, Kelly said at the current share price he would be “more than happy to own all of the shares” of the business, while reiterating that partnering with firms through acquisitions remains the core competency.
Finally, Kelly said the company intends to pursue a listing on an appropriate market outside the ASX, but only after it has resolved its debt structuring, adding that this was “about as much as we can say about that legally at this time.”
About Kelly Partners Group (ASX:KPG)
Kelly Partners Group Holdings Limited provides chartered accounting and other professional services to private businesses and high net worth individuals in Australia. It operates through two segments, Accounting and Other Services. The company offers accounting and taxation, corporate secretarial, outsourced CFO, audit, business structuring, bookkeeping, and other accounting related services. It also provides financial broking, wealth management, investment office, and other non-accounting services.
