August 2025 reporting season through a systematic lens

September 19, 2025

For financial advisers and professional investors only – not for distribution to retail investors. 

For systematic investors, reporting season isn’t just about who beat expectations and who missed. What really matters is how earnings updates are interpreted through the lens of investor behaviours and style preferences, which can be captured via factors.

Growth investors may shrug off a weak result if guidance is strong. Value investors may forgive flat revenue guidance if costs are well managed. Identical earnings results from two different companies can trigger very different market reactions – and quant investors like to think about why.

The Australian second-half FY25 reporting season, which wrapped up in August, reinforced that results versus guidance are never judged in isolation. Instead, they are filtered through the lens of investor style. But if “good” results are so subjective, how do investors even begin to understand what matters?

Factor lens on reporting season

Below is just a snapshot of how a systematic manager approaches reporting season - highlighting the nuance of what aspects of earnings updates will ultimately drive returns for each pocket of the market and informing active positioning for reactions rather than headline results.

August FY25 outcomes by style

The Value factor outperformed this reporting season. Earnings were solid across resources, utilities and some mid-cap industrials trading at discounted valuations. Investors growing more sceptical of higher valuations rotated into stocks with valuations better backed by earnings. Generous dividend announcements were treated favourably and interpreted as signs of management confidence.

• Takeaway: Value was the clear winner this season, with strong demand for cheaper stocks in an increasingly cautious market.

The Quality factor was reasonably weak - these stocks were already trading at a premium for their more stable characteristics considering economic uncertainty, and their results didn't warrant this to be pushed any higher. We didn't see the "risk-off" flight-to-quality that is often a symptom of a disappointing earnings season, which can be a catalyst for outperformance in defensive-style quality names.

Investors preferred pivoting into what they saw as good value and/or the names they believe remain exposed to key themes driving markets higher. But watch this space - with markets at fuller valuations and some economic uncertainties, quality characteristics may become suddenly in demand.

• Takeaway: Quality provided defensiveness, but upside was capped.

The Growth factor struggled this earnings season, despite a number of guidance upgrades from the likes of Life360 (360) and Seek Ltd (SEK). While many companies met or modestly beat conservative estimates, that was not enough to satisfy investor expectations. Given the more uncertain economic outlook, these companies struggled to provide the level of certainty and optimism in forward guidance that growth investors demanded, resulting in some sharp sell-offs as investors rotated into either better value names or those growth stocks that provided bullish outlooks. Growth-heavy sectors such as technology, healthcare and communications underperformed in August.

• Takeaway: Growth underperformed despite reasonable results, as cautious guidance and lack of material upgrades weighed on returns.

The Momentum factor showed a divided picture. Sentiment-style characteristics have been a key driver of returns across the ASX over the past 18 months, however leadership across these names narrowed throughout August. Companies aligned with trending thematics – such as AI & gold – retained strong investor backing even when results were in line with consensus estimates. Gold miner Northern Star (NST) pushed higher despite softer FY26 guidance, however Pro Medicus (PME) finished August down 7.5% despite an FY25 earnings beat. Momentum therefore proved highly selective.

• Takeaway: Momentum was mixed – thematic leaders were rewarded, while others faltered.

Three key themes from the August 2025 reporting season:

1. Beats is the new Meets

With investors accustomed to strong double-digit growth in recent years, merely meeting expectations wasn’t good enough in many cases. A number of companies that only matched guidance, or delivered marginal beats, were sold off sharply.

Commonwealth Bank (CBA) posted a record profit for FY25 but was punished as investors took profits and questioned the lack of further upside surprise to support its >30x P/E ratio – a multiple now well into the expected range of a growth stock.

2. The ASX was driven to new records, but it wasn’t only earnings at the wheel

It's all too easy to label this reporting season as a resounding success, on the basis that the ASX 200 continued to reach new all-time records throughout. However, it's important to consider that multiple thematics are at play here, masking the true impact of a somewhat mediocre reporting season despite some bright spots. As put by many executives across the ASX over the past month - the operating environment, amidst rising costs and economic uncertainty, is indeed a difficult one. The RBA cut, paired with Jerome Powell indicating that a pivot to cuts in the US was now finally on the way, clearly provided buoyancy across the ASX throughout reporting season and became a safety net for the glut of companies tasked with announcing weaker results and tempering forward guidance for FY26.

• Implication: Stock selection is critical – broad index gains are masking diverging company-level outcomes.

3. Investors believe there is plenty of growth left on the table

The volatile reactions to outlier results - whether that was a rush for the exits following a weak earnings outlook, or a stampede onto the register after an impressive beat - demonstrates that investors still strongly believe that growth remains on the table for the right set of stocks. The general flavour of the reporting season was a somewhat ruthless and free-wheeling rotation by investors into earnings growth bright spots - driving handsome reward for investors positioned well ahead of time.

• ZIP (ZIP), Life360 (360) soared after announcing guidance upgrades, whilst CSL Limited (CSL) and James Hardie (JHX) disappointed on guidance and were sold off sharply

Fund performance for August 2025

• The Macquarie Australian Small Companies Fund outperformed its benchmark, returning 11.41% versus 8.41%. Over the last 5 years, the fund has generated a return of 13.35% p.a. versus the benchmark return of 7.91% p.a.
• The Macquarie Australian Shares Fund outperformed its benchmark, returning 4.13%, versus 3.10%. Over the last 5 years, the fund has generated a return of 13.59% p.a. versus the benchmark return of 12.32% p.a.
• The Macquarie Australian Enhanced Plus Equities Fund outperformed its benchmark, returning 3.52% versus 3.16%. Over the last 5 years, the fund has generated a return of 13.01% p.a. versus the benchmark return of 12.20% p.a.
• The Macquarie Core Australian Equity Active ETF outperformed its benchmark, returning 3.68% versus 3.16%. Since the ETF’s inception on 13 May 2024, it has generated a return of 17.76% p.a. versus the benchmark return of 15.43% p.a.

Past performance is not a reliable indicator of future performance.  Up to date performance information for the Funds referred to in this insight is available on our website at macquarie.com/mam/au-performance. All performance figures above are net of fees.

The Macquarie Australian Shares Fund is designed for consumers who:

• are seeking capital growth and income distribution
• are intending to use the Fund as a core component, minor allocation or satellite allocation within a portfolio
• have a minimum investment timeframe of five years
• have a high or very high risk/return profile for that portion of their investment portfolio, and
• require the ability to have access to capital within one week of request.

The Macquarie Australian Small Companies Fund is designed for consumers who:

• are seeking capital growth and income distribution
• are intending to use the Fund as a minor allocation or satellite allocation within a portfolio
• have a minimum investment timeframe of five years
• have a very high risk/return profile for that portion of their investment portfolio, and
• require the ability to have access to capital within one week of request.

The Macquarie Australian Enhanced Plus Equities Fund is designed for consumers who:

• are seeking capital growth and income distribution
• are intending to use the Fund as a core component, minor allocation or satellite allocation within a portfolio
• have a minimum investment timeframe of five years
• have a high or very high risk/return profile for that portion of their investment portfolio, and
• require the ability to have access to capital within one week of request.

The Macquarie Core Australian Equity Active ETF is designed for consumers who:

• are seeking capital growth and income distribution
• are intending to use the Fund as a core component, minor allocation or satellite allocation within a portfolio
• have a minimum investment timeframe of five years
• have a high or very high risk/return profile for that portion of their investment portfolio, and
• require the ability to have access to capital within one week of request.