Bubs Australia Limited

Bubs reported H1 FY26 revenue of $55.5 million, up 14% year over year. Underlying EBITDA was $4.4 million, compared with negative $0.7 million in the prior corresponding period, and reported EBITDA was $3 million versus $0.6 million. Gross profit margin was 48%, down from 50% but above prior guidance of 40% to 45%. Operating expenses were about 3% lower at $24.5 million versus $25.2 million. Cash flow from operating activities was an outflow of $5.7 million versus an outflow of $0.5 million a year earlier, mainly due to inventory rebuild. Inventory rose to $28.1 million from $20.1 million, and net working capital was $33.4 million versus $23.2 million. FY26 guidance was raised to revenue of $120 million to $125 million, gross profit margin of 40% to 45%, reported EBITDA of $4 million to $6 million, and underlying EBITDA of $9 million to $11 million. Management said the full-year EBITDA bridge assumes about $5.8 million of airfreight and penalty tariff costs, plus a one-off $0.8 million payment from Alice & Willis, with no further proceeds expected from that legal matter.

Joe Coote struck an upbeat tone, saying the company has moved from strategy development to strategy deployment and has already delivered better-than-committed results. He emphasized disciplined execution, especially around stock rationing, airfreight, leadership changes, and new retail ranging in the U.S. He also framed the business as well positioned in a volatile global environment because it serves a premium natural consumer segment and has diversified markets.

Naomi Verloop focused on the financial drivers behind the half, highlighting underlying EBITDA of $4.4 million and a 48% gross margin despite tariff and airfreight headwinds. She pointed to inventory rebuild as the main reason for the $5.7 million operating cash outflow and said inventory should be about $8 million to $10 million higher by year-end. She also noted NAB increased the working capital facility from $10 million to $20 million, and reiterated that second-half margins should land back in the 40% to 45% range as airfreight and tariff costs remain elevated.

Analysts pressed on whether the stronger second half guidance reflects growth outside the U.S., and management said China should improve as distributor sell-out normalizes while the U.S. benefits from new ranging at Walmart and Target. On tariffs and airfreight, management split first-half costs at about $1.8 million for airfreight and about $0.4 million in penalty tariff, and said the second half will likely be more impacted because more product must be sourced and expedited for U.S. demand. Questions on China and Daigou led management to say it is not seeing much Daigou recovery, though it remains constructive on China due to strong O2O and CBEC performance. Analysts also asked about supply capability, and management said the Melbourne facility is running at 40% to 60% of nameplate capacity, with goat milk solids still the key constraint in the long supply chain.