Bubs Australia Limited

Reported results for H1 FY26: revenue of $55.5 million, up 14% year over year; gross profit margin of 48%; underlying EBITDA of $4.4 million versus negative $0.7 million in the prior corresponding period; and reported EBITDA of $3 million versus $0.6 million. Operating expenses were $24.5 million, down about 3% from $25.2 million. Inventory increased from $20.1 million to $28.1 million, and operating cash flow was a $5.7 million outflow versus a $0.5 million outflow a year earlier, largely due to inventory rebuild. For FY26, management now expects revenue of $120 million to $125 million, gross profit margin of 40% to 45% for the full year, reported EBITDA of $4 million to $6 million, and underlying EBITDA of $9 million to $11 million.

Joe Coote framed the half as evidence that the company has moved from strategy development to strategy deployment, emphasizing execution, leadership changes, and a stronger operating culture. He highlighted 5 leadership appointments, strong progress with FDA engagement for U.S. market access, and a clearer focus on premium natural consumers and digital marketing. His tone was upbeat and confident, but he repeatedly noted the business is operating in a volatile global environment with tariffs, FX, and quality issues across the category.

Naomi Verloop focused on the financial outperformance in H1, especially the $4.4 million underlying EBITDA result, 48% gross margin, and 14% revenue growth. She pointed to $1.8 million of airfreight and about $0.4 million of penalty tariff costs in the half, and said these costs are expected to be higher in H2, which is why full-year margin guidance remains 40% to 45% even after the strong first half. She also noted inventory rose to $28.1 million and is expected to be $8 million to $10 million higher by year-end, while the NAB working capital facility was increased from $10 million to $20 million to support the rebuild.

Analysts focused on the stronger second-half weighting in revenue guidance, asking whether China, Australia and other regions would normalize and whether U.S. range-review gains were already showing up. Management said China and Australia have recently improved, and U.S. sales should step up as Walmart and Target intake begins from the new ranging. Questions also probed the split between tariffs and airfreight, with management quantifying $1.8 million of airfreight and about $0.4 million of penalty tariffs, and discussing the chance of more tariff and freight pressure in H2. In China, management said it is not seeing much Daigou resurgence, but remains constructive on the market and noted that any shift toward English label products could help Bubs.