Bubs Australia Limited

FY26 revenue increased 9.2% year-over-year to just under $112 million, with U.S. net revenue up 24% to $65.8 million. Gross profit declined 9.4% to $44.5 million and gross margin was 39.8%. Reported EBITDA was a loss of $1.8 million, while underlying EBITDA was $5.3 million. Operating expenses rose 5% to $48.8 million, and inventory increased by $16.2 million to $36.3 million. Management said tariff costs were $2.6 million, second-half regulatory-reset costs were just under $4 million, and airfreight cost $3 million, with those headwinds expected to mostly wash through by FY27. They expect gross margin to improve and normalize and said they are comfortable with current inventory levels supporting growth.

Joe Coote framed FY26 around Bubs’ purpose of keeping infant formula in stock for consumers and said the company invested to protect shelf presence through disruptions. He highlighted strong U.S. growth, expanding international scale, a brand reset in Australia, and momentum in China and selected rest-of-world markets. His tone was optimistic but measured, especially around FDA approval, which he said is in the final review stage and likely forthcoming.

Chris Rowe emphasized that revenue growth came from the U.S., while gross profit was pressured by airfreight, regulatory changes, and tariffs. He noted operating expenses rose to $48.8 million largely due to marketing investment, but OpEx as a percentage of revenue improved slightly to 44% from 45%. On the balance sheet, he said inventory rebuild was planned and funded through cash and debt, with inventory rising to $36.3 million and now viewed as about the right level to support growth.

Analysts focused on one-off costs, asking about the $3.9 million regulatory-reset expense, how much was provisioning and write-downs, and whether those costs would recur in FY27. Management said the costs were largely one-off, included about $1.5 million of inventory provisioning/write-downs, and should not materially flow into FY27. Questions also covered marketing intensity, tariffs, China inventory balance, AI use, and FDA timing; management said marketing should run in the mid-teens as a percentage of net revenue, tariff refunds would likely not be material, China inventory is now better balanced, and AI is being targeted first at procurement, freight, and manufacturing.