How Is AUCyber Turning Around Cash Flow and Boosting Margins in Q1 FY26?
AUCyber Limited reports a rise in customer receipts and improved operating cash flow in Q1 FY26, following strategic exits from low-margin contracts and a focus on cybersecurity services.
- Customer receipts increased to $6.21 million from $5.48 million
- Operating cash flow turned positive excluding timing impacts
- Gross margins improved to approximately 27%
- Quarter-end cash balance of $2.08 million with no debt
- Focus on cost discipline and leveraging cybersecurity capabilities
Q1 FY26 Financial Performance
AUCyber Limited (ASX – CYB) has delivered a solid start to fiscal year 2026, reporting improved customer receipts and stabilizing operating cash flow in the quarter ending 30 September 2025. The company’s revenue rose to $6.21 million, up from $5.48 million in the previous quarter, reflecting the impact of strategic decisions made earlier in the year to exit low-margin contracts.
Despite a reported net operating cash outflow of $1.33 million, this figure was notably influenced by the timing of payments, including $1.5 million in accounts payable from the prior quarter processed in July. Excluding this timing anomaly, operating cash flow was positive, signaling improved underlying operational health.
Margin and Cost Management
The company’s gross margin improved modestly to approximately 27%, up from 25.7% in the June quarter. This improvement was driven by disciplined cost control and a strategic pivot towards higher-margin cybersecurity services. Operating expenses for the quarter were $3.46 million, with reductions in marketing, staff, and administrative costs contributing to a leaner cost base.
Management emphasized ongoing efforts to optimize costs while maintaining operational effectiveness, a balancing act crucial for sustaining growth in a competitive cybersecurity market. Related party payments, including fees to directors and associates, were disclosed transparently as part of the company’s governance practices.
Liquidity and Investment
AUCyber closed the quarter with a healthy cash balance of $2.08 million and no debt facilities drawn, underscoring a strong liquidity position. The company made a $100,000 payment related to deferred consideration from a prior acquisition, demonstrating continued investment in strategic growth initiatives without compromising cash reserves.
Notably, there was no capital raising during the quarter, with management confident that internal cash generation and cost discipline will support operations and growth in the near term.
Outlook and Strategic Focus
Looking ahead, AUCyber plans to maintain its focus on improving operating cash flow through further cost optimization and margin enhancement. The company aims to leverage its cybersecurity capabilities to drive sustainable revenue growth and reduce reliance on low-margin resale activities.
With the 2025 Annual General Meeting scheduled for 26 November, shareholders will have the opportunity to engage with management on these strategic priorities and the company’s progress toward long-term sustainability.
Bottom Line?
AUCyber’s Q1 results mark a cautious but clear step toward financial stability and growth, with upcoming quarters critical to confirming this trajectory.
Questions in the middle?
- Will AUCyber sustain positive operating cash flow beyond timing adjustments?
- How will the company balance growth investments with ongoing cost discipline?
- What impact will the strategic shift away from low-margin contracts have on long-term revenue?