Vinyl Group Ltd has reported a landmark quarter with record cash receipts up 80% quarter-on-quarter and its first operating cash flow positive result, signalling a turning point for the music and culture company.
- Record $7.2 million cash receipts in Q2 FY26, up 80% QoQ
- First operating cash flow positive quarter with $305K net inflows
- Significant reduction in fixed costs and improved operational efficiency
- Validation of vertical acquisition strategy with Funkified meeting earn-out targets
- FY26 revenue guidance updated to $22 million - $25 million
A Breakthrough Quarter for Vinyl Group
Vinyl Group Ltd (ASX – VNL), Australia's only ASX-listed music company, has delivered a standout performance in its December 2025 quarter, posting record cash receipts of $7.2 million, an 80% increase from the previous quarter. This surge reflects the seasonal strength of its vinyl sales and a boost from marketing events, marking the company’s first operating cash flow positive quarter with net operating inflows of $305,000.
This milestone is a clear indicator that Vinyl’s unique business model is beginning to scale profitably. CEO Josh Simons highlighted that the company’s structural cost reductions, combined with organic growth, have paved the way for this improved financial footing. The quarter also saw a 36% year-on-year increase in cash receipts, underscoring sustained momentum.
Strategic Cost Management and Operational Efficiency
Vinyl Group has successfully lowered its fixed cost base, even as variable costs rose due to increased product manufacturing and contract labour linked to its Vinyl.com e-commerce platform and events business. Staff costs decreased slightly quarter-on-quarter, and administrative expenses fell by 40%, reflecting disciplined cost control. These efforts contributed to a significant improvement in operating cash flow, with cash used in operations halving compared to the first half of FY25.
Importantly, the company’s investment in AI-driven publishing tools is beginning to pay dividends. By integrating new AI technology into its workflows, Vinyl aims to multiply its content output tenfold by the end of FY26, enhancing engagement across its media assets and deepening its connection with youth culture audiences.
Validation of Vertical Acquisition Strategy
Vinyl’s vertical acquisition approach has been validated with Funkified Entertainment, its media events subsidiary, achieving its earn-out target for calendar year 2025. This success demonstrates the value of acquiring profitable, complementary businesses to strengthen margins and scalability. The company continues to assess further accretive acquisition opportunities to consolidate its leading position in music and youth culture segments.
Recognition as the second fastest-growing technology company in Australia at Deloitte’s Tech Fast 50 Awards further cements Vinyl’s reputation as an innovator blending media influence with proprietary technology infrastructure.
Outlook and Financial Position
Vinyl Group ended the quarter with $2.05 million in cash and a fully drawn $1.5 million line of credit, providing a solid liquidity buffer. Management has updated FY26 revenue guidance to a range of $22 million to $25 million, reflecting confidence in continued growth despite the seasonally weaker Q3.
While the company has placed its Jaxsta product into hibernation to focus on higher-growth units, it remains committed to disciplined execution, working capital efficiency, and selective acquisitions to accelerate profitability throughout FY26.
Bottom Line?
Vinyl Group’s first positive operating cash flow quarter signals a pivotal shift, but sustaining momentum through seasonal dips and managing rising variable costs will be key challenges ahead.
Questions in the middle?
- How will Vinyl Group manage margin pressures from rising variable costs in manufacturing and events?
- What specific acquisition targets are being considered to accelerate growth and profitability?
- How quickly will the AI-driven content expansion translate into measurable revenue gains?