How Will BSA Navigate Profit Risks After Restructuring and Contract Losses?

Quarterly Financial Snapshot

BSA Limited has released its trading update and quarterly activities report for the second quarter of fiscal 2026, revealing a revenue of $5.3 million and an EBITDA of $0.9 million. Notably, the EBITDA margin rose to 16.4%, a significant improvement of nearly 6 percentage points compared to the same period last year. This margin expansion is attributed to disciplined cost management and margin controls, despite the headwinds from contract losses.

Year-to-date revenue has declined sharply by 85% to $22.8 million, primarily due to the expiry and non-renewal of key contracts including NBN, Bluecurrent, and Intellihub. EBITDA for the first half also fell 66% compared to the prior year, although this was cushioned by one-off transition payments received during contract wind-downs.

Restructuring and Workforce Changes

The company has completed a significant restructuring process, reducing its workforce from approximately 150 employees mid-2025 to around 40 by the end of December. This downsizing was accompanied by redundancy-related cash outflows of $0.3 million during the quarter. The restructuring aims to streamline operations and focus on a more defined customer base, positioning BSA for sustainable growth despite recent setbacks.

Operational Highlights and Growth Prospects

On the operational front, BSA’s Foxtel platform delivered positive financial results, with ongoing collaboration to develop new service offerings that could boost set-top box installations. The Wireless segment saw steady progress, particularly with the Waveconn small cell sites project, which is on schedule and may lead to further contract awards. The NSW Telcom Authority project also contributed solidly to the quarter’s performance.

In Electrical Services, BSA secured a national panel appointment for smart meter installations on behalf of Yurika, signalling potential for revenue growth in the second half of the year. This diversification into smart infrastructure aligns with broader industry trends and offers a promising avenue for expansion.

Financial Position and Cash Flow

BSA closed the quarter with a strong net cash position of $17.1 million and no external borrowings, supported by a $2.6 million guarantee facility, of which $2.1 million is utilised and largely cash-backed. Operating cash flow was effectively breakeven for the quarter after adjusting for redundancy costs, marking an improvement from the prior period.

Despite these positives, the company cautions that the risk of unprofitability remains for the second half of FY2026, reflecting ongoing challenges in securing new contracts and the impact of lost business. Management is actively pursuing organic growth initiatives and new client engagements within existing verticals to mitigate these risks.

Looking Ahead

CEO Sasho Kacevski emphasised that while recent tender outcomes have been unfavourable, the company’s focus on margin discipline and operational efficiency has helped maintain a healthy EBITDA margin. The completion of restructuring and a leaner cost base provide a foundation for pursuing growth opportunities, though the path to sustained profitability remains uncertain.