AUCyber Posts $0.3M Operating Cash Flow in Q2 FY26 with $5.94M Receipts
AUCyber Limited has reported a return to positive operating cash flow in Q2 FY26, driven by disciplined cost control and improved working capital management. Despite a slight dip in customer receipts, the company maintains strong liquidity and is focused on sustainable growth through enhanced cybersecurity services.
- Positive operating cash flow of $0.3 million in Q2 FY26
- Customer receipts of $5.94 million, slightly down due to timing
- Gross margins at approximately 22% after updated cost accounting
- Strong liquidity with $1.97 million cash and no debt
- Focus on margin improvement and reducing low-margin contracts
Operational Stabilisation and Cash Flow Recovery
AUCyber Limited (ASX – CYB) has signalled a cautious but positive turnaround in its financial performance for the quarter ending 31 December 2025. The company reported a return to positive operating cash flow of $0.3 million, a notable improvement from the previous quarter's outflow. This recovery is attributed to improved working capital management and disciplined cost control following strategic exits from lower-margin contracts earlier in the fiscal year.
Revenue and Margin Dynamics
Customer receipts for the quarter stood at $5.94 million, a slight decrease from $6.21 million in the prior quarter. Management clarified that this dip primarily reflects the timing of collections rather than any underlying weakness in business activity. Gross margins settled at around 22%, influenced by a shift in revenue mix and the adoption of a revised cost of goods sold methodology. This new approach, particularly impacting the Cloud division, incorporates certain lease-related costs into COGS to enhance transparency and comparability, without indicating any hidden expenses.
Cost Management and Liquidity Position
Operating payments decreased significantly to approximately $2.0 million from $3.46 million in the previous quarter, largely due to the absence of timing-related payments. The company ended the quarter with a robust cash balance of $1.97 million and no drawn debt facilities, underscoring a strong liquidity position. Notably, no new capital raising occurred during the period, with AUCyber relying on internal cash generation and prior capital injections to fund ongoing operations.
Strategic Focus and Outlook
Looking ahead, AUCyber’s management remains committed to enhancing operating cash flow through continued cost optimisation and margin improvement initiatives. The company aims to leverage its cybersecurity expertise to drive sustainable growth, expand higher-value service offerings, and reduce reliance on lower-margin resale activities. This strategic pivot reflects a broader industry trend where cybersecurity providers seek to differentiate through specialised, value-added services rather than competing on volume alone.
While the short-term margin variability presents some challenges, the company’s disciplined approach and strong balance sheet provide a solid foundation for future growth. Investors will be watching closely to see how effectively AUCyber can translate these operational improvements into consistent financial performance in the coming quarters.
Bottom Line?
AUCyber’s return to positive cash flow marks a turning point, but sustaining momentum will require continued focus on margin enhancement and strategic growth.
Questions in the middle?
- How will AUCyber’s updated cost accounting methodology affect future margin comparability?
- What specific higher-value cybersecurity services is the company prioritising for growth?
- Can AUCyber maintain positive operating cash flow without resorting to new capital raises?
