How Bubs Australia’s US Sales Surge is Shaping FY26 Growth
Bubs Australia reports a 14% increase in half-year revenue, powered by a 47% jump in US sales, while other regions face challenges. The company remains optimistic about FDA approval and market recovery in H2 FY26.
- H1 FY26 net revenue up 14% to $55.5 million
- US sales surge 47%, offsetting declines in China, Australia, and Rest-of-World
- Gross margin steady at 49.3%, slightly below prior year
- Cash reserves of $9.9 million plus $10 million undrawn debt facilities
- FDA approval process progressing with no outstanding requests
Strong US Growth Offsets Regional Headwinds
Bubs Australia Limited (ASX – BUB) has delivered a solid start to fiscal 2026, with net revenue for the first half rising 14% to $55.5 million compared to the prior corresponding period. This growth was largely driven by a remarkable 47% increase in sales in the United States, which continues to be the company’s primary growth engine. The US market’s expansion reflects successful efforts to increase store presence and in-store product ranges, supported by an air-freight program to meet rising demand.
However, this positive momentum contrasts with softer performances in other key regions. China’s revenue declined by 26.5% to $7.5 million, impacted by the clearance of ageing stock and previous supply constraints, although underlying consumer demand remains strong with a 40% increase in sell-through. Australia and Rest-of-World markets also experienced declines of 8.5% and 8.7% respectively, affected by cost-of-living pressures, heightened competition, regulatory challenges, and supply rationing.
Stable Margins and Cash Position Amid Inventory Build
Despite the mixed regional results, Bubs maintained a gross margin of 49.3%, only slightly below the 50% recorded in the prior year. The company ended the half with $9.9 million in cash and an additional $10 million in undrawn debt facilities, providing a total liquidity buffer of nearly $20 million. This financial flexibility is crucial as Bubs continues to build inventory levels, which contributed to a negative operating cash flow of $3.5 million in Q2.
Management remains confident that the inventory build is a strategic move to support anticipated growth, particularly in the US market, and expects market conditions in Australia, China, and Rest-of-World to stabilise and improve in the second half of the year.
FDA Approval on Track, Regulatory Progress Encouraging
On the regulatory front, Bubs is progressing steadily towards FDA approval for its infant formula products. The company has fulfilled all information requests and recently received confirmation from the FDA that there are no outstanding questions regarding the clinical trial component of its submission. The FDA has also agreed to continue facilitating the importation, sale, and distribution of Bubs’ products in the US during the ongoing review process, which is a significant operational relief.
CEO Joe Coote expressed optimism about the company’s trajectory, highlighting the US as a key growth driver and signalling confidence in meeting full-year guidance. The company plans to provide further updates with its half-year results scheduled for late February.
Bottom Line?
Bubs’ strong US momentum and FDA progress set the stage for a pivotal second half, but regional challenges and cash flow dynamics warrant close watch.
Questions in the middle?
- Will the FDA approval be secured in time to sustain US market growth momentum?
- How quickly can Bubs reverse declines and stabilise sales in China, Australia, and Rest-of-World markets?
- What strategies will Bubs employ to manage cash flow amid ongoing inventory build and market uncertainties?
