Bubs Australia has delivered a robust first half for FY26, powered by a 48% revenue surge in the US, prompting an upgrade to its full-year earnings guidance.
- Underlying EBITDA jumps to $4.4 million from $0.5 million year-on-year
- Group revenue climbs 14% to $55.5 million, led by US market growth
- Upgraded FY26 revenue guidance to $120-$125 million and EBITDA to $4-$6 million
- Inventory build supports demand but results in negative operating cash flow
- Challenges persist in Australia and Rest of World markets due to supply and regulatory issues
Strong Half-Year Performance
Bubs Australia Limited has reported a significant turnaround in its financial performance for the six months ending December 2025. The company’s underlying EBITDA soared to $4.4 million, a remarkable increase from just $0.5 million in the same period last year. This improvement was accompanied by a 14% rise in group revenue to $55.5 million, underscoring the company’s growing footprint in key markets.
US Market Drives Growth
The standout contributor to Bubs’ strong half was the United States, where revenue jumped 48% to $34.2 million. This surge was fuelled by expanding retail presence and category growth, particularly in the goat infant formula segment. Major US retailers have increased store counts and broadened in-store distribution, positioning Bubs well for sustained momentum into the second half of the fiscal year.
Inventory and Cash Flow Dynamics
To support this growth, Bubs has strategically increased its inventory levels to $28.5 million, ensuring consistent supply amid rising demand. However, this inventory build contributed to a negative operating cash flow of $5.7 million for the half. Despite this, the company maintains a solid balance sheet with $9.9 million in cash and $20 million in undrawn debt facilities, providing ample liquidity to navigate ongoing expansion.
Mixed Regional Performance
While the US market shines, Bubs’ performance in other regions presents a mixed picture. In China, revenue reached $7.5 million, reflecting strong demand in cross-border e-commerce and online-to-offline channels, despite temporary supply shortages and inventory adjustments. Australia’s revenue of $9.5 million was constrained by stock limitations and competitive pressures, while the Rest of World segment faced regulatory hurdles and product availability challenges, impacting sales in markets like Japan and Vietnam.
Strategic Moves and Outlook
CEO Joe Coote highlighted ongoing investments in leadership and product portfolio rationalisation as key to sustaining growth. The company has upgraded its full-year guidance, now expecting group revenue between $120 million and $125 million and EBITDA in the range of $4 million to $6 million. Gross profit margins are projected to settle between 40% and 45%, slightly below the prior half but reflective of the evolving product mix and market dynamics.
Bottom Line?
Bubs’ strong US momentum and strategic inventory management set the stage for a pivotal second half, but regional challenges warrant close watch.
Questions in the middle?
- How will Bubs manage inventory levels to balance growth and cash flow in the coming quarters?
- What impact will regulatory complexities in Rest of World markets have on future expansion?
- Can the company sustain its US market growth amid intensifying competition and retailer dynamics?