Vinyl Group’s Loss Narrows but Profitability Still Elusive Despite Revenue Jump
Vinyl Group Ltd has reported a robust 49% increase in revenue for the first half of FY26, alongside a significant reduction in net loss, driven by strategic acquisitions and AI integration.
- Revenue climbs 49% to $11.4 million in 1H FY26
- Operating expenses fall 13%, boosting gross margin to 45.3%
- Net loss narrows to $3.1 million from $6.9 million a year earlier
- First operating cash flow positive quarter achieved in Q2 FY26
- FY26 revenue guidance maintained at $22 million to $25 million
Strong Revenue Growth and Cost Discipline
Vinyl Group Ltd (ASX: VNL), Australia's sole ASX-listed music company, has delivered a compelling financial performance for the half-year ended 31 December 2025. The company reported revenue of $11.4 million, a 49% increase compared to the prior corresponding period. This growth was underpinned by both its publishing arm, Vinyl Media, which grew revenue by 45%, and its platforms division, including Vinyl.com, Vampr, and Serenade, which surged 64%.
Crucially, Vinyl Group achieved this revenue expansion while reducing operating expenses by 13%, resulting in a structurally leaner cost base. The gross margin improved markedly to 45.3%, up from 33.8% the previous year, reflecting disciplined cost control and operational efficiencies.
Path to Profitability Accelerates
Despite still reporting a net loss after tax of $3.1 million, this represents a significant improvement from the $6.9 million loss in 1H FY25. The company’s operating cash flow also improved dramatically, with net cash used in operations falling to $1.1 million from $4.0 million. Notably, Vinyl Group recorded its first operating cash flow positive quarter in Q2 FY26, signalling positive momentum on the path to profitability.
CEO Josh Simons highlighted the company’s strategy of integrating acquisitions completed in FY25 and leveraging artificial intelligence to drive efficiency and innovation. This approach is helping Vinyl Group build a unique portfolio of premium cultural assets that connect music creators, fans, and brands in an integrated ecosystem.
Diversification and Future Outlook
Vinyl Group’s diversification strategy is evident in the strong performance of Vinyl.com, which achieved record sales of $2.5 million, alongside robust contributions from its events business. The company is crafting advertising campaigns that blend traditional and emerging channels, including AI-driven targeting, to reach niche audiences at scale.
Looking ahead, Vinyl Group has reaffirmed its FY26 revenue guidance of $22 million to $25 million. Management remains focused on maintaining operational discipline and is actively evaluating selective acquisitions to accelerate growth and enhance earnings and cash flow generation.
While the company has made strides, the net loss remains material, and the full impact of recent acquisitions on future profitability is yet to be fully realised. Additionally, improved cash flow partly reflects drawing on a credit facility, underscoring the importance of sustained operational improvements.
Bottom Line?
Vinyl Group’s strong half-year results and AI-driven efficiencies set the stage for a critical year of growth and profitability pursuit.
Questions in the middle?
- How will recent acquisitions contribute to earnings and cash flow in the coming quarters?
- What specific AI innovations are driving operational efficiencies and how scalable are they?
- Can Vinyl sustain positive operating cash flow beyond seasonal fluctuations in Q3?
