BSA’s FY26 Revenue Falls 89% While Profit Rises 14% on Cost Cuts and Foxtel Contract Extension

Revenue Collapse Masks Profit Gain in FY26

BSA Limited (ASX:BSA) reported a staggering 89% drop in revenue for the year ended 30 June 2026, falling from $287 million to just $32.1 million. This collapse was primarily driven by the loss of the nbn contract, which exited the Group’s portfolio by 30 September 2025. Yet, paradoxically, the company managed to increase its profit after tax by 14% to $4.27 million, up from $3.73 million the prior year.

The sharp revenue decline reflects the challenges BSA faced in tender and contract renewals, with volumes significantly reduced. However, the company’s aggressive restructuring, cutting headcount from 147 to 39 employees, realigning its cost base, and simplifying operations, helped stabilise margins and reduce costs. EBITDA before share-based payment expenses dropped to $7.1 million from $21.2 million in FY25, highlighting the ongoing pressure on earnings despite operational efficiencies.

Foxtel Contract Extension Provides Strategic Anchor

Amid the turmoil, BSA secured a vital early renewal of its Foxtel Agreement, extending the partnership from October 2027 to October 2029, with options to extend further to 2031. This deal underpins the company’s steady performance in the subscription television segment and reflects strong project delivery and disciplined cost management. Foxtel remains a cornerstone client, accounting for a significant portion of BSA’s revenue, and the renewal signals confidence in BSA’s service capabilities despite broader market headwinds.

The Wireless division also performed robustly, supported by contracts with NSW Telco Authority, Waveconn, and Jolt, although these are in their sunset phase. Meanwhile, BSA is investing in growth areas such as Electric Vehicle infrastructure, expanding capabilities across site acquisition, permitting, and design for public and residential charging stations.

Balance Sheet Strength and Cash Flow Challenges

BSA’s balance sheet remains solid with no external debt and $16.8 million in cash and cash equivalents as of 30 June 2026. The company has a $2.1 million guarantee facility, with $1.8 million utilised, and a $2 million unsecured loan facility linked to share acquisition provided by an entity associated with Non-Executive Chair David Geraghty. This loan carries a 10% interest rate and is subject to standard commercial terms.

Operating cash flow swung to a negative $4.4 million from a $30.5 million inflow in FY25, reflecting the impact of contract losses and $5.9 million in redundancy-related payments. Excluding these redundancy costs, operating cash flow was a modest positive $1.5 million, indicating some underlying operational cash generation despite the transition challenges.

Safety and Governance Improvements Highlighted

BSA reported an impressive safety record in FY26, with the Lost Time Injury Frequency Rate (LTIFR) and Total Recordable Injury Frequency Rate (TRIFR) both improving to zero. This outcome underscores the company’s investment in leadership, risk management, and workforce engagement, aligning with its core value of "we work safe and go home safe."

Governance changes marked the year, including the appointment of David Geraghty as Non-Executive Chair in March 2026, succeeding Daniel Raihani, who had a brief tenure as Chair earlier in the year. New directors joined the board, including Piers Lewis, while several long-serving directors resigned. These shifts reflect a strategic reset as BSA navigates its recovery.

Remuneration Aligned with Performance and Transition

BSA granted 11.7 million performance rights and 12.5 million options to directors, executives, and consultants under its new Employee Securities Incentive Plan approved in April 2026. These equity incentives are tied to share price performance hurdles ranging from $0.23 to $0.45 over periods up to three years, designed to align management incentives with shareholder value creation.

The remuneration report reveals that CEO Sasho Kacevski and CFO Nanda Herling received a mix of fixed and performance-based pay, with actual incentive payouts reflecting achievement of 43.2% and 40% of target total fixed remuneration respectively. The board also cancelled certain performance rights previously scheduled to vest, reflecting the company’s challenging operating environment.

Cautious Optimism for FY27 Amid Uncertainty

Looking forward, BSA’s board and management adopt a cautiously optimistic stance for FY27. While the company faces a competitive market and uncertainty over new contract timing, it benefits from a strengthening pipeline and a leaner cost structure. The focus remains on disciplined capital management, securing new revenue, and progressing toward sustainable profitability.

However, the auditor’s report highlights a material uncertainty related to going concern due to the revenue decline and market conditions, signalling that the company’s ability to continue as a going concern depends on execution of its recovery strategy. Investors will be watching closely how BSA translates its restructuring and contract wins into improved financial performance in the coming year.