Novatti has swung to a positive EBITDA of $2.0 million in FY26, driven by strategic refocusing on its core Payments AU/NZ business despite a 40.7% revenue decline and loss of control over AUDC.
- EBITDA improves by $6.5 million to $2.0 million
- Revenue falls 40.7% to $29.9 million after exiting low-margin streams
- Payments AU/NZ segment grows 15% in revenue and drives profitability
- Loss of control over AUDC leads to equity accounting of 47% stake
- Underlying EBITDA loss narrows 61.8% to $2.7 million
EBITDA Turns Positive After Strategic Overhaul
Novatti Group Limited (ASX:NOV) has reported a significant earnings turnaround for the fiscal year ended 30 June 2026, posting a positive EBITDA of $2.0 million compared to a $4.4 million loss the previous year. This $6.5 million improvement reflects the payoff from a multi-year strategic transformation focused on simplifying the business and concentrating on higher-margin payments infrastructure.
The net loss from operations narrowed dramatically to $0.2 million, a $6.4 million improvement year-on-year, while underlying EBITDA; a non-IFRS measure excluding non-cash and one-off items; improved by 61.8% to a loss of $2.7 million. The company’s CEO Mark Healy described FY26 as a “defining year” where the benefits of restructuring and refocusing became visible in the financials.
Revenue Declines as Novatti Exits Low-Margin Businesses
Group revenue declined 40.7% to $29.9 million, primarily due to Novatti’s deliberate exit from non-core and low-margin revenue streams. This strategic pruning helped lift the group’s gross margin to 51%, up from 30% in FY25, underscoring the improved quality of earnings.
The company disposed of its technology subsidiary Emersion Systems in September 2025, presenting it as a discontinued operation, and lost control over AUDC Pty Ltd in September 2025. Following a board change at AUDC, Novatti’s 57% stake was deconsolidated and reclassified as a 47% equity-accounted associate, with a fair value of $7.0 million recognized at the time. The group recorded a $1.53 million share of loss from AUDC during the year.
Payments AU/NZ Drives Growth and Profitability
The Payments AU/NZ segment emerged as the engine of Novatti’s turnaround, growing revenue by 15% to $13.8 million and gross margin by 23% to $6.3 million. Direct EBITDA for this core segment surged 522% to $2.3 million, reflecting the success of the company’s customer-focused sales strategy and technology platform upgrades.
Novatti is replicating its growth model from the Issuing business across the Acquiring business, targeting scalable transaction volumes through partnerships in retail, eCommerce, education, and healthcare. A notable example is the integration of Alipay at the University of New South Wales, which generated over $60 million in gross transaction value and nearly $1 million in revenue within 10 months.
Balance Sheet and Liquidity
Novatti ended FY26 with a modest net asset position of $746,000, reversing a net deficiency of $879,000 in the prior year. Cash and cash equivalents increased to $3.1 million, supported by a post-reporting sale of 1.5 million AUDC shares for $1.2 million. The company also renegotiated repayment terms on a $1 million loan facility to extend maturity to early 2027, contingent on capital raising or AUDC share sales.
Despite the financial improvements, Novatti’s audit remains ongoing with an expected emphasis of matter regarding material uncertainty over going concern. The company flagged the need to strengthen its balance sheet through capital raising, debt facility access, sales growth, cost management, or asset sales.
Strategic Pivot Sets Stage for FY27
With restructuring largely complete, Novatti is focused on executing its vision of integrated payments infrastructure bridging traditional and digital finance. The momentum from the second half of FY26, particularly in the Payments AU/NZ business, provides a stronger foundation for growth in FY27.
However, the narrowing loss and positive EBITDA come against a backdrop of significant revenue contraction and ongoing losses from associate investments, leaving investors to watch how Novatti balances growth ambitions with financial discipline in the year ahead.
Bottom Line?
Novatti’s FY26 results mark a crucial inflection point, but sustaining growth while managing associate losses and balance sheet risks will be key challenges in FY27.
Questions in the middle?
- How will Novatti manage the financial impact of its equity-accounted AUDC investment amid ongoing losses?
- Can the Payments AU/NZ segment’s growth momentum offset revenue declines from exited businesses?
- What capital raising or refinancing steps will Novatti take to address going concern uncertainties?