Bubs Australia (ASX: BUB) has upgraded its full-year FY26 guidance, projecting revenues between $120-125 million and EBITDA of $4-6 million, underpinned by robust US market performance and a strong first half performance.
The company achieved revenue of $55.5 million, marking a 14% increase year-on-year.
Underlying EBITDA saw a significant uplift, reaching $4.4 million, up from $0.5 million in the prior corresponding period (1HY25).
The United States market continues to be a key growth engine, with US revenue surging 48% to $34.2 million.
Infant formula (IMF) sales also demonstrated strength, growing 16% to $48.6 million during the period.
Inventory Build and Cash Flow Dynamics
Bubs Australia's inventory increased to $28.5 million during 1HY26.
This strategic inventory build is aimed at supporting anticipated future growth and minimising stock-outs.
However, this build contributed to a negative operating cash flow of $5.7 million in 1HY26.
While the gross margin for 1HY26 was 48%, a slight decrease from 49% in 1HY25, the company's full-year guidance for gross profit remains between 40-45%.
Upgraded FY26 Guidance Reflects Momentum
The strong first-half results have prompted Bubs Australia to upgrade its full-year guidance for FY26.
The company now anticipates revenue to be between $120-125 million.
Furthermore, Bubs Australia is projecting its FY26 EBITDA guidance to fall within the range of $4-6 million.
The company expects gross profit margin for FY26 to be around 40-45%.
Liquidity and Funding Position
At the end of the period, Bubs Australia maintained a solid liquidity position.
Cash and cash equivalents stood at $9.9 million.
The company also boasts $20 million in undrawn facilities, providing a stable buffer for its operations and growth initiatives.
A post-period increase to this facility confirms ongoing funding support.
Regulatory Environment and Risks
The regulatory environment, particularly concerning US Food and Drug Administration (FDA) approval, remains a critical factor for Bubs Australia's long-term operations in the market.
While the FDA continues to facilitate sales under enforcement discretion, permanent approval is an ongoing process and uncertainty persists.
Explicit risks highlighted include potential regulatory access delays and supply constraints, particularly in the Rest of World and China markets.
On a positive note, past legal disputes are largely resolved, with an anticipated recovery of $825,000 from a Willis’ secured creditor expected by 9 December 2025.
No further recoveries are expected from Alice or Willis.
Outlook
Bubs Australia has demonstrated strong first-half performance, driven by significant US market growth, enabling an upgrade to its full-year outlook.
While inventory build and operating cash flow present near-term working capital challenges, the company's enhanced liquidity and clear US market traction position it for continued expansion, contingent on navigating ongoing regulatory pathways.
