Bubs Australia Posts $2.9m EBITDA Turnaround, Eyes FDA Approval in 2025

Financial Turnaround and Revenue Growth

Bubs Australia Limited (ASX: BUB) has delivered a compelling financial turnaround in the first half of FY25, reporting a positive EBITDA of $2.9 million compared to a $6.8 million loss in the prior corresponding period. This marks a significant inflection point for the infant nutrition company, driven by a 42% increase in net revenue to $28.7 million in Q2 FY25 and a gross profit margin improvement to 48%, well above the company’s 40% target for the year.

The company’s operating cash flow also swung positively, with a $3.9 million inflow in Q2 FY25 compared to a $13 million outflow a year earlier. Bubs ended the quarter with $17.2 million in cash and an additional $5 million in undrawn debt facilities, providing a solid liquidity buffer as it invests in growth.

Regional Market Momentum

Growth across Bubs’ key markets was robust. The USA, its largest market, saw gross revenue rise 26% to $17.2 million, despite transitional challenges related to new packaging formats required by US labelling laws. The company successfully transitioned to a new 20-ounce tin size, which is the US market standard and offers a lower price point to attract trial consumers. By early January 2025, 98% of tins sold were in the new format, positioning Bubs for stronger sales momentum in the coming quarters.

China’s revenue surged 68% to $7.1 million, fueled by expanding distribution in the Online to Offline (O2O) mother and baby store channel, now present in 20 provinces and 61 cities. The addition of over 480 new O2O stores in the quarter brought the total to nearly 1,000, underpinning the company’s strategy to deepen market penetration in China’s cross-border e-commerce (CBEC) sector.

Domestically, Bubs maintained its dominant position in Australia’s goat infant milk formula market with a 55% share and grew 13.1% in major retailers, outpacing the market growth rate sixfold.

FDA Clinical Trial Progress and Regulatory Outlook

A critical milestone was reached with the completion of infant enrolment in Bubs’ large-scale clinical trial in the USA, a key step toward permanent FDA approval. The trial, involving 478 infants across all three of Bubs’ formulations and including a breastfeeding cohort, is one of the largest infant formula studies ever conducted. The company expects to submit the full clinical trial data to the FDA in a timely manner, with a regulatory decision anticipated in October 2025.

Currently operating under the FDA’s “Enforcement Discretion” process, Bubs is among only eight companies permitted to sell infant formula in the US under this framework. Permanent approval would solidify Bubs’ foothold in its largest market and unlock further growth opportunities.

Operational Capacity and Outlook

Bubs’ manufacturing facility in Deloraine is operating at 84% capacity, reflecting strong demand. The company expects some cash flow fluctuations in Q3 FY25 due to working capital investments but anticipates returning to positive cash flow in Q4.

Management reaffirmed FY25 guidance of $102 million in revenue, a gross margin exceeding 40%, and EBITDA breakeven. CEO Reg Weine highlighted the strategic pillars driving the turnaround, including portfolio optimisation, cost discipline, and market diversification.