BSA Faces Cash Burn and Contract Loss Risks Despite $19M Cash Buffer

Significant Revenue Decline Post-nbn Contract

BSA Limited has reported a dramatic 77% drop in revenue for the first quarter of fiscal 2026, plunging to $17.5 million compared to the prior corresponding period. This steep decline is primarily attributed to the expiration of the company’s long-standing contract with nbn on 30 September 2025, which had been a major revenue driver. The loss of this contract, coupled with unfavorable outcomes in tender and contract renewals with Bluecurrent and Intellihub, has significantly impacted the company’s top line.

Restructuring and Cost Management

In response to these challenges, BSA has undertaken a substantial restructuring effort. Staff numbers have been slashed from approximately 150 to around 50, with redundancy-related cash outflows totaling $5.6 million during the quarter. The company expects this restructuring to be fully completed by the end of the next quarter. Despite these costs, BSA’s EBITDA stood at $3.9 million, supported by non-recurring transition-out payments from nbn and other projects, underscoring the temporary nature of some of the recent financial relief.

Strategic Pivot and Growth Initiatives

Looking beyond the immediate financial pressures, BSA is advancing several new initiatives. The Foxtel platform continues to deliver positive financial results, and the company is progressing a new intellectual property project aimed at bundling IP and pay-TV services, which could significantly boost set-top box installations. In the wireless segment, the Waveconn small cell sites project is on track, positioning BSA for potential future site awards. Additionally, the electrical services division anticipates revenue growth driven by planned expansion of electric vehicle charging sites in the second half of the fiscal year.

Financial Position and Outlook

Despite the revenue and EBITDA declines, BSA closed the quarter with a healthy net cash position of $19 million and no external borrowings. The company maintains a $2.6 million guarantee facility, with most of the utilized amount now cash-backed. Operating cash flow was negative $4.7 million, reflecting the restructuring costs and reduced contract volumes. The executive team, led by CEO Sasho Kacevski, is actively exploring all available options to optimize outcomes for stakeholders, including refining the operating model and focusing on a more defined customer base.

Navigating Uncertainty

While BSA faces ongoing challenges from unprofitable trading and contract losses, its strong cash reserves and strategic initiatives provide a foundation for potential recovery. The company’s next steps will be critical to watch, as it balances cost discipline with growth opportunities in emerging technology areas.