Q4 2026 Cettire Ltd Earnings Call
Speaker #2: Ron, and thanks for joining today's full-year FY26 results call for Cettire. My name's Sam Wells from NWR, and I'm pleased to have joining me from Cettire today founder and Chief Executive Officer Dean Mintz, as well as Chief Financial Officer Tim Hume.
Speaker #2: Both Dean and Tim will spend some time reviewing results released to the ASX this morning, including some notable financial and operational highlights. Following their comments, we will have some time for questions at the end of the call.
Speaker #2: The audience can submit written questions via the Q&A function at the bottom of your Zoom screen, and time permitting, we will get to all questions during the meeting.
Speaker #2: In some cases, we may combine questions on the same or similar topics. We'd also request that those asking questions please limit yourselves to no more than two questions on today's call.
Speaker #2: We'll aim to have the call wrapped up in 30 minutes, including Q&A. Thanks again, and with that, I'll pass it over to you, Dean.
Speaker #3: Thanks, Sam. Good afternoon, everyone, and thank you for joining Cettire's results briefing for the 2026 financial year. Before we begin, I'd like to remind you of the disclaimer statement in our ASX results presentation.
Speaker #3: That disclaimer also applies to this investor call. I'm joined today by our CFO, Tim Hume, and together we'll take you through the company's results for the year ending 30 June 2026.
Speaker #3: Today's results are the outcome of our relentless focus on profitable growth, with a clear bias towards profit in what remained a tough luxury market.
Speaker #3: Gross revenue was $953.4 million, and sales revenue was $718.4 million. Both were broadly stable year on year. Importantly, excluding the U.S., sales revenue grew 14% year on year to $420 million.
Speaker #3: which is a testament to our ability to grow our market share in newer markets. We had 605,000 active customers during the period, reflecting a deliberate reduction in paid marketing combined with softer U.S. demand.
Speaker #3: Demand remains strong. Repeat customers continue to represent a lion's share of gross revenues, now at 68%. Our bias towards profitability is evident, with adjusted EBITDA at $17.1 million, a year-on-year improvement of $16.7 million.
Speaker #3: This result clearly demonstrates the benefits of our agile and flexible business model. Our AOV increased 10% year on year to $904, reflecting the continued loyalty of our customers and the pass-through of higher U.S. prices.
Speaker #3: Duties in our pricing. We closed the period with $27.9 million in cash and zero financial debt. Against the backdrop of significant headwinds, our team executed exceptionally well.
Speaker #3: Our strategy to prioritize profitability, maintain cash, and strengthen customer loyalty continued through FY26. This was executed in an environment where demand for luxury goods remained soft.
Speaker #3: While the luxury industry has experienced a couple of years of softness, when you look across the recent commentary from luxury peers, there are some signs of earlier stabilization.
Speaker #3: We're seeing this in our business outside of the U.S., which increased sales revenue by 14% year on year. In the fourth quarter, ex-U.S., growth was closer to 25% year on year.
Speaker #3: In constant currency terms, the growth rates are actually materially higher. We've also deliberately reduced paid marketing investment and turned our efforts towards enhancing engagement with our existing customers.
Speaker #3: This drove continued strong contribution to gross sales from repeat customers. On the supply side, engagements with brands and inventory holders have never been stronger.
Speaker #3: We exited FY26 with record available inventory levels, further strengthening our customer value proposition and minimizing supplier concentration. Localization remains a core strategic priority. Our efforts in the half delivered, and the uplift in sales from emerging markets represented 44% of gross revenue, up from 37% at the same time last year.
Speaker #3: And from a balance sheet perspective, our capital-light model continued to deliver resilience, with a closing cash balance of $28 million and no financial debt.
Speaker #3: Turning to slide 6, we finished the year with 605,000 active customers. Looking at the year as a whole, new customer adds slowed, reflecting both softer demand and a decision to lower marketing spend.
Speaker #3: We're prioritizing our investment towards quality engagement and conversion over volume. However, as we cycled Liberation Day in Q4, the active customer count began to increase again, supported by improving acquisition, improved acquisitions, and lower churn.
Speaker #3: The customer growth trends have continued into the financial year. Our average order value increased to $904, with repeat customers spending $994 per order on average, compared to $759 for new customers.
Speaker #3: The increase largely reflects the incorporation of higher duties costs in our pricing. Repeat customers accounted for 68% of gross revenues, in line with last year.
Speaker #3: This continuing loyalty reflects the ongoing attractiveness of our business model to consumers. This loyalty is a key enabler, as it helps sustain the business through cycles and underpins long-term, profitable growth.
Speaker #3: This chart once again reflects the benefits of having a strong cohort of loyal customers, and our ability to increase our share of wallet over the long term.
Speaker #3: Our unit economics over the period strengthened, primarily driven by customer acquisition and customer acquisition costs. Customer acquisition costs declined to $84, reflecting a reduction in paid marketing investment.
Speaker #3: While this came at a cost to new customer adds, we believe it is prudent to manage marketing spend in line with achieving a reasonable return on that investment.
Speaker #3: Delivered margin per active customer was $179, a slight reduction on the prior year as we absorbed higher U.S. duties costs. Our localization strategy continued to diversify our revenue base during the period, with emerging markets’ gross revenue increasing by 17% year on year.
Speaker #3: These strategic markets now represent around 44% of Cettire's gross revenue. Established markets, including the U.S., U.K., and Australia, contracted 13%, primarily driven by the challenges impacting the U.S.
Speaker #3: The U.S. now represents approximately 41% of revenues, with Australia at 7%. We continue to focus on increasing market share in existing and new markets by focusing on enhancing our capabilities and driving localized initiatives.
Speaker #3: During the year, we launched a tier in several new markets, which are supportive of continued growth in emerging markets. We also announced a partnership with Tmall Global to broaden our channel presence in China.
Speaker #3: This remains on track for launch during Q1 FY27. Our supply chain, with hundreds of suppliers, continues to grow throughout the year. Engagement levels remain very high as inventory holders in luxury brands seek new routes to market in this challenging demand environment.
Speaker #3: Pleasingly, we exited the half with record levels of inventory and grew our published stock product counts by a third year-on-year. I'll now hand over to Tim.
Speaker #2: Thanks, Dean, and good afternoon, everybody. Sales revenue was $718.4 million, down 3% on the prior year. This reflects the impact of U.S.
Speaker #2: Tariff changes and softer demand in the region. Excluding the U.S., sales revenue grew 14% to $420 million. Gross revenue was $953.4 million, while refund rates remained relatively stable.
Speaker #2: Currency was a headwind throughout the year, particularly in the second half. On a constant currency basis, the business was slightly up year-on-year.
Speaker #2: Delivered margin at 15% of sales was impacted by higher U.S. duties costs being absorbed into our fulfillment cost base. This was partially offset by a decrease in overall promotional activity.
Speaker #2: In the second half, we accrued tariff refunds as a result of the U.S. Supreme Court decision in relation to IEPA tariffs. This supported delivered margin in the fourth quarter and served to offset the costs incurred for these tariffs in the first three quarters of the year.
Speaker #2: Paid acquisition expenses were 4.6% of sales revenue, and brand investment was modest at $3.3 million. This reflected our deliberate strategy to prioritize profitability. Adjusted EBITDA was $17.1 million, delivering an EBITDA margin of 2.4%.
Speaker #2: Moving on to the balance sheet, closing cash was $28 million, and we continue to have zero financial debt. The movement in cash during the year reflects positive trading and working capital movements, offset by investments in the tech platform and some purchases into the employee share trust in H1.
Speaker #2: There have been no additional share purchases into the employee share trust in the second half. We have commenced receiving IEPA tariff refunds, but the bulk of this is expected to be received in FY27, supplementing the balance sheet.
Speaker #2: We continue to invest in the technology platform to develop capability and reinforce our competitive advantage. This resulted in capitalized investments as a proportion of sales revenue being 2.3%.
Speaker #2: Again, to flag the receivables, we have receivables relating to credits for VAT paid on purchases in Europe. To remind investors, these are statutory receivables that are due and payable, and could be paid at any time.
Speaker #2: However, we are subject to the timeline of the government to pay out these amounts. The government has been slow to pay, and out of caution,
Speaker #2: We continue to conservatively reclass a large portion of this receivable to non-current. On the sector outlook, importantly, the long-term fundamentals of the sector remain robust.
Speaker #2: The most recent study on luxury by Bain Altagamma estimates that the personal luxury goods market declined by 2% in 2025. However, on the positive side, a rebound is expected in calendar year '26, with a return to modest growth.
Speaker #2: We are seeing an improvement in fundamentals in our trading, and this is supported when looking across to the commentary from other players in our sector.
Speaker #2: I'll hand you back to Dean now to conclude.
Speaker #3: Thanks, Tim. In the short term, while there continues to be in the short term, while there continues to be uncertainty with the global luxury personal goods market, CETIRE has commenced FY27 with a continuation of the positive trading momentum observed in Q4 FY26, we achieved year-to-date gross revenue growth of approximately $22%, supported by improving trading conditions and the company's ongoing focus on geographic diversification.
Speaker #3: Growth ex-U.S. has exceeded this rate over the same time period. Reflecting its focus on profitable growth, Cettire achieved positive adjusted EBITDA in July 2026.
Speaker #3: On that note, I'll hand back to Sam.
Speaker #4: Great. Thanks, Dean. Thanks, Tim. As a reminder, the audience can submit written questions via the Q&A function at the bottom of your screen. The first question is on constant currency: How does your performance in constant currency look versus AUD terms for year-to-date FY27?
Speaker #2: Sorry, Sam, that was for year-to-date, was it? Just to clarify. Yeah. So, I don't have the precise figure for year-to-date, but I think it remains the case in the period post year-end that foreign exchange is a revenue headwind at the moment.
Speaker #2: I would expect our growth rate to be in the order of 5 to 10 percentage points higher than what was reported for the first few weeks of the year.
Speaker #2: If we look back to fiscal year '26, though, overall revenue growth increased in constant currency terms. That compares with a modest decline in reported terms, and the second half of the year grew strongly in constant currency terms.
Speaker #4: Great, thank you. On growth ex-USA, you've called out growth outside of the USA. Which markets, excluding the U.S., are responsible for driving the growth?
Speaker #3: It's quite broad-based, Sam, across the footprint. So, Europe and the Middle East are all performing very strongly, as are Canada and Australia.
Speaker #4: Thank you. On year-to-date trading, from your commentary and the growth profile in the last few months, it seems you're pointing to some green shoots. What specifically are you seeing?
Speaker #3: I think there's a couple of things. I think the growth outside the U.S., as we've mentioned, has been very strong. As we know, the U.S.—
Speaker #3: It has its own specific issues right now, but the rest of the market portfolio is growing very nicely. I think the encouraging thing is that the growth is both from a customer growth perspective and from an order volumes growth perspective.
Speaker #3: In the preceding 18 months or so, we've achieved we've volume growth itself has been harder to achieve. Given the pass-through of U.S. tariffs. And at the same time, we've achieved this growth without materially increasing without materially increasing marketing spend.
Speaker #3: So overall, it's quite promising.
Speaker #4: And just sticking to year-to-date trading, what exactly do you think, or why exactly do you think you're growing better in the last few months?
Speaker #4: Have you adjusted any internal operational settings in relation to this performance as well as in Q4 of '26, i.e., paid marketing sorry, paid advertising or marketing spend to drive this improvement?
Speaker #3: There haven't been any major changes in operating settings. I think what's really happening is that the U.S. itself has stabilized, and it's no longer an anchor.
Speaker #3: And at the same time, the growth ex-U.S. continues to perform very, very strongly.
Speaker #4: Okay, great. And can you provide any insights into the Q3 and Q4 revenue trends, noting your comments around Q4 stabilization?
Speaker #2: I'll comment on that. Look, I think we provided a trading update in at the half-year results, which showed the revenue trajectory fairly deeply into February.
Speaker #2: And at that point, the third quarter was tracking down in the high teens percentage points year on year. The third quarter was always going to be a very difficult quarter for us, just given the comparator.
Speaker #2: So, we ended up with a negative Q4, but a very strong rebound in the fourth quarter, where we saw both—I mean, the U.S.
Speaker #2: Business grew in the fourth quarter. To Dean's point just now, regarding how we've seen a stabilization in the U.S. and ex-U.S., in Aussie dollar terms, it was approximately 25% up year on year.
Speaker #2: But to my earlier comments, from a constant currency perspective, those growth rates were even stronger.
Speaker #4: Okay, great. And just on the U.S. opportunity, does Cettire consider the U.S. market still viable given ongoing tariff policies? And what contingency plans does Cettire have in place if future tariff changes come to light?
Speaker #3: Look, it's absolutely still viable. And look, I think tariff and duties changes are just business as usual, and we're well adept at adapting as needed.
Speaker #4: Okay. And maybe just sticking with tariffs for a minute, do you have any update on your progress in getting a tariff clawback mechanism in place for returned goods in the U.S.?
Speaker #3: Do you want to take that one, too?
Speaker #2: Yeah, sure. Look, this is certainly part of the challenge of the last 12 months or so in the U.S. If we look back to the period before the changes in the de minimis rules, less than 10% of our shipments into the U.S.
Speaker #2: Attracted duties. That's now 100% of shipments into the U.S. And then, when a customer returns a parcel to us and the goods leave the USA to get back to home base, those duties are not refunded.
Speaker #2: So our business has funded that cost throughout the bulk of fiscal year '26, and we are certainly working on opportunities to improve that flow with our freight carriers.
Speaker #2: We don't have a specific update at this stage in terms of setting up a drawback flow, but it's something that we're working very hard on to have implemented.
Speaker #2: Which certainly will be supportive of profitability once it's in place.
Speaker #4: Great, thank you. A couple of questions on China. You've announced that China is expanding with the Timor partnership, and you've also launched on the JD store.
Speaker #4: How is China progressing? And are you on track to launch in Timor in Q1? How big is JD overall? And where do you see the China opportunity getting to over a two- to three-year period?
Speaker #3: Yeah, look, so I think in general, China remains a long-term project for us. I think we've learned that it's a complicated market and that we will need multiple pathways to reach customers.
Speaker #3: And that's what we've been working on at present. I've said a few times we've been taking a cautious approach, and that continues to be the same.
Speaker #3: Look, we're on track to be launching with Timor very, very shortly, and we'll continue to build out similar partnerships as we see appropriate. Sorry, did I get all the points there for you, Sam?
Speaker #4: Yeah. Maybe just, where do you see the China opportunity getting to in a two- to three-year timeline?
Speaker #3: I think in the long term, I see China being a very meaningful portion of— it could potentially be a very meaningful portion of—revenue, but I think there's still— and we know that, given the size of the market and potential in general.
Speaker #3: But I think there's still a lot of progress that needs to be made to get to where we want to be.
Speaker #4: Okay, great. Thank you. And maybe just shifting to IEPA refunds—there's a few questions coming in here. You've identified around $9 million of IEPA tariff refunds.
Speaker #4: How much have you received already in the second half of FY26, or FY26 as a whole? And is the $9 million— is that just your internal estimate, or is there a greater level of comfort around that figure?
Speaker #3: Tim, do you want to take that?
Speaker #2: So, we have started receiving the refunds, which commenced hitting the bank account in June and have been paid progressively. To date, we've received less than $1 million.
Speaker #2: So, the bulk of the amount that we have estimated at this stage—the vast majority—we expect to be received during fiscal '27. Now, we don't have perfect line of sight to the payment schedule, but I think it's reasonable to expect that the bulk of that amount should be paid during the course of the first half.
Speaker #2: As for the estimate, yes, it's our estimation of what the tariff amount should be. And we feel pretty good around our estimation, but there may ultimately be some variance between what's received and the estimated amount.
Speaker #2: But this is the best current view.
Speaker #4: Thank you. And is that $9 million— is that included in accounts receivable?
Speaker #2: So the way it works is that we've incurred that cost in the first three quarters of the year, and the cost has been treated as a fulfillment cost.
Speaker #2: Likewise, when we accrue for the refund, it again offsets against fulfillment costs. And then in terms of where it sits on the balance sheet, it's a reduction in our accounts payable.
Speaker #2: So it's offset against our other payables.
Speaker #4: Okay, great. Thank you. And turning to Italian VAT receivables, there are a couple of questions here. It's been growing significantly, with a meaningful portion classified as non-current.
Speaker #4: So, the balance appears to be accelerating faster than the refunds are being received. Can management provide us some color on, number one, what specifically is holding up the process?
Speaker #4: Is the backlog due to routine administrative processes, or has the Italian tax authority raised any queries, audits, or objections with respect to the large claims?
Speaker #2: Okay. There is no conflict or dispute with the Italian tax office. Just let me be very clear on that. Every for every refund that has been requested, the for every refund that's been requested, the amount has been paid as per the amount requested.
Speaker #2: So the holdup here is administrative-related. I believe we've talked on prior calls that in certain jurisdictions in Europe, the timeliness of the refund process is not as simple as it might be in markets like Australia, which perhaps the investor group on this call are more familiar with.
Speaker #2: So we continue to work with the relevant stakeholders, including the local tax authorities, to do whatever we can to streamline that process. At the same time, certainly for the portion of that VAT receivable that's currently treated as non-current.
Speaker #2: We are looking at all available options to potentially accelerate the conversion to cash. That could include something like a factoring transaction, which is common to provide liquidity when these types of receivables can be tied up.
Speaker #2: So, we'll look at all options to accelerate the conversion to cash, as I said, but the primary path remains continued engagement with the local tax authority to receive the refunds as expected.
Speaker #2: And we've most recently received—I should say, I should add—the most recent refund that we received was just last month.
Speaker #4: Okay, great, thank you. And sorry, just one clarification on the IEPA: did some or all of the $9 million get booked in FY26 and benefit the P&L?
Speaker #2: Yes. Yes. Yes. That's right.
Speaker #4: Okay, thank you. Moving to the audit—what's the reason for no audit? Last time, it was a technical accounting issue. Can you provide any color on what it is this time?
Speaker #4: Is it related to the non-current asset deficiency? And what comments can you make overall on the company's financial strength?
Speaker #2: Okay, so look, the main comment here is that's correct. We've released unaudited accounts today. The simple reason for that is the audit work is not yet completed.
Speaker #2: So, there's no specific issue to highlight. What we're seeing here is really just the company growing in scale and complexity, which naturally comes with additional audit work streams.
Speaker #2: So, as a couple of examples, this year some of the key topics relate to the tariff refunds that we've just talked about—obviously, meaningful numbers.
Speaker #2: But also the VAT classification between current and non-current. Both of these are ultimately relevant to the balance sheet. So, I think the only other comment to make here is that we aim to release the audited accounts to market as soon as practical.
Speaker #4: Okay, great, thank you. There was one other question, but I think you've answered that. Maybe just ending with one final question: Are you lifting marketing spend versus the first quarter, FY26, to deliver your growth period to date, or is the growth coming from existing clients and/or better marketing efficiencies?
Speaker #2: Look, I'll make some initial comments on that, if that's okay, Dan. So, I think there's no meaningful change in our marketing spend, folks. What we're seeing is a continuation of the efficient CAC level that we've seen throughout FY26.
Speaker #2: And very strong engagement at the moment from new customers. So we continue to see strong re-engagement from our existing base. And we're seeing that not just in terms of spend, but in terms of improving retention rates.
Speaker #2: But we're also seeing particularly strong performance from new customers at the moment, and that's without a material change in our spend profile on the marketing side.
Speaker #2: So Dean touched on some of these dynamics. A bit earlier in the call. And I think this is one of the data points or a couple of the data points that we're sort of reflecting on as we think through a bit more an outlook with a bit more encouragement than perhaps we talked about in the last couple of sets of results.
Speaker #4: Okay, great. Thank you. I think that's all the time we have for questions today. Please feel free to send through any additional or unanswered questions, and we'll endeavor to come back to you.
Speaker #4: And with that, it concludes our session and brings us to the end of Cettire's FY26 earnings call. Enjoy the rest of your day. Thank you and goodbye.
