Cettire Limited

Good morning everyone and thanks for joining today's full year FY26 results call for CETIRE. My name is Sam Wells from NWR and I'm pleased to have joining me from CETIRE today, Founder and Chief Executive Officer, Dean Mintz, as well as Chief Financial Officer, Tim Hume. 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. The audience could submit written questions via the Q&A function at the bottom of your Zoom screen, and time permitting, we'll get to all questions, in some cases combining questions on the same or similar topic. We'd also request that those asking questions please limit yourself to no more than two questions on today's call. 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.

Thanks, Sam. Good afternoon, everyone, and thank you for joining Satire's results briefing for the 2026 financial year. Before we begin, I'd like to remind you of the disclaimer statement in our ASX result presentation. That disclaimer also applies to this investor call. I'm joined today by our CFO, Tim Hulme, and together we'll take you through the company's results for the year ending 30 June 2026. 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. Gross revenue was 953.4 million and sales revenue was 718.4 million. Both were broadly stable year on year. Importantly, excluding the US, sales revenue grew 14% year on year to 420 million. 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 US demand. Repeat customers continue to represent the lion's share of gross revenues now at 68%. Our bias towards profitability saw an adjusted EBITDA at 17.1 million and a year-on-year improvement of 16.7 million. 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 US 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. 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. While the luxury industry has experienced a couple of years of softness, when you look across the recent commentary from luxury peers, there's some signs of early stabilization. We're seeing this in our business outside of the US, which increased sales revenue by 14% year-on-year. In the fourth quarter, XUS growth was closer to 25% year-on-year. In constant currency terms, the growth rates are actually materially higher. We also deliberately reduced paid marketing investment and turned our efforts towards enhancing engagement with our existing customers. This drove continued strong contribution of gross sales from repeat customers. On the supply side, engagements with brands and inventory holders has never been stronger. 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 an uplift in sales from emerging markets representing 44% of gross revenue, up from 37% the same time last year. And from a balance sheet perspective, our Capitalite model continued to deliver resilience with a closing cash balance of 28 million and no financial debt. Turning to slide six, we finished the year with 605,000 active customers. Looking at the year as a whole, new customer ads slowed, reflecting both softer demand and a decision to lower marketing spend. We prioritized 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 acquisitions and lower churn. 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. 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. 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. 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. Our unit economics over the period strengthened primarily driven by customer acquisition costs. Customer acquisition costs declined to $84, reflecting a reduction in paid marketing investment. While this came at a cost to new customer ads, we believe it is prudent to manage marketing spend in line with achieving a reasonable return on that investment. Delivered margin per active customer was $179, a slight reduction on the prior year as we absorbed higher US 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. These strategic markets now represent around 44% of Satirex gross revenue. Established markets, including the US, UK and Australia contracted 13%, primarily driven by the challenges impacting the US. The US 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 localised initiatives. During the year, we launched Satire in several new markets which are supportive of continued growth in emerging markets. We also announced a partnership with Timor Global to broaden our channel presence in China. This remains on track for launch during Q1 FY27. Our supply chain with hundreds of suppliers continues to grow through the year. Engagement levels remain very high as inventory holders and luxury brands seek new routes to market in this challenging demand environment. 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.

Thanks, Dean, and good afternoon, everybody. Sales revenue was $718.4 million, down 3% on the prior year. This reflects the impact of US tariff changes and softer demand in the region. Excluding the US, sales revenue grew 14% to $420 million. Gross revenue was $953.4 million, while refund rates remained relatively stable. 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. Delivered margin at 15% of sales was impacted by higher US duties costs being absorbed into our fulfillment cost base. This was partially offset by a decrease in overall promotional activity. In the second half, we accrued tariff refunds as a result of the US 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. Paid acquisition expenses were 4.6% of sales revenue and brand investment was modest at $3.3 million. This reflected our deliberate strategy to prioritise profitability. Adjusted EBITDA was $17.1 million, delivering an EBITDA margin of 2.4%. Moving on to the balance sheet, closing cash was $28 million and we continued 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. 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. 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%. 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. They could be paid at any time. 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, 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, The most recent study on luxury by Bain Altagamma estimates that the personal goods, 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. We are seeing the improvement in fundamentals in our trading and this is supported when looking across to the commentary from other players in our sector. I'll hand you back to Dean now to conclude.

Thanks, Tim. In the short term, while there continues to be uncertainty with the global luxury personal goods market, Satire 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. GrowthXUS has exceeded this rate over the same time period. Reflecting its focus on profitable growth, Sitara achieved positive adjusted EBITDA in July, 2026. On that note, I'll hand back to Sam.

Great, thanks, Dean. Thanks, Tim. As a reminder, the audience could submit written questions via the Q&A function at the bottom of your screen. The first question on constant currency, how does your performance in constant currency look versus AUD terms for year-to-date FY27?

Sorry, Sam, that was for year-to-date, was it? Just to clarify.

Yeah.

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. I would expect our growth rate to be in the order of five to 10 percentage points higher than what was reported for the first few weeks of the year. 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.

Great, thank you. On growth ex-USA, you've called out growth outside of the USA. Which markets, excluding the US, are responsible for driving the growth?

It's quite broad-based, Sam, across the footprint. So Europe, Middle East, all performing very strongly, as are Canada and Australia.

Thank you. On year-to-date trading, from your commentary and growth profile in the last few months, it seems you're pointing to some green shoots. What specifically are you seeing?

I think there's a couple of things. I think the growth outside US, as we've mentioned, has been very strong. As we know, the US has its own specific issues right now. but the rest of the market portfolio is growing very nicely. And I think the encouraging thing is that the growth is both from a customer growth perspective and an order volumes growth. You know, in the preceding 18 months or so we've achieved, you know, volume growth itself has been harder to achieve given the pass through of US tariffs. You know, and at the same time, we've achieved this growth without materially increasing without, you know, materially increasing marketing spent. So overall, it's, it's, it's, it's quite promising.

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? Have you adjusted any internal operational settings in relation to this performance as well as in Q4 of 26, i.e. paid advertising or marketing spend to drive this improvement?

There hasn't been any major changes in operating settings. I think what's really happening is that the US itself has stabilized and it's no longer an anchor. And at the same time, the growth ex-US continues to perform very, very strongly.

Okay, great. And can you provide any insights into the Q3, Q4 revenue trends, noting your comments around Q4 stabilisation?

I'll comment on that. Look, I think we provided a trading update at the half-year results, which showed the revenue trajectory fairly deeply into February. 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. So we ended up with a negative Q4, but a very strong rebound in the fourth quarter, where we saw the US business grew in the fourth quarter. to Dean's point just now with around how we've seen a stabilization in the US and ex-USA in Aussie dollar terms was approximately 25% up year on year. But to my earlier comments, from a constant currency perspective, those growth rates were even stronger.

Okay, great. And just on the US opportunity, does CETI consider the US market still viable given ongoing tariff policies? And what contingency plans does CETI have in place if future tariff changes come to light?

Look, it's absolutely still viable. And look, I think tariff and duties changes are just business as usual. And we're well adept to adapting as needed.

Okay, 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 return goods in the USA?

Do you want to take that one too?

Yeah, sure. Look, this is certainly part of the challenge of the last 12 months or so in the US. If we look back to the period before the changes in the de minimis rules, less than 10% of our shipments into the US attracted duties. That's now 100% of shipments into the US. 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. 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. 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, which certainly will be supportive of profitability once it's in place.

Great, thank you. A couple of questions on China. You've announced that China is expanding with the Tmall partnership and you've also launched on the JD store. How is China progressing and are you on track to launch in Tmall in Q1? How big is JD overall? And where do you see the China opportunity getting to over a two to three year period?

Yeah, 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 reaching customers. 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. Look, we're on track to be launching with Tmall 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?

Yeah, maybe just where do you see the China opportunity getting to in a two to three year timeline?

in the long term, I see China being a very meaningful portion of, you know, it could potentially be a very meaningful portion of revenue, but I think there's still, you know, and we know that given the size of the market and, you know, and potential in general. But I think there's still a lot of progress that needs to be made to get to where we want to be.

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. 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?

Tim, do you want to take that?

So we have started receiving the refunds that commenced hitting the bank account in June and have been paid progressively. To date, we've received less than a million dollars. 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. 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 you know, that there may ultimately be some variance between what's received and the estimated amount, but this is the best current view.

Thank you. And is that 9 million, is that included in accounts receivables?

So the way it works is that we have, so we've incurred that cost in the first three quarters of the year, and the cost has been treated as a fulfillment cost. 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. So it's offset against our other payables.

Okay, great, thank you. And turning to Italian VAT receivables, there's a couple of questions here. It's been growing significantly with a meaningful portion classified as non-current, so the balance appears to be accelerating faster than the refunds are being received. Can management provide us some colour on, number one, what specifically is holding up the process? Is the routine administrative backlog, or has the Italian Tax Authority raised queries, audits, or objections with respect to the lodge claims?

Okay. There is no conflict or dispute with the Italian tax office. Just let me be very clear on that. For every refund that has been requested, for every refund that's been requested, the amount has been paid as per the amount requested. So the hold up 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 that perhaps the investor group on his call are more familiar with. 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 is currently treated as non-current, we are looking at all available options to potentially accelerate the conversion to cash. And that could include something like a factoring transaction, which is a common pathway in Europe to provide liquidity when these types of receivables can be tied up. 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. And we've most recently received, I should say, I should add, the most recent refund that we received was just last month.

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?

Yes, yes, yes, that's right.

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 related to the non-current asset deficiency? And what comments can you make overall on the company's financial strength?

Okay, so look, the main comment here is that's correct. We've released unordered accounts today. The simple reason for that is the audit work is not yet completed. So there's no specific issue to highlight. What we're seeing here is really just the company growing scale and complexity. which naturally comes with additional audit work streams. 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, but also the VAT classification between current and non-current. Both of these are ultimately relevant to the balance sheet. I think the only other comment to make here is that we aim to release the order of accounts to market as soon as practical.

Okay, great. Thank you. That 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?

Look, I'll make some initial comments on that, if that's okay, Debbie. 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 the fiscal year 26. 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. 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. 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.

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 endeavour to come back to you. And with that, it concludes our session and brings us to the end of CETI's FY26 earnings call. Enjoy the rest of your day. Thank you and goodbye.