CleanSpace Posts 10% Revenue Growth and Turns EBITDA Positive on European Surge

CleanSpace delivers 10% revenue growth and strengthens cash position in H1 FY26

CleanSpace Holdings reported its CleanSpace Holdings H1 FY26 Results for the six months ended 31 December 2025, delivering $10.1M in revenue, a 10% increase on the prior corresponding period. The Sydney-based respiratory protection manufacturer sustained its gross margin at 75% whilst improving its cash position to $9.8M, up $1.5M versus H1 FY25.

The company achieved a turnaround to positive EBITDA of $2.1M, compared to -$0.5M in the prior period, driven by a $2.831M accounting gain from the remeasurement of its NSW Health Administration loan to nil. Operating EBITDA improved to -$0.3M, reflecting a $0.1M improvement on H1 FY25 despite continued investment in sales, marketing and research and development activities. Net profit after tax reached $1.8M, reversing a $0.4M loss in the prior period.

Operating cash outflow improved to $0.6M from $1.4M in H1 FY25, whilst free cash outflow reduced to $0.4M, representing a $0.7M improvement. The company received its R&D tax incentive refund of $891k in February 2026. (ASX: CSX) operates with no recognised debt following the loan remeasurement, with lease repayments of $0.2M representing the only financing outflow.

The strengthening cash flow trajectory reflects the combination of sustained revenue growth, strong gross margins, no recognised debt, and carried forward tax losses. The company’s deferred tax asset of $7.1M is expected to cover taxable profits in the medium term, providing additional financial flexibility to support organic growth initiatives.

Europe powers 26% regional growth while North America gains momentum

Europe delivered the standout regional performance, generating $6.7M in revenue, representing 66% of total revenue and 26% growth on the prior period. Western Europe contributed 48% growth whilst the Nordics delivered 42% expansion, driven by sustained end-user demand and the company’s established distribution network across the region.

North America reported revenue of $2.1M, accounting for 21% of total revenue and 8% growth on H1 FY25. Management noted sales momentum is strengthening under the new regional team despite macroeconomic headwinds and disruption related to NIOSH regulatory changes. The CS WORK respirator product has demonstrated particular success in the region, with expanding distribution channels and improving brand adoption supporting the growth trajectory.

The APAC and Rest of World segment declined 22% to $1.3M, representing 13% of total revenue. Management attributed this decline to the timing of one-off business wins achieved in the 2025 comparative period and ongoing regulatory conditions in the Australian market. The company reported a strengthening opportunity pipeline in mining end markets, with an expected near-term product launch anticipated to drive momentum in Australia during the second half.

1. Europe: $6.7M (66% of revenue), up 26% on PCP
2. North America: $2.1M (21% of revenue), up 8% on PCP
3. APAC & ROW: $1.3M (13% of revenue), down 22% on PCP

CleanSpace added 26 new distributors during H1 FY26, expanding its market reach across priority regions. The distributor-led growth model continues to validate the company’s commercial strategy in established markets, particularly across European territories where regulatory frameworks actively promote adoption of powered air-purifying respirators as essential respiratory protection equipment.

What is a PAPR and why does the market opportunity matter?

A Powered Air-Purifying Respirator (PAPR) is a battery-operated breathing device that delivers filtered air to the wearer through a motorised blower unit. Unlike traditional disposable masks that require the user to draw air through filters by breathing effort alone, PAPRs actively push clean air through certified filtration systems, providing continuous airflow regardless of the wearer’s breathing rate or physical exertion level.

CleanSpace’s technology differentiates itself through its patented Airsensit® system and lightweight, tubeless design. Traditional PAPR systems typically include a belt-mounted power unit connected to a headpiece via tubing, often weighing several kilograms. CleanSpace’s integrated design eliminates the tube and positions the motor and filter directly on the headpiece, reducing weight and improving user comfort during extended wear periods.

The global PAPR market is projected to reach US$3.8B by 2030, growing at a compound annual rate of 6.75%, according to research firm 360i Research. Within this broader market, CleanSpace targets industrial sectors including construction, mining, oil and gas, welding, chemicals, and biohazards, representing an addressable market opportunity of US$1.4B by 2030. The company’s focus markets (Australia, France, Germany, UK, Nordics, and USA) account for US$785M of this industrial opportunity.

Market growth is driven by structural factors including workplace safety regulation evolution, heightened compliance requirements, and changing workforce demographics placing greater emphasis on duty-of-care obligations. Industrial organisations face increasing pressure to upgrade respiratory protection equipment as regulatory bodies in developed markets actively promote PAPR adoption over traditional disposable respirators in high-exposure work environments.

CleanSpace’s differentiated technology positions the company to capture market share as employers transition to powered respiratory protection. The lightweight design addresses a key barrier to PAPR adoption, with end-user feedback from Australian clinical trials highlighting the comfort advantage: “It’s definitely better to use when it’s hot, or you’re breathing heavy air and sweat… it just feels like fresh air coming in all the time.”

Product innovation and digital capability driving differentiation

CleanSpace launched its Data Insights software and SMART App during H1 FY26, introducing digital capabilities that extend beyond traditional hardware provision. The platform delivers real-time safety checks, compliance tracking, fleet management, and operational data reporting, transforming the company’s offering from standalone respiratory protection equipment to an integrated compliance and data solution.

Initial customer responses to the digital platform have been overwhelmingly positive. Frutex Australia’s Technical Manager stated:

Technical Manager, Frutex Australia

“The CleanSpace Ultra has strengthened our safety program by delivering consistent, reliable protection. Its ease of use and real-time monitoring make it an essential tool for our team.”

New product certifications are advancing through regulatory pathways, with management expecting launch in late FY26. The company maintained its strategic investment in research and development during the half, reflecting management’s commitment to maintaining product leadership in a market characterised by regulatory fragmentation and evolving compliance requirements.

The addition of digital features increases customer stickiness by embedding CleanSpace technology within broader workplace safety and compliance systems. Organisations adopting digital fleet management capabilities face higher switching costs compared to traditional hardware-only procurement relationships, supporting premium pricing and recurring engagement models.

Improving cash flow trajectory and pathway to profitability

Operating cash outflow improved to $0.6M compared to $1.4M in H1 FY25, reflecting an $0.8M improvement driven by stronger underlying cash performance. Free cash outflow reduced to $0.4M, representing a $0.7M improvement on the prior period. The timing of recurring annual expenses paid in H1 influenced the half-year cash flow position, with management noting cash at bank increased $1.5M versus the prior corresponding period.

The NSW Health Administration loan, originally established to support manufacturing capability during the company’s early development phase, was remeasured to nil during the half. This remeasurement resulted in a $2.831M accounting gain recognised in the profit and loss statement, contributing to the positive EBITDA outcome. The company now operates with zero recognised debt, with lease obligations representing the only financing commitment.

CleanSpace holds a deferred tax asset of $7.1M, expected to offset taxable profits in the medium term. This tax position, combined with no debt obligations and improving operational cash flow, provides a clear pathway to sustainable profitability without the requirement for external capital.

Several factors are supporting the improving cash flow trajectory:

• Sustained revenue growth across priority markets
• Strong gross margins maintained in the mid-70% range
• No recognised debt obligations
• Carried forward tax losses providing medium-term tax relief
• Continued investment in innovation to maintain product leadership
• Operating expense stewardship aligned with revenue growth

Management implemented price increases during H2 FY26, representing the first adjustments since 2023. The company reported broad-based customer acceptance of the pricing changes, which are expected to provide revenue and margin tailwinds in H2 FY26 and beyond. Pricing remains compelling relative to competitors despite the adjustments, reflecting confidence in CleanSpace’s differentiated value proposition.

The combination of price increases, improving operational efficiency, and zero debt provides operating leverage as revenue scales. Management’s explicit guidance for full-year cash flow positive represents a material milestone for a company at this development stage, signalling the transition from cash consumption to self-sustaining operations.

FY26 outlook and revised guidance

Management revised its FY26 revenue growth guidance to approximately 15%, reflecting improved visibility following the H1 performance and anticipated H2 momentum. Gross margin is expected to remain in the mid-70% range, supported by continuous improvement initiatives in freight costs, quality enhancements, and sourcing efficiencies.

The company expects to deliver positive operating EBITDA for H2 FY26, with full-year cash flow anticipated to be positive. Management emphasised continuing cost control discipline whilst reinvesting surplus cash to support organic growth initiatives, including expanded sales coverage, enhanced marketing programmes, and accelerated product development activities.

Key assumptions underpinning the H2 outlook include:

1. Consistent performance in European markets maintaining H1 momentum
2. Product launch plan progressing as expected with late FY26 certification completion
3. No further disruption in the US market related to NIOSH regulatory changes
4. Timing of larger sales pipeline opportunities converting as forecasted

The upgraded outlook incorporates the expected impact of H2 price increases and new product launches, suggesting accelerating momentum into the second half. Management’s confidence in achieving full-year cash flow positive status reflects the improving operational leverage evident in H1 results, combined with strategic initiatives positioned to enhance both top-line growth and margin performance.

Chief Executive Officer Gabrielle O’Carroll commented on the outlook:

Gabrielle O’Carroll, CEO

“In a growing global PAPR market, the opportunity for CleanSpace is significant. Our differentiated technology positions us well for future growth even in an uncertain macroeconomic environment.”

The explicit guidance for positive operating EBITDA in H2 and full-year cash flow positive represents a meaningful inflection point. Combined with no debt, improving cash conversion, and expanding distribution reach across priority markets, CleanSpace is demonstrating the operational execution required to capitalise on the structural growth opportunity in industrial respiratory protection.

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