Vinyl Group delivers 49% revenue surge as turnaround strategy gains traction
Vinyl Group has reported Vinyl Group Revenue Growth Results for the half-year ended 31 December 2025, with revenue climbing 49% to $11.4 million on a structurally lower cost base. The ASX-listed music company achieved this top-line expansion while reducing operating expenses by 14% to $8.3 million, demonstrating operational leverage as its turnaround strategy takes hold.
The company’s net loss after tax narrowed to $3.1 million, a substantial improvement from the $6.9 million loss recorded in 1H FY25. Operating cash outflows similarly compressed to $1.1 million, down from $4.0 million in the prior corresponding period. These results mark a turning point for (ASX: VNL), which has been working to integrate four acquisitions completed in FY25 whilst optimising its cost structure.
CEO and Executive Director Josh Simons said the results validate the company’s growth strategy. The dual achievement of revenue expansion and expense discipline creates operating leverage that could accelerate the path to profitability if momentum continues through the second half of FY26.
| Metric | 1H FY26 | 1H FY25 | Improvement |
|---|---|---|---|
| Revenue | $11.4m | $7.6m | +49% |
| Operating Expenses | $8.3m | $9.5m | -14% |
| Net Loss After Tax | ($3.1m) | ($6.9m) | +$3.8m |
| Operating Cash Outflow | ($1.1m) | ($4.0m) | +$2.9m |
| Cash Balance (period end) | $2.0m | $1.8m | +$0.2m |
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Breaking down half-year results — where the growth came from
Vinyl Group operates across two divisions: Publishing and Platforms. The Publishing business, trading as Vinyl Media, generated $8.5 million in revenue, up 45% on the prior corresponding period (1H FY25: $5.9 million). This division encompasses premium content properties including Concrete Playground, Mediaweek, Tone Deaf, and licensed mastheads Rolling Stone, Refinery29, and Variety in Australia.
The Platforms division delivered $2.9 million in revenue, up 64% on the prior corresponding period (1H FY25: $1.8 million). This stronger growth rate reflects organic expansion from digital campaign efforts across the company’s three technology platforms:
- Vinyl.com – E-commerce platform with over 60,000 titles, achieving record sales of $2.5 million in 1H FY26
- Vampr – Social-professional network and talent marketplace with 1.6 million creators across 190+ countries
- Serenade – Physical and digital collectibles platform supporting more than 200 global artists
Gross profit expanded to $5.2 million (1H FY25: $2.6 million), with gross margin improving to 45.3% from 33.8% in the prior period. Cost of sales as a percentage of revenue declined to 55% from 66%, reflecting improved pricing power and operational efficiency. The company has incorporated AI into its platforms and internal processes to drive efficiency gains.
Revenue diversification increased during the half, with strong contributions from the Events business complementing Vinyl.com’s record sales performance. This broader revenue mix reduces reliance on any single channel and provides more stable cash flows.
Cash flow positive quarter marks inflection point
Q2 FY26 represented a milestone for Vinyl Group, delivering an operating cash flow positive quarter with net inflows of $305,000. This result demonstrates the business model is generating cash from operations, not merely cutting expenses to slow the cash burn rate.
The company’s cash balance stood at $2.0 million at 31 December 2025, up from $1.8 million at 30 June 2025. This improvement was achieved through a combination of drawing on the company’s line of credit facility and improved operating cash flows. For the full half-year period, operating cash outflow of $1.1 million compared favourably to $4.0 million in 1H FY25.
The quarterly cash flow positive result provides validation that the company’s integrated model can generate sustainable cash returns once scale is achieved. For small-cap investors concerned about capital raising risk, the Q2 FY26 performance reduces the probability of near-term dilutive funding requirements.
Understanding operating leverage in media businesses
Operating leverage refers to how profits can grow faster than revenues once a company surpasses its breakeven point. Media businesses with high fixed costs in content production, technology platforms, and staff exhibit particularly strong operating leverage characteristics. Once infrastructure is in place, each additional dollar of revenue delivers higher profit contribution.
Vinyl Group’s results demonstrate this dynamic in action. Revenue grew 49% whilst operating expenses fell 14%, creating a spread of 63 percentage points of operating leverage. The gross margin expansion from 33.8% to 45.3% amplifies this effect, with every incremental revenue dollar now contributing more to covering fixed costs and ultimately profit.
For Vinyl Group specifically, the model combines high-margin digital platforms with content assets that can scale distribution without proportional cost increases. AI integration into platforms and internal processes further reduces variable costs per transaction. This creates the potential for accelerating profit growth as revenue scales, with the path from the current $3.1 million loss to breakeven potentially shorter than linear extrapolation would suggest.
The company’s performance in 1H FY26 suggests the early stages of operating leverage taking effect. If revenue momentum continues on the existing cost base, the improvement rate in profitability could accelerate through subsequent quarters.
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FY26 guidance and strategic outlook
Management confirmed full-year FY26 revenue guidance in the range of $22 million to $25 million. With $11.4 million already achieved in the first half, this implies second-half revenue of $10.6 million to $13.6 million. The company acknowledged that Q3 traditionally represents the weakest seasonal quarter, which may moderate near-term growth rates before a stronger finish in Q4.
Vinyl Group is building an integrated advertising model where premium cultural assets, technology and distribution work together to deliver meaningful brand connections at scale. The company is crafting campaigns that utilise both existing channels (legacy and social) and emerging channels (AI and cultural assets) to target niche audiences at scale.
Josh Simons, CEO and Executive Director
“We are building a unique portfolio of premium cultural assets, including publishing, technology and youth audience reach, that connect music creators, fans and brands in an integrated ecosystem. These financial results show that our growth strategy is working, with strong revenue growth on a structurally lower cost base. We have positive momentum on the path to profitability and we remain confident in the growth potential ahead of us.”
Management continues to evaluate selective acquisition opportunities that align with the company’s capital allocation framework. These potential transactions aim to accelerate earnings and cash flow generation, consolidating Vinyl Group’s position in audience reach. The focus remains on accretive acquisitions that enhance the integrated model rather than purely revenue-focused deals.
The company’s strategy centres on owning both the cultural assets that engage audiences and the technology platforms that monetise those relationships. This vertical integration differentiates Vinyl Group from pure-play publishers or standalone technology platforms.
What to watch next
Several catalysts will determine whether Vinyl Group can maintain momentum through the remainder of FY26:
- Q3 FY26 performance: Management flagged Q3 as seasonally weak. The extent of revenue moderation will test whether the company can sustain cash flow positive operations or reverts to quarterly outflows.
- Sustained cash generation: Q2 FY26 marked a cash flow positive quarter. Investors should monitor whether this becomes a consistent trend or a one-off result.
- Accretive acquisition completion: Management’s commentary on selective M&A opportunities suggests potential transaction announcements. Deal structure and integration execution will determine value creation.
- Gross margin trajectory: The improvement from 33.8% to 45.3% is substantial. Whether margins stabilise at this level or continue expanding will influence the timeline to profitability.
The company’s guidance confirmation provides visibility on the full-year revenue trajectory. However, the implied second-half run rate of $10.6 million to $13.6 million will need to account for Q3 seasonal weakness, suggesting Q4 FY26 may require strong performance to hit the upper end of guidance.
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