Bubs Australia Limited (BUB) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Bubs Australia Limited 1H '22 results presentation. [Operator Instructions] I would now like to hand the conference over to Kristy Carr, Founder and CEO. Please go ahead.

Good morning, everyone, and welcome to Bubs Australia investor presentation on the release of our interim results for the first half of the financial year 2022 as were published on the ASX this morning. As per the introduction, my name is Kristy Carr. I'm Founder, CEO of Bubs Australia. And with me, I have our Executive Chairman, Dennis Lin, who is calling in from Los Angeles as he sets out our American business over there; and Iris Ren, our Chief Financial Officer. They will join me in presenting the results. And then at the end of the short presentation, we will open up the call to questions. We will provide instructions on how to make those questions at that time. So needless to say, the last 2 years have been somewhat turbulent, I think, for all Australians and certainly, for Australian business. And our industry and our company were certainly not immune to those disruptions that caused the onset of the COVID-19 pandemic. However, I am very pleased to report that Bubs has survived that initial onslaught, and I'm very confident that we are now well positioned to return to our high growth agenda. We acted early in the pandemic and did a number of things in terms of reengineering our supply chain and executing our operational response to the disruption caused by those border closures. We then set in place a rebuild strategy, which included protecting our home market heritage, reimagining our supply to our Chinese consumers through our Bubs Daigou 2.0 strategy as well as focusing on our international expansion, with the U.S.A. market really spearheading that international development. And I think our half year results reflect this uncompromising strategic focus and our ability to execute. And I think that's a true reflection of the DNA and our corporate culture and what I try to instill in all of our team and to be able to respond when times are tough, to renavigate and to be able to perform in that high-growth agenda that we set out to achieve when we first publicly listed the company. We are now very confident that we can continue to innovate and thrive regardless of what the macro environment sends our way. So just to touch on the key highlights of the first half results. We measured ourselves against 5 key health metrics in our financials that we set out to achieve, and they were delivered in the first half ahead of plan. We achieved record revenue, both at a gross and a net level, so that we could return to that high-growth trajectory that we were on pre-COVID. We delivered for the first time our positive EBITDA. We delivered significant improvement in gross margins across the group, but also in our key product margins. We delivered a cash-generative position with positive cash flow over 2 consecutive quarters and finished off with a robust cash balance with the working capital needs to support our future growth. In terms of those strategic milestones that we delivered, we doubled our infant formula sales, which is the lead margin driver of our portfolio. We expanded our portfolio across the Bubs brand by launching 16 new products across 3 different product market segments and launched them successfully into 8 different markets. In terms of our 3 key regions, we continue to deliver strong growth in our domestic retail scan, with both significant increases in scan growth, in volume, value and in market share. We also reinvented our corporate Daigou strategy. And now I'm pleased to report that our corporate Daigou sales have returned to high growth and factor at record levels beyond what they were pre-COVID-19. In addition, we focused on North America as our second lead export market for future potential. And not only were we able to bring our sales live onto the major e-commerce platforms that we informed the market of at our AGM and last results, but we were also able now to secure our first in-store range in bricks-and-mortar accounts in Ralphs supermarkets. Just to go into this in a little bit more detail in terms of the strategic milestones. We have many different segments of the -- of Bubs products that tap into consumers' needs across many different parts of their nutritional consumption pattern. But all -- and that extends across baby food and toddler snacks, vitamins, and we also have a portfolio of adult dairy nutritional products, both in the goat and cow milk sector. However, it is our infant formula that remains our key margin driver and most profitable sector of the portfolio. And it is -- therefore, that is where we focus a lot of our investment. So across all channels, Bubs infant formula sales doubled through the period. In our domestic home market, which is very core to our entire strategy that we are a true authentic, Australian brand that was founded back in 2006, and we continue to nurture our Australian consumers and develop a range of product portfolio with over 40 offerings under the Bubs banner across different retail outlets for Australian consumers. We are pleased to say that Bubs Australia remains the fastest-growing infant formula manufacturer in the domestic retail space, growing at over 31% across Coles, Woolworths and Chemist Warehouse combined, by far the large majority of infant formula retail sales in Australia. The Daigou channel has been not only a very lucrative channel for Bubs and our development of our brands into China, but also very important for us for building awareness, educating and recruiting consumers to the Bubs family of infant formula products. The Daigou channel was certainly the most hit during the pandemic, and we are pleased to say that we've been working with our strategic partner, AZ Global, very closely to turn that strategy around with Bubs Daigou 2.0. And as I said, sales are now exceeding pre-COVID levels, up 276% compared to the prior period. And we'll go into a little bit more detail about our new Daigou strategy later in the presentation. And then most exciting, we have secured our first bricks-and-mortar retail account in the U.S.A. with a supermarket chain, which is called Ralphs, which is the largest food retailer in Southern California. It comes as a subsidiary of the Kroger banner. And we've also listed the Aussie Bubs' goat and cow toddler milk products on the 3 largest food distributors in North America. Just in case anyone thought that no one was busy at Bubs Australia, I wanted to share with you our innovation portfolio. And innovation remains at the forefront of how we intend to grow the business. So whether we're innovating in strategic approach, in new market development or in product portfolio, it's really built into the DNA of our corporate culture that we will remain innovative. We will stay ahead and abreast of consumer trends, and that we will be able to expand the Bubs brand across many different segments of mom and babies' nutritional needs across the life stage of their development. So really quite an extraordinary feat across 6 months of the reporting period. We launched 18 products across these 3 -- sorry, 16 products across these 3 consumer segments. Firstly and most importantly, our Aussie Bubs, after going through a long process of FDA registration for the toddler range of cow and goat milk grass-fed products, have launched into American market, first on e-commerce retail in both its larger pack format as well as single-serve sachets. We also, during the half, expanded our baby food range to tap into the plant-based movement trend that's happening across the international shopping landscape, retail landscape. And Bubs Organic has relaunched its Plant Burst baby food range, which has spread across Chemist Warehouse here in Australia as well as in New Zealand and also into our export customers in the Middle East, Taiwan, Malaysia and Singapore. In addition, we launched our Bubs Family Nutrition milk powder products, which are cow milk-based products in both full cream and skim milk in various different formats. We extended these products into our existing customer network across China and Singapore, but it also allowed us to tap into new export markets that we haven't been able to before because of the value chain or the barrier in regulatory guidelines in those markets. So these products have also been sent to Seychelles in East Africa and to the Pacific Islands. Thank you. My apologies, everyone. Technical difficulty, I got cut off there. So I think that you heard around the positive EBITDA profit and the top line gross revenue. We also had significant improvements in our group margin, delivering 38% across the group, and we'll share a little bit more detail around that group gross margin improvement as well as our product margins, where we also had significant gains with both infant formula gross margin, our hero product increasing from 34% to 38% and our branded products also increasing from 21% to 30%. As I said, very pleased to see infant formula driving that growth, with sales doubling over the period. And we ended with a robust balance sheet with 2 quarters of positive cash flow. If we just reflect on the COVID journey, this is the -- this chart represents our top line revenue over the last 2.5 years by quarter. And we've kept it as quarterly so that you could see the impact of COVID on the business and how we've been able to rebuild. So we can see in quarter 3 FY '20, that's when we -- the initial onset of COVID-19, where there was a surge in infant formula through pantry stocking, which followed for the following 6 months where the international borders shut and it caused a collapse in the retail Daigou channel and the way in which we routed a lot of our products China. By quarter 2 of FY '21, we reset that strategy. In particular, we worked closely with our corporate Daigou partner to be able to move through that transitionary period, a period of resilience for the company and the brand as we work to bring inventory and our value chain back into balance. That allowed us to instigate our new growth turnaround strategy, which we put in place on the -- in July. For quarter 1 FY '22, we've gotten a significant uplift in growth, and then we're very pleased to be able to sustain that growth momentum going into the second quarter to deliver our highest record revenues. In terms of that total revenue breakdown, you can see here on the left our gross revenue increasing after that FY '21 significant hit from the pandemic. We've now increased those revenues, as I said, up 73% on a gross level and up 84% at a net level, so significant acceleration in that top line revenue. In terms of our key markets and where that revenue trajectory has come from, our domestic retail, so our branded products across the whole portfolio in domestic retailers has grown, despite the category being in decline. And we have increased sales 8% on the prior period and 26% on last half. In China, you can see this was our clear lead export market and clear driver of the business. We now combine our export corporate Daigou sales out of Australia with our inbound cross-border e-commerce sales to collectively make up our China figure now that the ecosystem has really merged into an omnichannel platform. And you can see now that we had a $21.7 million generated out of our China business, which is up 137% to the prior period and up by 88% on the half. And that's got all key elements of the channel, whether it be in Daigou 2.0 or cross-border e-commerce in -- back into growth mode. And then obviously, international has been an increased focus for us over the last few years, and we will continue to prioritize expanding the Bubs brand to markets around the world. So our international business has increased 164% on prior year and is starting to make more of a material contribution to the overall business. I'll now hand over to Iris Ren, our CFO, to talk through the specifics around those key financial metrics.

Thanks, Kristy. On Slide 14, we have achieved EBITDA profit of $1.2 million, which is mainly driven by significant improvement of gross profit and the disciplined OpEx spend. Management has been focusing on the following key factors to improve the gross profit: optimize the trade spend investments, optimize the channel mix and product mix, improve supply chain efficiency and inventory provision reversal. This has resulted in the group's gross margin of 38% in first half '22. In financial year '21, due to the prolonged uncertainties caused by COVID, we took a conservative forecast position, which resulted in a significant inventory provision balance, contributing to negative 19% gross margin. Subsequently, we have seen the business performance turn around, which enabled us to reverse the provision and realizing cash from sale of the goods. If we could move on to Slide 15. On the right-hand side of the slide, we could also see the product margin for branded products has improved from 21% to 30% and goat infant formula margin has improved from 34% to 38%. The next slide sets out a key overview of our half year results. Gross revenue increased 75% to $38.5 million. Revenue increased 84% to $33.6 million, which is the reflection of more effective trade spend investment. Group gross margin increased to 38%. Moving on to OpEx. Distribution over revenue ratio has reduced from 5% to 3%. Marketing costs and employee costs have increased compared to financial year '21 to support the business growth. Admin cost has decreased 17%. All the above factors have contributed to our first EBITDA profit of $1.2 million. Now we're moving on to channel mix. While we maintained the strong position in domestic front, the increased revenue and margin contribution is from China, with Daigou increased 276% and the CBEC increased 53%, overall China contributing 56% of the group revenue. Contribution from other international markets has increased to 21%, with major expansion opportunities developing in U.S.A. We've always focused on the growth of our key product, infant formula. Our infant formula portfolio has doubled compared to 12 months ago and is now contributing 58% of the group revenue. Next, we have our adult goat dairy products, contributing 24% of the group revenue, with the key product adult goat milk powder increasing 41%. Looking at the strength of our balance sheet, we have achieved 2 consecutive positive cash flow quarters and have a strong cash position at the end of December to support the future growth. I'm now handing over to Dennis to talk about strategic road map.

Thank you very much, Iris, and thank you to everyone for joining today. The -- moving on to, I guess, the strategic road map after Kristy and Iris' presentation. I think if you look at our business and going back to the time we listed in 2017, what COVID has really taught us is that our initial strategy has been very sound. The key element for us over the last 2 years has been effectively navigating ways to actually continuing to execute that particular strategy. And what does that actually involve? Looking at the page there, it involves protecting the home-based heritage that we have here in Australia that we are very proud of and continue to be proud of, that we are able to sustain the value chain confidence. We've always been a vertically integrated model. And I think COVID has taught us that and some in terms of what we can do to continue to enhance that and also finding cost efficiencies throughout that particular process. We have seen China channels continue to merge more and more, but the consumer demand, as far as our products are concerned, has not waned. And as a matter of fact, we are finding that they are continuing to grow and increase. And obviously, further, the export diversification, which I'll spend a little bit of time on, given that I am in sunny California today. So moving on to -- I guess, first of all, looking at initially the COVID response and the operational plan that we had. It's -- I'm glad to report that we have now put COVID behind us, even though there are still remnants of supply chain congestion and so forth. But as far as we are concerned, we've dealt with 2 years of uncertainty. It's not just that we've had enough of COVID. I think we've dealt with enough black swans that we have a sense of confidence that despite the volatility, the team that we have is incredible and we'll be able to continue to respond. And that is reflected in the fact that we've put out 4 key operational priorities just over 12 months ago. And I'm very glad to report that they are now all complete, either on time or ahead of time. Looking at the diversified revenue streams that we have. We spoke about Australia. We spoke about China. People do ask us quite often about the geopolitical tension and the issues. I would probably say at this particular juncture, we would all want the geopolitical situation or the trade tension to be easier for us. But at the same time, we've just delivered 6 months of results that have shown, ultimately, consumer rules and the supply/demand will always be the fundamental rule to, I guess, our industry. So as long as we are providing quality products, we will be able to find ways to deliver them to consumers' hands that want them. Certainly, international continues to be an area that we focus on. We have moved into Southeast Asia. And certainly, the U.S.A. and North America generally is our next frontier, which we would love to actually talk about. And as we have mentioned in the past, our business-to-business solutions, particularly through our Deloraine Dairy solutions is an area that we're really looking to grow as well. So looking quickly at domestic, Kristy has mentioned earlier on that we have been able to really grow for multiple category segments. I think it's particularly pleasing to call out the -- our organic profit that, albeit from a relatively low base, has actually grown 93% PCP. It's a real indication that Bubs is becoming a brand that is able to cater for, I guess, different products. And this speaks to, I guess, the consumer group as a brand rather than as -- only as a product. That is, I guess, further reflected on the right-hand side. You'll be able to see that our market share has genuinely grown throughout this particular time. And if you look at the scan sales without talking about the overall category and what's happened, you can certainly see that we've grown by 31.1% against, I guess, our industry peers that have them being as lucky. So that's always pleasing to see. Now when we talk about China, there are particularly 2 channels. One is obviously the Daigou channel, which we continue to support. And we continue to remain optimistic, and we believe that we have reinvented that particular channel. But before we do that, I think it's important to recognize the CBEC, the cross-border e-commerce channel. And you'll see there that we have continued to grow that particular channel and distribution into that to the point where we are getting 53% growth PCP. And we are the #1 Australian goat formula brand. And thankfully, we've got a trophy to prove it. And we are #7 in the total category during the Double 11 campaign. So you can see that in terms of our growth, we are coming from multiple channels and multiple products. And that, in this current environment, is really important to us to make sure that we are managing both the opportunity as well as the risk in an otherwise volatile environment. Looking at Daigou, and I think this one is worth spending a little bit of time on because really, this has been a key driver for our business over the last 6 months, despite the borders being shut -- and someone mentioned to me that the Australian borders were shut for nearly 700 days. So of that 700 days, the Bubs team have been able to effectively find a different way of getting, I guess, our products into the consumer hands through a reimagined and reinvented Daigou channel. And you can see here, especially the -- I guess the diagram, which we've tried to represent on the right-hand side, the power of the Daigou channel together with Bubs, and we're sort of calling it a brand Bubs channel, is that Bubs is vertically integrated. And therefore, to the extent we are looking at new products or to the extent that we're needing to make adjustments, we're able to do that very, very quickly. And so we're able to actually get the channel and consumer feedback in real time and be able to actually adjust that so that we're able to actually continue to cater to the consumer. Obviously, that also requires an underlying innovative mindset, which is very much in our corporate DNA. The reason why we are always interested and will always be a supporter of the Daigou channel is because you can see there that, that particular channel has that direct end consumer relationship as well as new user acquisition. And that really goes down to also numbers and facts. By being able to do this, we're effectively building communities without needing to put our ads on big billboards. And what that means is we are able to spend our marketing in a much, much more targeted way. And as a result, if you look at purely our percentage of marketing as against sales, it may look a little bit different relative to our industry peers, but that's because for us, we are first and foremost a community brand builder before we go into, if you like, a -- more of a broader marketing campaign, which we'll always do because ultimately, we are a brand-led business. Looking at now the Bubs global growth agenda, I think this is where it gets quite interesting. You can see there that we've sort of been talking about one brand, one family, one world. It's much easier to be building, I guess, a portfolio with one single brand that speaks to the target market. And you see there that these are just underlying numbers. Australia gets about 300,000 births a year. China has about 10.6 million, and the U.S. has about 3.6 million. The reason we sort of wanted to sort of show this is we spoke about the domestic heritage. It's also about the ability to execute because by purely looking at those numbers, it doesn't really mean you're going to be able to actually capture those very opportunities. So we believe that we have been relatively good in executing and penetrating Australia. We believe we have barely touched the surface in relation to China. That's why you look at the 10.6 million births relative to, I guess, what we are selling into China. We believe that there's still a lot to go for us. But then looking at the U.S.A., we certainly see and feel that there is now a really good gap in the U.S.A. that would allow an independent boutique brand to enter the market, and we will bring all the discipline of executing in Australia and China to what is otherwise a very, very large market in the U.S. And so if you look at, I guess, our key credentials, it's the fact that we are an authentic brand with global appeal for millennial moms. We do have a team experienced in -- with critical capabilities in the infant nutrition sector. We have an in-house R&D team. And we do have a very unique approach to forging strategic partnerships and alliances to make sure that we're able to just get slightly ahead of the curve in building up that catalyst to growth. Now looking at the U.S.A. in particular, I'm putting a bit of a spotlight there, which is, I guess, where I'm situated now. You can see there that in Australia -- and this is independent information, there's about sort of just over 2,000 supermarkets and grocery stores, whereas in the U.S.A., you've got 63,000. And if I look at how Bubs has done it in Australia, we are now in sort of circa 2,000 stores in Australia, and we have about 3.9% of the overall market share in basically a country where there are 294,000 births a year. Switching over to the U.S.A., you can see with 63,000 stores and 3.6 million births per year, it is a significantly larger market, and some would say albeit competitive, it probably hasn't really been as innovative as some of the other jurisdictions that we have seen, and that's why we believe that there is an opportunity. But at the same time, we remain very cautious and disciplined in terms of our thinking and where we may get to. But you can see at the bottom there that we have announced the launching of the Bubs products into the Ralphs stores that will take place next month. And we do have a level of confidence that we'll get to about 3,000 stores by the end of the calendar year, but very importantly in the right areas. So going down to, I guess, our broader plan in relation to the U.S., you will see that we've completed effectively phase 1, which is to get on the major e-commerce platforms with our 2 top products, being our grass-fed and our goat toddler formulations under the Aussie Bubs brand. Under Phase 2, we are now en route. We're also listed with the 3 key distributors. And we are expecting to be able to, I guess, make sure that we are able to get into the right demographic areas during the course of this particular calendar year. And naturally, we are an infant nutrition brand and business. So we are certainly looking very, very closely at a different way for us to be able to actually move into infant nutrition expansion. And certainly, we are in active discussions with the FDA here in the U.S. about that. So looking at, I guess, overall as a summary and outlook before I open up to questions. Look, it's been an incredibly challenging 2 years, but it's also been an incredibly enriching, learning experience for us and the team. And we're very grateful for all the support that our stakeholders have given us. And you can see there that hopefully, we are repaying the faith by making sure that we are kicking off quite a few items. And certainly, we feel we've done that during the first half but with still much more work to go. So during the second half, we will continue with our strategic focus. It's likely that we will be continuing with our innovation that is at the heart of our corporate DNA and making sure that we are able to, I guess, continue to kick as many goals as we can and remain, I guess, true to the DNA in building it into a fantastic business that Kristy initially founded 16 years ago. So -- and in looking at, I guess, how we might close out the year, we do feel the last 6 months have been a bit of an inflection point for the business. And therefore, we are expecting our business to continue to grow, although there will be a seasonally sort of lower, I guess, result expected during quarter 3. But in terms of the half year to close the year out, I must say we, together, as a team, feel relatively confident despite the macroeconomics. So that, I guess, completes the presentation. We will now move to questions. And if I could perhaps ask if I could perhaps ask Kristy and Iris to unmute themselves in case we need to actually, I guess, ask you to answer some of those questions.

First of all, we had a question from [ Sam Xi ]. [ Sam ] asks, congratulations on the results. Is there any update on SAMR registrations? The -- [ Sam ], thank you very much for your question. At present, we don't have any additional update, negative or positive, in relation to SAMR. But as you can see, despite that, we are certainly still very focused on growing our China business in a very profitable way. The next question is from [ Brian Lee ]. Now [ Brian ] has asked quite a few questions. But [ Brian ], if it's okay, I might deal with them one by one in turn. The first one is, has Bubs been in talk with supermarkets, i.e. Coles, Woolworths, to further expand its product offering behind baby formula such as baby food pouch. Currently only Bubs is visible, and parents like myself buy baby food in supermarkets, not pharmacy like Chemist Warehouse. Kristy, did you want to answer that question?

Sure thing. Thanks, [ Brian ]. So yes, we are absolutely always talking to the major grocery players, Coles and Woolworths. And about our full range of products, as you know, over 45 products on offer under the Bubs banner, certainly, our focus is around infant formula, and we have just been through our infant formula reviews for Coles and Woolworths, which happen once a year and got some very pleasing results to be able to have retain our infant formula product line, which extends from infant all the way through to junior nutrition across both portfolios in our goat and our cow segments. And as you saw, our cow grass-fed organic infant formula line is in rapid growth and is really starting to increase share in that organic segment of the market. In terms of food, it does remain a challenging space particularly on pouches. We mentioned CUB, which is Coles home brand, and home brand has really started to take a very big shelf presence among the food line. So we have not yet been successful in getting the pouch baby food into Coles and Woolworths, but we will -- at this review, we have just been successful in getting part of the toddler snacks and teething range into Coles. So that was a really pleasing first step, and we will continue to focus on some of the premium organic and independent sort of retail chains, like the IGAs, which you will find our baby food pouches, but also some of the other chains. We're quite well progressed with discussions with Paris Farms, for example, on the new pouch line. But currently, sales are really going very well in Chemist Warehouse and have provided us with a good footprint.

Okay. Now thank you very much for that, Kristy. The next question, which Kristy, I might get you to answer as well. It's also from [ Brian ]. The visibility of Bubs infant formula is very poor on Amazon mostly due to competition and search algorithm where it displays bibs instead -- maybe we should sell some bibs. Has Bubs considered to set up a Bubs Amazon store, exclusive Bubs page on Amazon, rather than just a single product listing? Kristy?

Yes. So I will have to send you a direct link, [ Brian ]. I'm not sure why it's not coming up in search for you. But over the last year, we have set up our own Amazon store, and the Bubs Amazon store is actually in very high growth and ranges our entire portfolio of products. And we've also just replicated that, obviously, in North America. So Amazon is becoming more and more a focus for us across our e-commerce sales, but albeit off a small base and something that we will continue to develop and improve on.

Now -- thank you, Kristy. Now the third question from [ Brian ] is perhaps for me. So with birth rate falling in China, and Chinese governments push for breast feeding and its own domestic brands, which market will Bubs' main focus carrying forward over the next few years? Can Bubs remain profitable if it excludes the Chinese market? [ Brian ], look, as a brand that was founded by moms, I'm going to say first and foremost, we absolutely promote breast feeding as much as the Chinese government. So we have no issue at all to actually be able to actually help mothers. That was why the brand was actually founded in the first place. In terms of the Chinese government's push for its own domestic brands, that's a present issue. But at the same time, I think it's no different to, I guess, any market. Consumers will always want choice. And the question is, is our brand clear and unique enough for a consumer to actually want to pick our product? And that's why, I guess, we're in business. And that's why we are in fast-moving consumer goods. We're not scared of competition because we are confident that we'll find a way to, I guess, stand out from the crowd. So China, despite the falling birth rate, is still a very, very big market. I think we sort of just showed even though it's falling, we're still talking about a market that's nearly 3x as big as the U.S., which is 10x bigger than Australia. So I don't think we can possibly say we're going to get out of China, full stop, because the market will always be big. and when the market is big, that means there will always be a demand for a business and products like ours. So I think that China will always be a market for us. In terms of your question, can Bubs remain profitable if we exclude Chinese market, I think our goal will always be profitable across all channels and across all products. But certainly, China will always be at the forefront. So to answer your question, I'm not sure I would ever exclude China because it's a little bit -- it's a bit like asking would Bubs be profitable if you were to exclude Australia? Well, it's part our DNA. So our goal is to be profitable across all the channels and across all the products. So that's -- those are the questions from [ Brian ]. The next one is a question from [ Jay ] or [ Bumet ], sorry. So [ Bumet's ] question is perhaps for me. It's -- you have mentioned that the margin improvement priority is complete. Given that the margin is 30%, in brackets, without stock provision reversal, is 30% roughly where management expects margin to be in the future? Thanks, [ Bumet ]. [ Bumet ], look, thank you very much for your question. And my apologies if I have, I guess, miscommunicated that. When I sort of mentioned margin improvement, it was because our margin was so eroded during COVID. It was important for us to bring it back on track. And therefore, in our mind, we have brought it back on track and had recovered from, I guess, the COVID impact. In terms of where we want to go, we have an aspirational goal of getting to at least 40% gross margin, and that remains our goal. So no, it's not we won't be happy with 30%. So thank you very much for asking that question and giving me the opportunity to clarify it. The next question is from [ Sam Xi ]. So [ Sam ] asks, in relation to Double 11 sales event, could you please give some color on how Bubs approached this? And how should investors take these results, i.e., the Blue River increased marketing spend just for this event? Or should we just look through this as an anomaly? Thank you. Kristy, did you want to take this one on?

Certainly. So Bubs had a very successful campaign this year for Double 11. And it is a big time of the year for us and certainly our largest sales on the CBEC platform throughout the year. Throughout that period, if we look at Alibaba, for example, the Tmall Global campaign, we were #7 in the total category, and that includes across all Chinese and imported goat formula brands on the Tmall Global platform and the #1 Australian goat formula brand throughout the campaign. So when we look at our Double 11 strategy, as we do with some of the other key festival events throughout the year, we ensure that we are not just focusing on a GMV, the highest GMV, which is the gross merchandise value, the highest platform sales that we can possibly deliver, but making sure that we can manage the entire ecosystem in a sustainable and balanced way moving forward because quite often, you can have such a surge in sales of Double 11 that -- and then through to 12/12 that you can have an oversupply into the market that exceeds demand, and then your pricing throughout the entire channel can come -- become quite stable -- unstable, sorry, through that following the subsequent months, which tend to be very quiet over Chinese New Year in January and February. So there's a different sort of strategic overlay other than just sales. And I think ranking is an important one. Obviously, every brand has their own strategy to cross-border e-commerce depending on their origin but also very much depending on their brand life stage. Blue River, you mentioned as an example, certainly invest very heavily in marketing not just throughout the campaign, but very much across the China landscape, with cross-border e-commerce really driving their sales strategy. Whereas with Bubs, we look more at the total ecosystem and where we can get the most return on investment for our marketing budget spend throughout the entire channel.

Now thank you very much, Kristy. And [ Sam ], thank you very much for that question. We have another question. Let me just double check. Okay. So the next question is from [ Jay ]. When do you expect to achieve net profit after tax to be positive? Thanks, [ Jay ]. [ Jay ], look, I can hand it over to Iris, but certainly, having dealt with, I guess, the period that we've had, we feel a lot more comfortable in terms of, I guess, the strength of the business model and where we can be. But the world remains a little bit volatile and unpredictable. So in terms of when we might expect to achieve an NPAT positive, my only answer for you is as soon as management is able to do so. I can guarantee you that we won't be delaying it just for a nice price. Iris, did you want to answer that question or add to any of that?

Yes. Thanks, Dennis. I think from the tax recognition perspective, given that we have quite a significant balance of unutilized tax losses accumulated over the years, we're getting into the profit outlook. We are able to take advantage of that and then -- which would contribute into the tax benefit that would close the gap at the bottom line. Thank you.

Now thank you very much. I think that completes all the questions that have been asked. Unless we had anyone else that wanted to actually ask any additional questions, I would certainly suggest that you do so now. We have about 8 minutes left. Well, I might give everyone just another 30 seconds before we close out this session. Okay. Well, I think -- look, thanks, everyone, for attending this session, and we do hope you found it informative. The -- I might now hand it back to Kristy to close out the session before we hand it back to the operator. Kristy?

Thank you. Thank you, Dennis, and Iris, and thank you, everyone, for joining. I think that's a good line of questioning related to our current business, and we look forward to delivering a similar level of high performance in the second half. So thank you for joining.

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.