I would now like to hand the conference over to Mr Mark Winter, Chief Executive Officer. Please go ahead.
Thanks, Kaylee. Kia ora, and welcome everybody. I'm Mark Winter, the CEO of My Food Bag, and today I'm presenting alongside our CFO, Louise Newsome. Thanks for joining our update around our full year results for the period ending 31 March 2026, which going forward through the presentation, we'll refer to as FY 2026. In terms of today, we'll cover three key areas, provide an update on our business through FY 2026, a review of our financial performance for the year, and then we'll talk about our outlook for FY 2027. Turning to FY 2026 and review. Today, we're reporting revenue of NZD 170.2 million for FY 2026. This represents growth of 5% on last year. EBITDA came in at NZD 16.4 million, and net profit after tax was NZD 6.7 million, up from NZD 6.3 million in FY 2025.
We've maintained gross margin in line with prior years and grown and improved the lifetime value of active customers by continuing to be more relevant through greater flexibility, convenience, and value. A final dividend of NZD 0.0115 per share has been declared by the board, and that'll be paid in June. Turning over. FY 2026 has been a year focused on growing quality active customers through the ongoing delivery of our strategy. Over the past 12 months, we've maintained our focus on quality, convenience, and value, and this has contributed to improved customer retention, loyalty, and higher order frequency. These are all attributes of a stronger customer base. Our gross margin of 49% was above our five-year average, and this reflects supply chain optimization work, innovation, as well as our pricing.
The My Food Bag Shop continued to grow, expanding our range of gifting, care package, and ready-made meal products, while also helping us attract new customers with a more flexible operating model. We also continued to expand our health-led offering, leveraging our strong nutrition expertise and partnerships, helping more New Zealanders find meal solutions suited to their lifestyles and wellbeing goals. Our employee engagement continued to increase. This is a result of our commitment and investment in the organization culture and capability, the key contributor in our ability to execute on our strategy. Financially, we further improved our free cash flow generation to NZD 8.5 million. That allowed us to further strengthen our balance sheet by reducing our net debt by more than NZD 5 million, while also increasing the dividend payments to our shareholders. Our purpose remains to help Aotearoa New Zealand eat and live well.
This purpose guides our customer-centric decision making and shapes how we innovate across our brands, our products, and ultimately, our customers' experiences. As health, convenience, and personalization become increasingly important to consumers, we believe My Food Bag is well-positioned to continue to meet these changing needs. Business update. Our strategy remains focused on growing active customers with the objectives of strengthening our leadership in meal kits and continuing to expand into the wider online grocery category. Everything we've delivered during FY 2026 has been underpinned by our four strategic areas of focus shown on this slide. Firstly, brand value and advocacy. We continue to leverage our portfolio of brands to drive higher customer engagement and loyalty while continuing to communicate and demonstrate our value for money. Secondly, convenience. We've further helped customers save time through flexible delivery options, a wider ready-made meal range, faster recipes, and a seamless digital experience.
Ultimately, we solve the problem of what's for dinner tonight. Thirdly, flexible solutions. We provide customers with more flexibility and tailored options to suit their different lifestyles, dietary preferences, and health needs, personalizing their experience with us. Finally, our focus is around unlocking new customer segments and occasions. We've expanded beyond subscriptions and into new channels, audiences, and purchasing occasions throughout the year. All of this is underpinned by an efficient operating model with ongoing investment into our supply chain, data and technology, and culture, core enablers of our strategy. Over the next few slides, I'll talk through some of the progress we've made on these strategic objectives during FY 2026. Turning to slide nine, clear strategy, consistent execution. Our portfolio of brands are aimed at meeting New Zealand household needs across a range of consumer segments.
As New Zealand's highest-rated meal kit, My Food Bag continues to be our leading brand, and we've continued to build trust and loyalty with customers by providing the flexibility they want. For example, we've continued to invest in the menu to expand recipe variety and further personalize options for our customers. Bargain Box remains very well-positioned as New Zealand's most affordable meal kit. We continue to appeal to customers' sense of value by providing everyday savers, a range of grocery extras, and with campaigns like Saver Flavour, well-received by customers on a budget. During FY 2026, we further expanded our health-led offering through the Diabetes Plan in partnership with Diabetes New Zealand, and launched a GLP-1 support product. We've also seen continued growth in our gluten-free, low-carb, and high-protein offerings.
In FY 2026, with strength and convenience for customers through the My Food Bag Shop, which has delivered reduced lead times and allows for one-off deliveries. Within meal kits, we've implemented the likes of smart packaging to allow customers to have right-sized packaging, reducing waste and lowering costs. For customers wanting more flexibility, one of our successful initiatives this year was the launch of Double Protein across all of our brands, where customers have the ability to increase the protein in their chosen recipe. This is just one example of many customized enhancements that we're undertaking and more planned ahead. Stepping back, what I can say is that collectively, our brand initiatives are growing consumer engagement across multiple segments and occasions. Turning to slide 10. The My Food Bag Shop has continued to unlock demand by offering one-off purchases beyond subscription, with shorter delivery times to consumers.
Over the past year, we've continued to develop our range of products and categories to widen the appeal and are seeing this offering unlock new customers and create leads for our meal kit business. In addition to targeting new audiences via the shop, we've also grown our network of corporate partners during FY 2026 to capture further demand. This is about utilizing our existing operating model and technology to drive incremental revenue through B2B customers to further meet their organization needs. Finally, another small example of targeting new customers and exploring other channels has been our new ventures pilot with WM Robotics, which has provided ready-made meal vending machines to offices, apartments, and hotels. Early results validate the demand for our convenient and healthy ready-made meals.
Over the page, I'll talk more to our unique health positioning, recognizing that our health credentials provide a clear competitive advantage by helping consumers achieve their health goals. We have three New Zealand-registered dieticians supporting us. We're well-placed to support customers evolve their health and wellbeing needs. During FY 2026, we developed a range of solutions to meet the needs of New Zealanders, including the Diabetes Plan, which was launched in partnership with Diabetes New Zealand. The new high-protein and gut-friendly preferences, and a tailored meal plan and product to support customers on GLP-1 weight loss medications. We continued to nurture our partnerships with a range of organizations and health professionals to help build awareness of these solutions with new customers.
Health is at the heart of our purpose, and we'll continue to help New Zealanders by providing access to high-quality nutrition to improve their wellbeing, lifestyle, and meet their goal and dietary needs. Turning to slide 12. We're very proud to continue to improve our customers' experience with improved performance and product quality, picking, and delivery accuracy. This reflected in our net promoter scores. Recently, we've implemented an ingredient management system into our supply chain to further strengthen inventory and quality controls and improve traceability. This was an important investment benefiting our customers and our business resilience, providing further optionality around extending convenience into the future. Health and safety remains at the forefront of all processes, resulting in a sustained reduction in injuries during the year compared with the prior, with our TRIFR at 0.88, down from 1.2 in FY 2025.
As I highlighted earlier, the delivery of our strategy very much relies on our team, which through FY 2026 we saw as stable with improved engagement scores. Our data and technology platform has scaled this year, enabling personalized experiences from customers, efficient and optimized operations, and real-time decision-making across our business. We continue to utilize AI to further enable our business, we're seeing positive impacts, including AI-assisted productivity from things such as internal LLM tools. We're also seeing AI help with optimizing menus, assisting recipe development, and we're embedding automation end to end across a number of our key business processes. Finally, on slide 13.
Aligned with our purpose of helping Aotearoa, New Zealand eat and live well, we continue to focus on minimizing waste and supporting our communities during FY 2026. For example, as I mentioned earlier, our smart packaging solution now means boxes and ice fit to what each customer has ordered, reducing cardboard use and waste, improving the customer experience. We've continued to play a role in the community, supporting charities like the City Mission, the Heart Foundation, and Garden to Table, while continuing to deliver nutrition education to partners and dietetic students via events and resources. We're able to do this because of the internal capability and foundations that we have as a business. As always, over 98% of our proteins and produce remain locally sourced. On top of this, we've expanded our range of local and sustainably sourced fish across the year.
I'll now hand you over to Louise Newsome, who will take you through the financials.
Thanks, Mark. Turning now to our financial performance on slide 15. Overall, FY 2026 represents a strong financial result, balancing growth with disciplined cost management, and investment in growth initiatives. EBITDA landed at NZD 16.4 million, and net profit after tax was NZD 6.7 million, up 5.3% on FY 2025. This performance was driven by 5% revenue growth, supported by higher delivery volumes, improved order frequency, and a 2.8% increase in average order value. The uplift in average order value reflects a favorable brand mix shift towards the My Food Bag brand, alongside modest pricing actions during the year. Momentum strengthened in the second half of the year, with revenue increasing 6.3% compared to the prior period. Gross margin remains strong at 49%, despite continued food price inflation pressures across produce and proteins.
Contribution margin is in line with the prior year at 21.2%, and we'll go into more detail about this on later slides. Additional investment in growth initiatives, including the My Food Bag Shop and marketing activity, as well as project costs, contributed to higher overheads during the year. Turning over to slide 16. Deliveries increased by 2.1% during FY 2026, supported by strong customer response to targeted campaigns, product innovation, and continued improvements in customer experience. The second half of the year saw accelerated momentum, with delivery growth of 2.9%. In particular, health food offerings, including our Diabetes Plan, GLP-1 support meals, and gluten-free range, have continued attracting new customers and supporting incremental growth. Customer retention continues to trend upwards, with frequency increasing to 5.5%, and this reflects stronger engagement with our product, which we attribute to our strategic focus on providing convenience and flexibility for our customers.
This focus has also contributed to growth in average order value. For example, enhanced flexibility features such as the introduction of double protein options enable customers to increase spend with each order. Year on year, our retained customer base, defined as customers taking deliveries across consecutive quarters, has continued to increase as a proportion of our total active customers. Alongside a reduction in cancellation rates, this reflects strong levels of customer engagement and loyalty across our customer base. This has been supported by increasingly targeted and refined marketing strategies aimed at both retaining our loyal customers and acquiring new customers. In addition, despite the impact of an earlier Easter in April limiting new customer acquisition, total active customers increased compared to the prior year. Turning to slide 18. Gross margin remained stable at 49%, above the five-year average of 48.5%.
Ingredient cost inflation remained elevated through FY 2026 at 3.4%, particularly across produce and proteins, which represent a significant portion of our product composition and cost base. We mitigated these pressures through procurement initiatives such as direct sourcing relationships and recipe optimization, alongside modest pricing actions. Importantly, these price increases resulted in minimal customer churn, enabling us to balance margin protection while maintaining quality and value for our customers. Contribution margin was maintained in line with the prior year at 21.2%. Cost pressures were partially offset through labor efficiencies, driven by higher throughput rates and reduced downtime following optimization of production planning. We also delivered cost savings through packaging initiatives, including right-sizing boxes to customer orders and optimizing our ice usage. In addition, initiatives with our delivery partner, New Zealand Post, to consolidate depot operations resulted in distribution cost efficiencies. Turning now to the balance sheet.
We continued strengthening our balance sheet through FY 2026, reducing net debt to NZD 1.9 million at year-end. This represents a NZD 13.4 million reduction over the past three years, including NZD 5.1 million in FY 2026. This improvement was supported by strong free cash flow generation and disciplined capital expenditure, with no significant capital outlays during the year. The reduction in debt enhances our financial flexibility and positions the business well as we enter FY 2027. Free cash flow increased to NZD 8.5 million during FY 2026, supported by strong operating cash flow and lower capital expenditure requirements, as mentioned in the previous slide. This cash generation enabled continued debt reduction while also supporting dividend payments to shareholders. The board has declared a final dividend of NZD 0.0115 per share for FY 2026, reflecting confidence in the underlying strength and cash generation capability of the business.
This represents a total FY 2026 dividend of NZD 0.019 per share with an approximate yield of 10.1%. I'll now hand back to Mark, who will talk through the outlook for FY 2027.
Thanks, Louise. Our strategy remains growing leadership in meal kits and within the wider online grocery market. As I've talked to earlier, there's four key pillars associated with brand value, convenience, flexibility, and targeting new audiences and occasions which underpins this. In FY 2027, we have a pipeline of initiatives tied to these pillars, all focused on driving active customer growth. This growth will be supported by health-led innovation as well as the expansion of the My Food Bag Shop and corporate partnerships. With regard to a trading update, revenue through the first seven weeks of FY 2027 was up 5.1% on the previous period, reflecting continued sales growth from the execution of our plan and strength of our customer base. On the cost side, recently, we're seeing distribution and certain packaging costs increase, with further ingredient cost pressures now beginning to emerge, driven by higher fuel prices.
We're actively mitigating these impacts through supply chain optimization and cost control where possible. Consistent with prior years, we'll take a balanced approach to pricing. Finally, as previously announced, the My Food Bag board has commenced a review to evaluate its ownership, capital structure, and strategic options. My Food Bag's engaged Cameron Partners as its financial advisor. The review at this stage remains in its preliminary stages, and there's no certainty that any transaction involving My Food Bag will eventuate. My Food Bag will continue to keep shareholders and the market updated in accordance with its continuous disclosure obligations. I'll now pause there, and I'll hand it over for questions. Thank you.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. Your first question comes from Guy Hooper with Jarden.
Yeah. Good morning, team. It's a solid result, so well done on that. Can I just ask about the acceleration in deliveries growth in the second half or re-acceleration, given it was a reasonable underlying growth in the second half in the prior period. Can I get a sense of how the core subscription base is going versus perhaps some of the initiatives in occasions and health focus and where that growth is really coming from?
Thanks, Guy. Yeah, look, we have seen that acceleration play through in H2, with 6.3% top-line growth. What we have seen is that improvement around more retained customers and those retained customers more engaged, taking orders more frequently. The combination of those two has really strengthened our delivery performance. Over and above that, we've seen a continued shift towards the My Food Bag brand in terms of our overall brand mix, and that's obviously come with an improved average order value as well. They're kind of the key components. Within that, there's no doubt the appeal of not only the convenience of My Food Bag but the benefit of the healthy eating and some of the different dietary offerings that we're providing is seeing further engagement. Typically, those products have a higher order frequency associated with them.
People that are going on our GLP-1 support range, for example, are typically taking that product on a higher frequency compared to normal customers because it is very much suiting their lifestyle and becoming more of a habit for them. We can see the same around gluten-free, for example. Health is definitely strengthening not only the engagement and retention of customers, but also the frequency of their purchase habits.
What portion of customers or portion deliveries are of those sort of health-linked products, of the double protein, GLP-1, et cetera, versus, say, regular products? How has that mix changed over the last couple of years?
All of our products are healthy. My Food Bag at its core is nutrition and healthy eating. What we've been more of it, is obviously marketing that message and creating that awareness with the New Zealanders that, whether it's Bargain Box and selecting a low-carb option, whether it's My Food Bag and high protein, or whether it's Fresh Start and one of the dietary preferences there, it improves not only your convenience and your time saving, but also your wellbeing and your lifestyle and helps support your health goals. On the one hand, it's across the portfolio. Specifically within the brands, each of them have different health offerings. We are seeing the growth of those sort of out index, the kind of core offerings that have already existed.
Great. Thank you for that additional color there. In terms of a mix shift towards the My Food Bag brand, is that you, say, reactivating or gaining new customers to that brand or is there a bit of trading up going on? Do you have a sense of what, say, a meal kit customer generally is doing and whether or not that market is growing again?
We do have some sense of that Guy.
Is it or not?
What we're seeing is, yes, we're seeing the strength of having a portfolio of brands and customers that may have come in as a Bargain Box customer because it suits their stage of life, migrate into My Food Bag. We're also seeing with My Food Bag, a good level of reactivation of lapsed customers who are coming back, having had a break from us for a period of time. Coming back to the health piece, we're also seeing that drive new customers in terms of that acquisition, because of those core offerings appealing to where they're at in their lifestyle. It is a bit of everything, to be honest with you. We do see that migration within the portfolio of brands.
The other area we see it is between Fresh Start and My Food Bag, where customers, depending on where they're at with their lifestyle, migrate to Fresh Start, and they might have a specific objective around that, or it might be at a certain time of year, and then move back to My Food Bag. It talks to the strength of having a portfolio of brands, but it also talks to the fact that we're able to re-engage lapsed customers, and also bring in new ones as well.
All right. Thanks. Maybe just one last one from me on the operating cost base. I appreciate you doing some ingredients there, freight inflation coming through and you have some levers to try and offset that. As we think about the rest of the cost base, there was a reasonable step up, say, in marketing and project costs in this year, how much of that is repeatable into next?
From a marketing perspective, we continue to remain very disciplined around our level of marketing spend. When we look at that spend sort of indexed as a proportion of revenue, that stayed flat or slightly decreased. The focus is around its efficiency and making sure that it's working hard for us, to get the right growth outcomes that we're looking for. That will continue in terms of that disciplined approach and that indexation. I actually expect it to be slightly more favorable from an index perspective heading into FY 2027. The reason for that is that we're continuing to get more targeted, and more efficient in how we market, particularly around promotion and incentives. With that, we're able to obviously spend less money. That's sort of how I see that part.
From an overhead perspective, more broadly, there was some one-off project costs that were incurred in FY 2026, which I don't expect to repeat. We obviously had the implementation of the Factory Track system, which was expensed, as I talked to earlier, to kind of really strengthen the resilience of the business. That's the ingredient management system.
Great. Thanks. I'll pause there. Thanks for taking the questions, guys.
That does conclude our question and answer session. I'll hand the conference back to Mr. Winter.
Well, thank you. Thank you to everybody for dialing in. That concludes our call today. Thank you for your support. If there's any follow-up questions, please feel free to get in contact. We've got the email address, ir@myfoodbag.co.nz. Have a great day.