AO World (AO) H1 2026 earnings summary

Executive summary

• Group sales for H1 reached £586m, up 14.4% year-over-year, with profit before tax (PBT) of £18m, a 10.4% increase, despite £4m in government-driven cost increases.

• Free cash flow at period end was £57m, with liquidity rising to £200m, supporting a £10m share buyback.

• Membership numbers are at record highs, driving improved share of wallet and retention rates, with new products like Switch24 and MVNO enhancing the offering.

• Launched Switch24, offering iPhone 17 for £17/month, and on track to launch AO Mobile MVNO by year-end.

• Net funds increased to £65m, and continued investment in the Five Star membership proposition.

Financial highlights

• B2C retail revenue grew 12% to £423m, while B2B and mobile revenues declined by 22.8% and 26%, respectively.

• Recommerce revenue surged 864% to £56m, reflecting the integration of musicMagpie.

• Gross margin improved to 25.3% in H1 FY26 from 24.4% in H1 FY25, mainly due to Magpie sales mix and core retail margin improvement.

• Underlying profit margin slightly decreased from 3.3% to 3.1% due to higher employment costs and Magpie integration.

• SG&A expenses increased to 22.3% of revenue, up from 21.0% year-over-year.

Outlook and guidance

• Upgraded full-year PBT guidance to the top end of £45m–£50m for FY26.

• Full-year free cash flow expected to be around £50m, with working capital benefits expected to reverse in H2.

• Continued focus on cost efficiency, tech investment, automation, and offshoring to drive profitability.

• Targeting medium-term PBT margin of 7%, with current performance at about 4%.

• Revolving credit facility of £120m expected to remain undrawn.