BAB, Inc. Reports Results for 3rd Quarter FY 2026

BAB, Inc. delivered higher revenue and profit, with core earnings up year-over-year.

What the company is saying

BAB, Inc. reports a strong quarter, highlighting an 18.1% increase in total revenue to $908,000 and a 35.6% rise in net income to $227,000, or $0.03 per share. The company attributes the revenue growth mainly to a $115,000 increase in marketing fund revenue, which is offset by matching expenses and does not affect net income. Royalty fee revenue and licensing fees also saw modest gains. For the nine months ended August 31, 2026, revenue reached $2,435,000 and net income $533,000, or $0.07 per share, both up from the prior year. The company emphasizes operational discipline, noting a $109,000 reduction in selling, general and administrative expenses over nine months. The tone is factual, focusing on realised financial improvements and providing detailed breakdowns of revenue and expenses.

What the data suggests

The numbers show clear operational and financial improvement. Quarterly revenue rose to $908,000 from $769,000, and net income increased to $227,377 from $167,629, with EPS up to $0.03 from $0.02. For the nine months, revenue was $2,435,220 versus $2,334,220, and net income was $533,428 versus $438,188, with EPS up to $0.07 from $0.06. The main driver of revenue growth was marketing fund revenue, which increased by $115,000 for the quarter and $76,000 for the nine months, but this is fully offset by equivalent expenses and does not impact profit. Core earnings improvement comes from higher royalty fees (up $19,000 for the quarter and $36,000 for the nine months) and lower selling, general and administrative expenses (down $58,000 for the quarter and $109,000 for the nine months). Licensing fees and other income increased modestly for the quarter but declined for the nine months. The company’s disclosures are granular, with all major revenue and expense lines detailed and reconciled, supporting the credibility of the reported profit gains.

Analysis

The announcement is a factual quarterly and nine-month financial results release, providing detailed and transparent figures for revenue, net income, earnings per share, and expense categories. All key claims are realised and supported by the disclosed numerical data, with no forward-looking statements or projections present. The tone is neutral and avoids promotional or exaggerated language, focusing solely on historical performance. There is no mention of large capital outlays, future plans, or aspirational targets, and all benefits (improved revenue and net income) are already realised as of the reporting period. The increase in marketing fund revenue is explicitly stated to have no impact on net income, demonstrating transparency. The data supports a clear, measurable improvement in profitability and operational efficiency.

Risk flags

• ●Marketing fund revenue and expenses are large components of both revenue and operating costs, but they net to zero impact on profit. This accounting structure can make headline revenue growth appear stronger than underlying earnings momentum, so investors must focus on core royalty and licensing trends.
• ●Royalty fee growth, while positive, is modest in absolute terms ($19,000 for the quarter, $36,000 for the nine months), which may limit the pace of future profit expansion if franchise or system-wide sales growth does not accelerate.
• ●Licensing fees and other income declined by $14,000 for the nine months, indicating some volatility or potential softness in non-core revenue streams that could affect future earnings stability if the trend continues.

Bottom line

BAB, Inc. delivered improved profitability and revenue for both the quarter and nine months ended August 31, 2026, with net income up 35.6% for the quarter and 21.7% for the nine months. The headline revenue gains are driven mainly by marketing fund flows, which do not affect profit, so the real earnings progress comes from higher royalty fees and lower administrative costs. The company’s financial reporting is transparent and detailed, allowing investors to clearly see the sources of improvement. While the business is profitable and operationally disciplined, future growth in core earnings will depend on accelerating royalty and licensing revenues rather than marketing fund movements. The most important takeaway is that BAB, Inc. is managing costs well and maintaining profitability, but underlying growth remains moderate.

Announcement summary

(OTCQB:BABB) BAB, Inc. announced its financial results for the third quarter ended August 31, 2026. For the quarter ended August 31, 2026, BAB, Inc. reported revenues of $908,000 and net income of $227,000, or $0.03 per share, compared to revenues of $769,000 and net income of $168,000, or $0.02 per share, for the same quarter in 2025. Total revenue increased by $139,000, or 18.1%, over the prior-year period, primarily due to a $115,000 increase in marketing fund revenue, a $19,000 increase in royalty fee revenue, and a $5,000 increase in licensing fees and other income. The increase in marketing fund revenue had no impact on net income as it is offset by corresponding expenses. For the nine months ended August 31, 2026, revenues were $2,435,000 and net income was $533,000, or $0.07 per share, versus revenues of $2,334,000 and net income of $438,000, or $0.06 per share, for the same period in 2025. Total revenue for the nine months increased by $101,000, or 4.3%, mainly due to a $76,000 increase in marketing fund revenue and a $36,000 increase in royalty fee revenue, partially offset by a $14,000 decrease in licensing fees and other income. Total operating expenses for the three months ended August 31, 2026 were $607,000, compared to $550,000 for the same period in 2025, an increase of $57,000, or 10.4%, primarily due to a $115,000 increase in marketing fund expenses, partially offset by a $58,000 decrease in selling, general and administrative expenses. For the nine months ended August 31, 2026, total operating expenses were $1,734,000, compared to $1,767,000 for the same period in 2025, a decrease of $33,000, or 1.9%, mainly due to a $109,000 decrease in selling, general and administrative expenses, partially offset by a $76,000 increase in marketing fund expenses. Royalty fees from franchised stores for the quarter were $530,868, up from $511,736 in the prior year, and for the nine months were $1,516,777, up from $1,480,809. Franchise and area development fee revenue for the quarter was $2,987, and for the nine months was $18,187. Licensing fees and other income for the quarter were $72,134, and for the nine months were $193,006. Marketing fund revenue for the quarter was $301,878, and for the nine months was $707,250. Selling, general and administrative expenses for the quarter were $304,405, and for the nine months were $1,012,374. Depreciation and amortization for the quarter was $300, and for the nine months was $14,139. Marketing fund expenses for the quarter were $301,878, and for the nine months were $707,250. Total expenses for the quarter were $606,583, and for the nine months were $1,733,763. Income from operations for the quarter was $301,284, and for the nine months was $701,457. Interest/other income for the quarter was $13,089, and for the nine months was $38,767. Income taxes for the quarter were $86,996, and for the nine months were $206,796. Net income for the quarter was $227,377, and for the nine months was $533,428. Earnings per share for the quarter were $0.03, and for the nine months were $0.07. The average number of shares outstanding was 7,263,508 for all periods. BAB, Inc. franchises and licenses Big Apple Bagels®, My Favorite Muffin®, SweetDuet® frozen yogurt, and Brewster’s® Coffee.

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