The Redbubble Ltd (ASX: RBL) share price is going crazy this morning after releasing a business update.
Redbubble was founded in 2006, it owns and operates Redbubble.com and TeePublc.com, two global online market places where over 800,000 independent artists can sell their designs on products like apparel, stationery, bags, wall art and so on. It allows customers to shop through a wide range of options rather than just going to one art gallery at a time.
What’s Happening At Redbubble?
The company released its June 2019 cash flow update and also gave a full year update.
For FY19 the company achieved Marketplace revenue of $257 million, which was up 41% or up 34% in constant currency terms. Redbubble product revenue from ‘authentic sellers’ grew by 39% over FY19 and represents 76% of Redbubble’s product revenue. Marketplace revenue from members increased by 109% and is 29% of Redbubble marketplace revenue.
Redbubble also boasted of reducing fulfillment costs whilst increasing the customer NPS by 3 points to 68, which Redbubble said is an excellent score.
Redbubble achieved a gross profit of $95 million, which grew by 48% compared to FY18. The gross profit margin improved by 1.8% to 36.8%, which speaks of the increasing operating leverage.
If you exclude non-cash share-based payments, currency and TeePublic acquisition costs (which are all relevant to the statutory accounts), cash operating expenses only grew by 25% to $64 million, meaning that an operating EBITDA profit of $3.8 million was achieved, an improvement of $7.7 million from last year’s loss of $3.8 million.
The tech platform company also said that FY19’s free cash outflow was $3.1 million, improving from $6.9 million last year. Redbubble had $29 million of cash at the end of the year.
Are Redbubble Shares A Buy?
Redbubble sees a lot of growth in a large addressable market by continuing to build relationships with artists and brands, like Star Trek. It’s no surprise the share price is up 22% right now.
Redbubble is no longer going to provide short term guidance, but is aiming for $1 billion of sales over the longer term and said that “current economics demonstrate that this can be achieved profitably”.
I think Redbubble is one worth watching. It’s the type of platform business that could grow into a nicely sized company with good profit margins if the revenue keeps increasing, but there’s no guarantee of that. However, the synergies between Redbubble and Teepublic are compelling.
Redbubble, along with the two rapidly growing shares in the free report below, are interesting options to think about.
NEW SMALL CAPS INVESTING REPORT!
After searching through a market with over 2,000 shares, our lead expert investment analyst has narrowed it down to just 2 of his favourite rapid-growth shares in a FREE report to Rask Media readers.
Over the past five years, these two shares have gone from being 'tiny caps' to being serious contenders for the ASX 300.
Idea #1 is taking on the world with an online marketplace capable of generating serious free cash flow. This company's addressable opportunity is multiples of its current valuation.
Idea #2 is a technology business with super-sticky revenue and mission critical software. With operations around the globe, this growth stock has many years of potential.
Access the free report by clicking here now. Absolutely no credit card or payment details required.
Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.