Redbubble (ASX: RBL) has released its first quarter trading update to September 2019, is it time to buy shares?
Redbubble is an Australian online retail marketplace business specialising in customised graphic design and speedy fulfilment of orders. It has relationships with fulfillers around the world who process orders for freelance artists and users who are seeking products such as custom t-shirts, mugs, cups, posters and lots more. Redbubble was founded in 2006.
What Redbubble Revealed In Its Q1 Update
Redbubble was please to report that both its brands of Redbubble and TeePublic were profitable and cash flow positive in the first quarter.
The company reported that marketplace revenue increased by 43% to $70 million, or up 37% on a constant currency basis.
Gross profit grew by 48% to $27 million, which was an increase of 42% in constant currency terms. Its gross profit margin improved by 1.5% (or 150 basis points) to 37.9%.
Operating EBITDA (click here to learn what EBITDA means) improved by $4.5 million to $3.7 million, up from a loss of $1.8 million in last year’s first quarter. Actual EBITDA was $2.2 million, an improvement of $4 million.
I think the most impressive part of the update was that Redbubble reported free cash flow of $7.8 million. The first quarter of FY19 free cash flow was $0.4 million, so it has been a big increase.
Redbubble said the revenue continues to be driven by strong growth rates seen from TeePublic.
The company said that the Redbubble branded marketplace is working through a shift in marketing that has provided a short term reduction in marketing spend below target. The shift involves a move from higher cost social media channels toward lower cost, brand associated channels as well as improving customer retention.
Is The Redbubble Share Price A Buy?
This could be an inflection point for Redbubble. Generating so much free cash flow seems impressive and revenue continues to grow at a fast pace. I wouldn’t be surprised to see the share price jump today, at the pre-open price I’d want to buy some shares.
A portfolio of growth shares like Redbubble along with reliable businesses like the ones in the free report below could be a good combination for good returns.
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