Redbubble (ASX: RBL) shares are going nuts, it’s currently up around 40%.
What is Redbubble?
Redbubble, founded in 2006, 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.
FY20 update
Redbubble said it has benefited from an acceleration in online activity in the fourth quarter of FY20.
There was an increase in demand at both of Redbubble’s marketplaces, as well as across core geographies and product categories.
In the quarter to date (to 22 June), marketplace revenue growth was 107% (up 96% on a constant currency basis).
In the year to date (to 22 June), marketplace revenue growth was 42% (up 34% in constant currency terms).
Redbubble said it generated operating EBITDA of $11.9 million (click here to learn what EBITDA means) for the 11 months to 31 May 2020, this represents growth of 101% year on year, up 86% in constant currency terms.
Operating expenses for April and May were tracking 7.7% above the first two months of the third quarter, with a variable portion related to incremental volume increases.
Restructure
Redbubble said it’s going to reduce its headcount and related operating costs. The teams will be focused on three areas: 1) artist acquisition, activation and retention, 2) user acquisition and transaction optimisation and 3) audience understanding and loyalty.
This reorganisation is expected to save $5.6 million in annual operating costs, with one-off costs of $2.1 million. A portion of the savings will be reinvested in growth initiatives.
Summary
The Redbubble share price is soaring. I can see why, the company is showing enormous growth. It will be interesting to see if the growth continues. Redbubble shares have been volatile over the past few years, so there could easily be another large decline over the next 12 months to take advantage of.
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Disclosure: At the time of writing, Jaz doesn’t own shares in any of the businesses mentioned.
