The Redbubble (ASX: RBL) share price is up more than 2% after releasing its FY20 report. It showed strong growth.
Redbubble’s strong FY20 result
Redbubble had previously announced some of its result to the market.
The online artist marketplace business announced that marketplace revenue rose by 36% to $349 million. Constant currency growth was 29%.
In FY20 it had 511,000 selling artists, up 51%. Artist earnings were up 35% to $67 million. Unique customers were up 30% to 6.8 million. Repeat sales accounted for 40% of marketplace revenue. It launched 16 new products in FY20, including face masks in April 2020.
Redbubble’s app sales grew by 159% in FY20, representing 12.6% of its total marketplace revenue.
This helped gross profit rise by 42% to $134 million. In constant currency terms profit growth was 36%.
Operating EBITDA (click here to learn what EBITDA means) jumped by 141% to $15.3 million and EBITDA increased 358% to $5.1 million.
Redbubble generated free cash flow of $38 million for the year, a major improvement from the cash outflow of $0.2 million in FY19.
https://youtu.be/YZpXXG9W26k
The company’s growth accelerated in the fourth quarter of FY20. Redbubble saw marketplace revenue of $103 million, up 73% on the prior corresponding period. Gross profit increased by 83%. FY20 fourth quarter operating EBITDA was $8.4 million (more than half of the FY20 total) and EBITDA was $7.4 million.
Its statutory net loss improved by 68.2% to $8.8 million. Marketing spend was 11.4% of marketplace revenue. Operating expenses for the year was $79.3 million, which included a $2.2 million provision for an organisational restructure announced on 25 June 2020.
Outlook
July marketplace revenue grew by 132% and there has been similar sales levels in the first two weeks of August on a paid basis.
But there is still a lot of uncertainty, so Redbubble won’t be providing FY21 guidance.
It will be focusing on winning and retaining artists, winning and retaining customers, understanding customers & brand building, and expanding its operational capabilities to fulfil product orders.
Redbubble CEO Martin Hosking said: “RB Group’s on-demand fulfilment model and differentiated consumer offerings provide us with distinctive advantages. The strong financial performance follows from these fundamentals.
“It has been pleasing to see the acceleration of existing trends in the last few months. 2021 represents a year of opportunity for the business. We are positioned to build a decade of momentum and aggressively pursue the global opportunity presented by the shift to online activity and increasing adoption of ecommerce platforms.”
A decade of growth sounds very promising. I think that Redbubble looks very promising. I’m not sure how much growth Redbubble has – how big can it become? Is it going to be a $2 billion business? A $10 billion business?
It’s trading at around 25x its FY20 free cashflow with seemingly further strong growth coming in FY21. Based on that, I think Redbubble is worth buying today with a 3 to 5 year investment timeframe in mind. But other ASX growth shares could also good long term picks like Pushpay Holdings Ltd (ASX: PPH).
