The Redbubble Ltd (ASX: RBL) share price is in focus after announcing its FY21 result, after a very volatile 12 months.
Redbubble’s FY21 result
The e-commerce, artist-designed product business reported that its FY21 gross transaction value (GTV) increased by 48% to $701 million (or 60% growth in constant foreign exchange rate).
Marketplace revenue rose by 58% to $553 million and gross profit increased by 66% to $223 million (that was constant currency growth of 71% and 79% respectively).
The number of artists increased by 54% to 728,000 and the number of unique artists increased by 40% to 9.5 million unique customers. There was 67% growth in purchases from repeat customers, contributing 42% of marketplace revenue.
Redbubble’s EBITDA (EBITDA explained) jumped 930% to $53 million. It generated EBIT of $39 million and net profit after tax of $31 million (up from a loss of $9 million for both statistics in FY20).
Operating cash inflow was $55 million, up 17% from FY20. The company ended FY21 with a cash balance of $99 million.
Outlook
Redbubble pointed out that it’s now competing against strong prior period e-commerce sales, particularly as mask sales contributed $57 million to FY21 marketplace revenue. The expectation of slow/no growth could be a key reason for the Redbubble share price decline over the prior months.
Excluding those mask sales, Redbubble is expecting a slight increase of marketplace revenue in FY22.
In the first half of FY22, marketplace revenue is expected to be negative due to the strong sales last year.
But starting from the second half of FY22, Redbubble is expecting a return to year on year growth consistent with meeting its medium-term aspirations.
What are those aspirations?
From the 2024 calendar year onwards, Redbubble is aiming for $1.25 billion of marketplace revenue with a gross profit margin of between 40% to 42% and an EBITDA margin of between 13% to 18%.
Redbubble believes it’s operating in an enormous global e-commerce market that is worth pursuing. So it’s going to invest heavily in its marketing, core systems and processes. During this period, the EBITDA margin is expected to be in the mid single digit range.
Thoughts on Redbubble and the share price
The last six months have been difficult for shareholders. And the market is yet to have its say on this result. But I believe that the business has a potentially exciting long-term future if it can achieve the metrics and market share it’s aiming for.
Don’t forget, 2024 is not the end of the story. That’s just the point where Redbubble thinks it will start experiencing significant profit growth.
It’s one of the ASX growth shares on my watchlist, that’s for sure.
