The Cettire Ltd (ASX: CTT) share price is in focus after the e-commerce business announced its FY21 result.
Cettire sells a wide range of luxury products online.
FY21 result
Cettire reported that sales revenue soared 304% to $92.4 million. Its prospectus forecast was for sales revenue to be $70 million. This was helped by a 285% increase in active customers to 114,830. Around 40% of gross revenue came from repeat customers – this was up from 26% in FY20.
The e-commerce ASX share delivered a reported product margin of 37% and a delivered margin of 24%. Cettire’s ‘product margin’ surged 307% year on year to $33.8 million – the prospectus forecast was $24.4 million.
The ‘delivered margin’ increased by 243% to $22 million. Cettire’s conversion rate went from 0.99% to 1.22%, though the average order value decreased by 4% from $757 to $723.
Other e-commerce ASX shares like Kogan.com Ltd (ASX: KGN), Redbubble Ltd (ASX: RBL) and Temple & Webster Group Ltd (ASX: TPW) have also seen a large increase in customers since the start of COVID-19.
Cettire generated $2.1 million of adjusted EBITDA (EBITDA explained) for the year. The adjusted part removes IPO costs, share-based payments and unrealised foreign exchange movements.
The statutory loss after tax was $0.3 million. However, the business managed to generate $12.7 million of operating cashflow, an increase of 131%.
Direct partnerships with brand owners
Cettire announced that it has commenced direct partnerships with brand owners.
The Cettire CEO and founder Dean Mintz said:
“Whilst it is still very early in the development of our direct relationships with brand owners, this represents a natural progression of our business. We are excited by the potential of working directly with additional brand owners to complement our existing supply chain.”
This may or may not address some of the issues that were raised earlier in the year.
Trading update and outlook for the Cettire share price
Cettire said that it has experienced positive trading momentum into FY22, with July 2021 gross revenue increasing 181% on July 2020.
Its number one priority is to “maximise its global revenue potential by taking a long-term view”. It’s going to focus on winning more customers, investing in its technology and building its organisational capability.
By 2025, Cettire is expecting the luxury goods market to be even larger, with a significantly higher percentage of that shopping being done online. Growing into other categories is another opportunity area, such as children’s wear category expansion – this helps grow the addressable market.
Cettire is an interesting business. It seems to be capital light, already generating a good amount of cashflow with a lot of potential to add more products. I’m not sure if the current Cettire share price is a buy after its strong run, but it’s certainly one to keep an eye on.
