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FY24 Q1 update causes Cettire (ASX:CTT) share price volatility

The Cettire Ltd (ASX: CTT) share price has seen enormous volatility today as the market reacts to its FY24 result.

Cettire is a global online retailer that sells a wide range of personal luxury items – it has a catalogue of 500,000 products from more than 2,500 brands.

FY24 first quarter update

The e-commerce ASX share said that in the first three months of FY24, its sales revenue climbed 92% to $127.1 million.

This growth largely occurred thanks to a 69% rise in active customers to 487,289 and a 2% rise in the average order value to $731. Interestingly, the percentage of gross revenue from repeat customers improved year on year to 59%, up from 56%.

Cettire said that it’s seeing “broad-based momentum” across both its established and emerging markets.

Perhaps even more importantly, the business delivered adjusted EBITDA (EBITDA explained) of $8.7 million, on a delivered (profit) margin of more than 20%. This is good for the Cettire share price because profit (growth) is normally what the market likes to see.

Cettire’s net cash balance increased to roughly $59 million at the end of the period.

The company believes it’s “well-positioned” for the second quarter, supported by “seasonally improved metrics, resilient demand and growing online luxury penetration.” Sales revenue for October month-to-date, to the 17th, had increased by 80% year on year.

Cettire also said that its ‘localisation’ initiatives and marketing execution are helping performance.

Management commentary

The Cettire founder and CEO Dean Mintz said:

We continue to operate the business to maximise revenue growth, whilst also delivering profitability and cash generation. Whilst Q1 is traditionally a seasonal low point, we observed an improvement in profit trends during September which provides confidence in the Q2 outlook. The positive quarterly cash flow was supported by the underlying trading performance, supportive working capital dynamics and conversion of receivables to cash.

Final thoughts on the Cettire share price

The business has done well to grow as much as it has since it listed. Interestingly, the Cettire share price has fallen over 8% since its peak earlier today, when it had initially opened more than 8% higher.

Investors are expecting a lot of growth from the business, and it’s delivering a lot of growth. Can this high level of revenue growth continue? Maybe. If profit margins keep improving then that could keep driving the Cettire share price higher over time.

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