The Cettire Ltd (ASX: CTT) share price is in focus after the e-commerce company reported more strong growth.
Cettire operates a global website that sells personal luxury goods across clothing, shoes, bags and accessories.
HY24 result
Here are some of the highlights from the six months to 31 December 2023:
- Sales revenue jumped by 89% to $354.3 million
- ‘Delivered’ profit of $82.2 million, up 75%
- Adjusted EBITDA (EBITDA explained) rose 56% to $26.1 million
- Statutory EBITDA of $22.4 million
- Operating cashflow rose 81% to $65 million
- Statutory net profit after tax (NPAT) of $12.8 million
The company revealed a number of positive revenue-related metrics. Active customers increased 83% to 575,888 and the percentage of gross revenue that came from repeat customers improved by another two percentage points to 58%. These sorts of stats can help the Cettire share price in the future if more customers keep returning.
One of the main negatives was that the adjusted EBITDA margin declined from 8.9% in HY23 to 7.4% in HY24. Cettire increased its marketing/paid acquisition investment to 8.9% of sales revenue (up from 7.9% in HY23). It also saw a year on year increase of fulfilment costs as a proportion of sales revenue.
The FY24 second quarter saw a record of quarterly net active customer additions – the marketing helped add new customers and led to a significant improvement in 12-month retention of customers.
The business finished December with a cash balance of around $100 million and zero debt. It said this provides “balance sheet flexibility to capitalise on multiple attractive global growth opportunities and explore capital management.” It’s interesting that Cettire is thinking about capital management and it will be interesting to see what form that takes, if it happens.
Outlook for the Cettire share price
The company has directed increased engineering focus and resources towards improving the core customer experience, including enhancing direct revenue opportunities and address potential customer friction points. Cettire is “encouraged” by the early customer response to these features.
In January 2024 the company has seen its gross revenue increase by approximately 80%, while adjusted EBITDA profitability has been “maintained”.
It said it’s going to continue to focus on maximising “profitable revenue growth”, while also self-funding.
Perhaps unsurprisingly, Cettire’s growth rate is starting to slow down. When the actual revenue number becomes bigger and bigger, we can’t expect it to keep scaling at the same pace in percentage terms.
It’s a different business compared to many others on the ASX and it could keep growing. I’m not sure if it’s a buy at this price – at this stage it’s hard for me to assess how big this business can become. But, it could continue doing well.
There could be other ASX growth shares that could be better value to invest in.
