Redbubble (ASX:RBL) - CEO, Michael Ilczynski
CEO, Michael Ilczynski
Source: Michael Ilczynski/Twitter
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  • Redbubble (RBL) has posted a 25 per cent hit to its gross profit in the first half of the 2022 financial year in its latest unaudited preliminary financial results
  • The company’s gross profit for the six months ending in December was $108 million, down 25 per cent year-on-year
  • Redbubble said it flagged a potential drop in growth in previous outlook statements, saying the drop was likely due to “cycling of strong prior year numbers, including strong mask sales in particular”
  • Redbubble now expects FY22 marketplace revenue to be slightly below FY21
  • Redbubble shares have taken a hit on the market this morning, falling 26.9 per cent to $2.19

Redbubble (RBL) has posted a 25 per cent hit to its gross profit in the first half of the 2022 financial year in its latest unaudited preliminary financial results.

The company’s gross profit for the six months ending in December was $108 million, down 25 per cent year-on-year.

Excluding masks and on a paid basis, 1H FY22 underlying marketplace revenue will be $283 million. Inlcuding those metrics, marketplace revenue fell 18 per cent to $288 million.

Earnings before interest, taxes, depreciation, and amortisation (EBITDA) decreased by 84 percent to $8 million while gross transaction value fell 14 per cent to $381 million.

Redbubble said it flagged a potential drop in growth in previous outlook statements, saying the fall was likely due to “cycling of strong prior year numbers, including strong mask sales in particular”.

The first half revenue grew by 60 per cent and 68 per cent on a constant currency basis since the fist half of the financial year 2020.

Growth in Redbubble’s largest category, North American apparel, was up 10 per cent in the second quarter.

The business is larger compared to before the pandemic and will further scale to build resilience and improve profitability, according to Redbubble.

Two key factors impacted contribution margin in 1H FY22, according to the company; strong competition impacting organic demand and increasing paid aquisitions costs.

In response, Redbubble increased promotional activities and paid acquisition spending through a relatively lower contribution margin.

In addition, Redbubble experienced increased shipping costs, which in turn decreased the shipping margin.

Redbubble now expects FY22 marketplace revenue to be slightly below FY21.

FY22 EBITDA margin as a percent of marketplace revenue is now expected to be negative low single digits.

Redbubble stands by its strategic direction focused on four key themes: artist activation and engagement; user acquisition and transaction optimisation; customer understanding, loyalty and brand building; and physical product range and 3rd party fulfillment network.

The company will be continuing near term investments by using existing cash reserves to enable future growth.

Redbubble CEO Michael Ilczynski said he is confident in the potential for the company.

“We have multiple growth levers at our disposal, and given our strong cash balance, we will continue to invest to realise the potential upside that can be unlocked by aggressively pursuing this opportunity,” he said.

“We remain committed to our medium-term aspirations to grow GTV to more than $1.5 billion, to grow artist revenue to $250 million, and to produce marketplace revenue of $1.25 billion per annum.”

A complete and audited set of financial statements will be provided at the scheduled half-year results released in February.

Redbubble shares have taken a hit on the market this morning, falling 26.9 per cent to $2.19 at 11:18 am AEDT.

RBL by the numbers
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