Redbubble Shares Sink on Q1 FY22 Update (ASX:RBL)

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Redbubble Ltd [ASX:RBL] share price slumped after registering a 21% decline in gross transaction volume in Q1 FY22.

While Redbubble said the results were in line with expectations, investors were disappointed, sending RBL shares lower.

At time of writing, the RBL share price was trading at $4.09 per share, down 10%.

ASX RBL - RBL Share Price ChartSource:

After lockdowns pulled forward demand last year to send sales soaring, RBL’s stock has corrected this year as sales flagged.

The RBL stock is down 27% year to date.

Redbubble down on key metrics in Q1 FY22

Here are the key financial highlights from Redbubble’s quarterly:

  • Gross transaction value fell 21% to $142 million
  • Marketplace revenue fell 28% to $106 million
  • Artist revenue fell 26% to $21 million
  • Gross profit fell 34% to $42 million
  • EBITDA fell a substantial 85% to $3.9 million, down from $25.7 million in Q1 FY21
  • Operating cash balance at 30 September stood at $109 million

While key metrics were all down this quarter compared to Q1 FY21, Redbubble was quick to note Q1 FY22 numbers were all up on Q1 FY20.

For instance, total revenue this quarter was 24% higher than Q1 FY20.

And Q1 FY22 marketplace revenue was 55% higher than Q1 FY20, reflecting a two-year CAGR of 24%.

A big contributor to lower gross transaction value this quarter were declining mask sales within the accessories segment.

Redbubble’s GTV for the accessories product category was $48 million in Q1 FY21 but only $17 million in Q1 FY22.

Gross Transaction Value By Product CategorySource: Company presentation

Operational update and strategic experiments

Redbubble said it continued to deliver initiatives and conduct experiments across four key strategic themes. These experiments were flagged by RBL CEO Michael Ilczynski in an April pitch to shareholders.

Apart from launching Afterpay Ltd [ASX:APT] for customers in the US, Canada, UK, and Australia, RBL completed 13 loyalty experiments with ‘7 showing early positive retention signals’.

RBL also launched a search and recommendation experiment to improve discoverability of new artists and works.

Afterpay does tout its ability to drive extra sales to its merchants, so it will be interesting to see the aggregate effect of these moves on RBL’s sales in the coming quarters.

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Redbubble provides outlook

Looking ahead, Redbubble reiterated its outlook statements from August.

RBL still expects FY22 marketplace revenue to be slightly above FY21 underlying marketplace revenue.

However, the retailer also said, ‘Marketplace Revenue growth in 1H will likely be negative YoY with a steady return to YoY growth rates consistent with meeting its medium-term aspirations from 2H.

Redbubble also flagged that its upcoming targeted investments would impact gross margin, marketing, and OPEX lines.

EBITDA margin as a percentage of marketplace revenue is predicted to be in the mid-single digit range for FY22, with EBITDA margin expected to expand over the medium-term with top-line growth.

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Kiryll Prakapenka,

For Money Morning  

PS: Our publication Money Morning is a fantastic place to start on your investment journey. We talk about the big trends driving the most innovative stocks on the ASX. Learn all about it here

About Kiryll Prakapenka

Kiryll Prakapenka is a research analyst focusing on investigating the biggest trends in investments. Kiryll brings sound analytical skills to his work, courtesy of his Philosophy degree from the University of Melbourne. A student of legendary investors and their strategies, Kiryll likes to synthesise macroeconomic narratives with a keen understanding…

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