Redbubble returns to positive underlying cash flow

Last year, Redbubble reported $18 million operating loss for 1HFY23 and hit a two year ASX low in October 2022 at $0.46, dropping 88.5 percent over 12 months. In February, Redbubble announced it would be implementing a number of cost-saving initiatives including multiple rounds of job cuts expected to reduce cost base by approximately $20 million to $25 million and return the company to to cash flow positive by the end of calendar year 2023. The company has achieved this goal in Q1FY23 with positive underlying cash flow of $0.7 million up $16.9 million on the PcP, and up $5.5 million on the fourth quarter of FY23.

Redbubble has reported a GPAPA of $26.5 million for the quarter, 14 percent higher than the PcP, and GPAPA margin of 28 percent, 490 basis points higher than last year. Redbubble cited the success of recently-implemented initiatives, including the introduction of artist account tiers on both the Redbubble and TeePublic marketplaces and a dynamic order routing system for the Redbubble marketplace in the US, as well as further optimisation of paid marketing spend for the turnaround. 

As a result, Marketplace Revenue ended up 6 percent lower than last quarter, which the company remains optimistic that it reflects the Group’s focus on maximising GPAPA and the softer trading conditions in the US.

“The Group has had a good start to the financial year,” said Martin Hosking, Group CEO and Managing Director of the Redbubble Group. “Our ongoing focus on a narrow set of priorities continues to drive margin expansion and absolute GPAPA growth. These improvements, combined with our continued focus on cost discipline, has enabled the Group to achieve positive underlying cash flow this quarter, a particularly strong feat as the first quarter is a seasonally-low revenue period. 

“Both marketplaces delivered GPAPA growth and positive underlying cash flow during the quarter, which were my initial objectives after being appointed Group CEO in March 2023 and necessary to stabilise the business. I am now shifting my focus to reinstating profitable revenue growth and am confident that we have the right team and resources in place to achieve this goal.”

Alongside the results, Hosking commended the new head of Redbubble marketplace, Adam Crouch who started last month. “We were delighted to welcome Adam Crouch to the Group in September as head of the Redbubble marketplace,” he said. “Adam most recently was at Poshmark, a leading social marketplace for clothing and accessories, where he created a capital-efficient growth model around the world. Prior to this, he held US and global ecommerce leadership roles at Volvo Cars, Walgreens, and Claire’s. We are confident that Adam is the right person to help the Redbubble marketplace return to profitable growth. Adam is based out of the Redbubble office in San Francisco.”

FY24 guidance has been reaffirmed for a FY24 GPAPA margin to be between 23 percent and 26 percent and FY24 operating expenditure to be between $92 million and $100 million.