Redbubble, the online marketplace for artists, spikes (again) on strong Q1 trading update
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Ecommerce business Redbubble (ASX:RBL) caught the market’s attention this morning with a strong Q1 trading update.
The company owns and operates online marketplaces that provide a vehicle for independent artists to sell their designs.
Redbubble, which derives more than half its sales from North America, said gross revenue increased to $70m for the three months to September (up 48 per cent).
That fed through to underlying earnings momentum, as company reported EBITDA of $2.2m — a turnaround from a $1.8m loss in the prior year comparative period.
The results continued the recent rally in RBL’s recent share price, which has now doubled since July:
Redbubble said the Q1 revenue increase was primarily driven by strong growth in its TeePublic business, which it acquired earlier this year.
The management team also highlighted a renewed focus on operational efficiency, which has seen revenue growth accompanied by a reduction in costs.
In particular, they noted a shift away from a “higher cost” social media strategy towards brand association channels, customer retention strategies based around the Redbubble app and a targeted shift towards Google Shopping.
Redbuble also said EBITDA got a boost from its decision to implement new accounting standards around property leases, effective from July 1.
The new rules, which require leases to be moved to the balance sheet, mean rent expenses paid on property leases are no longer recognised on the P&L. As a result, Redbubble’s Q1 EBITDA figures got a $700,000 boost, while free cash flow rose by $900,000.
The company said it remains focused on a number of strategic initiatives, which include driven revenue from highly-rated “authentic sellers”, increasing memberships on its platforms and improving the user experience for web and mobile.
Wisetech Global (ASX:WTC) has issued another response to last week’s report from J Capital Research, which was heavily critical of WTC’s acquisitive-focused growth strategy. WTC has spent around $400m buying 33 companies since listing in 2016. In defending itself, Wisetech argued that integrating new businesses is essential to the “speed of development necessary to deliver on our global customs strategy”.
The response stemmed the bleeding on WTC shares, which came out of a trading halt and climbed by five per cent after getting hammered in the immediate fallout from the report.
SaaS provider AppsVillage (ASX:APV) also jumped in morning trade, after announcing a deal with US-based loan procurement company Seek Capital. The deal forms part of APV’s strategy to expand into small-business lending services for its existing customer base.
Meanwhile, shares in family-photo sharing app TinyBeans (ASX:TNY) — one of the standout small-cap performers this year — slumped after a Q1 trading update. The company reported active user growth of 50k in the quarter to 1.28m, but markets were looking for more — the stock fell more than 20 per cent in morning trade.