The Redbubble Ltd (ASX: RBL) share price is down 11% to 98 cents in trade today after the fashion and arts focused online marketplace revealed an operating cash outflow of $25.9 million for the quarter ending March 31 2019.
That's not as bad as its sounds though because Redbubble explained that its sells a lot of goods in the Christmas quarter, but has to pay the artists for the goods sold in the March quarter in an impact that distorts the quarterly financials somewhat.
However, another reason the stock is coming under pressure is because the group once again flagged that "organic search headwinds" remain partly due to search engine giant Google seemingly re-indexing how it classifies Redbubble content.
Lower organic search traffic is a problem for the business as this is what produces strong gross profit margins, as otherwise Redbubble is forced to rely more on paid for marketing via online ads on Google or other 3rd party website display or banner type adverts for example.
On the bright side total market place revenue was up 40.3% (32.6% FX-adjusted) over the prior corresponding quarter, although you have to account for the acquisition of TeePublic in that number.
Zooming out a little over the nine months to March 31 2019 the group has posted an operating cash profit of $2.95 million and has a healthy $29.1 million cash on hand.
However, its mixed performance indicators are likely to continue to divide the bulls and bears.
Others in the online classifieds space to consider include REA Group Limited (ASX: REA) or Carsales.com Ltd (ASX: CAR).
