The Redbubble Ltd (ASX: RBL) share price will be one to watch this morning following the release of its first quarter update.
With its shares up 60% since the start of the year, expectations certainly are high for Redbubble in FY 2020.
Did Redbubble live up to expectations in the first quarter?
This morning the leading global marketplace operator for independent artists revealed that it has started the year strongly.
During the first quarter Redbubble reported a 43% lift in marketplace revenue to $70 million. This was driven by the explosive growth of its TeePublic business and supported by solid growth from the core Redbubble business and a jump in active members to 2.8 million.
Thanks to strong operating leverage, Redbubble's gross profit growth was even stronger at 48%.
Furthermore, the company's expenses grew 22% over the prior corresponding period. Management revealed that it has been disciplined with both its marketing and operating expenses. In respect to marketing, the Redbubble branded marketplace is shifting from higher cost social media channels toward lower cost, brand associated channels.
Another positive was that Redbubble posted an EBITDA profit of $2.2 million during the first quarter. This is an improvement of $4 million from a loss of $1.8 million during the prior corresponding period.
The company generated free cash flow of $7.8 million during the period. This left it with a closing cash balance of $37.9 million.
What's next for Redbubble?
No guidance was given for the remainder of FY 2020.
However, management said: "RB Group is focused on executing across its four strategic initiatives and delivering on opportunities to propel the flywheel. The business continues to demonstrate progress on the key drivers of operating leverage. In the immediate term, the Group is now focused on the upcoming holiday season."
