The Redbubble Ltd (ASX: RBL) share price is up by more than 3% after the company provided investors with its trading update for the three months to 31 March 2022.
For readers who don't know, Redbubble owns and operates the marketplace websites Redbubble.com and TeePublic.com. Those websites sell products with 'uncommon' designs on them that have been created by artists. Some of the products sold include apparel, stationery, housewares, bags, wall art, and so on.
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Redbubble FY22 third quarter
Redbubble said that its third-quarter performance was largely in line with its expectations.
It processed $123 million of gross transaction value, which was a decline of 8%. This led to marketplace revenue declining by 7% to $96 million. Quarterly gross profit was down 9% to $36 million.
Its quarterly operating earnings before interest, tax, depreciation, and amortisation (EBITDA) was a loss of $6 million, while total EBITDA was a loss of $10 million.
The company noted that it had a strong overall retention rate with 47% of group marketplace revenue coming from repeat purchases in the third quarter. This was an all-time high for the group.
Management said that repeat rates among Redbubble members are higher than non-members, suggesting that there is a longer-term opportunity from expanding memberships.
The 'COVID cohort' – customers that made their first Redbubble purchase in the six months to 31 December 2020 – repeat purchase rate within 12 months was "strong" at 20.3%. Redbubble said this was an encouraging indication of the company's ability to retain COVID cohort customers and build loyalty with a large number of customers.
FY22 year to date
With the third quarter of FY22 finished, Redbubble was able to tell investors about the company's performance for the financial year to date (YTD) for the nine months to March 2022.
It has generated marketplace revenue of $384 million, which was a decline of 16%. However, excluding mask sales from FY21, the underlying marketplace revenue was down 4% to $376 million.
Year to date gross profit was down 22% to $144 million. It has generated $4.5 million of operating EBITDA in FY22 so far. But, total EBITDA was a loss of $2.3 million, impacted by $1.9 million of unrealised net foreign exchange losses.
Leadership commentary on the Redbubble share price
Redbubble's board commented on the declining price of Redbubble shares (and other technology names):
Regarding the recent share price movements experienced across the broader technology sector, including Redbubble, the board does not believe that the current share price reflects the fundamentals and prospects of the business.
The company said that it continues to actively investigate value-enhancing options on behalf of all stakeholders. This includes both 'organic' and 'inorganic' opportunities that could help grow the value of the business.
Guidance
Redbubble is still expecting FY22 marketplace revenue to be slightly below FY21's underlying marketplace revenue. The FY22 EBITDA margin as a percentage of marketplace revenue is expected to be negative in the low single digits.
It's still aiming, in the medium-term, to grow gross transaction value to more than $1.5 billion, which will mean $1.25 billion of marketplace revenue. The EBITDA margin is expected to expand "significantly" over the medium-term with top-line growth.
Redbubble share price snapshot
Since the start of 2022, the Redbubble share price has dropped by around 60%. At the time of writing, Redbubble shares are swapping hands for $1.30.
