Redbubble’s (ASX:RBL) share price falls 23% on quarterly update

Highlights:

• Redbubble reported a 7% fall in its gross profit for the September quarter.
• During the quarter, the company posted EBIT loss of AU$17 million.
• Redbubble cash balance has fallen from AU$89.1 million to AU$74.9 million on a quarter-on-quarter basis.

Shares of Australian retailer Redbubble Limited (ASX:RBL) were heading south on Thursday (20 October 2022) after the company shared its quarterly update for the period ending on 30 September 2022. Redbubble has reported a 5% drop in its marketplace revenue and a 7% drop in its gross profit during the first quarter of the financial year 2023 (1QFY23).

Redbubble shares were trading 23.61% lower at AU$0.55 per share at 1:06 PM AEDT, with the market capitalisation of AU$199.95 million. With this, in the past year, the share price has dropped by 87%. On a year-to-date (YYD) basis, Redbubble’s share price has fallen 83.43%. One month fall for the shares stands at 26.67%.

Key financial metrics for 1QFY23

• The marketplace revenue (MPR) during the quarter has dropped by 5% to AU$100.8 million on prior corresponding period (pcp). The drop was driven by a decline in Homeware and artwork categories. Moreover, the MPR was affected by lower sales across the UK, Europe, and Australia in September.
• The underlying MPR has fallen 2% on pcp to AU$102 million. Since the financial year 2020 (FY20), it has increased by 49%.
• During the quarter, the artist revenue has fallen by 2% to AU$20.3 million.
• The gross profit has dropped by 7%. The gross margin reached 39.1%, down 90bps. Free shipping trials affected the gross margins during the quarter.
• EBITDA loss stood at AU$14.6 million and EBIT loss at AU$17 million. It was affected by an AU$3.8 million investment in the brand, an increase in investment in wages and salaries and a surge in other expenses.
• In three months, total salaries and wages stood at AU$19.3 million.
• As of 30 September 2022, the closing cash balance was AU$74.9 million. As of 30 June 2022, it was AU$89.1 million.

FY23 outlook

CEO OF Redbubble, Michael Ilczynski, said,

Redbubble expects unit economics to remain supported by nearly 6% rise in average base price from early May 2022. In the full year 2023, the company expects salaries and wages to increase by 14 million to 18 million. Forecasted Redbubble brand investment was in the range of AU$8 million to 12 million.