255% share price run in 3 months, What’s next for this ASX Growth Stock – Redbubble

Summary

• ASX growth stock, Redbubble, the owner of international e-commerce platform, has garnered attention for sweeping the market and generating a miraculous return of 255 per cent over the last three months.
• Redbubble embraced COVID-19 headwinds and capitalised on the addition of the facemasks in its product portfolio, which contributed over AU$26 million of marketplace revenue since its launch until 31 July 2020 and is one of the key highlights of FY20 results ended 30 June, released on 21 August.
• Redbubble has commenced FY21 with swelled July marketplace revenue of AU$49 million. In FY21, the Company would work towards expansion of its fulfilment network and physical product; acquisition of customer base; transaction optimisation; customer understanding and build brand and loyalty.
• Owing to COVID-19 pandemic induced continuous uncertainty, Redbubble refrained from providing earnings guidance for FY21. However, the Company, with its bolstered financial performance during FY20 plans to aggressively pursue the opportunity presented by accelerated shift and adoption of the online marketplace.

Numerous ASX-listed digitally-enabled retailers have turned the corner by witnessing impressive growth in their online businesses during the highly uncertain times induced by COVID-19 pandemic.

Notwithstanding the headwinds from the forthcoming worries of the pandemic, ASX growth Stock, Redbubble Limited (ASX:RBL), the leading global marketplace for independent artists, has generated an awe-inspiring return of 255% over the last three months. On 21 August 2020, Redbubble share price was at AU$3.630, indicating an increase of 2.254% compared to its last close.

Also, the stupendous 3-month return of Redbubble share price is buoyed by the positive business updates during the last couple of months, showcasing soared earnings, and continuous uptake of its products across the globe during the COVID-19 pandemic period.

Did you read; Strategy Unmasked: Redbubble shines on sales of designer face masks

Established in 2006 in Melbourne, Australia, Redbubble platform is powered by over 1 million independent artists and designers across the globe with their millions of passionate fans.

Notably, Redbubble owns and operates two leading artist-product websites, which comprises of Redbubble.com and TeePublic.com. Furthermore, the platform boasts of having unusual designs on high-quality, everyday products such as bags, apparel, housewares, stationery, wall art and many more.

Join us as we take off for a ride to familiarise with this ASX growth Stock and its latest news.

Impressive business performance during FY20

On 21 August 2020, ASX listed growth stock Redbubble unveiled its FY20 performance report for the period ended 30 June and highlighted bolstered marketplace revenue of AU$349 million.

The impressive y-o-y increase of 36 per cent, equivalent to 29 per cent on a constant currency basis on last year was driven majorly by strengthened margins, efficient paid marketing spends and controlled operating expenses. Noteworthy, repeat sales accounted for 40 per cent of the marketplace revenue for FY20.

Despite the fact that COVID-19 pandemic has impacted the retail industry, it has also driven individuals to shop for goods online. As per Redbubble, the augmented shift to online shopping resulted in its y-o-y growth across its core geographies and product categories.

Source: Company’s presentation, dated 21 August 2020

Did you read; Significant Shift Towards e-retailing, Is Brick-and-Mortar Model at Perpetual Risk?

Although Redbubble’s operating EBITDA noted an increment of 141 per cent, its EBITDA witnessed a robust y-o-y growth of 358 per cent (886 per cent on a constant currency basis) and reached AU$5.1 million.

Additionally, Redbubble’s gross profit noted a considerable increment of 42 per cent (y-o-y) and was noted at AU$134 million. The soared gross profit is ascribed to the onboarding of additional fulfilment capacity in Canada, Europe and the United States.

Furthermore, the Company also divulged its bolstered financial position with AU$58 million in cash, as on 30 June 2020 versus AU$7.8 million noted in FY19, demonstrating Redbubble’s strong working capital advantage as aggregate operating and investing cash flows to be positive for the first time in FY20.

It is worth noting that Redbubble’s free cash inflow for FY20 was recorded at AU$38 million, for FY20 versus an outflow of $0.2 million noted in FY2019.

The Company’s operating expenses stood at AU$79.3 million, including one-off AU$2.2 million restructuring provision subsequent to the organisational restructure (inclusive of reduced headcount and related operating costs), as announced on 25 June 2020.

Source: Company’s presentation, dated 21 August 2020

During FY20, 511,000 artists were witnessed making sales across the group marketplaces, up by 51 per cent on pcp. Moreover, artist revenue also surged by 35 per cent and stood at AU$67 million.

Redbubble witnessed accelerated unique customer growth of 30 per cent y-o-y and were noted at 6.8 million.

Furthermore, Redbubble app sales zoomed by 159 per cent during the period and portrayed 13% per cent of marketplace revenue in FY20.

Source: Company’s presentation, dated 21 August 2020

Did you read; June Retail Sales – 3 Key Trends

July Marketplace Revenue Soared 132%

FY21 has commenced vigorously for Redbubble with July marketplace revenue of AU$49 million, indicating an upsurge of 132 per cent (y-o-y), equivalent to 133 per cent on a constant currency basis. Noteworthy, similar sales levels were noted in the first two weeks of August.

Did you read; Redbubble’s July Marketplace Revenue up 132%, Stock Rallied ~12%

Enlarged product portfolio with the launch of facemasks in April end

Redbubble had rapidly responded to the burgeoning need of face masks and launched a variety of masks on its platform at the end of April 2020. Notably, face masks had a swift financial impact, contributing over AU$26 million of marketplace revenue since its launch until 31 July 2020.

Outlook for FY21

Owing to the uncertainty caused by the coronavirus pandemic, Redbubble did not provide any earnings guidance for FY21. However, Redbubble plans to aggressively pursue the opportunity presented by expanded adoption of the online marketplace and would further work towards the enlargement of its fulfilment network and physical product; transaction optimisation; customer and build brand and loyalty.

Source: Company’s presentation, dated 21 August 2020