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Redbubble's first half positions it to deliver full-year revenue growth of more than 20%

Published: 09:45 25 Jan 2018 AEDT

Picture of cash and an upward moving chart
The fixed cost base has driven consistent gross profit margins of circa 35%

Redbubble Ltd’s (ASX:RBL) robust performance in the recent December quarter lays the foundation for the company to deliver meet revenue growth guidance of more than 20%.

The global marketplace for independent artists topped off a strong first half period for the company in which it delivered year-on-year revenue growth of 30%.

With gross profit increasing circa 25% to $35.3 million, cash flow of $18.6 million and cash operating expenses remaining below 10%, the company’s financial position is looking sound.

Holiday season has positive feedback

Redbubble is a seasonal business with the December quarter containing extended holiday periods.

Management has taken this traditional skew in business activity into account in reaffirming year-on-year revenue guidance of more than 20%, in line with its fiscal 2017 performance.

The global online marketplace is now powered by over 600,000 independent artists who design products such as apparel, stationery, housewares and wall art.

Medium-term organic growth to be complemented by acquisitions

As a business that is still scaling up, organic growth is still a driving factor.

However, management is open to investing in customer acquisitions, effectively increasing its operating leverage off a relatively fixed cost base.

This leverage is illustrated in the company’s gross profit margins which were 35.6% in fiscal 2017 and 34.5% in the first half of fiscal 2018.

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