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.