The Redbubble Ltd (ASX: RBL) share price will be one to watch this morning following the release of the ecommerce company's fourth quarter and full year update.
How did Redbubble perform in FY 2019?
In FY 2019 Redbubble reported Marketplace revenue of $257 million, which was an increase of 41% (34% in constant currency) on the previous year. This was driven partly by the accelerating TeePublic business.
The company's gross profit increased 48% (41% in constant currency) year on year to $95 million and its gross profit margin widened by 1.8 percentage points to 36.8%. Management advised that the company "continues to strengthen gross margins leveraging scale and localisation benefits in fulfillment and shipping along with pricing optimisation to increase its effective take rate."
Shareholders will no doubt be pleased to learn that its cash operating expenses increased at a slower rate than revenue and gross profit. They increased 25% (20% in constant currency) to $64 million thanks to significant operating leverage and the company's lower than typical spend on marketing. The release explains that its "FY2019 marketing spend represented 10.5% of Marketplace Revenue, well below many online marketplaces / ecommerce peers."
This ultimately led to Redbubble recording an operating EBITDA profit of $3.8 million for the year, up from a loss of $3.8 million in FY 2018.
Balance sheet review.
As part of the company's end of year process it has reviewed its balance sheet. According to the release, the company has a deferred tax asset of $13.9 million representing the tax effect of losses accumulated post-IPO.
By adopting a conservative view, management has decided to write off its deferred tax asset from the balance sheet, which is consistent with the position taken with respect to pre-IPO losses. As of the end of FY 2018, the company had, in aggregate, $75 million of losses which remain in existence for taxation purposes.
No more guidance.
Redbubble advised that it will no longer provide specific short term financial guidance. Instead, management explained that the company is focused on the strategic work required to reach the milestone of $1 billion in sales. The good news is that it believes current economics demonstrate that this can be achieved profitably.
Redbubble isn't the only small cap tech share releasing an update today. Fellow fast-growing tech shares LiveTiles Ltd (ASX: LVT) and Volpara Health Technologies Ltd (ASX: VHT) have released updates of their own this morning and could be on the move when the market opens.
