The Redbubble Ltd (ASX: RBL) share price will be one to watch on Thursday following the release of its first quarter update.
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How did Redbubble perform in the first quarter?
Redbubble has started FY 2021 in a very positive fashion, with further strong growth being delivered across the business.
For the three months ended 30 September, Redbubble reported Marketplace Revenue of $147.5 million, up 116% (122% on a constant currency basis) on the prior corresponding period.
Things were even better for its gross profit, which increased 149% (157% in constant currency) to $64.5 million for the quarter.
This ultimately led to Redbubble delivering first quarter earnings before interest and tax (EBIT) of $22.1 million, compared to a loss before interest and tax of $1.5 million a year earlier.
What were the drivers of its growth?
Management advised that the company saw a continuation of strong demand across products and geographies during the quarter.
This was particularly the case in its largest market – North America. First quarter sales in the region more than doubled during the quarter. This is a big positive given that the North American market accounts for 71% of its gross transaction value.
Sales were also very strong in the ANZ and UK markets, growing 124% and 122% over the prior corresponding period.
In respect to products, the accessories category was the star of the show. It reported a 562% increase in accessories sales during the first quarter. This appears to have been driven partly by increasing demand for fashionable face masks. Accessories now account for 27% of sales on its marketplace.
What's next?
The company advised that it is continuing to monitor online sales trends and remains mindful of external uncertainties that lie ahead.
It intends to focus on four key initiatives to generate ongoing profitable growth:
1) Artist acquisition, activation and retention; 2) User acquisition and transaction optimisation, 3) Customer understanding, loyalty and brand building; 4) Further physical product and fulfilment network expansion.
Redbubble CEO, Martin Hosking, commented: "The strategic priority for the group now is to ensure we extend the market leadership we have established. We intend to invest in the customer experience to improve loyalty and retention and ensure long-term higher levels of growth. The company has the resources to undertake the anticipated investments and the margin structure to ensure it can do so while remaining profitable."
