Redbubble (ASX:RBL) share price sinks 13% despite strong H1 FY21 results

The Redbubble (ASX: RBL) share price is sinking today following release of the company’s 2021 half-year result. Here’s what you need to know.

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The Redbubble Ltd (ASX: RBL) share price is sinking today following the release of its half-year result for 2021.

In early morning trade, shares in the e-commerce company are down an astonishing 13% to $6.07.

Let’s take a look and see how Redbubble performed over the H1 FY21 period.

Financial highlights

The Redbubble share price is deep in negative territory despite announcing significant growth across its business’ key metrics.

A catalyst for the fall could be that customer orders were affected by COVID-19 constraints during December. The temporary issue was caused by shipping partners who were unable to provide assurances in delivering products on time to customers. Consequently, lower sales margins in December were realised.

Despite the delays in shipping orders at the end of the period, the company experienced strong sales throughout the first-half.

For the six months ending 31 December, Redbubble reported marketplace revenue (total revenue less artist revenue) of $352.8 million. This was up 96% over the prior corresponding period (pcp). When using a constant currency basis, revenue actually grew 105% compared to H1 FY20. The result reflected strong customer demand throughout the holiday season with around 572,000 artists making sales. This was an increase of 76% year-on-year.

Most of its business came from its United States customer base which accounted for 69% of total gross transactions. The next in line was the European Union with just 14%. Following the EU was the United Kingdom and the Australia/New Zealand region, at 11% and 6% respectively.

Gross profit came to $144 million, which represented a lift of 118% from the same time last year. Again, on a constant currency basis, this metric actually further increased to 127%.

Earnings before interest and tax (EBIT) stood at $41.8 million. A massive improvement over the H1 FY20 result where EBIT recorded a loss of $1.9 million.

The group achieved an operating cash inflow of $79.7 million compared to $40.9 million over the pcp. The leadership team did carefully manage operating expenses. However, the strengthening of the Australian dollar in Q2 led to a favourable currency impact of $2.2 million.

At the end of December, Redbubble had a closing cash balance of $129.7 million.

The board moved against declaring an interim dividend, instead opting to reinvest into the company’s growth strategy. In addition, it also noted that due to the uncertain economic environment, it will be prudent with its cash.

Words from the CEO

Looking towards the future, Redbubble CEO Michael Ilczynski commented:

The strategic priority for the Group now is to ensure we extend the market leadership we have established. We intend to invest in both the artist and customer experiences, to improve loyalty and retention and to ensure long-term growth.

Redbubble share price snapshot

The Redbubble share price has been a standout performer over the past 12 months, accelerating to more than 460%. The company’s shares hit a low of 40 cents in March, before moving on an upwards trajectory.

Based on the current share price, Redbubble commands a market capitalisation of around $1.8 billion.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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