Redbubble (ASX:RBL) share price sinks despite 58% revenue increase

The e-commerce company enjoyed a solid year of growth in FY21…

| More on:
A woman bursts her bubblegum, indicating a sinking share price

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Redbubble Ltd (ASX: RBL) share price is sliding in early trade this morning after the e-commerce company reported its full-year earnings for FY21.

At the time of writing, the Redbubble share price has dropped 11.7% to $2.70.

Redbubble share price slumps after record result

  • Gross transaction value up 48% on the prior year to $701 milliion
  • Marketplace revenue increased to $553 million, up 58%
  • Earnings before interest, tax, depreciation, and amortisation (EBITDA) of $53 million, up 930% from FY20
  • Net profit after tax swung from a loss of $9 million in FY20 to a profit of $31 million
  • Unique customers climbed to 9.5 million, up 40% from prior year.

What happened in FY21 for Redbubble

The Redbubble share price will be in the spotlight today as investors take in the record result posted by the e-commerce company. Despite concerns earlier in the year, shoppers appear to have flocked to the marketplace that connects independent artists and consumers.

Shareholders can rejoice today after Redbubble posted substantial growth across its metrics for the FY21 full year. For starters, gross transaction value increased 48% to $701 million. This resulted in a record for marketplace revenue of $553 million, representing an increase of 58%.

In another relief for investors, the marketplace experienced sustained strong customer demand, despite traditional bricks and mortar retail reopening in the back half of the year. We will likely see the impact of this on the Redbubble share price today.

An inkling we covered earlier in the week of Redbubble being a potential beneficiary of mask-wearing again in 2021 appears true. Specifically, face masks contributed $57 million to marketplace revenue during FY21. Being a higher-margin product, sales of face masks also assisted in increasing gross profit margins. This translated to a 66% lift in gross profit to $223 million.

What did management say?

Commenting on the result, Redbubble CEO Michael Ilcznski said:

The Redbubble marketplaces are flywheel businesses, where improving one side creates positive, reinforcing impacts on the other sides of the marketplace. We have witnessed this powerful flywheel effect throughout FY21. I am proud of the record financial results and operational achievements that the team has delivered during that time.

On the company's future efforts, Mr Ilczynski said:

We remain focused on the tremendous opportunity we have as a business, and on our medium term aspirations to grow GTV to more than $1.5 billion, to grow Artist Revenue to $250 million, and to produce Marketplace Revenue of $1.25 billion per annum.

What's next for Redbubble?

Redbubble remains highly focused on its medium-term goals, which include driving top-line growth through customer acquisition. In quantifiable terms, this means a target of more than $1.5 billion in gross transaction value. Additionally, the company aspires to hit $1.25 billion in marketplace revenue and $250 million in artist revenue.

In chasing these goals, Redbubble will continue to make targeted investments in FY2022. These will include focusing on improvements in customer experience, both digital and physical.

Finally, the company warned that the first half of FY22 will likely see negative year-over-year growth in marketplace revenue. This is due to 1H FY22 being compared to a particularly strong cyclical period in the previous year.

Redbubble share price snapshot

The Redbubble share price has struggled over the past year. Following the company's announcement of increased investments in the business, investors have sold off shares in the e-commerce platform.

During the past 12 months, shares in ASX-listed Redbubble dropped 7.3%. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) has surged 21.6%.

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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.

More on Share Fallers

a business man in a suit holds his hand over his eyes as he bows his head in a defeated post suggesting regret and remorse.
Share Fallers

Why Core Lithium, Deterra Royalties, Northern Star, and Opthea shares are dropping

These shares are ending the week deep in the red. But why?

Read more »

A young male investor wearing a white business shirt screams in frustration with his hands grasping his hair after ASX 200 shares fell rapidly today and appear to be heading into a stock market crash
Share Fallers

Why ASX, Brazilian Rare Earths, Liontown, and Sigma shares are sinking today

These shares are under pressure on Thursday. But why?

Read more »

A man sits in deep thought with a pen held to his lips as he ponders his computer screen with a laptop open next to him on his desk in a home office environment.
Share Fallers

Why did this ASX AI stock just crash 21%?

Investors just sent this ASX AI stock tumbling by more than 21%. But why?

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why Arafura Rare Earths, Bigtincan, Evolution Mining, and Galileo Mining shares are dropping

These shares are having a tough time on hump day.

Read more »

A woman sits with her hands covering her eyes while lifting her spectacles sitting at a computer on a desk in an office setting.
Share Fallers

Why Chalice Mining, Northern Star, Peninsula Energy, and Service Stream shares are sinking

These shares are starting the week deep in the red. But why?

Read more »

Investor looking at falling ASX share price on computer screen
Share Fallers

Can the Appen share price recover amid AI mania?

Once an ASX tech darling, Appen has fallen on hard times in recent years. Can it capitalise on the AI…

Read more »

A woman with a sad face looks to be receiving bad news on her phone as she holds it in her hands and looks down at it.
Share Fallers

Why Beach Energy, Life360, Viva Leisure, and Wildcat shares are dropping today

These shares are ending the week in the red. But why?

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why Core Lithium, IDP Education, Seek, and Skycity shares are sinking today

These shares are having a very tough session on Thursday. But why?

Read more »