Booktopia (ASX:BKG) share price sinks 7% despite 125% EBITDA growth in FY21

Booktopia shares are on the move down despite a robust FY21 performance.

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The Booktopia Group Ltd (ASX: BKG) share price is sliding into the red in lunchtime trade on Monday as the online book retailer reported its FY21 earnings.

Let's investigate further.

Booktopia share price slides 7% despite strong revenue and earnings growth in FY21

Booktopia outlined several investment highlights in its report, including:

  • Revenue growth of 35% year on year to $223.9m million, up from $165.7 million
  • Underlying EBITDA (adjusted for IPO costs) up 125% from the year prior to $13.6m
  • A record 8.2 million units shipped, up from 6.5 million in FY20
  • Sales in the first two months (July and August) of new financial year, tracking above the same period in FY21
  • Completion of three (Brio Books, Zookal and Welbeck) strategic partnerships.

What happened in FY21 for Booktopia?

Recall that Booktopia completed its initial public offering (IPO) and listed on the ASX in December 2020, successfully raising $43.1 million.

In a potential positive for the Booktopia share price, the company grew its revenue by 35% in FY21, from $166 million to $224 million. The company explained it had achieved a compound annual growth rate (CAGR) in revenue of 26% since 2018.

This result carried through to EBITDA growth of 125% from the year prior, which also came in 45% above the prospectus forecast.

Booktopia's revenue and earnings growth was underscored by a 27% increase in "total units shipped" which totalled 8.2 million units in FY21.

As a result, the "annual spend per customer" increased by around 14% to $126.85. Average order value also managed to creep up to $71.07 from $65.08, an increase of 9% from FY20.

From its FY21 results, the company "smashed" its prospectus forecasts, as customers "continue to splurge on books".

Finally, the company invested over $20 million in the "automation of its 14,000 square metre distribution centre" in Sydney. This effectively doubles the company's shipping capacity from "60,000 books across 145,000 different titles per day".

What did management say?

Speaking on the company's first results since listing on the ASX back in December, Booktopia CEO Tony Nash said:

Our prospectus set some very ambitious targets for our first year as a listed company and I am very happy to report we have been able to eclipse those expectations. Our focus has now shifted to executing our multi-pronged growth strategy that will see us ramp up our market penetration, expand our reach within the book industry and lock-in new, earnings accretive partnerships and acquisitions.

Touching on the growth vision for the company, Nash added:

Bolt-on opportunities, whether through acquisition or partnership, provide a clear path to supercharging our growth over the next few years and if we see an opportunity that provides the right benefits, at the right price, we will pursue it.

What's next for Booktopia?

According the company, FY22 has already "started strongly" with revenue "tracking ahead" of results the same time last year.

Booktopia expects to continue benefitting from "strong tailwinds", such as the dynamics around online shopping due to "structural and demographic shifts".

The company believes COVID-19 will continue to "accelerate these trends" which is another potential tailwind to the Booktopia share price.

Moreover, the company believes there will be an "increase in discretionary spending" domestically due to travel restrictions imposed through the ongoing pandemic.

The Booktopia share price has had a choppy year to date, posting a return of 7.7% since January 1. This result has lagged the S&P/ASX 200 index (ASX: XJO)'s gain of around 14% over this same time.

At the time of writing, Booktopia shares had clawed back some ground and are now trading for $2.82 each, down 5.69% on their previous closing price.

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Booktopia Group Limited. 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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