The Cettire Ltd (ASX: CTT) share price shot up on Tuesday morning after its 2022 financial results revealed explosive growth.
The stock was up 16% at one stage, but has settled down to $1 at the time of writing for a gain of 13.7%.
What did the company report?
- Revenue up 127% to $209.9 million
- Net loss after tax up 7,494% to $19 million
- Active customers up 127% to 260,249
- 50% of gross revenue is from repeat customers, compared to 40% in FY2021
- Adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) at negative $21.5 million, from positive $2.35 million in FY2021
The company attributed the huge earnings dip to "significant investment to scale platform".
What else happened in FY22?
In February, Cettire celebrated a deal with Chinese e-commerce giant JD.com Inc (NASDAQ: JD) that was meant to open up a $150 billion addressable market. The retailer also launched a beauty vertical in January, which got its foot in the door of a $100 billion global addressable market.
In the background the company continued to invest in its systems to scale it out for growth.
What did management say?
Founder and chief executive Dean Mintz said:
In FY22, Cettire continued its rapid scaling. Sales revenues have increased almost 10x in the last 2 years as our proposition has gained traction and we have invested to capture the global market opportunity. We finished the FY22 year with much stronger foundations than the beginning of the period.
During FY22, we made significant advancements to our technology platform. We now own the technology stack across the end-to-end customer journey, having launched and migrated all traffic to our proprietary storefront software. This is a major milestone and provides significant incremental functionality and flexibility to support our global growth.
What's next?
While the company gave no specific guidance for the 2023 financial year, it did forecast EBITDA would turn positive.
Mintz said:
Our greater scale has facilitated rapid growth in our supply chain, which in turn enables us to better serve and attract more customers. We have also secured improved terms with some of our partners which support better unit economics over time. Cettire is a business that will only get better and stronger as we grow.
We're really excited and encouraged by the early FY23 results achieved during July and August. We have observed continued strong revenue growth as our marketing continues to optimise following adjustments to our operating settings. It is pleasing to see that our increased emphasis on profitable growth is already delivering results based on July's trading performance, and we have demonstrated in prior financial years that the business can generate healthy profits when it is operated to do so. We have a nimble and flexible business model with a largely variable cost base and minimal inventory risk. This enables us to adjust quickly to market conditions and optimise performance.
Looking ahead, successfully launching in China and beauty remain key focus areas within our growth strategy into FY23.
Cettire share price snapshot
Cettire was well-received by the market in the first half for its explosive growth, sending the shares up about 60% to their mid-November peak. The newcomer actually overtook established e-commerce peer Kogan.com Ltd (ASX: KGN) by market capitalisation in September.
But like many growth stocks, it's been a sorry story in the second half. The Cettire share price has fallen more than 73% since the start of 2022.
It hasn't helped that there has been constant speculation that Mintz would offload his shares as soon as escrow restrictions would allow.
And indeed in March, he did exactly that. Mintz sold down 35 million shares in the company, which represented an astounding 9.18% of the issued capital at the time.
