Australian online print platform Redbubble expects its FY2017 EBITDA loss to be $6m-$8m, compared to the $1.3m loss forecast at the IPO.
It says it now expects to move into month on month profitability late in FY2018, roughly two years time. The company which listed last year revised its full year revenue forecast from $215m down to $175m-$185m. The new forecast ranges still epresent year on year growth of 22 per cent to 29 per cent.
In an update for stockholders, the company cites ‘significant headwinds’ as the reason for higher than expected losses, including a strong Australian dollar, uncertainty in the UK and US markets which accounted for 14.6 per cent and 61.2 per cent of GTV in 1HFY2017, and the company’s investment to capture a larger audience on mobile devices. Redbubble notes its year on year growth in GTV from mobiles was 52.3 per cent versus 13.8 per cent for other devices.
Redbubble says it expects an improvement in gross product margin of 35 per cent of revenue for the full year, higher than the 34.1 per cent forecast at the IPO. This follows on from a 38.1 per cent growth in gross profit to $28.3 million.
Gross Transaction Value for the half-year was $98.6m, $11.6m lower than the IPO forecast, Redbubble notes that it had only a modest growth in expenditure of 9.3 per cent, compared to the IPO forecast of 26.7 per cent for the full year.
Martin Hosking, CEO, Redbubble says “Whilst I am disappointed that we have fallen short of the growth targets we set for ourselves, we experienced stable growth throughout the six months.”
The company notes that due to the seasonality of Christmas sales, December’s cash position is exaggerated, as customers pay Redbubble on sale, while Redbubble pays the order fulfillers later.
Redbubble points to strong growth from its European language websites, with GTV in Germany growing by 61.8 per cent, Spain 80.8 per cent and France 33.7 per cent, alongside its ‘growth initiatives’ as evidence the company is moving towards profitability, with new customers and artists being ‘acquired through a low cost’ using Facebook’s advertising and Google’s shopping platforms.
“Importantly, the growth in gross profit after paid acquisition combined with lower operating expenditure growth reflects a business scaling to profitability. We are confident that the company’s ongoing growth initiatives will enable us to exploit the large global opportunity in front of the company” says Hosking.
Redbubble was founded a decade ago by three Melbourne friends, and listed on the ASX last year in a placement that valued the business at $300m.
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