TeePublic, marketing shift boost Redbubble’s first quarter results
E-commerce company Redbubble posted solid growth for the first quarter of FY20 driven by the explosive results of its TeePublic business and a shift in its marketing strategy.
During the first quarter, the company posted a 43 per cent increase in marketplace revenue to $70 million driven by the growth of its TeePublic business and solid results in the core Redbubble business.
Redbubble is also working through a shift in marketing that has provided a short-term reduction in marketing spend. A jump in active members to 2.8 million has also helped.
Strong operating leverage made Redbubble’s gross profit growth even stronger at 48 per cent.
“All of these approaches are generating good results at a relatively small overall scale,” said Barry Newstead, company chief executive.
“To set the business up for the new approach to marketing we reorganised the function, including changes in leadership.”
Newstead said through these changes and the reduced reliance on Google and Facebook, the quality of Redbubble’s revenue is higher when considering the flow through to gross profit after pay acquisition.
According to the company, they want to move from higher cost social media channels, to lower cost, brand-associated channels and improving customer retention through its iOS app.
“We rely less on transactional paid marketing and focus more on relationships that have a higher LTV potential at lower cost of acquisition,” Newstead said.
“It sets the business up for investing marketing dollars effectively for brand building, new user acquisition and LTV growth in 2020 and beyond.”
Redbubble generated free cash flow of $7.8 million during the period which left it with a closing cash balance of $37.9 million.
Newstead said overall, they are feeling really good about what they have achieved for the quarter and where the business is heading.
No guidance was given for the remainder of FY20.