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$6.04
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#Bear Case
Added 2 weeks ago

Sharing a bearish perspective I came across on twitter by @neke86_

https://twitter.com/neke86_/status/1389092856783015936?s=19

I haven't done the work, but it seemed some good points were raised.

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#Review of RBL
Added 2 weeks ago

Author: Ron Shamgar

This week we take a look at one of our top performing investments from the last year, a stock we wrote about on multiple occasions. This week we would like to explain our investment journey; why we backed the company then, our entry and exit prices and ultimately what changed our mind in January and February this year that caused us sell the stock.

?Redbubble (RBL.ASX) is an e-commerce marketplace that connects consumers with artists globally. The business model is one we like; it enables shoppers to choose from many different designs and product categories and get it printed on demand. This business model is favourable as it carries no inventory risk and the company receives the purchase payment upfront while paying artists and fulfillers after.

In mid-2020 we took a position in RBL at around the $3.00 mark. As we articulated last year on many occasions, businesses that facilitated and enabled consumers to shop online during lockdowns and restrictions were amongst our so called “Covid Winners”.

Unlike many of its peers, RBL was cashed up and profitable. It also operated on a global scale which meant it wasn’t limited by its addressable market like some of its land constrained peers, Kogan (KGN.ASX) and Temple & Webster (TPW.ASX).

During 1H2021, RBL reported strong sales growth and profitability was on track to hit $60m of EBITDA by 1H. Cashflows were strong with cash balances ballooning to over $100m. RBL was not only benefitting from consumer demand for online shopping, but also from reduced marketing costs and higher gross margins in (temporarily high demand) products like face masks.

We understood from day one that RBL would likely struggle to maintain elevated sales growth in 2H2021 and beyond. We did however believe that, due to the global nature of its business, RBL could maintain growth and profitability, albeit at a lower level. We also expected management to begin paying dividends to investors. Our valuation over 1H2021 increased to $7.00 based on consensus estimates. We also had a bullish best-case scenario valuation of $10.00 had RBL achieved our estimate of $100m EBITDA in FY21.

During January 2021 the stock exceeded our valuation of $7.00 and we sold down substantially to secure profits for our investors. We maintained a small position going into the Q2 update.

There are many sayings in investing, but one that never fails is that “good news travels fast”.

The market (and us), were expecting very strong sales and EBITDA figures for Q2 and there was an expectation that management would update the market by late January. As the news never came, we became concerned and reduced our holding even further at $7.00+ as the risk/reward trade off was no longer balanced.

RBL reported Q2 results during its half year result in late February and although sales were as expected, gross margins were significantly below expectations as competition increased. We exited our holding above $6.00 on the day. Overall, RBL was one of our top performing stocks in 2020.

Last week, RBL provided a Q3 update to investors and laid out a new strategy for investors under the reign of recently appointed CEO Michael J. Ilczynski. As we no longer owned the stock, we looked on with interest from the sidelines.

Unfortunately for investors, the update was disappointing as sales growth slowed down and profitability completely disappeared as margins were heavily impacted by discounting and increased marketing spend. To make matters worse, the new CEO laid out a strategy of reinvestment and lower profits for the next two years to drive top line growth.

The ultimate reward for investors is a $1.25bn sales target beyond 2024 and EBITDA margins of 10-15%. Essentially, or in other words, the company now needs to spend more on marketing to stay competitive and relevant. Investors were not impressed and sent the stock to $4.00.

So, does RBL now present a buying opportunity

At this stage we don’t believe so. There are serious headwinds for the company for the remainder of CY2021. These short term hurdles include cycling the elevated sales from the lockdowns from April to December last year and a persistently stronger AUD, which has appreciated 17% against the USD (RBL’s main sales currency).

To make matters worse, RBL was added to the ASX200 index just three days before the disappointing update. It is now likely that RBL will be removed from the index on the next rebalance, adding more artificial selling pressure to the share price.

Overall, we did well out of RBL and we may re-enter the stock at some point in the future. Experience has taught us that there is no immediate rush to do so, and we will want to see a material discount to our updated valuation of $4.50, based on consensus forecasts for the next two years.

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#Research report
Added 2 weeks ago

RBL - 

Chapter 1 - Breaking down the letter to shareholders

Chapter 2 - Potential Outcomes

Chapter 3 - Valuation

Chapter 4 - What happens now?

 

If anyone wants my model template to play with the numbers, feel free to reach out.

All my own research

 

DISC - I own a tiny amount of RBL shares

View Attachment

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#Bull Case
Added 2 weeks ago

The artist product business has been sold off – it’s down 25% from when it released its trading update, as well as a strategy change.

That new strategy seems to have spooked the market. Instead of getting steadily more profitable, it has decided to try to maximise its market share and growth. That means more marketing spending and operational investing, as well as lower EBITDA margins (EBITDA explained).

But before investors get too hung up on margins, remember that in several years Redbubble can become a much bigger business. Then the margins can jump higher.

The FY21 third quarter saw marketplace revenue increase 54% whilst gross profit grew 55%. EBIT went up 91%. That’s strong growth when investors were worried about a post-COVID drop in sales.

I think today’s price of $4.10 could seem excellent value in a few years after it has grown its operations a lot.

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#Seasonality of Earnings
Added 2 weeks ago

Attached are some Images relating the seasonality of RBL's MPR & EBITDA.

 

Please note - In other straws differening figures are used.

These graphs are based from Market Place Revenue, not total operating revenue. This is because the artist revenue is not really relevant as it is paid fully back to the artists.

View Attachment

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#Substantial Holder Buying
Added 3 weeks ago

Where as Osmium is selling, Virtus Group continues to accummulate RBL.  Virtus Group is now up to 7.19% taking advantage of the current share price weakness after the  3Q21 update and strategy update.

Substantial Notices

26 Apr 21: Virtus Group 7.19% from 6.01%

16 Apr 21: Osmium Partners Ceasing from 5.4%

12 Apr 21: Virtus Group 6.01% from 5.07%

6 Apr 21: Osmium Partners 5.4% from 6.7%

29 Mar 21: Virtus Group 5.07% Initial

26 Oct 20: Martin Hosking 9.76% from 12.52%

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#Marketplace Revenue by Quarter
Added 3 weeks ago

Expanding on Rapstar's seasonality of earnings straw. In my opinion the only way to compare the quarterly result is with the corresponding quarter. I have created a column graph of marketplace revenue by quarter. The general trends and seasonality are quite clear..

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#Seasonality of Earnings
Added 3 weeks ago

Holders need to be aware, this is a very seasonal business.   Attached is the quarterly revenue numbers, which shows the slowdown, is all part of the seasonal cycle, although the slowdown is about 20% more severre than usual.   

If that continues, Redbubble holders can expect a relatively flat FY2022, as the economy tranititions to a post-COVID reality.

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#Bull Case
Added 3 weeks ago

Very interesting sell-off in my view.

Looking back to past years, Redbubble has experienced a similar slowdown in Q3 coming out of the holiday period by around 40-50% compared to Q2, what were shareholders expecting? Another record quarter? The expectations were clearly too high.

Sacrificing profit in the short-term to drive top-line growth and efficiencies seems to be the most appropriate choice for the moment. Were shareholders expecting a dividend? I would've been much more concerned if they choose to pay out a dividend in my opinion.

Mask concentration is not a significant issue in my view. Management addressed some of these concerns in a conference released today.

"The third quarter performance is more impressive once adjusted for mask sales which contributed only 6% to sales for the quarter, down from 8% last quarter and 21% in the first quarter."

Meaning, Q2 was an outstanding quarter and only had 8% in mask sales. I'm not concerned moving foward.

This number might continue to fall as we emerge from Covid, but I think the whole mask thing a great example of how companies like redbubble have the agility to adapt to what the market wants at the time. I also couldn't imagine mask sales dropping to zero as I think Covid has permanently changed the way we go about hygiene.

Management is targeting $1.25 billion in marketplace revenue (MPR) with EBITDA margins between 10-15%, so around $150 million EBITDA by calendar year 2024.

Compare this to FY20 MPR of $349 million and EBITDA of $5.1 million. That's a revenue CAGR of around 30%.

I would be interested to hear what other people have to think in response to this bullcase rather than just downvoting, I'm all for an open discussion :)

I will update my valuation accordingly. 

 

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#Sell off
Last edited 3 weeks ago

REDBUBBLE BRUTALLY SOLD OFF

Fears that this was a material covid beneficiary are coming to fruition with a disappointing Q3.

It's hard to deny that once people can spend their disposable income in a more "normal" way (travel and entertainment), artworks and home projects, take a hit. Remember, RBL were generating significant revenue from masks which will in time, go to zero.

Refer to my previous straw on competitive landscape but I'm pretty glad I passed on this one earlier in the year. Definitely owe a Jamieson whiskey (on Chalkys recommendation) to my housemates on explaining the competition to me and helping me steer cleer.

Whilst it doesn't get recorded in the book as returns, the decisions to pass are equally important in generating your investment returns.

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#Q3 FY2021 - Results Summary
Last edited 3 weeks ago

General Notes

  • Q3 is normally a bad quarter for RBL compared to other quarters results. I believe the way to compare the results is with the corresponding quarter.
  • Presentation appeared to be the new CEOs vision for the company. The CEOs strategy background from time at Seek is obvious.

Positives

  • Revenue numbers for quarter we better than thesis required.
  • Focus on customer loyalty. I think this is somewhere that can improve so acknowledgement of this is positive.

Negatives

  • Market didn't like the announcement around $1 taken off the share price (around 20% drop in one day).
  • Companies target is approximately my baseline thesis. Are they under or over promising?
  • I felt like they were trying to hid the quarter numbers which wont strong compared to other quarters. Still provided the quarter number results table as per usual.
  • Is this a negative inflection point as previous quarters YOY was much stronger? Is company just being realistic about growth from here. My thesis was based on 25% corresponding quarter revenue growth, result was 55%.

Has the thesis been broken?

  • No, thesis was based on 25% revenue increases over previous corresponding quarter moving forward with margins the same as historical. On a negative, this is now the baseline of expectations set by the company, they do need to execute. Substantial growth has occurred over the previous year, moving forward I had no expectation that those numbers would continue.
  • Need to monitor future quarterly results to ensure growth continues at the expected rate.

Valuation

  • Based on companies new projections adjusting the end FY2023 PE to 30 rather than 40 for valuation. Valuation based on 25% increase in revenue with previous corresponding quarter and historical metrics being maintained not improved as predicted by management. Valuation at $6.39 based on this. See Strawman valuation for assumption numbers.

Personal Sediment:

  • Hold - Monitor progress for potential buy. Don't understand why the market dropped this heavily. Only hold because I am being conservative that I have missed something. If price drops further there is definitely a buying opportunity but I will wait for positive sediment in the share price.
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#To Enter S&P/ASX200 19/4/21
Added 4 weeks ago

Coca-Cola Amatil Limited to be removed from the S&P/ASX 200 Index

SYDNEY, APRIL 16, 2021: S&P Dow Jones Indices announced today that it will remove Coca-Cola Amatil Limited (XASX: CCL) from the S&P/ASX 200, subject to final court approval of the scheme of arrangement whereby the company will be acquired by Coca-Cola European Partners Plc (XNYS: CCEP).

S&P Dow Jones will remove Coca-Cola Amatil Limited from the S&P/ASX 200 effective prior to the open of trading on April 22, 2021. Coca-Cola Amatil Limited will be replaced by Redbubble Limited (XASX: RBL) in the S&P/ASX 200 effective prior to the open of trading on April 22, 2021.

 

View Attachment

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#Substantial Holder Selling
Added 4 weeks ago

Osmium Partners, a substantial holder has continued to sell down it's holding to the point where they have ceased to substantial (>5%).  It will be a while yet until they have fully sold out (the remaining 5% if they want to totally exit).  The selling pressure increases when it gets towards $6.00 but there is resistance at $5.00. 

SUBSTANTIAL

16 Apr 21: Osmium Partners Ceasing from 5.4%

12 Apr 21: Virtus Group 6.01% from 5.07%

6 Apr 21: Osmium Partners 5.4% from 6.7%

29 Mar 21: Virtus Group 5.07% Initial

26 Oct 20: Martin Hosking 9.76% from 12.52%

 

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#Ecommerce comparison
Last edited 3 months ago

North American companies reported last week, and I thought about comparing key ecommerce companies using the metrics below.  

The metrics that I chose were:

  • Number of sellers 
  • Number of buyers 
  • Gross Transaction value (GTV)
  • Revenues 
  • Net transaction Margin (NTM) which is revenues / GTV
  • Gross Margin 
  • Operating Margin
  • Average transaction spend per buyer (GTV/ no. buyers)
  • Market Cap 
  • EV/EBITDA    

Companies

  • Etsy 
  • Shopify
  • Amazon
  • Ebay
  • Square
  • JD.com
  • Alibaba
  • Pinduoduo 
  • Kogan 
  • Redbubble  
  • Temple & Webster 
  • Adairs 

There are missing data points regarding customers and merchants especially for Amazon as they present their numbers under overall sales. Despite this, most key metrics are available for each company. I added Square just for fun, to see if they were an ecommerce company where would they fit?

An interesting insight from the data is that Redbubble has double the users of Kogan but the market cap is equivalent. The main takeaway is that Australian ecommerce companies have orders of magnitude fewer users than their American counterparts. It is perhaps the main reason why Australian ecommerce companies trade at a discount. 

Since the last straw, Etsy came out with their Q4 2020 results:

  • Increased sellers by 600k to 4.5M
  • Increased buyers by 12M to 81M
  • Increased GTV by $3.6B to $10.3B
  • Increased revenue by $600M to $1.7B (I made a mistake there, the Q3 YTD revenue was actually $1.1B not $800M mentioned in the previous straw)
  • Regardless, the result was very impressive and to me proves that Etsy is more valuable than Shopify despite fewer sellers and buyers. The margins are much better with Etsy.            
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#Fundie/Analyst Views:
Added 3 months ago

Linking Goldman Sacchs Report for those that don't have access to commsec reports. (This is not my work). I have attached the document but their outline is: 

RBL has released its 1H21 result which beat our forecasts on revenues but missed on costs (lower Gross Margin and higher paid acquisition). While this was disappointing, our investment thesis remains unchanged: large global addressable market, e-Commerce trends that should be broadly supportive of online demand remaining robust, a strong balance sheet (net cash > A$120m by end of FY21E) and a new CEO who we believe could focus the business more sharply on driving new customer growth, improving repeat transactions, accelerating product roll-outs and investment in data analytics, in line with the company’s stated focus areas. Furthermore we regard RBL as attractively valued relative to its peer group. As our A$7.15 12m TP implies a potential return of 26%, we make no change to our Buy rating.

Disc: I do own RBL shares 

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#Bull Case
Added 3 months ago

Attached is an investment case for RBL from EGP's Capital (Tony H).

 

Well worth a read in talking about the investment case for a long term play with RBL shares.

 

*I own RBL shares

View Attachment

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#Redbubble vs Etsy
Added 3 months ago

In reply to El Paso and other recent posters about their offering. 
my understanding of RBL's model is a little different  

RBL do not hold inventory. They receive payment for an order. They then place an order from third party suppliers. So they hold the money before paying both the supplier and the designer. So have the use of "free cash" to use in promoting and expanding their business. 
 

Etsy act as a marketplace. The designer/seller holds the inventory and Etsy clips the ticket of any purchase. 
 

both benefit from flywheel network effects. 
 

but agree that there is an awful lot of sh*te on the RBL and the site is a bit chaotic and bloated. 

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#Competition
Added 3 months ago

After thinking through RBL for some time, and being interested by what looks like a fantastic, growing business at quite an attractive valuation I have decided to pass on this for now.

I spoke at length with my 5 housemates who are very interested in art and specifically, independent art. (Yes I have 5 housemates which makes me a better investor...)

They found that RBL is flooded with bad products and bots, which makes it extremely difficult to find good quality vendors. I'll link some of the products below which looks like something you would find on ebay (counterfeit hats, generic shirts, etc).

Anyway, my housemates all agreed that a website called EVERPRESS is far superior in this niche and they are no longer RBL users. I looked into Everpress but unfortunately it is not listed.

I guess the moral of the story is before you buy into the independent art market story and "investing in art", do your research. I can't see Redbubble restricting vendors to maintain the niche, as it is, at the end of the day, revenue.

They might still do well, but it is a risk I can't take on if the people around me are saying the website is rubbish. This could lead to user churn and stagnate growth quite quickly.

 

Bad product link:

https://www.redbubble.com/shop/aphex+twin

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#Etsy Comparison
Last edited 3 months ago

The best company to compare Redbubble is actually Etsy not Kogan. Etsy provide very similar products using ecommerce. As Etsy call their platform "the creative marketplace".

Both platforms have buyers and sellers but the difference is that the design is sold at Redbubble while the product is sold at Etsy. With Etsy you need to keep inventory while Redbubble takes care of inventory. Redbubble is more capital intensive as they have to build the product using the artist design. 

Marketplace Revenue  

Etsy = $839M as of October CY2020 (4Q will be out on Feb 25)

Redbubble = (349-180+353) = $522M as of December CY2020

So, Etsy will have ~ 2x more revenue than Redbubble prior to Q4 results, and is currently valued at $28B in the Nasdaq exchange. Redbubble's current market valuation is $1.6B, that is ~14x  valuation difference. If Redbubble was to list in the Nasdaq, it should get a much higher valuation and the valuation difference would not be as extreme.

Platform Economics 

Redbubble

  • 572K artists (sellers)
  • 6.2M customers (buyers)
  • $442M Gross transaction value

Etsy 

  • 3.5M active sellers
  • 69M active buyers (27M repeat buyers = buy more than one product)
  • $6.7B Gross transaction value

Operating Metrics 

Gross Margin (Gross Profit / Revenue)

  • Redbubble - 41% 
  • Etsy - 72% (including service revenues)

Operating Margin (EBIT / Revenue)

  • Redbubble - 12%
  • Etsy - 19% (including service revenues)

Thoughts 

In the unlikely scenario of Redbubble catching up to Etsy, I would not be surprised to see the market revalue Redbubble closer to Etsy. If that were to happen, it would mean Redbubble have become a large player in North America. Very rare to see Australian tech companies grab market share in North American markets. Looking at history, either our tech gets acquired or we get outcompeted by US tech firms with stronger network effects. 

Looking at the data, Etsy wins hands down on all metrics - they are stronger than Redbubble. However, the ecommerce market is massive and there is a strong case to be made that the TAM keeps going up as more people operate their businesses online. Thus, Redbubble can maintain growth as the market is growing faster.

Another reason to own Redbubble is a potential acquistion by a company like Etsy. Etsy has $1.15B of cash on their balance sheet and could buyout Redbubble cheaply for $2B. Shareholders should not agree if they feel Redbubble has more room to grow. Corporate consolidation is the next stage for ecommerce companies and I think if Redbubble starts stepping on Etsy's turf we could get an acquisition offer.      

In saying that, we are yet to see how Etsy performed in Q4 CY2020. Redbubble had a great (July-December) with revenues most likely coming from the last quarter (September - December) holiday period. Hence, it would not be outlandish to assume that Etsy would also have similar growth in the last quarter of 2020. Etsy could have a monster Q4 with $800M revenues which would mean $1.6B for 2020. It would extend their lead with 3x more revenues over Redbubble. If I were a Redbubble investor I would keep a very close eye on Etsy.

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#H1 Update
Last edited 3 months ago

Key points that stood out in the result to me were the growth in repeat purchases of 98% yoy in line with overall growth rates. Gives me some comfort that we are not seeing new customers gained as only more of a "one-off experience". Customer satisfaction and loyalty seem to be present here which is a positive for growth in the years ahead.

It is not an easy task to come up with forecasts over the year ahead given the growth in 2020 was extraordinary. However I was pleased to hear that already in 2021 growth on a constant currency basis hadn’t slowed down as much as I may have thought.

The current half growth will still likely be extremely strong, although Q4 the comparables might see this slow down a lot. Seasonally the current half is not quite as big but I still see them on target for circa $70 million EBIT FY21. (apologies for the edit here think I had 80 mill pencilled here before but it doesn't change the context of my straw). Cash generation is more impressive (although flattering from a seasonal perspective). Stripping out the cash balance (useful for a share buyback down the track? They probably won’t but if the share price were to struggle maybe this offers some downside protection), you could look at it as a stock with a PEG ratio of around 1. I think given so many tailwinds it is easy to see growth in the medium term even after this great financial year we are in still running above 20%.

With characteristics in vogue now such as strong MOAT, network effect, founder led, strong management, negative working capital business model, strong balance sheet with net cash, good margins, inflection point in terms of scale, large total addressable market I can easily see more justifiable multiple expansion here. I like their potential to introduce a lot more new product categories. Some of their new products in recent times have experienced fantastic growth.

I only became a shareholder late last year at around $5, seeing fair value easily at least $7.50 on that basis. Under $4 I was thinking of making It a bigger weight but I tried to get too cute when it was falling and didn’t follow through. I wouldn’t mind if this panic sell off continued to buy more but I have my doubts it will. Anyway my view about fair value easily being $7.50 or more has not changed from yesterdays results.

The share price had a big down day on the back of the results which I don’t read too much into. The price gained 10% before results day. After this big fall the shares are around the same price they finished at 2020. Comments around margins seemed to indicate there were reasonable excuses.

In terms of risks well sometimes I wonder how about their popularity in the medium term. Will this “personailsation” trend necessarily be as long lasting as many think? I am also reluctant to value the stock higher because of comparisons to Etsy, as I am not sure whether this might simply reflect some exuberance on the US exchange. Many have cited issues surrounding copyright also as a risk so perhaps that is another small reason to have stopped me making RBL a bigger weight in my portfolio so far.

For those owning zero RBL shares today the sell off yesterday should be a good opportunity to take a look and start buying. I guess the CEO is about to get busy doing that anyway!

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#Bull Case
Added 3 months ago

RBL - Customer Growth for FY2021H1

As per the Investor Update for the Half yearly results, this is quite a good profit and free cash flow given the scalability of their business model where both the Artwork and the actual Product Production is outsourced.

6.2m unique customers in the half up 69% YoY

Repeat Business 40.1% and First Time Business 59.9% on a $$$ MPR basis

So that's where the presentation goes on to mention focussing on developing RedBubble into a global brand I guess.

The geographic split of gross revenue shows most growth coming (~ $145m) from North America, so realtively speaking on the US population alone there is scope for alot of extra penetration and continued unique customer growth.

The thing is though, how competitive is this space ?

 

 

 

 

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#Financials
Added 3 months ago

RBL - P/E based upon Half Yearly Accounts  $41m EBIT

as per pg 9  Basic Profit per Share 0.15c =>  +0.16 from 2019 which was (0.01)

as per closing price of $5.69  (actually an 18% drop for the day with results being announced)

so I make that a PE ratio of  37.9  assuming that level of earnings can be maintained (!!)

the sell off is a bit strange but it was supported by 15m shares being traded which in itself is ranges  at 10 - 5 times daily volume of the last 4 weeks where the 1.5m would be an average day and 3m was the largest prior day.

So is it no dividend being paid or that the results are being seen as a once off hit from American revenue growth being deemed covid / ISO induced ?

Despite the spectactular turn around rbottom line result, still not a cheap business by the numbers alone.

 

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#H1 Update
Added 3 months ago

Amazing result by management 

  • $353M in marketplace revenues up 105% from 1HFY20 on constant currency basis
    • $141M is repeat purchases and $212M are first time purchases. The growth in both repeat and first time purchases was an amazing achievement by management.       
  • $144M in Gross Profit (41% Gross margin)
  • $42M in EBIT (12% operating margin)
  • $130M cash in the balance sheet 

In other words, they are printing cash with $80M positive operating casflow. Here's some more unit economics: 

  • 572K artists on the platform 
  • 6.2M customers spent $442M worth of product    
  • 41 fulfillment centres globally
  • Marketing Spend low at 12.5% MPR (which I think is Marketplace revenue)
  • 14% of revenues came from the Redbubble app. 
  • North America makes up 70% of total sales.  

Next step is to compare this result with Kogan on Feb 26

 

 

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#H1 Update
Added 3 months ago

RBL half yearly results commentary - see my notes attached.

 

~80m OCF, what's not to like ;)

View Attachment

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#Bull Case
Added 3 months ago

Great opportunity to add more at $5.7~, future looks great and I expect the stock will do many multiples long term.

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#H1 Update
Added 3 months ago

Redbubble reported strong H1 results, with marketplace revenue of 353m, which is greater than the total FY20 revenue (349m). Total net cash balance at 130m. YoY customer growth @ 69%, and strong growth across key geographies, mainly UK/EU/US. 

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#New CEO
Added 6 months ago

RBL have annouced the appointment of Michael Ilcyznski as the new group CEO.

  • Martin was previously employed at SEEK for 13 yrs 
    • Was the MD for Seek's Aus/NZ and CEO for the APA group for an extended period, and have been credited with a lot of Seek's success in recent years
  • Takes over the role in Jan 2021, which will see the interim CEO, Martin Hosking step back into an NED role.
  • Michael's compensation package to be $800k, half of which is credited to "Long term incentives" which are options activated given a specific share price
    • The LTI is only activated if TSR > 10% over a period of 3+ yrs.
  • Michael is to purchase $2m of on market shares following the release of the groups H12021 results
    • $1.6m in the form of a loan and $0.4m of his own funding

 

Overall, a very positive annoucement that the market reacted positively to. Michael brings a wealth of experience from his time at the helm of SEEK.

{I do not hold RBL shares}

** See PDF for further notes.

View Attachment

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#Fundie/Analyst Views:
Last edited 6 months ago

20-Nov-2020:  Ausbiz: "The Call" - Stock of the day - Redbubble (RBL)

RBL closed at $4.97 +0.43c (+9.47%) on Friday (20-Nov-2020) on their "New CEO" announcement.

From Ausbiz (on Friday):  Global print-on-demand online marketplace, Redbubble (RBL), has had a change in the big chair with former Seek exec, Michael Ilczynski who will replace Founder, Martin Hosking, who will now focus on the company's philanthropic efforts. RBL's sales have surged during he pandemic, with gross profit for Q1 surging 149% on Q1 FY20.

Today on The Call, Kochie asked his guests, Jun Bei Liu from Tribeca Investment Partners and Adam Dawes from Shaw and Partners for their views on RBL.  Jun Bei likes the company although she thinks it is something of a speculative stock.

"It's expensive and it's been growing really fast and it's absolutely been the COVID beneficiary, given people are buying masks and doing e-commerce related things.

"But I like it because the company has done very well in terms of broadening out its product range... they make a very good margin out of the products that they do. The company is trading on a free cash flow yield of 4%. This is very rare for [stocks in] the tech space."

Adam also likes RBL as a speculative prospect and the fact that it has had a recent pullback.

"It hit some highs and it's come back to $4.85. It jumped today on the announcement of that new CEO. It looks interesting.

"Most of the sectors that are contributing to [market] growth have grown over 100% year-on-year. Despite [the sales of] face mask slightly pulling back over July and through to September... their margins are fantastic."

--- click on the link at the top to view and listen to the entire conversation (this is just a sample from it) ---

--- the other 10 stocks covered on this episode of Ausbiz' "The Call" were WHC, TLT, AGH, FXL, DOU, SLC, COL, ELO, URW & OML ---

[I do not hold shares in any of those 11 companies.]

[Edit:  I do hold IFT (Infratil Ltd) and IFT holds 65.6% of TLT, so I do have indirect exposure to TLT.  Jun Bei and Adam were not keen on TLT, however they were more positive on IFT - which was added to "The Call Portfolio" in October.]

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#Q1 FY2021 update
stale
Added 7 months ago

Redbubble has seen an incredible change of fortune. 

Late last year, shares lost their shine after the company reported slower than expected growth due to increased price competition. The price continued to sink lower following a surprise resignation of the CEO and an underwhelming first half result in February this year.

In March, at the height of the Covid panic, shares at one point touched 40c.

Since then, shares have gained an amazing 1200%, with shares up a further 10% today to an all time record high.

Today Redbubble reported a 116% rise in maretplace revenue for the first quarter of FY2021, with Gross profit up 149%. Operating cash flow came in at $27.1m, compared with $10.2m for the same period last year (the company now has over $85m in cash).

Growth was seen across all geographies and segments, although the US (Gross transaction volume up 102%) and accessories (which i presume is things like masks, was up 562%)

You can view today's investor presentation here

 

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#Results
Added 9 months ago

21-Aug-2020:  Investor Update - FY2020 Financial Results   and   Investor Presentation - FY2020 Results   plus   FY2020 Appendix 4E, Directors' Report & Financial Report

RBL are up a little on these numbers.  It looks like a solid result, but I don't hold or know the company well.

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#ASX Announcements
stale
Added 9 months ago

Haven't spent any time looking at this but just following up on DazBo's post. I spent 15 years living in Canada and regularly bought from RedBubble and this was before COVID reared it's ugly head.

View Attachment

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#Bull Case
stale
Added 9 months ago

I think this company needs more attention and reevaluation. It's Australia's version of ETSY. I listened to an interview with the CEO of ETSY today and he made an interesting comment. He said, "Customer habits are up for grabs", meaning COVID has accelerated consumer behaviour change. Customers want more personal. Customers want custom-made. Customers love handwritten notes of appreciation. This business is in the eye of that storm and I believe the market is only just waking up to that fact. 

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