Equity Analysis /

AU : Redbubble - A focus on branding

    Steven Sassine
    Steven Sassine

    Research Associate

    18 August 2022
    Published byCGS-CIMB

    RBL’s FY22 result was largely as expected, slightly ahead of consensus at GTV (A$630m, -10% on pcp), in line with marketplace revenue (~A$3m, -13% on pcp) and ~3% ahead of consensus at GPAPA (A$107m, -~30% on pcp). Despite some promising momentum in the 4Q22 operating performance (e.g. GPAPA margin improvement of 160bps qoq), the headwinds that impacted organic acquisition channels in FY22 are likely to persist into FY23, i.e. competition driving up CACs. Opex was flagged to step up in FY23 (A$135m-A$145m) with Brand/marketing incremental spend of +A$8m-A$12m and additional employee expenses with recent FTE additions (+A$14m-A$18m). We make minor adjustments to our MPR estimates over FY23-FY25 lowering by -1%-5%, with larger reductions at the GPAPA and EBITDA lines on our expectations of elevated PAC remaining and the guided step up in opex. Our price target is reduced to A$1.65 (from A$2.05) on the above changes.