Redbubble shares soar after company claims first operating profit

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Chief executive Barry Newstead told The Age and The Sydney Morning Herald he was “proud” of the company’s turnaround and it was in a strong position for the years ahead.

“We made the decision five years ago to invest in the business and grow it, and we raised capital because we wanted to achieve profitable growth and we’re now back in a positive position,” he said.

When you invest in the future of the business, in future growth, that’s going to affect short-term profitability.

Chief executive Barry Newstead

Redbubble’s shares shot up 30.05 per cent, or 30.2¢, to $1.307 by 1.30pm AEST, a six-month high for the company and nearly a return to its $1.33 IPO price.

Mr Newstead attributed Redbubble’s EBITDA miss to its continuous growth and investment in marketing and people but said the company wasn’t far off being in the black.

“When you invest in the future of the business, in future growth, that’s going to affect short-term profitability,” he said.

“We’re close to a place where we’ll have our own cash to help drive that growth.”

More than 90 per cent of Redbubble’s revenue is sourced in foreign currencies and the company partially blamed exchange rate moves for its $7.3 million bill for other expenses.

Non-cash share-based payments made up the lion’s share of the loss, however, along with the $1.2 million cost of last year’s acquisition of US T-shirt design company TeePublic, which made a better than expected contribution to total revenue.

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In the eight months since its acquisition, TeePublic contributed $38 million to Redbubble’s revenue on a constant currency basis, an increase of 41 per cent, according to the unaudited figures.

Mr Newstead said the company’s performance was “really strong” as expected, and potentially opened the door for more acquisitions.

“We knew we were acquiring a really good business with a lot of similarities to Redbubble, so it’s been a dream acquisition,” he said.

Mr Newstead said the company was working towards a goal of $1 billion in sales, but provided no timeframe, saying only that he believed it could be done profitably.

Redbubble floated on the ASX in 2016 in a $40 million IPO, valuing the company at $288 million. Since then it’s had a bumpy ride, with its shares hitting a record high of $1.90 last year, before dropping below 90¢ at the start of 2019.

The company also faced the departure of founder and chief executive Martin Hosking last August, and Mr Newstead said his first full year in the top job had been equal parts fun and challenging.

“It’s certainly been challenging. I’ve learned a tonne and made a few mistakes, but I’ve had a blast and I think we have a great team and a bright future,” he said.

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