Australian-born marketplace Redbubble has recorded a 12 per cent drop in revenue in the third quarter of FY24 to $78.1 million.
The marketplace sells print-on-demand products based on user-submitted artwork across various categories including fashion, home and accessories.
Year-to-date revenue for the marketplace was down 10 per cent, matching the quarterly slump.
Redbubble's parent company Articore Group reported its subsidiary continued to focus on profitability, adding that the slip in sales also reflected a short-term disruption to paid marketing efficiency.
However, the group expects the decline in marketplace revenue to moderate in the fourth quarter of the financial year, highlighting an improvement in Redbubble’s performance in April to date.
Despite the sale slip, Articore reported a 4 per cent lift in gross profit to $34.8 million for the quarter, with a gross profit margin of 44.6 per cent - 660 basis points higher than the prior corresponding period (PCP). The group also manages a second similar marketplace in the United States called TeePublic.
The group also recorded a 6 per cent lift in gross profit after paid acquisition (GPAPA) to $21.3 million, and a GPAPA margin of 27.3 per cent. This margin is 450 basis points higher than the PCP, largely driven by the improvement in gross profit.
Following this, the group reaffirms its guidance range for FY24 GPAPA margin to be between 24 per cent and 26 per cent and FY24 operating expenditure to be between $97 million and $100 million.
Articore managing director and CEO Martin Hosking said the company has delivered a number of initiatives across both its marketplaces, which also includes US-based TeePublic, to drive profitability.
“Driving profitable revenue growth for the Group remains our primary objective going forward,” Hosking said. “This quarter the Redbubble marketplace implemented significant changes to its paid marketing strategy to enable it to scale its paid marketing spend, while maintaining the marketplace’s disciplined approach of being profitable on first order.
“We purposefully implemented these changes in 3QFY24, as it is seasonally the lowest MPR [marketplace revenue] quarter of the financial year. As expected, the changes were disruptive and had a negative impact on Redbubble’s MPR in 3QFY24. We are starting to see the intended benefit in April.
“While market conditions remain challenging, we are confident that our ongoing focus on profitability, combined with continued strong cost discipline, will enable us to achieve our aim of being underlying cash flow positive for FY24, a marked turnaround from FY23, and a necessary first step as we work towards returning to profitable revenue growth.”