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Creative works marketplace Redbubble (ASX: RBL) saw a 41 per cent spike in revenue in FY19, along with an almost equivalent surge in users driven by the 369,000 artists who now harness the platform to make income in the gig economy.
The group's marketplace revenue hit $257 million, contributing to the first full-year operating EBITDA profit since Redbubble's IPO in May 2016.
The operating profit of $3.4 million compared to an operating loss of $3.8 million in the previous year, and led to a 23 per cent surge in the share price to reach $1.23 in early trading.
When it comes to the bottom line however, final EBITDA was still in the red with a loss of $3.8 million as the loss from 'other income/expenses' more than doubled to $7.3 million.
Redbubble attributed this to non-cash share-based payments, currency losses and one-off costs of $1.2 million associated with the acquisition of TeePublic in the second quarter.
The takeover of the US company was completed in November 2018 with a purchase price of $57.7 million, essentially bringing two very similar platforms together through Redbubble's plan to form a multi-brand strategy.
Like Redbubble which allows independent artists to sell print on demand (POD) designs online, New York-based TeePublic is a global online marketplace enabling artists to sell their designs on 45 products produced and fulfilled by a network of third party suppliers.
TeePublic was co-founded by current COO Adam Schwartz and Josh Abramson, the latter known as the founder of Connected Ventures - the business that own video platform Vimeo and comedy website CollegeHumor.
"TeePublic is a very attractive strategic fit for Redbubble and we see tremendous potential in the combination of the businesses," Redbubble CEO Barry Newstead said when the acquisition announcement was made in October.
"This acquisition enables us to accelerate our marketplace flywheel together and emerge as the platform with scale to disrupt mainstream retail commerce."
The takeover was funded through a combination of a $36 million institutional placement and a $24.6 million entitlement offer. These funds would have been much easier to come by back then as shares were trading at $1.66 each - in the months that followed they dropped substantially, hitting a low of $0.82.
This was partly due to a slump in product and shipping revenue growth in October and November, with issues arising from a change in Google's algorithm which the company has sought to address and indicated was on the mend by the time Redbubble's Thanksgiving sales results were announced on 28 November.
"From the beginning of October through Friday, 23 November, the business saw a slower than previous product and shipping revenue growth of 18 per cent," Newstead said of the important period for US sales.
"This was due to a drop in organic visits and corresponding sales from Google organic search. It is clear that the cause of the drop was a Google algorithm change on 3 October, with the impact starting on 4 October.
"Looking back, the impact of the top line sales was due to the visit shift on that one day and visits have largely followed prior year seasonal patterns since."
In it announcement today, Redbubble said TeePublic had helped accelerate marketplace revenue growth, with progress made in areas including paid marketing, content partners, enhancing the the European business, supply chain improvements and boosting margins.
Redbubble was also in the news in March this year when the Federal Court of Australia ruled in its favour in a copyright case brought by Hells Angels.
The bikie gang was suing Redbubble or publishing Hells Angels trademarks on its site in various paraphernalia including T-shirts and posters, which had reportedly been removed.
The Judge found in Redbubble's favour and dismissed all of Hells Angels' claims in relation to the copyright and consumer law causes of action, but there was still a finding of technical trademark infringement.
This led to the Judge awarding nominal damages of $5,000 whilst declining to award exemplary damages.
"We have had very few instances of litigation in our history because we work to find pragmatic and low cost solutions for parties to collaborate together to address infringement," Redbubble chief legal officer Corina Davis said at the time.
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