-
-
-
Now ARTICORE Group (ATG.asx) . Redbubble is similar to a digital utility-like business (picture: gas station, cell phone, electricity). It should simply work as a platform that ties together artists' content that is parked/uploaded to the RBL content library, Redbubble outsources 100% of the production, Redbubble as the platform owner simply manages the platform (acquires traffic, pays royalties out, pays outsourced printers, etc). Consequently, this is NOT a Noah's Ark business model that requires two of everything. This is a take-rate model that could be run with fewer people and push $3+ million in revenue per head. However, the board let the business model run amok, during/post COVID. First, revenue per head went to $1 million +/-. Second, all the junk content flooding onto Redbubble caused RBL revenue per artist to fall to went to 25% of subsidiary Teepublic or $450 to $1600. This was a MAJOR problem, as it effectively undermines direct marketing with a lower ability to convert and attract new artists. @ $450 and 20% royalty, this is $90 bucks a year. This is average and there is a massive skew to this number....top 15% of artists make 85% of royalties which are $90 million per year. Anyways, RBL had under their roof Teepublic (Good Co: focused, high bar for new content) and RBL....Teepublic has +35% CAGR revenue growth since 2018...and now $180 million in revenue alone or close to 40% of total revenue.
Last edited by aperitif; 12-01-2024 at 03:03 AM.
-
We believe several catalysts will take hold to see considerable multiple expansion on what is about 10% of private market value at 2.5x sales vs. 0.25x now.... below is why... POSH sold for 2.2x sales last January... ATG Stock-based comp is only 1.5% of sales or $6 million a year... DOOR is at 12% and 3.5x sales.
In 1Q24, Canaccord will take ATG on a road show with the new team to Asia and the US. We view this as similar to an IPO roadshow with a new team of high achievers, a nuclear winter valuation, and a much-improved rev/profitability trajectory.
ATG.AX which is Redbubble/Teepublic...still has a dominant market share for POD....with roughly $500 million in GTV
ATG has seen a -92% pullback from 3x sales to 0.25x....not warranted and should reverse as liquidity returns to the market given: 1) MGT team 2) Balance Sheet 3) Return to Profitability 4) likely turning to growth story in 2024 5) dominant market position.
Redbubble/Teepublic are digital marketplaces (similar to Doordash, Uber, Etsy, etc)....the platform matches Artists and fulfillment, with a Consumer demand of about 8.5 million orders per year. The business requires virtually zero capital in inventory, A/R.
800,000 Artists earn $90 million a year from Redbubble on a $120 million EV (top 15% earn 85% of royalties)
Marketing Reach is $170 million per year or $90 million in royalties and $80 million in direct marketing.
We think normalized earnings power could revisit what was achieved during COVID..or guidance for at-scale targeted margins 13-18% EBITDA margins which on current revenue implies $50+ million or 2.5x.
No miss? given Australia's "continuous listing standard" requirement....ATG quarter was baked really about 2-3 weeks ago...and no update to guidance is good news
"Under the continuous disclosure requirements of the Corporations Act and ASX listing rules, once a company is or becomes aware of any information concerning it that a reasonable person would expect to have a material effect on the price or value of the company's shares, the company must immediately inform the ASX of that information. The requirement to immediately disclose material information should be satisfied if such information is provided to the ASX promptly and without delay. A reasonable person would be taken to expect information to have a material effect on the price or value of shares if the information would (or would be likely to) influence persons who commonly invest in shares in deciding whether or not to subscribe for, or buy or sell, the first mentioned shares."
https://resourcehub.bakermckenzie.co...the%20ASX%20of
Why is this team different?
Martin as CEO has rarely burned cash after 13 years at the helm and during COVID was CEO when RBL generated $100 million in cash flow.
Had dinner with the new CFO, he is impressive see below.
Vivek CEO of Teepublic has quietly shot the lights out....since he got to TP 5 years ago the company has organically grown from $45 million to $180 million in revenue.
ATG-> Business valuation is roughly 0.25x EV/Sales or $120 million on $445 million in revenue (GTV is roughly $90 million higher add back royalties)
Redbubble is roughly 7x EV/Cash Flow (assumes $15 million in cash flow +/- or just 33% of targeted and $50 million in net cash* by June 2024 YE)
We think Redbubble is worth +200% or at least $1.60 per share and possibly a lot more at 1x sales + cash
Cash flow should improve by $50 million yr/yr or better on $150 million market cap
Key Team Members...that are impressive
CEO of NYC Based Teepublic with 35% CAGR top line since 2018 ($180+ million in revenue) https://www.linkedin.com/in/vivekunc/
CEO of Redbubble since September 2023 ($250 million in revenue) https://www.linkedin.com/in/adamcrouch/
CFO of Redbubble Group since March 2023 (CFO of $2 bn Domain Holdings, also experience Fairfax Media and Vodafone) https://www.linkedin.com/in/rob-doyle-057b9b15/
Group CEO and 15% shareholder since 2023 https://www.linkedin.com/in/martin-hosking-115667/
Former CMO of Wayfair Since December 2023 https://www.linkedin.com/in/bob-sherwin/
Posting Permissions
- You may not post new threads
- You may not post replies
- You may not post attachments
- You may not edit your posts
-
Forum Rules
|
|
Reply With Quote
Bookmarks