Articore Group Limited · ASX:ATG
Articore — Investor Presentation (July 2019)
45 slides from Articore's investor presentation, Jul 30, 2019
Slide 1: Investor Presentation
Investor Presentation 30 July 2019 RB Group operates the leading global online marketplaces, Redbubble and TeePublic, powered by over one million independent artists, bringing more creativity into the world * Results and figures are from internal management reports and have not been subject to audit
Slide 2: Why RB Group?
Why RB Group? ● Loved by consumers seeking personalised creative adventures with emerging brand and deepening relationships ● On-demand content supply market leader - valuable back catalog, generative artists, fan art partners, scaling 3P fulfilment/operations ● Large addressable market trending towa
Slide 3: RB Group operates two online marketplaces
RB Group operates two online marketplaces Supply side Demand side 1.0 million 48 5.4 million artists brands customers active on RB on-boarded from bought from RB marketplaces content partners marketplaces 32 3P product fulfilment $328m GTV locations on awesome products in global network Note: As for
Slide 4: RB Group is a flywheel business
RB Group is a flywheel business 4
Slide 5: RB Group at forefront of a retail commerce revolution
RB Group at forefront of a retail commerce revolution RB Group connects authentic artists and content partners with millions of loyal customers enabling personalised adventures in creativity Powered by the Enabled by on-demand Tapping into shift new gig economy technology towards personalisation 5
Slide 6: On-demand economy is just getting started
On-demand economy is just getting started According to 2019 Mary Meeker report On-demand market has grown ~2x in two years and Online marketplaces capturing largest wallet share now has 56 million consumers in the US of US spend for on-demand products / services On-demand consumers, US On-demand pro
Slide 7: RB Group has a huge addressable market
RB Group has a huge addressable market 1 ~US$280B Total global online market for Apparel and Homewares2 to grow at 10- 14% p.a. to 2020 Within this market, On-Demand Retail is accelerating ● Personalised products on-demand will become more mainstream as technologies mature to support enhanced access
Slide 8: RB Group is leading the way for creative adventures in commerce
RB Group is leading the way for creative adventures in commerce
Slide 9: Consumers want a new kind of commerce
Consumers want a new kind of commerce Long term trend towards personalised retail Mass Retail today The RB way Traditional retailers Self expression at ● Undifferentiated affordable Personalised sea of sameness prices experience & professional ● Commoditised service offerings ● Conformist Human bran
Slide 10: RB provides 'creative adventures' for consumers
RB provides ‘creative adventures’ for consumers Our customers say… Artistry at its coolest! Because you can wear it, it’s your expression! - Jake, Canada For people looking for options outside the ordinary. - Uli, Germany A creative outlet for me to express my individuality - Audrey, US Never what y
Slide 11: Customers love their RB experiences
Customers love their RB experiences RB synonymous with creativity for consumers In a recent visitor survey1… RB customers are loving their experiences 96% agreed that Strong Net Promoter Scores (NPS)2,3 they enjoyed spending time on RB 68 52 93% agreed that RB Highly rated Redbubble iOS app Rated 4.
Slide 12: Artists can share and monetise creative content without risk or hassle
Artists can share and monetise creative content without risk or hassle Traditional model The RB Way Before joining RB ● Difficulty in Monetise Focus on monetising without design only creative talent financial risk Liberated from ● Financial, fulfilment production and Global shipping risk audience reach
Slide 13: RB has artist service in its DNA
RB has artist service in its DNA In a recent artist survey1… RB artists say the marketplaces are… 88% extremely or very Really fun and easy way to share and sell my art - Liz satisfied with tools & features I LOVE YOU! You are the most artist friendly - Ian for uploading and managing their artworks A
Slide 14: Content partners connecting with fans via RB platform
Content partners connecting with fans via RB platform 48 licensed brands and ~350,000 pieces Partners say that RB marketplaces are… of licenced content1 “A superhighway that can take brands directly to Examples of brands on-boarded during FY19 some of their most passionate fans. Licensors can use th
Slide 15: Fulfilment network - large product range, professional service, timely delivery across 3 continents
Fulfilment network - large product range, professional service, timely delivery across 3 continents Global supply network providing diverse product Flexibility in fulfilment network also has a number range and favourable customer experiences of other benefits ● Margin improvement via 32 3 reduction of
Slide 16: RB Group is focused on deeper relationships to grow and build scale
RB Group is focused on deeper relationships to grow and build scale
Slide 17: FY2019 RB Group operational summary
FY2019 RB Group operational summary Active works Mobile Marketplace Customer NPS2 Revenue (MP Rev) growth 24.1m 47% Members % Active ▲44% (45% of MP Rev) of Redbubble Members 68 52 MP Rev1 on Redbubble ▲3pts Selling artists 369k Unique Customers Repeat MP Rev growth 29% 5.7m Take rate3 ▲13pp ▲52% 29
Slide 18: Large and growing base of delighted customers
Large and growing base of delighted customers With upside potential from deeper relationships RB marketplaces are online shopping destinations Customers are really enjoying their experiences for 5.4 million unique customers across both Redbubble and TeePublic…. Unique customers1 (in millions, FY15 -
Slide 19: Deepening relationships with customers
Deepening relationships with customers 68% CAGR in Redbubble sales from members Accelerating base of active members1 on Redbubble Redbubble sales1 from members growing strongly as customers convert to membership and now contributing a meaningful share Active members on Redbubble within each period R
Slide 20: Mobile powering growth and iOS app enhancing loyalty
Mobile powering growth and iOS app enhancing loyalty Sales from mobile continue to grow across both Redbubble mobile iOS app loved by users and brands scaling rapidly since mid-2017 Marketplace Revenue from Mobile (A$m, FY15 - FY19) Rated 4.851 / 5 ★★★★★ Top 1002 shopping app Monthly active users (M
Slide 21: Marketing efforts diversified across multiple channels
Marketing efforts diversified across multiple channels Shifting from generic search driven to branded deeper relationships Marketing efforts focused on customer acquisition Marketing spend better than e-commerce peers at powered by brand larger scale with sustained efficiency of spend Marketing / adve
Slide 22: New geographies and products major drivers of growth and diversification
New geographies and products major drivers of growth and diversification Redbubble growth in EU supported by new Scalable new product launches to further growth languages with similar opportunity for TeePublic across the Group Geographic contribution Product contribution (% of Marketplace Revenue, FY
Slide 23: RB is propelled by a large artist community
RB is propelled by a large artist community Who continue to contribute to a large library of content Large and growing community of ~1 million Growing content library independent artists 24.1 million1 Active artists Active art works (in millions, FY15 - FY19) Evergreen content a vital asset ~60% of
Slide 24: Authentic sellers powering the marketplaces
Authentic sellers powering the marketplaces Tend to offer high quality, original works which resonate with customers Continuing to grow core segment of high Sales from this segment growing strongly and performing authentic sellers1 represent significant contributions to the topline Total authentic se
Slide 25: Effective take rate of ~$29 for $100 of GTV
Effective take rate1 of ~$29 for $100 of GTV2 RB benefits from a favourable working capital cycle $29.1 Inflows $100 $97.3 GTV 0 1-3 days ~2 weeks ~4 weeks ~3 months RB Group take rate Outflows $2.7 $15.3 $46.6 $6.4 Payment Artist Fulfillers Tax Platform Source: RB internal data. Analysis based on FY19
Slide 26: FY19 - a year of growth, scaling and shift to profitability
FY191 - a year of growth, scaling and shift to profitability Marketplace Operating Gross Profit Free Cash Flow4 Revenue2 EBITDA $257m $95m $3.8m ($3.1m) ▲34% CC3 ▲41% CC3 ▲$7.7m ▲56% Marketplace Revenue2 Gross Profit growth Operating EBITDA growth CC3 CC3 margins 2Qs tend to be seasonally higher Notes:
Slide 27: Economies of scale emerging at current size
Economies of scale emerging at current size GP margins gradually rising as supply chain Sustainable reduction in core operating costs as % efficiencies continue of sales Gross Profit as % of Marketplace Revenue Operating expenses as % of Marketplace Revenue (%, FY15 - FY19) (%, FY15 - FY19) ● Increase
Slide 28: RB Group has clear priorities for generating growth and scale
RB Group has clear priorities for generating growth and scale
Slide 29: Clear opportunities to propel flywheel for growth
Clear opportunities to propel flywheel for growth 4 key initiatives aligned with core Customers 3 Deeper relationships 4 Brand-driven customer growth Artists & Content 1 Authentic content 2 New products 29
Slide 30: Authentic artists and enriching content
1 Authentic artists and enriching content Fostering artists’ commercial success and developing pipeline of fan art partnerships ● Scale content partnerships ● Increase marketing effectiveness of authentic sellers ● Launch of artist dashboard + features to improve engagement and efficacy 30
Slide 31: New product launches expand market reach
2 New product launches expand market reach Recent investments expected to reduce engineering time and resources required ● 5 new products and working on additional 5+ products in CY19 ● Enabling faster new product launches ● Supporting more localisation via onboarding of new fulfillers 31
Slide 32: Growing customer membership with personalisation
3 Growing customer membership with personalisation Starting to deliver on the potential of deeper relationships and increased loyalty ● Opportunity for increasing customer Introduction of retention and personalised recommendations repurchase rates ● Building engaged membership base ❤ Members ● Expan
Slide 33: Scaling customer growth powered by brand
4 Scaling customer growth powered by brand Whilst acquiring customers profitably ● Stronger brand awareness to drive customer acquisition and retention ● Diversification from historical 3P channels ● Disciplined shift from transactional toward LTV-based marketing ● Grow TeePublic in Europe 33 Images s
Slide 34: Adjacent growth horizons
Adjacent growth horizons ● Artist services ● Wholesale on-demand ● Asia expansion ● Selective white labeling ● Retail footprint ● Disciplined inorganic pursuits 34
Slide 35: RB Group investment highlights
RB Group investment highlights RB Group has a revolutionary vision: RB Group connects authentic artists and content partners with millions of loyal customers for adventures in creativity that transform the retail commerce experience ● ● Targeting long term growth focused on large addressable market
Slide 36: Appendices
: f Appendices THANK YOU
Slide 37: Authentic artists and enriching content
1 Authentic artists and enriching content Fostering artists’ commercial success and developing pipeline of fan art partnerships Past 2 Years Now ● Segmentation of authentic ● Recently launched artist sellers who are uploading dashboard providing insights original works that resonate with to support
Slide 38: New product launches expand market reach
2 New product launches expand market reach Recent investments expected to reduce engineering time and resources required After a While Past 2 Years Now ● Expanded to ● Significant ● Engineering effort to: stationery, investment into ▼ ● Add new fulfiller with existing product ▼ 98% homewares, engineer
Slide 39: Growing customer membership with personalisation
3 Growing customer membership with personalisation Starting to deliver on the potential of deeper relationships and increased loyalty Past 2 Years Now ● Building customer ● Member acquisition membership base and ● Engagement marketing improving retention ● VIP program/targeted promo ● Improved searc
Slide 40: Scaling customer acquisition powered by brand
4 Scaling customer acquisition powered by brand Whilst acquiring customers profitably After a While Past 4 Years Now ● Started to add ● Scaled Google Paid ● Working to regain customers from ● Added paid social organic search rankings paid channels more channels ● Scaling fan art, influencer meaningful
Slide 41: At Redbubble 33,000 artists or 10% of selling artists represented 80% of earnings in FY19
At Redbubbl 33,000 artists or 10% of selling artists represented 80% of earnings in FY19 80% of sales are consistently made by top 10-12% of ...Whilst the number of top selling artists has artists... continued to increase substantially Distribution of product revenue across selling artists1 # of art
Slide 42: Loyal and growing artist base powers the market
Loyal and growing artist base powers the market Who also benefit from the multiplying effect of new products Number of selling artists continues to grow, with New physical product launches will continue having strong acquisition and retention a multiplying effect on our library Selling artists by ten
Slide 43: Long tail content is growing and remains a vital asset
Long tail content is growing and remains a vital asset With negligible acquisition or retention cost Library scaling rapidly and accumulating as a ~60% of works sold this year have been published durable asset across the Group for over a year Active art work library size1 Product revenue by age of w
Slide 44: Operational metric definitions
Operational metric definitions ● Active works: currently published works (i.e. available for sale to the public) at the end of the period; does not account for overlaps between Redbubble and TeePublic ● Selling artists: currently active artists (i.e. not suspended or deleted) who sold a currently pub
Slide 45: Disclaimer
Disclaimer The material herein is a presentation of information in summary form and does not purport to be complete. Investors or potential investors should seek their own independent advice. This material is not intended to be relied upon as advice to investors or potential investors and does not t