Articore Group Limited · ASX:ATG
Articore — FY2018 Earnings Presentation
26 slides from Articore's earnings presentation, Aug 23, 2018
Slide 1: FY2018 Results Presentation
FY2018 Results Presentation 23 August 2018 The world’s largest online marketplace for independent artists, bringing more creativity into the world
Slide 2: Year in review
Year in review
Slide 3: Redbubble propelled by marketplace flywheel that accelerates growth
Redbubble propelled by marketplace flywheel that accelerates growth 1. Content includes the combination of digital Art Works and the Products they are sold on 3
Slide 4: Marketplace has long tail and is scaling
Marketplace has long tail1 and is scaling – diversity of content, customer, artists, products and geographies 298,000+ 4.0M 32 Global Fulfiller Selling Artists Unique Customers2 Facilities (up 28.2%) (up 38.1%) (up from 24) 17.6M 7 Core Art Works3 66 Products Countries (up 25.7%) (up from 64) (c.200
Slide 5: Robust marketplace dynamics driven by strong and consistent growth on all sides
Robust marketplace dynamics driven by strong and consistent growth on all sides Unique customers Selling artists Product / Fulfilment capability 4.5 350.0 400 4.0 350 300.0 Product / Fulfilment combination2 3.5 3.9x 4.8x 300 5.6x Unique customers1 (m) 250.0 Selling artists ('000) 3.0 250 2.5 200.0 2
Slide 6: FY2018 marketplace metrics
FY2018 marketplace metrics Commentary YoY YoY • Strong marketplace dynamics 2H FY2017 2H FY2018 FY2017 FY2018 Growth Growth underpinning robust top-line GTV1● $76.8M $101.5M 32.1% $175.4M $231.3M 31.9% growth in FY2018 particularly 2H. Slight but important Mobile GTV $26.9M $41.9M 56.0% $57.2M $89.8
Slide 7: Expansion into new geographies and products is a major driver of growth
Expansion into new geographies and products is a major driver of growth and diversifies business Emergence of Continental Europe supported by Stationery and Homewares providing significant new languages growth potential Geographic contribution Product contribution (% of GTV; FY15 – FY18) (% of GTV;
Slide 8: Increasing customer spend as our value proposition becomes increasingly relevant
Increasing customer spend as our value proposition becomes increasingly relevant to more customers RBL Sales Penetration and Growth in Different Markets – FY2018 125% Share of Sales Redbubble YoY Sales growth 100% Spain, 106% Germany, 101% 75% France, 75% 50% Canada, 48% Australia, 24% ROW, 34% 25%
Slide 9: Marketplace is driven by three global trends
Marketplace is driven by three global trends that are starting to be disruptive to mainstream retail commerce Rise of the sharing economy enabling artists to share their creativity with a global customer base at low risk Increase in consumer demand for personalisation and self- expression enabled by
Slide 10: Results analysis
Results analysis
Slide 11: FY2018 P&L analysis
FY2018 P&L analysis 2H YoY Full Year YoY P&L (A$M) CC CC FY17 FY18 Growth FY17 FY18 Growth Growth* Growth* • FY GTV growth of 32.2% (CC basis1*), in 2● GTV 76.8 101.5 32.1% 31.0% 175.4 231.3 31.9% 32.2% line with guidance Revenue 62.2 80.5 29.3% 28.5% 141.0 182.8 29.7% 30.4% • FY Revenue growth of 3
Slide 12: Scaling business demonstrating sustained and strong Revenue and Gross Profit growth
Scaling business demonstrating sustained and strong Revenue and Gross Profit growth Revenue1 has grown at CAGR of 39% over five years Gross Profit growing at similar rates Revenue Gross Profit (A$m; FY14 – FY18) (A$m; FY14 – FY18) 183 64 CAGR 39% CAGR 40% 50 141 115 39 72 24 49 17 FY2014 FY2015 FY20
Slide 13: Majority of sales from unpaid channels enables low cost of marketing
Majority of sales from unpaid (free) channels enables low cost of marketing and supports improving GPAPA growth …Enabling strong GPAPA growth and sustained low Unpaid channels returned to 60% of sales… customer acquisition cost GPS1 by Channel GPAPA and Paid Spend as % of Total GTV ($Am; FY17 – FY18
Slide 14: Paid marketing is profitable and remains efficient with growth and addition of social
Paid marketing is profitable and remains efficient with growth and addition of social Paid channels remain highly profitable for each Social is an emerging source of growth for the Paid purchase, with average returns of 1.7x Gross Profit business Gross Profit / $ GTV v. Paid Spend / $ GTV sourced fr
Slide 15: Track record of prudently managing operating expenses whilst investing for growth
Track record of prudently managing operating expenses whilst investing for growth ~45% of total expenses spent on driving growth Consistent capitalisation of development costs initiatives Total expenses (operating expenses1 + capitalised development) Split of total expenses (operating expenses + cap
Slide 16: Receipts from sales and payment of costs in the same currencies creates a partial natural hedge
Receipts from sales and payment of costs in the same currencies creates a partial natural hedge in core countries Partial natural currency hedge in majority of core countries Commentary FY2018 distribution of Revenue and Costs by currency (A$m; FY18) • Revenue volatility risk associated with USD off
Slide 17: Negative working capital cycle funds significant amount of growth investment
Negative working capital cycle funds significant amount of growth investment Maintained a strong cash position of $21.2m as at 30 June 2018 Cash flow waterfall (A$m; FY17 – FY18) $6.2 ( $8.4 ) $27.8 ( $3.8 ) ( $0.9 ) $1.1 ( $0.7 ) $21.2 Opening Cash Operating EBITDA Change in Capitalised Investment
Slide 18: Strategic and operations update
Strategic and operations update
Slide 19: Focused execution across the following strategic priorities
Focused execution across the following strategic priorities Deeper customer Scaling fulfilment to bring engagement via a on new fulfillers and personalised member products faster and more experience driving loyalty easily, improving and increasing customer Business of customer value lifetime value E
Slide 20: Committed team of people across three regions
Committed team of 225 people across three regions (91 at end of FY2014) Significant investments have been made to build a As the business gains global relevance, Redbubble number of key functions is building a team to service core countries Employees by function Employees by location (headcount #; a
Slide 21: What we have delivered during FY2018
What we have delivered during FY2018 DEEPER FIND YOUR THING GLOBAL ACQUISITION SCALABILITY RELATIONSHIPS Goals Accelerate content growth, aid Build a personalised and rewarding Sustainable, low-cost, global, Invest in faster platforms, fulfiller discovery, mitigate piracy experience for our returnin
Slide 22: We will continue to deliver on strategic initiatives across our key themes
We will continue to deliver on strategic initiatives across our key themes DEEPER FIND YOUR THING GLOBAL ACQUISITION SCALABILITY RELATIONSHIPS Goals Accelerate content growth, aid Build a personalised and rewarding Sustainable, low-cost, global, Invest in faster platforms, fulfiller discovery, mitig
Slide 23: Mobile powering growth for both web and native iOS app users
Mobile powering growth for both web and native iOS app users We are making large Visits have shifted to mobile but Mobile iOS app has scaled rapidly investments in the future of our more checkouts still on desktop since global launch in May 2017 mobile platform Visits and GTV contribution from Mobil
Slide 24: As transition to mobile devices continues, the focus is on improving users' mobile experience
As transition to mobile devices continues, the focus is on improving users’ mobile experience FY2017 FY2018 YOY Growth Visits 92.5M 118.6M 28.2% Desktop1 % of total visits 49.1% 45.8% (3.3%)pts Conversion rate2 2.66% 2.56% (3.5%) AOV3 $48.1 $46.5 (3.3%) Visits4 95.8M 140.2M 46.3% % of total visits 5
Slide 25: THANK YOU
a) THANK YOU ee fea)
Slide 26: 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