Redbubble : still cheap, page-40

The market is forward looking @alfred137, and on FY21 numbers, Redbubble is trading nothing like 4x sales. Unless the recent shift to online substantially reverses, the FY21 revenue number will be markedly higher than the $350m posted in FY20.

The lowest FY21 revenue estimate I've seen is $480m (+37%), which I think would require something to go wrong. The +132% from July is probably the top end of possible FY21 outcomes or ~$800m. Realistically, especially given the strong Q4FY20 numbers they're cycling, I wouldn't be modelling much more than $550-600m until the current momentum proves it will hold. $600m would be ~2x sales, 1.75x if the EV is used rather than market capitalisation.

At $600m revenue, using a 40% GP (they achieved 41.6% in Q4), that's a $240m GP. The paid acquisition costs were 27.3% of GP in Q4 & 29.6% for FY20, so 27.5% is probably conservative enough, which would leave GPAPA of ~$174m.

Assume cash operating costs, which grew by $18m in FY20 (to $79.3m) grow by $20.7m to a nice round $100m (annualise H2 and you get $86.2m, so $100m leave lots of cost growth), then you have a cash/operating EBITDA of ~$74m predicated on a meaningful slowdown in the current growth rate and an aggressive increase in costs (despite recently flagged trimming in this area).

With the highly cash generative business model and the current sales growth, the business likely holds close to $100m cash at the end of August, which places the EV at roughly $1,050m at $4.30 per share. If the operating EBITDA posited above works out, that implies an EV/EBITDA of 14.3x, which is not at all aggressive in terms of the massive global market they've clearly tapped into like a mosquito penetrating a femoral artery - Eternalgrowth