Full Year 2026 Articore Group Ltd Earnings Call
Speaker #1: Us today. My name is Virginia Spring, and I'm responsible for investor relations at Article. I am in our Melbourne office and joining us live from our New York office is Article Group CEO and Managing Director, Vivek Kumar, and Group CFO, Derek Young.
Speaker #1: Vivek and Derek will provide an overview of our FY26 results shortly. And we will then open it up for questions. If you would like to ask a question, please submit it in the chat box, which will be sent directly to me.
Speaker #1: I will relay it during the Q&A session. The key information in today's call is contained in the ASX announcement, and investor presentation released to the market this morning.
Speaker #1: I would like to call your attention to the Safe Harbor statement in our ASX release regarding forward-looking information. That Safe Harbor statement also applies to this webcast.
Speaker #1: This session is being recorded and a transcript will be released to the ASX. I will now hand you over to Vivek.
Speaker #1: Again, that must be my friend. Box, which we send direct. I would like to add that the travel margin includes the 38.6% of 210 basis points.
Speaker #2: Thank you, Virginia. And thank you all for joining us today. FY26 was a transformative year for Article. We delivered EBIT of 10.3 million slightly above the top end of our guidance range, and a 20.1 million turnaround year on year.
[Company Representative] (Articore Group): To answer the question, which we did directly. Up 200 basis points. The profit margin improved to 38.6%, up 210 basis points. We also strengthened the balance sheet materially, with underlying cash flow of AUD 10.4 billion, driven by the activity in investment portfolio. This slide highlights the structural improvement over time, as seen consistently through the market profile. For Friday. Every year since FY20. Well, this year generated a positive spike effect number one. This is the effect of sustainable and structural changes in our business and our structure. We are confident that we can deliver profitable growth with strong cash generation. I'd like to conclude with a few words. Our business model is built on two established high-margin capital-light platforms. Efficiency is at the heart of net profit. Supporting that free cash flow are a number of other benefits.
Speaker #2: Margin expansion has been meaningful and sustainable. Gross profit and gross profit after paid acquisition, or GPAPA, both grew for the year. Driven by supply chain efficiencies, pricing, paid marketing effectiveness, and the new artist account fee structure, that enhanced market-based dynamics.
Speaker #2: Gross profit margin reached a record 49.6%, up 400 basis points. And GPAPA margin improved to 28.6%, up 210 basis points. We also strengthened the balance sheet materially.
Speaker #2: With underlying cash flow of 10.1 million and a closing cash balance of 40.5 million, giving us the flexibility to invest in future growth. This slide highlights the structural nature of the improvement over time.
Speaker #2: We have seen a consistent increase in our margin profile since FY23, as the group prioritized improving margins and restoring profit. We have reduced operating expenses every year since FY23, with OPEX falling from a peak of 129 million to 85 million this year.
Speaker #1: We also sent them the balance sheet, computed with underlying cash flow of 10, given as a flexibility investment for future growth. This slide highlights the structural improvement over time, as seen in the consistent increase in our margin profile.
Speaker #2: A 34% reduction. This has been achieved while continuing to invest in growth, including building Dashery from ground up and acquiring Frank Day Wearing. Together, margin expansion and sustained cost discipline have driven the turnaround in EBIT you can see on this slide.
Speaker #1: To prioritize every year since FY20, with opt-in from fees of about $29. It takes—the first year, project work generated a positive effect. Spike in FY21.
Speaker #2: 2026 was the first year Article generated a positive EBIT. Outside of the pandemic-driven spike in FY21, the significant turnaround to profitability compared to all those years in the past.
Speaker #2: This reflects a sustainable and structural change in our business, in our margins, and cost structure. We are confident that we can build on this momentum to ultimately deliver profitable revenue growth, with strong cash generation.
Speaker #2: Before turning to the details behind these results, I'd like to provide an overview of the business today. Article today owns and operates two established, high-margin, capitalized digital marketplaces that bubble and be public.
Speaker #1: This takes a sustainable and structured sequence in our business. We are confident that we can build strong cash generation, with participation to establish high-margin, capitalized public.
Speaker #2: Alongside two high-growth businesses, Dashery and Frank Day Wearing. The flywheel remains central to our investment thesis. Creators of float designs to our marketplaces; customers purchase products printed on demand by third-party wholesalers; and we charge service fees to provide tools and support for creators.
Speaker #2: Because creators only earn when they sell, the group benefits from an asset-like day-grade business model. Greater volume drives fulfillment scale, efficiencies that lower unit costs and expands margins.
Speaker #2: And stronger margins allow us to reinvest in customer acquisition and further accelerate the flywheel. When this flywheel gains momentum, it generates compounding benefits for creators, customers, and shareholders alike.
Speaker #2: Building and sustaining that momentum towards profitable growth remains our core priority. Supporting that flywheel are four structural competitive advantages. First, scale of content. Over 75 million designs, with more than 10,000 added daily, creating one of the largest and most dynamic catalogs of unique user-generated content in the world.
Speaker #1: Scale. Efficiency that lowers net profit. Supporting us. Second, for over 20 years, we are selling across the board. The platform becomes increasingly attractive. And fourth, consumer: 11 billion.
Speaker #2: Second, fulfillment scale. A diversified, global network of third-party sites allowing us to flex volume, optimize cost, and maintain efficient delivery for over 20 million units shipped in FY26.
Speaker #2: Third, network effects. We have more than 3 million creators selling across the group. As more creators and customers participate, the platform becomes increasingly attractive to both sides.
Speaker #2: And fourth, operational leverage. A global team of around 200 people generating approximately 1.8 million in revenue per employee. Together, these advantages make the model defensible, scalable, and increasingly efficient as volume grows.
[Company Representative] (Articore Group): Secondly, over regularly in a step effect. Our network effect. We have more than 2 million creators selling across our platforms. In 2018 to 2025, we have projected US GAAP by 2030, of 23.6% compound annual growth rate. In general, structural margin impact. People have been making strong contributions with interest in general since we were acquired in 2018. The third value is here. People include more than 10% in 2019 that drove profit.
Speaker #2: Within a global print-on-demand market, that itself is growing quickly from around US 11 billion in 2025 to a projected US 58 billion by 2033.
Speaker #2: A 23.6% compound annual growth rate. Looking across our two established marketplaces, both delivered structural margin gains this year. P-public remains a strong contributor to the group, with consistent growth since it was acquired in 2018.
Speaker #1: 2025, to a projected US $58 by 2033, for a 23.6% compound annual growth rate. Structural margin with interest in growth present was acquired in 2018.
Speaker #2: The trend continued this year. P-public grew marketplace revenue 2.8% in constant currency, y, with gross profit up 10.9% in constant currency. Driven by pricing and promotional optimization and ongoing supply chain efficiencies.
Speaker #1: The current contribution year growth profit, this included. The share largely offset software market recently—55.2%. Turning now to a high-growth business, starting the 20th.
Speaker #2: This included more favorable costs on blanks, a shift towards more cost-effective third-party fulfillers, and onboarding a new shipping carrier, which increased competition to offset rising US shipping costs.
Speaker #2: Redbubble's improvements to unit economics, largely offset softer marketplace revenue. The business delivered a record 55.2% quarterly gross profit margin in the fourth quarter. Reflecting the new artist account fee structure and continued supply chain efficiencies.
Speaker #2: Turning now to our high-growth businesses, starting with Frank Day Wearing. In May 2026, we completed the acquisition of Frank Day Wearing and Indian-based print-on-demand marketplace.
Speaker #2: This acquisition advances our technology consolidation and establishes a global capability center to drive operating efficiencies across the group. The acquisition opens access to the Indian print-on-demand market worth more than US $1 billion and growing around 25% annually.
Speaker #1: To drive operating efficiency. US $1 billion. Policy providers are generating functional support across the— And we are targeting hiring for the 30 and 50.
Speaker #2: Since we acquired it, just a few months ago, Frank Day Wearing has delivered year-on-year triple-digit marketplace revenue growth. Integration is progressing well, India-based teams are already providing engineering and other functional support across the group.
Speaker #2: And we are targeting hiring more than 30 employees by the end of FY27. Dashery is an emerging storefront platform for creators who want to monetize their existing audiences.
Speaker #2: FY26 marked Dashery's first full financial year and the early signs are encouraging. The platform generated 4 million of GPS gross processed sales, 2.4 million of NPR at a GPAPA margin of 36.5%, significantly above our established marketplaces, as creators bring their own demand.
Speaker #2: What excites us most is that a number of creators have already passed 100,000 dollars in gross sales in their first year alone. A strong signal of much higher lifetime value potential.
Speaker #2: Our current target customer profile is creators with 100,000 to 1 million followers, a segment we estimate at around 4 million creators globally. We are currently working with Shopify to launch an integrated offering to specifically broaden the target market to creators with millions of followers who have existing Shopify storefronts.
Speaker #2: AI is now embedded across the article flywheel, and we are continuing to expand into new use cases. On the creator side, our approval workflows are 100% AI-powered, which reduces manual review and improves both speed and consistency.
Speaker #2: On the customer side, our search is powered 100% by AI algorithms, combining vector search and machine learning ranking to improve relevance, discovery, and conversion.
Speaker #2: AI also underpins our marketing, from content creation through to campaign optimization. And across operations, AI is helping the business run more efficiently. With approximately 80% of customer contacts touched by AI-powered chat, speeding up query resolution.
Speaker #2: We have also taken a significant step into AI commerce, launching an early advertising initiative with OpenAI's ChatGPT for P-public. Buying behavior is shifting from searching to asking, and we were already seeing revenue growth from AI sources, including ChatGPT, Gemini, Claude, and others.
Speaker #2: Even before this launch. We see this becoming a growing revenue stream for the group. Our vision is to be the leading destination for customers to discover and buy unique design-first products, driven by a global creator ecosystem built to turn passion into profits.
Speaker #2: We'll pursue this through three growth drivers, which focus on customers, creators, and high-growth businesses. For customers, we will strengthen our competitive moat through content differentiation, build high-impact customer acquisition and retention engines, and elevate the customer experience through AI-driven discovery and personalization.
Speaker #2: For creators, we are focused on generating higher value outcomes through incremental monetization opportunities. And we will continue to invest in our new high-growth businesses, including Dashery and Frank Day Wearing.
Speaker #2: Leveraging our strategic assets and existing capabilities. Underpinning all three growth drivers is a single unified platform. This slide sets up the specific initiatives we are prioritizing in FY27 to unlock each of these key growth drivers.
Speaker #2: For customers, we are focused on three areas. Acquiring and elevating pop culture, license, and fan content. Improving search, discovery, and merchandising across both marketplaces.
Speaker #2: And building personalization opportunities that let customers express their identity and fandom. For creators, we are looking to increase creator earnings in ways that incentivize value-adding behavior.
Speaker #2: Simplify the creator experience, including enabling designs to be uploaded once and used across multiple platforms. And continuing to refine the artist account fee structure.
Speaker #2: For our high-growth businesses, we are expanding new revenue streams, such as on-site advertising, adding new features and integrations to Dashery, including Shopify, and leveraging group expertise and capabilities to accelerate Frank Day Wearing's growth.
Speaker #2: We have already made good progress working towards operating on a single platform, which we will build on in FY27. We are leveraging unified marketing technology across the group, integrating order management and fulfillment systems, and consolidating our content uploader.
Speaker #2: Together, these initiatives are designed to build on the structural gains we made in FY26 and support the group's return to profitable growth. I'll now hand it over to Derek to take you through the numbers in more details.
Speaker #3: Thanks for that. And hello to everyone joining us today. FY26 was a strong year of execution. We expanded margins, kept a tight rein on costs, and meaningfully strengthened the balance sheet.
Speaker #3: Starting with the P&L, as Vivek highlighted, the group delivered record margins this year, both gross profit and gross profit after paid acquisition, grew in absolute value offsetting a decline in NPR.
Speaker #3: Fulfillment pricing was a key driver of our record margin improvement this year. We negotiated pricing based on combined volume from Redbubble and P-public and directed more volume to fulfillers offer better pricing.
Speaker #3: Operating expenses declined 6.9% to 85 million, reflecting continued disciplined across the cost base, including a reduction in employment, web hosting, and software costs. Depreciation amortization declined 57.8% year on year, following the streamlined capitalization approach we introduced towards the end of FY25, which better aligns reporting with underlying cash flow.
Speaker #3: All this flows through EBIT, of 10.3 million for the year up from a loss of 9.8 million in FY25. It's worth noting that the US dollar declined 4.8% against Australian dollar year on year, but this had limited impact to the EBIT level, as 72% of the group's revenue and 75% of its costs are denominated in USD, providing an embedded operational hedge.
Speaker #3: Vivek has taken you through a substantial improvement in margins, across both marketplaces. What's clear from the results is a divergence in top-line performance. P-public's marketplace revenue continued to grow up 2.8% in content currency, while Redbubble's marketplace revenue declined 11.1% in content currency, though substantial margins expansion largely offset the softer top-line.
Speaker #3: Returning group NPR to profitable growth remains a key priority. Vivek outlined the key initiatives we're investing in driving outcomes, centered around the three pillars: customers, creators, and high-growth businesses.
Speaker #3: Our cash position and balance sheet improved significantly this year, providing financial flexibility. Underlying cash flow improved from 0.6 million in FY25 to 10.1 million this year in our closing cash balance grew 42% to 40.5 million, up from 28.4 million.
Speaker #3: We achieved this while returning capital to shareholders, buying back more than 2 million shares during the year, and with our compromising investment in Dashery, or the Frank Day Wearing acquisition.
Speaker #3: One clear sign of the financial improvement shows up in returns on shareholder capital. The return on equity turned from negative 22.8% in FY25 to positive 21.8% in FY26.
Speaker #3: The group enters FY27 in a strong position to return to profitable growth. Its core marketplace business is profitable and generating cash, has renewed focus on cost discipline, and it is investing in two high-growth businesses, Dashery and Frank Day Wearing.
Speaker #3: For FY27, the group expects to build on the structural change to its performance delivered in FY26. We're guiding to a G proper margin of 27% to 30%, a further step down in operating expenses to 79 million to 85 million, and an operating EBITDA of 17 million to 23 million.
Speaker #3: Thank you for joining us today. We will now open up the webcast to questions. If you have a question, please add it in the checkbox and Virginia will relay it on your behalf.
Speaker #1: Thanks, Derek and Vivek. We've received a number of questions from Weiwen, Chen, and RBC. I'll start with Weiwen's first question. Now that you have proved out the economics of your business model, how will you avoid the common growth versus earning trade-off of e-commerce companies?
Speaker #1: It seems like a lot of companies can only achieve one or the other, but not both concurrently.
Speaker #2: I can take that. Thank you, Vivek, for your question. And you're absolutely right. It is a critical balance that companies have to strike between profitability and growth, and that is why we are squarely focused on profitable revenue growth for FY27 and FY26 as well.
Speaker #2: And I would add to that that structurally, our business has certain inherent advantages. We have a flywheel that works. We have a business model where which is asset-led, and have working capital advantages, so we don't need a lot of investment upfront.
Speaker #2: To add to that, we have shown we have very strong discipline on both operating costs as well as we have already achieved record margins in FY26.
Speaker #2: We continue to remain disciplined in those two areas, as well as we have a marketing engine which is very efficient. So if you combine all the advantages of the business model, the discipline, and the performance that we have shown in FY26, we intend to continue to build on that in FY27 and beyond.
Speaker #2: And drive profitable revenue growth for the business. Which we have already started to make significant progress towards. Next question, please. You're on mute for a minute, I think.
Speaker #1: Sorry about that. The next question is, where will year-on-year OpEx savings come from?
Speaker #3: I can take that one. So four main areas, all of which are continuation from efforts that started in fiscal 26. So first would be continual leverage of AI in all areas that the company and Vivek had shared some of the successes that we've had already, especially around customer service.
Speaker #3: The second area is our continual effort for technology platform consolidation. In FY26, that effort yielded 3 million in savings year-on-year, and we expect that will continue to bear fruit in FY27.
Speaker #3: Third is getting cost leverage from building out our India operations with the global capability center. So that started in FY26, and we'll scale quite significantly more as Vivek had talked about in the new year.
Speaker #3: And then lastly, we expect that we'll continue to have a strong culture of cost discipline and look to continue to reduce overhead costs in things like facilities and leases and so on.
Speaker #1: Weiwen's third question is, can you speak to any advanced cultural points in time during the year which saw sales spikes? How nimble is your ability to market and capture these demand events?
Speaker #2: I take that one. It's a great question. And all our marketplaces get significant revenue from social, political, or cultural events happening around us every single day.
Speaker #2: And despite that we saw this year, we're centered around towards the World Cup, the soccer World Cup that was happening, and it was really fascinating to see how the trends changed as different players and different teams were progressing.
Speaker #2: Through the tournament. NBA, the basketball, was another key moment for the group where New York. Won the championship after 53 years, and we saw a lot of activity around that just this week, just a couple of days back.
Speaker #2: We had the unfortunate sad news of probably partner passing, and then we are seeing some sales activity around that on our content as well.
Speaker #2: So just to give you a few examples of how quickly the marketplaces respond to things that are happening in the social, cultural, political space.
Speaker #2: And our marketing is quite nimble. Our marketing in real time adapts and activates the content that we see on our platforms. There is we have fine-tuned our marketing engines and the algorithms in a way that the content very quickly goes to all the platforms where we are operating, whether it's Meta or Google or others.
Speaker #2: And start to really create that flywheel effect of getting more and more sales on these key trends. So definitely something that we want to continue amplifying in FY27 and beyond.
Speaker #1: And the final question for Weiwen is, how should we think about the first half, second half EBITDA skew?
Speaker #3: A great question. And thank you for that. I'll take that one. So our business is seasonal. Given the super majority of ourselves is US-centric, and we expect to be continued seasonal.
Speaker #3: So first half has been and will continue to be a great assure of the profit and EBITDA generation. So fiscal 26 is a more extreme example of that, where the first half operating EBITDA was predominantly almost entire years operating EBITDA, but our second half operating EBITDA was profitable.
Speaker #3: So that is a good milestone. As we grow again, we do expect that skewing to become less of less out of bounds, getting more into bounds, and we expect that to happen in FY27.
Speaker #1: The next question we've received from a shareholder is, do you envisage paying dividends in the future? And if so, when?
Speaker #2: We look at it and the board looks at it from multiple different angles. And capital allocation is definitely a key consideration for the board.
Speaker #2: We look at it every six months in terms of whether the right use of the group's capital is in paying dividends or other uses.
Speaker #2: The board has decided that right now there are we continue with the on-market buyback as well as investing in the growth for the group.
Speaker #2: And that's a better use of the capital that we have at the moment.
Speaker #1: The next question we've received is from a shareholder. Given the current market valuation, returning to a solid growth trajectory is top of mind for investors.
Speaker #1: What are the core pillars of Article's long-term growth plan, and what specific near-term milestones should shareholders be watching for proof of execution?
Speaker #2: Thank you for the question. And as I was laying my prepared remarks, we have made great progress this year on returning the group towards growth trajectory.
Speaker #2: The group has moderated revenue declines to low single digits. This year, versus declines of 12% that the group saw over the last preceding two years.
Speaker #2: We are focused on bringing the group to profitable NPR growth, and we are confident that we can build on this momentum. Our long-term growth plan is focused on the six growth pillars that was outlined in the presentation, centered around customers, creators, and our high-growth businesses.
Speaker #2: What I would also add is what's new in FY27 is our engineering capability in India, giving us the capacity to accelerate our tech roadmap.
Speaker #2: And unlock these drivers more quickly. And to answer your second part of the question, for FY27, the milestones that you should track are the ones in our guidance, GPAPA margin, OPEX, and operating EBITDA.
Speaker #1: The next question we've received from a shareholder is, can you please provide the revenue and estimated cash burn for both dashary and frankly wearing?
Speaker #3: Yeah, I can take that one. So we're excited about our high focus businesses, which are dashary and frankly wearing. As you can see, they are still rather small.
Speaker #3: And so while they're growing over a triple digits year on year, still not significant portion of the business as of now. So we're not disclosing specifically kind of what the revenue targets are other than we're continuing to see the progress that we expect.
Speaker #3: And we'll invest in those. For dashary in particular, last year we invested about $3.5 million. In dashary, we expect that investment to continue to FY27 above the same level.
Speaker #3: The EBITDA loss on dashary will decrease because the business is growing and generating good GPAPA and GPAPA margin. So it will be less from that perspective, but in terms of overall investment, it'll be consistent.
Speaker #3: Frankly wearing, at the time of acquisition, it was a profitable business. And we are doing a lot, as you've heard just in the kind of the first few months of acquisition, to get more leverage from the group to help that business.
Speaker #3: And it's working well. We are retargeting a roughly break-even year. So that business, even with high growth.
Speaker #1: The next question we've received is from Owen Humphreys at Canaccord. For FY27, OPEX to for FY27, OPEX to further step down, what's your plan investing in the Indian tech hub?
Speaker #1: Will there be increased capitalized product development as H2 product development CAPEX seems to be higher already?
Speaker #3: Yeah, I can take that one as well. So a great question. Thank you for the question, Owen. Absolutely. As I mentioned earlier in the prepared remarks, the GCC global capability center is an important component of our operating expense plan.
Speaker #3: There are actually two sides to that, though. That's both of them which are important. One is what you're commenting and asking about relative to the cost leverage.
Speaker #3: Just as important, I would say, is our ability to actually invest in more engineering capacity for us to be able to do the enhancements and to make more progress on technology control consolidation that will provide the overall leverage across the whole entire group that affect payment in terms of our vision and growth drivers.
Speaker #3: And then on the second half of your question around the capitalized product development, yes, because of the increased capacity of engineering and also because of the type of initiatives that we're investing into with technology, we do expect more of those efforts and just more in general in absolute terms of amount to be capitalized.
Speaker #3: It's not significantly more than this past year. I'd say roughly 15 to 20 percent higher than what we saw in FY26, but it will be higher.
Speaker #1: The next question we've received is from a shareholder. It looks like the share count is about 301 million shares. What is the fully diluted share count?
Speaker #3: The 300 million sounds a bit high to me. I think the fully diluted share count in our FY26 report says 295 million, if I'm correct.
Speaker #3: But we can follow up on that based on that question, maybe. The share that someone's seen somewhere or not.
Speaker #1: The next question we've received is, these are great results. The only concern we are seeing so far is the drop in NPR. You expect an increase in NPR for dashary and frankly wearing, but what about for Redbubble and TPublic?
Speaker #2: It's exactly what I'm thank you for the question. Absolutely. I think the key focus for the group remains profitable revenue growth. And as you can see, we have already made great strides.
Speaker #2: In getting the revenue growth or revenue moderating the revenue decline to low single digits for the full year, versus negative 12% for the two years preceding.
Speaker #2: The last couple of quarters were in the negative 1 to 2% rate, so almost flat to last year. And this is for the entire group, of course.
Speaker #2: Redbubble and TPublic are the established marketplaces on the key domain revenue drivers for the group. So we'll continue to work towards getting the group back to profitable revenue growth.
Speaker #2: Focusing on the strategy that we have laid out, centered around creators, customers, and our high-growth businesses. And just to add, the short-term incentive for the KMPs this year has an NPR growth component as well.
Speaker #2: Which, again, is a strong signal of how much focus we as a company are on generating profitable growth.
Speaker #1: The next question we've received is from a shareholder. What is the cash net of debt?
Speaker #3: We don't have any debt on the balance sheet. So our cash balance net of debt would be our cash balance, 40.5 million.
Speaker #1: The next question we've received from a shareholder is, are you expecting overall growth in sales for FY27?
Speaker #2: We are not specifically guiding towards an NPR number in our guidance, but as that you can have mentioned, previously in the earlier questions, we are absolutely focused on NPR, profitable growth for FY27 and beyond.
Speaker #1: The next question we've received is, could you comment a bit about the major geography from where your revenues are derived?
Speaker #3: Yeah, I'll take that one because that one is the easiest one because we have a slide for that investor presentation. So if you go to the appendix, the second slide will be shows a sales contribution by geography, at least by continent.
Speaker #3: And you can see that for the most part, we're still in North America, and we're still when we say North America, it's mostly US.
Speaker #3: Although we do have some Canadian sales. We don't expect this to change much in FY27 other than, of course, with additional frankly wearing, we do see that that will obviously add to sales in India.
Speaker #1: The next question we've received is, in projecting the FY27 guidance, do you expect NPR growth in FY27? What's the assumed contribution from frankly wearing in FY27 on top line and earnings?
Speaker #3: Yeah, I can take that one, Rebecca. So our focus for FY27 is NPR growth, in particular profitable growth. So we have developed a guidance that aims specifically at that with the GPublic margin where it's at in terms of compared to FY26.
Speaker #3: And also obviously operating deduct growth. In terms of frankly wearing and also just high-growth businesses in general, for FY27, you see that at FY26, it was less than 5% of NPR.
Speaker #3: While we expect that to grow significantly in FY27, it would still be below 5% of overall NPR.
Speaker #1: The next question we've received is, what is the board's capital management priorities?
Speaker #2: I can take that one. So as I mentioned earlier in the question around dividends, the board is absolutely focused on the capital allocation and capital management.
Speaker #2: At this moment, the board has decided to continue with the on-market buyback, the program remains on foot. As well as continuing to invest in the growth for the group, including our high-growth businesses, dashary and frankly wearing.
Speaker #2: And remain focused on bringing that to a positive profitable growth.
Speaker #1: The next question we have received is, as you head into the holiday season, what are you seeing in terms of demand in the US market as compared to last year?
Speaker #2: So overall, there are definitely as you can see, a lot of macro events happening that could impact consumer demand. We are continuing to stay focused on executing against our strategy, as well as focusing on the six core pillars that we have defined and outlined in our investor presentation.
Speaker #2: But definitely with a lot of the macro events happening around the globe, it's something that we are staying on top of from a consumer discretionary spending, as well as consumer sentiment standpoint.
Speaker #1: The next question is, what part of the company is domiciled and run from Australia? And what part is managed out of the US?
Speaker #2: So we have one group. We have integrated the group into our decor historically, Australia and San Francisco was a Redbubble operation, and New York was TPublic.
Speaker #2: But over the last 12 to 18 months, we now have one group. We have integrated teams across different domains, like marketing, supply chain, technology teams are now integrated.
Speaker #2: So it's one technology team. Where teams are distributed across Australia, New York, San Francisco, Berlin, as well as now India. So we work effectively across all these geographies and consider this to be a key strength as outlined in our four key competitive advantages that we have a global team of 200 generating 1.8 million revenue per employee.
Speaker #1: The next question is, well done on the turnaround. In your opinion, do these results vindicate the strategic review path, e.g., most compelling path to long-term shareholder value?
Speaker #3: Maybe I can start with that. I think vindication is for others to opine on and not for necessarily for management. I think that we believe that FY26 was a transformative year for us in terms of demonstrating that we have a profitable business model with economics that can scale.
Speaker #3: And we look forward to FY27 being a year where we do more of that and in a profitable growth manner.
Speaker #1: The next question is, who are your major competitors in the legacy businesses and the new businesses?
Speaker #2: Yeah, we are definitely consider ourselves to be bringing something unique to the customers. The catalog of 75 million designs, as well as human and creators, as well as the velocity at which we are able to get designs on our platform gives us a unique competitive advantage.
Speaker #2: We do compete overall with the other established marketplaces apparel and t-shirts are sold at a lot of places across the internet or even in offline retail.
Speaker #2: So there's definitely but also it's a big market. And same goes for frankly wearing. The frankly wearing is one of the emerging marketplaces in India, which is an artist creator-driven marketplace.
Speaker #2: And same with dashary are competitive advantage in dashary is a platform emerged platform for creators, which makes it really easy for creators to launch their merch business and they are very few, if any, hardly any competitors that are really focused on that creator segment and giving creators the ability to create their storefronts in with such ease.
Speaker #2: So yeah.
Speaker #1: The next question comes from Owen Humphreys at Canaccord. Redbubble margins were abnormally high in the fourth quarter. What was the contribution from the membership phase and is margins sustainable going forward?
Speaker #3: Yeah, I can take that one. So optimizing the artist fees was a important component of our gross profit margin improvements year on year. In total, for the whole company, it was roughly about 100 basis points of the 400 basis point improvement.
Speaker #3: So big component, but not actually the biggest component, right? The other components that we have talked about, which were bigger in impact in terms of year on year improvements, were the supply chain enhancements and also pricing.
Speaker #3: But on the second part of the question around sustainable margin going forward, for sure, we have seen the stability in the artist community after this change and in many ways actually have enhanced the marketplace dynamics.
Speaker #3: As you heard in our prepared remarks, the focus we feel good about the structure now. The focus is to work with the artists to incent behaviors that will grow business and grow their business and their earnings in FY27.
Speaker #1: The next question we've received from a shareholder. When TPublic was acquired, it was a small fraction of Redbubble. Today it is on par. Can you comment on why TPublic has outperformed Redbubble so much over the years, and what can Redbubble learn from TPublic?
Speaker #2: It's a great question and thank you for the question. It's absolutely right. TPublic has seen consistent growth since it was acquired and is now at par with Redbubble's from an NPR standpoint.
Speaker #2: Redbubble is still a significant driver of GPAPA dollars. The two marketplaces, even though they're similar in their business model and the flywheels, have some fundamental operational differences as to how TPublic and Redbubble activate and really leverage the content libraries.
Speaker #2: Also, TPublic has been a lot more focused on e-commerce fundamentals, as well as performance marketing from day one, given it was did not have the same advantages in SEO that Redbubble had.
Speaker #2: We have been applying learnings from TPublic to Redbubble and vice versa. A lot of the turnaround that you see in FY26 has been an outcome of applying those learnings to both businesses.
Speaker #2: And we continue to do so, as I was saying, we have not one team. The same team can now very quickly do experiments across one marketplace and apply it to the other.
Speaker #2: And apply the not just even shared, they just applied across platform learnings from one platform to the other. So that is definitely a huge lever that we have been pulling over the last 12 months.
Speaker #1: The next question we received is, has the board received any interest from potential acquirers?
Speaker #2: The board will continue to keep the shareholders updated for any updates as they come and when they come.
Speaker #1: The next question we've received from a shareholder. Any further intention of bolting on acquisitions to your frankly wearing acquisition?
Speaker #3: Sorry. Yeah. So we talked a bit in our prepared remarks around capital allocation and how we think about that. And certainly, a one element of that is to be continue to be opportunistic in terms of strategic M&A.
Speaker #3: So I think frankly wearing was a very good example in that regard in terms of entering in a new market that is large and growing.
Speaker #3: And then secondly, of course, building a global capability center as we have already commented around the importance of that particular example. So the going forward, the strategic M&A will have a strong filter to ensure that it's not really M&A for the sake of M&A, but it would actually help us accelerate the strategies and the growth drivers that the bank outlined.
Speaker #1: And this is the final question that we've received today. The US is by far your biggest market. How can you also build awareness among US investors?
Speaker #3: Yeah, I can start. So if this was a question from a US investor, so then part of what we're doing here today, I think, is helping with that.
Speaker #3: Over time, we have shifted more attention to US investors. And some of that is investing in specific efforts with outreach. My hiring to Articor was a important signal in terms of how important the US investors can be for us going forward.
Speaker #3: So it is something that we're very much working on. And appreciate someone asking that question, especially if they are a US-based investor.
Speaker #1: That's it, Vivek. We haven't received any more questions.
Speaker #2: Great. Thank you for your time and engagement today. Any further questions, we are available to speak directly. We appreciate your continued interest and look forward to updating you on our progress in the year ahead.
