Thank you for standing by, and welcome to the Redbubble Group FY 22 results conference call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number 1 on the telephone keypad. I would now like to turn the conference over to your speakers. Please go ahead.
Good morning, everyone, and welcome here in Australia, and good afternoon and evening to our northern hemisphere investors. My name is Peter Kopanidis. I'm responsible for investor relations at Redbubble. Welcome to this investor call following the release of our FY 2022 full-year results and reports provided earlier today. With me today, I have the Redbubble CEO, Michael Ilczynski, and CFO, Emma Clark. As well as our full-year results and reports, the key information for today's update is contained in the ASX announcement and the investor presentation also released to the market this morning. Please note that unless stated otherwise, the financial results have now been subject to audit review. Strategic and operational metrics are from internal management reports and have not been subject to audit review. Mike and Emma will speak shortly, and we'll then open up the lines for questions at the conclusion of their presentations.
This session is also being recorded. Before we start, I would like to call your attention to the safe harbor statement regarding forward-looking information in our ASX release. That safe harbor statement also applies to this investor call. With that, I'll now pass on to Mike.
Hello, everyone. Thank you for joining us today, where we will go through the Redbubble Group FY 2022 results. Overall, FY 2022 has been a year of challenge and transition for the group. Coming out of quarter four, I feel encouraged and excited about how we are performing and positioned. The group has undoubtedly faced the challenges of a reduction in the sales of masks, homewares, and artworks that have all reduced from their COVID-driven FY 2021 highs. At the same time, increased competition in digital marketing channels and the impact of ATT changes have driven up paid customer acquisition costs. Consumers have had to face record high inflation and the invasion of Ukraine. Within this context, the group internally has undergone significant transition with over 140 new team members and 5 new executives in the past 12 months.
We have been clear and committed to our strategy of internal investment to develop the platforms and processes required to improve the artist and customer experience. A disciplined approach to building internal capacity and capability is required to return the group to growth and achieve our medium-term aspirations. Despite a much more challenging macro and geopolitical environment over the past six months than we or anyone anticipated, we have delivered FY 22 results in line with the guidance we provided back in early January. Encouragingly, the group delivered positive growth for the year in our core apparel category, which represents almost 60% of gross transaction value. The growth in apparel was particularly strong in quarter four, driven by a strong quarter from the TeePublic business.
We saw the whole group record positive year-on-year growth on a floating currency basis in quarter four, as well as quarter four being up almost 2% on quarter three compared to last year, where quarter four was down almost 10% on Q3. These outcomes demonstrate the resilience and ongoing appeal of our marketplaces and, importantly, the improving operating and financial momentum of the group over the last few months of the year. The group has invested substantially in our capabilities in order to improve the artist and customer experiences to drive loyalty and retention, and we are beginning to see the positive impact of this investment. As such, we will continue with our strategy to deliver further improvements in FY 2023 and, excitingly, start investing in our brands to drive additional awareness and sustainably grow our businesses over the medium and long term.
Given our bottom-line outcome, we are not at all satisfied with our results for the year, but we are encouraged by the improvement and momentum we are starting to see, the quality and capability of the people we have added to the group through the investments we have made, and the genuine uniqueness of the scale and potential of our marketplaces. I'll turn now to the summary of our FY 2022 financial results. Our gross transaction value was AUD 630 million, and we achieved marketplace revenue of AUD 483 million. Adjusting for the impact of mask sales and delivery date adjustments, our underlying revenue was down 2.6% year-on-year to AUD 472 million. Gross profit of AUD 183 million was down 18% versus FY 2021.
On a 2-year view, which looks through the benefit of mask sales in FY 2021, gross profit was up 36%. EBITDA was negative AUD 11.2 million, which reflects the significant increase in OpEx during the year as the business invested in building internal capacity and capability. Our cash balance of AUD 89 million as of 30 June remains strong and continues to provide us with operational and investment flexibility. Emma will cover our financial results in more detail later in the presentation. Moving to slide 4. We are continuing to execute against our 4 key strategic themes. There has been no change to our foundational pillars upon which we can build and scale to our next phase of growth. I'll talk through progress against these 4 themes over the next few slides.
For this year, we've also included our two enablers, business enablement and risk mitigation. These enablers have been in place since we first shared our four strategic themes. Business enablement is a particular focus on our core technology platforms and processes, modernizing and enhancing them to ensure the scalability and reliability of our platforms and to enable more rapid future progress against our strategic themes. There is a significant proportion of our engineering capacity currently dedicated to this enablement. Risk mitigation includes areas such as compliance and regulatory testing of products manufactured by the third party fulfillment network, as well as development of our ESG strategy, which we have set out in some detail in our annual report, which we also released today. Slide five, starting with the artist activation engagement team. This slide is a really important chart for us as a business.
The slide on artist activation engagement reinforces that we continue to see new artists join the platform and make sales, and existing artists sell more works. In FY 2022, 68% of marketplace revenue was generated by artists who had been on the platform for over a year. This metric has been pretty steady and demonstrates the long-term recurring annuity value that artists and their content earn and bring to the marketplace. This combination of new artists bringing fresh, relevant content to the marketplace and existing artists continuing to make sales many years after joining, demonstrates the ongoing compounding nature of sales and growth that our platforms can and do generate. On slide 6, Redbubble Group is continuing to unlock opportunities for artists by connecting them with customers on a global scale.
Our investments enabled initiatives aimed at driving artist engagement this year included expanding the physical product range that artists can sell to, sending targeted messages to segmented artists, encouraging them to upload new content to the platform for customers to purchase. Through the Redbubble fan art partnership, Legendary Entertainment empowered artists around the world to express their unique fandom while reaching a new customer base to sell licensed fan art for the critically acclaimed and Oscar-winning movie, Dune. On slide seven, the Redbubble marketplace continues to attract new content. This slide demonstrates the strong increase we have seen in content uploaded over the past couple of years. Given this ongoing influx of new content, in order to ensure marketplace integrity, a key area of investment for us has been in our content operations and integrity teams.
We've scaled the number of people in this area by 11 times in the past few years, enabling a 13 times increase in the number of works reviewed. This investment in content operation clearly comes at a cost. This area represents approximately 8% of our OpEx base for the Redbubble business. In quarter four, we launched an initial implementation of a new image detection technology. This important investment of both people and technology will enhance our capabilities and enable us to scale in a much more effective and efficient manner as our marketplace continues to grow. Moving to slide 8 that covers user acquisition and transaction optimization. The tens of millions of designs that artists have on our platforms translate into billions of individual product listings for consumers to buy.
This extremely long tail of content and product listings provides significant advantages for attracting customers in the digital environment. On a LTM basis, organic and unpaid channels remain the source of the majority of marketplace revenue, 60% in FY 2022, in line with the prior year. The marketplaces are aggregators of demand on behalf of artists. In FY 2022, there were 8.3 million unique customers across the group, with unique customer numbers growing at a CAGR of 20% since FY 2018. Moving to slide nine, developing a culture and process of targeted experimentation across the business continues to be a key aspect of enabling us to achieve our longer-term potential. This remains an ongoing focus area as we continue to make investments and experiment across the customer transaction funnel.
We've included some examples of these experiments on this slide, including leveraging our new customer data platform to drive improvements to audience targeting and creative strategy, both designed to increase users to Redbubble through social channels and improve promotional experiences in the Redbubble native apps. Pleasingly, our average order value, AOV, was up 9% in the fourth quarter and up 5% versus FY 2021. This was driven by a combination of the May price rise and initiatives which built order value, such as bundling incentives and free shipping tests, which involve a threshold over which shipping is free. We are encouraged by the traction the teams are starting to get in this area. We still have a lot of work to do and a lot of opportunity right through the transaction funnel, and the teams will continue to experiment and improve.
On slide 10, as I mentioned in the opening, consistent with our strategic priorities, during FY 2022, we invested significantly in additional people to boost our internal capabilities. In the second half, this was particularly within the product and engineering teams in the Redbubble.com business. They are focused on improving both our technical foundation and the artist and customer experience. Some examples of how this investment is leading to improvements in the customer experience include the launch of branded dynamic product ads, particularly on social channels where the products presented are dynamically created depending on the customer's behavior, improved in-app promotional experience that has increased promotional take-up and therefore overall sales on our native apps, and the launch of buy now, pay later option to checkout, providing additional payment options for consumers that have helped both checkout conversion and AOV.
Moving to slide 11, the mobile customer experience remains crucial, with 60% of MPR on the platform now occurring on a mobile device. This is up from 58% in the first half. We have spoken consistently about our apps, and they continue to be an important element of our long-term strategy, being both a user acquisition and importantly, a loyalty play. 15% of the Redbubble marketplace's sales were generated by its iOS and Android apps in FY 2022. The iOS app retains a very high rating of 4.7 stars, and we continue to see stronger engagement and retention from customers who use our apps. Increasing the proportion of customers installing and using the apps will be an increasing focus over the years ahead. On slide 12, Redbubble's membership base is substantial.
During FY 2022, there were 14.4 million active members, down 7% on FY 2021. However, up 32% versus FY 2020. Being a member means that the customer has a Redbubble account and uses it to log in, browse, and purchase on the Redbubble Marketplace. We define a subsection of these as active members, who are unique members who visited either the web or app platforms while logged in at least once during the period. Of the 14.4 million active members in FY 2022, 12% went on to make a purchase during the period. Converting more members to active members, and then more active members who are on the platform to purchasing customers represents a significant opportunity for the business.
Pleasingly, when a member does purchase, they are much more likely to make subsequent purchases relative to non-members, and this increased frequency leads to a higher average annual order value. There is ample opportunity for us to continue to build our membership program over time, which will result in more users becoming active members and more active members purchasing. Moving to slide 13. Purchases by repeat customers made up 46% of marketplace revenue in FY 2022 across the two businesses. This is up from 45% for half and 42% in FY 2021. As we did at the half-year results, we have broken down the repeat purchases into existing and reactivated customers. Existing customers contributed AUD 160 million to FY 2022 revenue. These are customers who made a previous purchase in the prior twelve-month period and this period.
Reactivated customers contributed AUD 62 million of revenue, and these are customers who made a previous purchase more than 12 months ago who came back to purchase during the year. At our first half results, we noted the increased competition in online channels as both online and traditional retailers increased digital spend, and ATT changes impacted the effectiveness of some channels and further pushed up spending on others. The result was an increase in CAC, customer acquisition cost. Given our focus on profitable acquisition, this impacted the volume of new customers we acquired. This can be seen in the contraction of new customers with revenue contribution from this group of AUD 250 million for the year, down from the AUD 321 million in FY 2021. We know that FY 2021 also included a large volume of customer demand for masks.
CACs do remain elevated, however, they have stabilized. Our response has been twofold. First, we continue to focus on diversifying both our paid and unpaid customer acquisition channels, and secondly, our focus on retaining new customers through dedicated retention activities and a variety of loyalty experiments. The chart demonstrates that we are making progress in both businesses in growing revenue from repeat customers and believe there is still significant upside for us in increasing loyalty over the short and medium term. It's a validation that our focus on better customer understanding and loyalty is of high potential, while we also continue to work to develop new diversified customer acquisition channels. Moving to slide 14. Thus far, we've been able to remain relatively insulated against the well-publicized global supply chain pressures that continued during FY 2022. This has been in large part a specific feature of our business model.
The make-on-demand model, coupled with the diversified third-party network of fulfillers, means that Redbubble does not hold inventory. Goods are only manufactured when a customer order is placed, and product inputs are held in bulk in advance of demand by the fulfillers. Investment into our supply chain logistics and operations team during the financial year have enabled us to achieve improvements in the delivery experience and product quality for artists' customers. Some examples of this positive progress are the average days to ship decreased by 28% in the second half compared to the first half. The on-site delivery time estimates were reduced for 91 products by between 1-5 days, and we reduced the defect rate for stickers by 26% in the second half compared to the first half.
The group also continued to focus on localizing products at existing fulfillers during the year, particularly in the TeePublic marketplace, where 18 products were localized into existing third-party Australian and Canadian fulfiller sites. Increased localization has multiple benefits, including reduced shipping costs to customers, lower transit times, and improved sustainability, as well as strengthening the resilience of the entire network by adding optionality and redundancy. On slide 15, our teams have continued to deliver new product launches, line extensions, and visual merchandising improvements in FY 22. These drove tangible commercial outcomes, including incremental sales and conversion gains. We achieved AUD 5.3 million in sales in FY 22 from product launches, including mouse pads and caps, and AUD 6.1 million from line extensions across apparel, stationery, and device cases.
During the second half, we also added line extensions to a range of T-shirts, phone cases, and mouse pads. On slide 16, as I flagged that we would during our first half results, we launched a new pets category in June. This will help the group gain access to new addressable markets by expanding the existing product portfolio into new areas of rising demand among our core audience. The new products include pet blankets, pet mats for cats and dogs, and bandanas, with further extensions to this category to come over time. In the next section, I'll recap on the group's unit economics and outline the exciting brand investment program we have planned for FY 2023. Moving to slide 18. Redbubble Group unit economics remain compelling, and we took some proactive action in the second half to further solidify them.
Pricing actions were implemented in early May via an average 6% increase to base prices, and this was in recognition of expected higher costs of doing business and to enable a continued focus on lowering shipping margins. Our experience post the price rise has been encouraging, with negligible impact on conversion and higher AOV. For the fourth quarter, we achieved a gross profit margin of 39.7%, which was down 50 basis points versus PCP, but up 220 basis points versus the third quarter. Our fourth quarter GPAPA or contribution margin was 23%, and this was up 150 basis points versus the third quarter.
Our logistics and supply chain teams were able to successfully renegotiate improved shipping agreements in the U.S., Canada, and the U.K., and we will continue to see the financial benefits from these improved agreements in FY 2023. Moving to slide 19. Slide 19 reiterates the ongoing positive unit economics for the group. This is a critical point. It is why we have invested in our teams and why we will now begin investing in our brands to drive growth at the top line. Every dollar of revenue has a positive contribution margin, and that is why our focus now is all about driving efficient scale. In addition to the 6% average base price rise, in early May, the Redbubble business implemented a free shipping trial in the U.K. for purchases over GBP 50.
Our experience from this trial has resulted in a larger shopping basket with increased marketplace revenue offsetting the shipping cost and growth in gross profit dollars versus the preceding month. In July, we also launched a free shipping trial in the U.S. for purchases greater than $65 on Redbubble.com. Both of these free shipping trials remain in place today and are aligned with our strategy of reducing shipping costs to customers and replacing shipping margin dollars with product margin dollars. Moving to slide 20. As per our strategic themes, we have previously flagged the need to build our brands. This is a core strategic priority to build a deeper understanding with customers of our proposition, to increase the effectiveness of both paid and unpaid acquisition channels, and to improve customer loyalty and repeat purchases.
We believe that the time is now right to begin investing in the Redbubble brand. As I've mentioned, we've invested in our internal capacity and capability, and we are now improving the artist and customer experiences to drive loyalty and retention and to ensure sustainable growth. Building awareness of our brand is one of the untapped long-term growth opportunities for both businesses. With these investments, we are aiming to grow awareness in our unique value proposition and core platform offering with messaging we have developed through learnings over the last financial year. Redbubble is creatively inspired commerce. Redbubble enables self-expression for customers through a breadth and depth of content powered by the largest independent artist marketplace. Redbubble enables economic empowerment for artists, enabling artists to turn their passions into profits. Redbubble is confident commerce through building a trusted experience for all marketplace participants.
On slide 21, our awareness efforts will focus on attracting and retaining the Gen Z audience. That is, people aged 10 to 25 today. For the Redbubble brand, we know and have reaffirmed that Gen Z is the core growth audience who already engage the most with the brand. We also know that there is ample opportunity for growth with this audience. For FY 2023, we will evolve our on and off platform experience to better meet the expectations of Gen Z, which you can start to see through the merchandising experience of this year's product launches on Redbubble, bucket hats being a clear example, and on-site improvements, such as offering buy now, pay later options, of which Gen Z is the largest generation to use. On slide 22, for FY 2022, we did a large amount of work to understand who the customers are and our starting point.
We know that it takes time to build a brand, and in FY 2023, we will commence our investment in building awareness of Redbubble. Our execution plan for the year is grounded in learning what creative and media mix approach grows awareness in key US cities with Gen Z. Successful learnings will be scaled into new types of media and additional US cities. We've selected a strong agency partner to work with us on this, and Emma will outline the quantum of investment we intend to make. Moving to slide 23, before I hand over to Emma to run through the financials, I just want to take a moment to offer our support to the people of Ukraine and to thank the Redbubble and TeePublic community for the way they have so brilliantly and significantly demonstrated their support also.
This response really highlights the power of our platform to enable a meaningful response to events that impact our community and the world. It shows how Redbubble moves at the speed of culture. That is, artists respond immediately when cultural moments happen, uploading content onto the platform, enabling customers to purchase their products and express themselves, express their feelings, and express their support. As a company, we enacted our global event policy, which means we will not take profits from these works and instead seek to donate them. We selected two charities to donate to, developed landing pages to promote the works by Ukrainian artists and works in support of Ukraine, and we promoted those on-site through email and off-site through both paid and owned channels. To date, we have had over AUD 1 million in gross sales.
We have donated AUD 170 thousand to charities, and artists have generated AUD 150 thousand in earnings. I'm incredibly proud of the Redbubble community and the Redbubble and TeePublic teams for the way that they have rallied to support the people of Ukraine. I'll now hand over to Emma to run through the financial performance for FY 2022.
Thanks, Mike, and hello to everyone. I will now walk you through the income statement on slide 25. I won't go through every line item, but I did wanna take the opportunity to call out both the improved fourth quarter operating performance as well as the full year results. In the fourth quarter versus the prior comparative period, marketplace revenue was up 1% to AUD 98.2 million, and gross profit of AUD 39 million was flat. Mask sales were down AUD 2.5 million to AUD 500,000 dollars. Gross profit margin was down 50 basis points to 39.7%. Paid acquisition costs were up AUD 3.5 million. Operating expenses, excluding the AUD 1.1 million of brand spend, were up AUD 6.5 million or 28%, reflecting the investment in internal capacity across the business that Mike has already talked to.
Versus the third quarter, operating performance improved in the fourth quarter. Marketplace revenue and gross profit were up 1.9% and 7.9% respectively. Gross profit margin was up 200 basis points to 39.7%, and GPAPA margin was up 160 basis points to 23%. For the full year, reported marketplace revenue was down 13% or AUD 70.7 million versus the prior year. I will step through the bridge to underlying marketplace revenue on the next slide. Gross profit was AUD 183.1 million, down 18%. GPAPA was AUD 106.7 million, down 30%. Operating expenses, once again, excluding the AUD 1.1 million of brand spend, were up 23% to AUD 109.3 million.
I will cover this step up in more detail shortly. Finally, the EBITDA outcome for the year was a loss of AUD 11.2 million. Moving on to slide 26. Given the quantum of mask contributions and delivery date adjustments recorded in the prior year, we have been transparently bridging the reported figures to the underlying numbers. The delivery date adjustment added AUD 13 million in the prior year, and masks also contributed AUD 55 million of marketplace revenue in FY 2021. In the current year, the delivery date adjustment was only AUD 260,000, and masks contributed AUD 10 million. Adjusting for these two factors, FY 2022 underlying marketplace revenue growth was down 2.6% or AUD 13 million year on year, 4.3% on a constant currency basis. Looking over the longer term, FY 2022 marketplace revenue was 38% higher than FY 2020.
On to slide 27. Consistent with our previous commentary, this is a business that needs to be assessed over the longer term, as while there has been volatility quarter to quarter, the longer term growth rates since the business commenced in 2007 have been consistently high. Marketplace revenue has grown at a compound annual growth rate of 27% since FY 18, with a corresponding CAGR of 30% at the gross profit line and a CAGR of 23% for gross profit after paid acquisition. I'd like to focus specifically in on the GPAPA result. Back in April, at our third quarter results, we detailed how one of the factors impacting the results was increased competition that had a flow on effect to organic, which is largely unpaid demand.
We responded to these changes in the landscape by increasing total paid acquisition spend and have continued spending at this level. These actions across both marketplaces have positively impacted our revenue results, but at a lower contribution margin. With the fourth quarter GPAPA margin down 390 basis points to 23% versus the prior year. However, as I referenced earlier, the fourth quarter GPAPA margin was up 160 basis points versus the third quarter, which was driven by a 220 basis points increase in gross margin, which is largely the impact of the May price rise that Mike spoke to earlier. I would also like to reiterate that we maintain our first transaction profitability hurdle, so while paid acquisition remains elevated, it also remains profitable. Increasing scale will help to drive further growth profit and GPAPA improvements.
During COVID, we have already shown the ability to deliver strong returns when the business step changes at scale, and we are not in an investment phase. Moving to slide 28. Redbubble is a truly global business, and our multi-regional footprint is a key strength. North America continues to be our largest region at 69% of total platform sales, and on a two-year basis, this has grown 33%. Australia and New Zealand provided a source of positive year-on-year growth, up 4%, as lockdowns continued to occur intermittently during FY 2022. Since FY 2020, Australia and New Zealand are up 63%.
On slide 29, you can see that there are a diverse range of physical products available on the marketplaces, and this broad mix of lifestyle categories has enabled artists to maximize their selling opportunities as consumer needs and preferences have continuously shifted over the past 2 years. During the peak of the pandemic, categories such as accessories, which includes face masks, as well as homewares and wall art, performed exceptionally well. However, they have all faced a stronger year-on-year decline as they cycle those COVID comparatives. During FY 22, we were pleased to see other apparel and T-shirts, which is the group's largest product category, contribute positive year-on-year growth. Importantly, T-shirts and other apparel were also up in the fourth quarter versus prior year, up 20% and 5% respectively. Stationery and stickers were also up by 2% in the fourth quarter.
These results highlight the importance of continuing to have a diversified physical product offering on the marketplaces. As Mike talked through earlier, we continue to invest in both expanding the products available as well as improving the life cycle appeal of existing products. On to slide 30. Our cash position remains strong. As at the 30th of June, we have AUD 89 million cash at bank. This continues to provide us with flexibility to invest into our future business growth and for the prudent management of our working capital needs. There are also a couple of other balance sheet-related items that are worth mentioning. As some of you would be aware, we have AUD 48 million of off-balance-sheet tax losses. These losses are available to offset future taxes payable.
As we have previously discussed, Redbubble is required to recognize revenue upon delivery of goods rather than when the customer has paid for the order. This results in revenue being deferred to the balance sheet. As at year-end, this was AUD 13 million. Moving to slide 31. Given the internal investments we have made, we thought it was important to set out the step-up in our OpEx spend in FY 2022 and also provide a delta forecast range for FY 2023. Our total OpEx increased by AUD 22 million in FY 2022 to AUD 110 million. This includes AUD 1.1 million of brand spends that we incurred in the fourth quarter. The largest driver of the OpEx increase was salary and wages, up AUD 12 million, increasing from AUD 58 million in FY 2021 to AUD 70 million in FY 2022.
In FY 2022, we had an increase of 99 approved FTEs to 429. This is a 30% increase versus FY 2021. For FY 2023, we expect our FTE growth to slow substantially from the 30% increase in FY 2022 to approximately 4%. We expect our monthly salary and wages expense to increase to a range of AUD 7-7.4 million per month for FY 2023, noting that the actual number will depend on the timing and start date of the new roles. This final step-up in salary and wages equates to a range of AUD 14-18 million for FY 2023 as the full-year run rate of the FY 2022 hiring is embedded and the remaining 46 vacancies are filled.
Our FY 2023 Redbubble brand investment is a 12-month program with a range of spend in the order of AUD 8 million-AUD 12 million for the year. Thank you, and I will now hand back over to Mike.
Thanks, Emma. Moving to slide 33. I've presented this slide previously, but I wanted to take an opportunity to revisit the unique aspects of the Redbubble business model and specifically how we create value. Redbubble and TeePublic are large-scale, difficult-to-replicate three-sided marketplaces. They offer a simple, no-upfront-cost selling model for artists, which is uniquely positioned in the way we serve the creator economy, helping artists to monetize their creativity and sell to millions of their customers globally at very little risk to them. The marketplaces connect artists and creators to a third-party on-demand fulfillment network that enables neither the artists or the marketplaces to need to carry inventory or warehousing costs and risks, as well as being highly scalable and capital light for the group.
These millions of artists provide a large-scale, highly dynamic, and deep source of content, and they create a massive, constantly evolving catalog of content and product listings. Redbubble Group's core role is to aggregate and enable consumer demand for artists by utilizing this enormous product content library across organic and paid channels. When the artists sell an item to a customer, it is fulfilled and shipped on-demand directly from the third-party network. Our business model therefore enables effectively infinite product listings, each of which, if and when purchased, has a positive contribution margin for the marketplaces. Importantly, we've made solid progress to improve the underlying operational performance of the group and solidify these strong unit economics. The artists and their content, their customers, and the third-party fulfillment network form genuinely unique three-sided marketplaces, and we are focused on driving their flywheel effects to build scale, efficiency, and group profitability.
On slide 34, we have previously shared our medium-term strategic plan based upon our high-potential growth levers. These initiatives will be phased over the next 4-5 years and have been ordered to give us the best chance of maximizing our returns on investment. This slide sets out our current and medium-term growth levers for the period of financial year 2023-2025 and then beyond financial year 2025. While we continue to work on improving our foundations in some areas, in other areas, we are now moving into the second phase of earning growth through disciplined investment. In FY 2023, this includes commencing investment in the Redbubble brand, as I described earlier, and a continued focus on gaining efficiencies across the fulfillment network as we scale.
Slide 35, we shared our medium-term aspirations to reach AUD 1.5 billion in gross transaction value and AUD 250 million in annual artist earnings in April last year. We remain committed to these aspirations, and we continue to believe that the margin profile presented with these aspirations is achievable at that level of scale. In recognition of our current position, the progress we are making against our strategic priorities, and the challenges faced by the Group to replace the AUD 55 million of mask sales in FY 2021, we have updated and clarified our timeframe for these aspirations to the two-year period from FY 2026 to FY 2027. Moving to slide 36.
To reiterate, when we achieve this level of scale, which includes growing marketplace revenue in line with our historic CAGR between 20% and 30%, we remain confident that this level of profitability is achievable. Our aspirations are for the group to be two and a half times larger from a GTV and marketplace revenue perspective than it is today. At that scale, we are confident in the operating leverage achievable and that will enable us to produce EBITDA margins in the medium term of 13%-18%. Moving now to our FY 2023 outlook on slide 37. Revenue growth is expected in FY 2023, with the benefit of one-off mask sales in FY 2021 of approximately AUD 55 million now largely fully cycled.
Redbubble unit economics to remain compelling, supported by the 6% average base price rise from early May 2022, with 60% of marketplace revenue from unpaid sources on a last click attribution basis. Our forecast FY 2023 OpEx reflects the following. A slowing of new roles in FY 2023 down to 4% from 30% growth in FY 2022. FY 2023 forecast FTE salaries and wages average run rate is between AUD 7 million-AUD 7.4 million per month, an increase of between approximately AUD 14 million-AUD 18 million for the year. FY 2023 forecast Redbubble brand investment of approximately AUD 8-12 million at constant currency to build awareness that reinforces the path to our medium term aspirations. That concludes our presentation. Thank you very much for listening, and we'll now open up the line for questions.
Thank you very much, sir. Ladies and gentlemen, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speaker phone, please pick up the handset to ask your question. We request you to limit to two questions. We have our first question from the line of Owen Humphries with Canaccord Genuity. Please go ahead.
G'day, guys. Can you hear me? Yes. Can you just maybe highlight what the constant currency growth was for the fourth quarter from a revenue perspective? I just couldn't see it.
Yeah, thanks. Thanks, Owen. It should be on the first page of the release. The constant currency marketplace revenue was down 4% quarter four versus quarter four last year. Was that the question you're asking?
Yeah, that's right. Good one. Sorry about that. Just talking through, so price rises of 6% in May, how much of that will fall through to gross profit margins you call it FY 2023? Are we expecting a 6% uplift in margins? I'm guessing not, but just how much of that actually falls through of that 6%?
Thanks, Owen. Great question. As we called out in our speaking notes just previously, the fourth quarter results had a 220 basis point increase in gross profit margin. That was largely the impact of those 6% price increases falling through. You can effectively factor that in. Obviously, as Mike said, you know, there will be increased cost of doing business coming through in the future. We don't know to what order of magnitude those will come through, but we'll continue to monitor pricing and take action to keep our unit economics and GPAPA level pretty consistent.
Good one. Okay. I just noticed last quarter you guys talked about, you know, strategic corporate initiatives to extract value for shareholders. I noticed that wasn't reiterated in this release. Can you maybe talk through what was taken, and is that now dated?
Look, thanks, Owen. There's no change in our focus. Obviously, it's, you know, it's a core responsibility of management and the board to continue to look at all opportunities to enhance value for shareholders. We have been doing that, and we will continue to do that moving forward. Our core focus, though, is on our internal growth path. We've obviously made significant investments into our people. We're now backing that with investment into the Redbubble brand. That is our core focus. At the same time, obviously, we'll continue to look at all opportunities that might enhance shareholder value.
Cool. One last quick one for now. I know I've got limited to two, but just based on the GPAPA margin of 23% of that fourth quarter, obviously a bit of tailwind here around the price rises potentially into FY 2023. Given the OpEx base, I know there's been ambiguous around the revenue growth guidance, but what's the revenue growth that's expected to drive a improvement in EBITDA in FY 2023?
Yeah. Owen, we're not giving specific revenue guidance for FY 2023 because of the uncertainties in the overall environment. We're obviously flagging that we expect to return to growth. That growth will not be linear across the four quarters of the year, so we'll move around a little bit. We're not actually giving any revenue guidance this time now.
Can I ask another way? What is the GPAPA margin of 23% the fourth quarter, you guys thinking that you can get back to the long term trend between 25% and 27% in FY 2023?
Yeah. Once again, if you look at the outlook statement on the last page of the presentation, you'll see that we explicitly state that we expect our unit economics to remain compelling, which has been supported by that price rise. As Mike said earlier, we're looking forward now into going to that next phase where we're looking to get further efficiencies out of our fulfillment network. Obviously, these are all supportive to that GPAPA margin percentage.
Good one. I'll step back. Thank you. Thanks, guys.
Thank you. We have next question from the line of Joseph Michael with Morgan Stanley. Please go ahead.
Morning, Michael. Morning, Emma. Thanks for your time. Just a couple of questions.
Obviously the revenue growth trajectory improved through FY 2022. Just keen to hear what you're seeing in the first quarter of 2023. Has that improving trajectory continued?
Yes, a great question, Joe. We're not giving any specific, you know, commentary about the current period performance because we are gonna be out again in October talking about that, which is gonna be very soon. What I will say is July was in line with our expectations. I would note, and it comes back to the previous comment that I had for one of Owen's questions. We are cycling a strong first quarter 2022, because if you think back to that July to September period last year, we had our back-to-school seasonal uplift. For that period last year, that was the first year after two years of lockdowns that North Americans actually were able to go back anywhere. We had the reopening trade. We've factored that into all of our projections.
Obviously what we're looking for is really where we're gonna land over the first half and specifically quarter-over-quarter, I do think those comps will move around a little bit. What I will say, July is in line with expectations, and encouragingly, we have seen the uptick that would reflect that normal back-to-school seasonal pattern at the end of July.
Okay. Got it. Just a second question just around that sort of OpEx increase. Slide 31, we've sort of highlighted, call that sort of a AUD 30 million OpEx increase. How is that being funded? Is that being funded from the price increase or should we kinda view that cost increase as incremental?
Well, effectively, the net outcome at the EBITDA line level is being funded out of our cash balance, so obviously we're internally investing into that.
Okay. Got it. Thank you.
Thank you. We have next question from the line of Tim Piper with UBS. Please go ahead.
Hey, morning. Sorry, just unmuting myself. Just to follow on from the last question, maybe asking it a different way, but you put through the price increase. Is it fair to say, like, on your runway of where you think it's gonna be in 2023 at the top line, you know, GPAPA or once that price increase dropped through, could be an incremental like AUD 20 million, so hence you're investing that back into OpEx? I mean, you're clearly taking a different path to some of the other companies we've heard come out and kind of talking about uncertainty, but sort of certain enough to throw a lot of additional OpEx here. I'm just trying to understand your thought process around balancing what's incremental versus what's additional.
Yeah. Thanks, Tim. I might start and then Emma, feel free to jump in if you need to. I think there's a couple of things to think about, Tim. Number one, there is absolutely, you know, uncertainty moving forward. That said, as we spoke, we do feel that the time is right to start investing in our brand. The cost increases that you're seeing, the majority of the cost increases you're seeing on the salary and wages line is really full year effect of the people that we've brought in particularly over the past three, four, five months and seeing that full year effect flow in, plus filling the vacancies that we had year end.
As we talked about, we are significantly slowing down our new FY 2023 roles down to just a 4% increase, majority of them into the TeePublic business. We are obviously conscious of the external environment. At the same time, we're starting to see the benefits of this increase in people and capacity, and we're starting to see that flowing in. We're feeling confident about the trajectory of our business. Given our positive unit economics, it is all about scale for us. It's all about driving scale at that top line. That obviously doesn't happen overnight. We've got levers that we can pull in the short term through product improvements and paid marketing. We do believe that growing our brand awareness is fundamentally important to growing that longer term, our growth over the longer term.
We know that stronger brand means better both unpaid and paid acquisition. We know that it leads to stronger retention and loyalty, and we think now is the time, the time is right. Obviously, we do have a degree of discretion among our OpEx base if the world turns more negatively against us than we would hope. Clearly, we'll be assessing, you know, on a weekly to monthly basis on how we're tracking versus our plan because we do have discretion among some of those elements of spend. But we really have some confidence in how the business is starting to move, and we believe that the time is right to continue. Obviously, assessing to make sure the world is moving how we expect it to move.
Okay. Just a second one. On the employee costs, obviously you called out 4% FTE growth in 2023. Can you just break down maybe sort of the midpoint of that incremental employee cost line? How much of that is annualization from the prior period? And then how much annualization do we expect in FY 2024 in employee costs? Do we take that plus 4% in FTE as signaling sort of the end of this hiring cycle, which has been going on for some time? Like, where are you at in the employee base once you fill those roles?
Yes. Yeah. Thanks for the question, Tim. Answering the last part of your question first, yes is the answer. We were quite clear that we want to step up the capacity to a certain level, and then we're gonna run with that level of capacity for a year or two. This last lot of hiring FY 2023 is that final step up, and then we won't have a further large step up in FTE in FY 2024 and beyond. What I would say in terms of the AUD increase across FY 2023, a very large proportion of it is for the roles that we hired in FY 2022, because most of them came on in the second half and, you know, in the last sort of four months in a lot of instances of the year.
It's a full year run rate of that. We go into the year as at the thirtieth of June with 46 vacancies. Then the new role that we've approved for FY 2023 is only 18 roles. That's the hiring still to come once those two have run through. And we're doing that right now. We actually closed quite a bit of vacancies in July. We will see most of that effect in the year of FY 2023, so that we won't be sitting here at the end of next year saying, "Actually, there's a huge run rate impact of those hires into FY 2024," because most of those hires will happen in the first half of FY 2023.
Okay. Got it. I know we're limited to two, but just looking, I just wanna point something out to you. Slide 31, where you've got that OpEx chart. Just optically looking at that, I mean, going from 110, you've got then the three buckets split out there with the ranges. I mean, they're the only three buckets, right? Then you've got the gray bar for OpEx in 2023, but then you've got this green section and blue section on top of the gray bar there.
I'm just gonna-
Am I getting that wrong? Like, it looks like.
No. They're just the ranges, Tim. This is where it gets difficult to pictorially depict, right? What we're simply saying is when you add up the ranges in each of those increases in the FY 2023 year, if you go to the bottom, you'll get a number that's AUD 135. If you add up the top of each one of those sub-ranges, you'll get to AUD 145. All we're doing with the green and the blue is illustrating the range.
Okay. I'll jump back in the queue. Thanks.
Thank you. We have next question from the line of Wilson Wong with Jarden. Please go ahead.
Hi, guys. Can you just talk to the customer acquisition cost trends you're seeing and how you expect this to change over the next year?
Yeah, thanks. Look, obviously, it's, you know, important—it's an important issue for us as we, you know, as we talked about 40% of our marketplace revenue on a last-click basis is generated through paid channels. It's a bit more than that when we use our attribution model, as we've talked about. Customer acquisition cost, if we think back to last year, really stepped up around October, November last year. Multitude of factors, both the increase we saw online and the traditional retailers come back into the digital advertising environment. At pretty much the same time, the first round of ATT changes rolled out. That impacted the effectiveness really of the social channels, pushed a lot of spend onto the intent-driven channels, particularly Google, drove up CPCs quite strongly, you know, particularly in search.
What we've seen over the last sort of, you know, 7, 8 months since then is that CPCs, they've bounced around, but they've mostly remained elevated. They've remained elevated without going up further. They really stepped up October, November, December. They've since bounced around since then, but on average have stayed at about that elevated level. Now, therefore, our assumption moving forward is that they will remain at that elevated level but not substantially go, you know, up or down. That's obviously both a risk and an opportunity for us. Depending on who you speak to, you know, some will say that they're gonna go up further, some will say they're gonna going to come down further. Our assumption is that they remain elevated without substantially increasing further.
That's the assumption that we're putting into our planning moving forward. Really for us, it does emphasize the importance of continuing to diversify our acquisition channels. The intent channels are the, you know, which is more the search ones. They're the ones that have really gone up as the visibility into the social channels has been impacted. We're continuing to experiment across a range of channels, and we'll continue on that focus of diversifying both our paid, but also continuing our significant investment into our SEO so that we're continuing to drive those unpaid and organic channels as well.
Okay. Thanks for that. Can you just provide some detail around what the brand investment will be comprised of, and do you sort of expect this level of investment to grow over the medium term?
Yeah, thanks. As we tried to say, it for, you know, relative to our OpEx, it's a significant investment. Relative to the U.S., the U.S. market, when we're talking about Gen Z in the U.S., it's a relatively small investment. This year for us is very much about learning and testing. We're not blanketing all of our market. It's very focused on U.S., it's focused on key U.S. cities, and therefore the investment is what you would expect. It's a combination of production and mostly media spend with obviously agency underneath that. That's generally what it comprises of. Our media, as we talked about, will be focused on digital channels.
With the 1.1 that you saw in FY 2022 within the final quarter of this year mostly, and was really focused on us starting to test channels, testing messages just in a couple of cities. We're taking those learnings and we go out to our next lot of test cities and test markets in the coming weeks and months. So the spend is mostly media and production.
Thank you. We have next question from the line of Taylor Gill with Barrenjoey. Please go ahead.
Hi, guys. Thanks for taking my questions. You touched on this a bit earlier. Can you provide a bit more detail on if there's anything you're seeing in the business over the last few months that's given you confidence in stepping up the cost base further, maybe with regards to marketing costs coming down or revenue momentum?
Yeah, sure. As you know, as we talked about, I think the things that are giving confidence are twofold. One, you know, we're seeing some of our internal key metrics, areas like our visits, particularly our organic visits, things like our average order value have been increasing over the past few months. They are key transaction and funnel metrics for us. When we put those together, as we talked about. Particularly in quarter four, we had really solid year-on-year growth in apparel. Apparel is core Redbubble and TeePublic. Apparel makes up more than 40% of our total gross sales.
To see year-on-year growth over the quarter in apparel, particularly driven through our TeePublic business, which is very North American, very apparel-focused, that's given us confidence that the business is, you know, moving in the right direction where we see those core areas. We also saw stickers, which again, that's core stickers is core Redbubble, to start to get some year-on-year growth back into in the stickers category in Q4, also a really positive area of encouragement for us. We've still got a lot of work to do. As Emma mentioned before, the Q1 for us now is actually a pretty tough comp because of the reopening trade that we saw and the back-to-school trade we saw last year.
When we look through the quarter and focus more on the half and the year, the momentum that we've seen over the past few months, both in some key categories for us and against some of our key operating metrics, is what's giving us the confidence that we can, that we're. Just to be clear, our OpEx now is stabilizing even though you're seeing additional OpEx come through in the numbers. Just to re-emphasize, that's the full year effect of the roles that we've already brought on or the vacancies that we've got existing. We do think that we're having a degree of conservatism in not having another wave of increasing headcount across the business.
That's why we emphasized the 4% growth versus the 30%. We have a lot of work to do. There's clearly some uncertainty in the year ahead. Obviously we feel confident about what we're seeing on a metrics and financial position to give us the confidence to continue on the path we're going and to start investing in our brands.
Okay, great. Thank you. Also following on from Owen's question earlier on, your previous commentary on enhancing its shareholder value, can you just provide a bit more information on the measures you've considered for that, please?
Look, we've talked about that previously in terms of, you know, making sure that we're looking at a variety of measures, whether that's M&A opportunities, whether that's capital management opportunities. They're things that remain, you know, right at the forefront of what we're thinking about, particularly on the M&A front. You know, given where the industry is, given where we are as a business, there's obviously a pretty high bar on those sort of activities at the moment. But it doesn't mean that we stop looking. It's important in this environment that if there is opportunities, that we're ready to act.
I would just add to that and just to reiterate a point that we made earlier. You know, that's just good management and good board management to keep looking at those opportunities. I think what we wanna make sure is clearly understood is we're highly aligned with achieving our midterm aspirations, and we're investing to achieve those midterm aspirations. That is actually the best ROI of the palette that we're looking at at the moment, and that's why we're doing what we're doing.
Okay, great. Thank you.
Thank you. We have next question from the line of Wei-Weng Chen with RBC Capital Markets. Please go ahead.
Hello? Are you guys there?
Yep.
We're here.
Oh, excellent. All right. Cool. Sorry, I just joined the call a little bit late. I might have missed the start. Just wanted to talk about the OpEx firstly. I caught the bit where you said you weren't giving revenue guidance, but is the expectation that in FY 2023 we see OpEx, sort of, you know, go up to, let's say the midpoint AUD 30 million, is that gonna be offset by, revenue or, are we expecting sort of EBITDA losses to kind of widen in 2023?
Yes, we did get asked this question before, and unfortunately, no, we cannot give you any more revenue guidance other than that we are returning to growth across the year.
Okay. All right. No worries. Then the other question I had was, can you maybe give a, I mean, if I think about, let's say slide 26, you go from FY 22 and then there's a bit of, you know, gray space and then you go to FY 26, 27 with your, I guess, longer term targets. Can you maybe fill in the gap a bit in terms of kind of what you're expecting in terms of how we get from FY 22 to, you know, the longer term targets?
Yeah. Yes. Okay. Obviously we're not giving revenue guidance next year, so we're not certainly gonna give revenue guidance right out every year to FY 2026, FY 2027. Well, how I would answer your question is to say that if you, in any model, pop in certain revenue growth for next year and then put somewhere between 20% and 30% revenue growth CAGR for the remaining period, you will get to FY 2026, FY 2027. Now obviously, as we've discussed earlier, it's not necessarily linear quarter to quarter. Certainly we experience volatility quarter to quarter, but over that long term, really it's our historical growth rates that need to be maintained over a 5-year period that get us there.
Yeah. I think if you pull up Wei-Weng Chen, you can see when we look back from FY 18, we look through COVID.
Mm-hmm.
To where we are now, you can see how we've grown at, you know, both MPR and gross profit and gross margin. Then obviously when we're talking about returning to revenue growth over the full year for FY 23, without specifying how much, you can see that we've had the bumps from COVID and we've dropped down this year, but you can clearly see that we now expect that to return to growth. From our perspective, you look at the historical rate from FY 18 to FY 22, and then you look at what we're projecting for the years forward, we don't expect it to be linear.
We do expect obviously revenue growth over the next, you know, 3, 4, 5 years to significantly outpace OpEx growth over those periods. That's what enables us to, you know, to increase, get ourselves back to EBITDA positive over time and then obviously get us to those margins that we're looking at over a 4- to 5-year period.
Okay.
Thank you. Ladies and gentlemen, we have reached the end of the question and answer session, and I'd like to hand the call back over to Michael Ilczynski for closing remarks. Over to you, sir.
Thank you, Vikram. Just wanna say thanks to everyone for tuning in. Thanks for your support over the past 12 months. We look forward to catching up with many of you over the days ahead.
Thank you very much, sir. Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may now disconnect.