Welcome everyone. My name is Anne Ward. I'm Chairman of the Board, Redbubble Limited, and I welcome you to Redbubble's Annual General Meeting for 2021. It is shortly after 5:00 P.M., and the company secretary informs me that there is a quorum present, and so I now declare the meeting open. Notice of the meeting was duly given on 23rd September 2021, and I take that notice as read. The meeting has been properly convened. As was the case last year, this meeting will be conducted as a virtual meeting using the technology of our share registry, Link Market Services. We are hopeful that we will be able to convene a physical meeting next year with virtual capability in a hybrid format. Voting on the resolution set out in the notice of meeting will be conducted by way of a poll, which is now open.
I remind you that all resolutions may only be voted on by shareholders, proxy holders, and shareholder company representatives. For those who have not yet voted, you will be able to cast your vote using the electronic voting card or use the helpline specified. Sorry, using the electronic voting card received upon validation of online registration. Please refer to the online voting guide or use the helpline specified. You will be able to submit your vote online until five minutes after the meeting closes. If we experience any technology issues during the meeting, we may need to take a short break. If there is a significant technological issue, we may need to adjourn the meeting to another time or date. In the event that this is required, we will notify shareholders through email and the AGM page on our investor website. We will also lodge details with the ASX.
The agenda for today's meeting is as follows. First, I will deliver my Chair's address. Our CEO, Michael Ilczynski, will deliver his CEO's address. We will then move to the formal business of the meeting, including the resolutions to be voted on by shareholders. We will then address shareholders' questions in relation to the company's financial year 2021 reports, the resolutions, and other general business questions. We will conclude with the final opportunity to cast votes on the resolutions set out in the notice of meeting. If you are a shareholder and would like to ask a question, you can do this in writing or by phone. I encourage shareholders attending online who have questions to send their questions through as soon as possible. Please click on the Ask Question button, type your question, and click Submit. Please ensure your questions are relevant to shareholders as a whole.
Shareholders and proxies wishing to ask questions via phone, we're required to register for their unique PIN provided by Link Market Services. If you do not have your PIN and would like to ask a question via phone, you can contact Link Market Services on the phone numbers now on this slide. Questions received prior to the meeting will be addressed during the question and answer session. We will not address questions that don't relate to the business of the meeting or to the Redbubble Group. We will address multiple questions on the same topic as one where appropriate. Voting on the resolutions will be conducted by way of poll at the end of the meeting following the question and answer session. The results of the poll will be announced to the ASX later today.
Shareholders attending the meeting online will be able to cast their vote using the electronic voting card received when online registration was validated. Please refer to the online voting guide or use the helpline specified if you have difficulty in casting your vote. Shareholders will be able to submit their vote online until five minutes after the meeting closes. All resolutions for consideration today may only be voted on by shareholders, proxy holders, and shareholder company representatives. Now, I would like to introduce the other members of your board. First, Martin Hosking, Non-Executive Director. Martin was one of the Founders of Redbubble and served as CEO from 2010 until 2018, remaining on the board as a Non-Executive Director. Martin also served as Interim CEO between February 2020 and January 2021. Martin will be standing for re-election today. Next, we have Jenny Macdonald, Non-Executive Director.
Jenny joined the board in February 2018 as a Non-Executive Director and chairs the Audit and Risk Committee. Jenny will be standing for re-election today. Next, we have Greg Lockwood, Non-Executive Director. Greg joined the board in June 2015. Greg will also be standing for re-election today. Finally, we have Ben Heap, Non-Executive Director. Ben joined the board in April 2020 and was elected to a three year term at last year's AGM. He is Chair of the People and Nomination Committee. I welcome members of the Redbubble executive team also joining the meeting today. I would also like to welcome Ash Butler from the company's auditors, Ernst & Young. Ash will be available to answer any questions relating to the conduct of the audit and the preparation and content of the auditor's report. I now turn to my chair's address to the meeting.
Financial year 2021 marked my first full financial year as Board Chair, and it was, again, as we all know, a very challenging year for many parts of the world. Over the past 18 months, the COVID-19 pandemic has had a profound effect on all our lives. It has changed how we live, work, travel, and connect with friends, family, and loved ones. It has also changed consumer behavior and accelerated the shift to online platforms, including ours. It was pleasing to see many countries in which we operate begin moving into the post-COVID era in the latter part of the year. It has also been pleasing to see our business continue to perform strongly during this transition and retain many of the customers introduced to the Redbubble and TeePublic marketplaces during the pandemic. As a result, your company achieved record financial results in the 2021 financial year.
The results, which Mike will speak about shortly, are a testament to the Redbubble on-demand business model, a diversified and resilient fulfillment network, capable and committed management and staff, and a loyal community of artists and creators. Redbubble is a company with a mission to create the world's largest marketplaces for independent artists and to bring more creativity into the world. I'd like to take a moment to speak about the artists who use our marketplaces. Anyone who has visited the Redbubble platforms will appreciate the incredible range of work made available by talented artists through our marketplaces. Despite the difficulties of the past year, artists continued to produce work in ever greater numbers and were rewarded by earning a total of AUD 104 million in artist revenue on Redbubble marketplaces, which is the highest annual amount in the history of the company.
Without these artists, we could not fulfill our mission nor produce strong financial results for you, our shareholders. A highlight for the company during the year was the appointment of our new CEO, Michael Ilczynski. Mike assumed the role in January 2021, taking the reins from our Interim CEO and Redbubble Co-Founder, Martin Hosking. I'd like to once again thank Martin for his willingness to continue as Interim CEO while we conducted a global search, which resulted in Mike's appointment. With Mike's commencement and the articulation of Redbubble's medium-term strategy and aspirations in April, the business has a very clear path forward for realizing our growth ambitions in a large and growing addressable market. This next phase will require a combination of disciplined investments and focused execution as the company makes progress towards achieving our medium-term aspirations and delivering longer-term value.
We have also made changes to the structure and composition of the executive leadership team, and the group is building a highly capable team that can leverage the significant achievements to date and scale Redbubble Group into its next phase of growth. In addition, with the ever-increasing focus on environmental, social, and governance issues, it is more important than ever that the group continues to recognize the importance of the ESG. Redbubble's business model has always emphasized a small environmental footprint, together with a strong focus on having a positive social impact. We continue to work to better understand our material ESG impacts and more clearly integrate ESG considerations into our strategy and decision-making in the future.
In closing, I offer my sincere thanks to my fellow directors, to Mike and the executive leadership team, and the many committed employees of the Redbubble Group for their ongoing contribution through another challenging year. Finally, I would like to thank you, our shareholders. For those of you who have been with Redbubble for a while, we thank you for your continued support. For those who have joined us over the past 12 months, I would like to extend a warm welcome. Together, we look forward to sharing our progress with you in the coming years as the business strives towards its longer-term growth potential. I will now call on Mike to provide his CEO address to the meeting.
Thank you, Anne. I'm delighted to be addressing my first AGM as CEO of Redbubble Limited. Today, I'll provide shareholders with an overview of Redbubble's performance in FY 2021, which was a record year for the company and demonstrated the potential of the business when it is operating at scale. Having been appointed less than one year ago, though, I'd like to take a moment to share my impressions of the company. As mentioned by Anne, I commenced with Redbubble in January 2021, and I want to thank everyone for the warm welcome that has been extended to me. The pandemic has, unfortunately, impacted significantly on how my first nine months in the role have looked compared to normal times.
As CEO, my usual approach would have been to get out and meet the team, some of our artists, our stakeholders, such as the third-party fulfillment providers, and of course, you, our investors. Travel restrictions and lockdowns have meant that I've not been able to meet many Redbubble and TeePublic staff in person, nor have I been able to visit the fulfillment network, nor meet face-to-face with shareholders. These circumstances have provided me with the opportunity to see firsthand how the group is able to operate under difficult circumstances, and it has shown me that the Redbubble business model is resilient and scalable. It also reflects the ongoing skill, professionalism, and fortitude of our team.
Despite all the macro events and having been in lockdown for an extended period of time in some geographies, the performance of our people has been outstanding, showing their dedication to the company and the artist community whose customers our marketplaces serve. There is undoubtedly a lot of work for us to do. There are significant opportunities to improve the way we serve artists and the customers, and to improve our operations and systems to enable us to scale and achieve our medium-term aspirations that I will speak to in a few moments. I'll turn to the FY 2021 results. Please note the slides that I'll be speaking to are a compilation from the full-year results presentation that we shared in August. I'm pleased to report that in financial year 2021, the group achieved record financial results.
In summary, at the group level, gross transaction value across the marketplaces was AUD 701 million for the year, up 48% year-on-year, and up 60% on a constant currency basis. Marketplace revenue was AUD 553 million, up 58% year-on-year, and 31% on a constant currency basis. Net profit after tax was AUD 31 million, compared to a loss of AUD 9 million the previous year. Importantly, FY 2021 saw AUD 104 million earned by over 700,000 selling artists across the Redbubble Group marketplaces. As Anne Ward mentioned, this is the highest annual amount ever earned by artists using our platforms. We are all particularly proud of the record artist revenue that was earned by this community of creative people. This is an incredibly important milestone.
It took Redbubble 11 years to achieve more than AUD 100 million in total cumulative artist earnings, whereas over the course of FY 2021, this was reached in under 12 months. A testament to the strong growth experienced by the business and the artists we serve. At the year-end, the company had no debt and AUD 99 million in cash. This has increased to AUD 109 million as of 30 September 2021. This cash position provides a strong financial foundation and strategic flexibility as we pursue our medium to longer term opportunity. Turning now to our strategic and operational update. Record growth during the year was achieved through a clear and disciplined focus on our four key strategic themes. Those four key themes are firstly, artist activation and engagement.
Secondly, user acquisition and transaction optimization. Third, customer understanding, loyalty, and brand building, and fourth, our physical products and the third-party fulfillment network expansion. Investment in these areas is crucial to ongoing growth of the business, and I will speak to each of these in turn. Artist activation and engagement.
The record amount earned by artists across the Redbubble Group marketplaces represents not only strong growth in the number of selling artists during the year, but also the continued engagement of existing artists. This demonstrates clearly the long-term value that artists and their content bring to the marketplaces. To enable us to take a more proactive and segmented approach to artist acquisition and engagement, a group-level artist function was established in the second half of the financial year, and we expect this investment to impact this area positively in the years ahead. For user acquisition and transaction optimization. 9.5 million unique customers made purchases on our marketplaces in FY 2021. This number is up 40% year-on-year and reflects strong organic growth for acquisition channels, which continue to be a key source of competitive advantage.
We also saw particularly strong growth in acquisition from channels such as Google Ads, affiliates, and then PR. Over 50% of all sales on the platform occur via a mobile device, with marketplace revenue on our apps growing 77% year-on-year during FY 2021. During the year, there was a stronger engagement and retention of customers who are using our apps. It is important that we continue to invest in improving the customer experience for all mobile device users to attract even more customers to these platforms. Customer understanding, loyalty, and brand building. While the growth in unique customers during the year is very pleasing, customer loyalty is an important opportunity for the business. The repeat rate of purchases is a key loyalty metric, and in FY 2021, purchases by repeat customers made up 42% of marketplace revenue.
We also saw that the rate of revenue growth from repeat customers exceeded that of first-time purchases. Our data also shows that those customers who first purchased on Redbubble during the second half of calendar year 2020 have demonstrated a six-month repeat rate at the same level of those who were first acquired in the equivalent half pre-COVID in 2019, despite the 2020 cohort being significantly larger. This indicates to us that many of the gains made during COVID should be sustained as economies reopen. For the product range and third-party fulfillment network. In FY 2021, we saw the value of previous investments in the network. The network was able to maintain continuity of operations and supply in the face of surging demand, record holiday season volumes, and constrained shipping conditions due to the pandemic. This was achieved without significantly compromising the customer experience.
We also continued to add new products to our range during the financial year, including jigsaw puzzles, aprons, and magnets. In addition to the uplift achieved by expanding the range, we also saw improved customer acquisition and conversion through our focus on enhancing and refreshing some of the existing product range. I'll turn now to our medium-term aspirations. FY 2021 shows that we are on our way to creating the world's largest marketplace for independent artists. This remains our mission. It drives our ambition. We are passionately committed to it. We believe that our mission is supported by favorable macro trends, and as such, we are uniquely positioned to be a significant winner in large and growing addressable markets. In April of this year, I shared our medium-term aspirations in a letter to shareholders.
These aspirations are focused on driving a step change in the impact we have for artists and in the scale of the business, growing our core top-line metrics. Our medium-term ambition is to grow gross transaction value to AUD 1.5 billion per annum, marketplace revenue to AUD 1.25 billion per annum, which would enable us to significantly impact the artist community by increasing artist revenue to AUD 250 million per annum. Our willingness to openly set and share these aspirations, and our confidence in our ability to achieve these in the years ahead, is reinforced by the group's track record of top-line growth. This track record enables us to look ahead with confidence as we aspire towards a CAGR, a cumulative average growth rate, of 20%-30% for revenue over the next four to five years. I now turn to the near-term outlook.
Looking ahead, I know that progress may not occur in a linear fashion, and there are likely to be various challenges along the way. None of this, however, will take away from the opportunity we have and the potential for our business. A few weeks ago, we reiterated our outlook statements for FY 2022 provided in August, and also shared our first quarter results and some operational highlights. During the quarter, the business recorded first quarter marketplace revenue of AUD 106 million, down 28% and 27% on a constant currency basis year-on-year when looking at the headline numbers. At an underlying level, we exclude mask sales and delivery date timing adjustments, resulting in marketplace revenue of AUD 104 million, which is 6% below prior year on a floating basis and only 4% on a constant currency basis.
Given the unprecedented events of the last 18 months, and we also look to the fact that these results were more than 55% greater than Q1 of FY 2020. On a two-year view, the CAGR was + 24%, demonstrating the significant growth the business has had over the last two years. I won't repeat all of the P&L metrics now, as we provided them only a couple of weeks ago. I do want to underscore that we are pleased with the quarterly results came in in line with our internal expectations, with the business continuing to retain the majority of the accelerated growth and the resultant revenue that occurred during FY 2021. Underlying marketplace revenue in July, on a paid basis, was down 11% versus July last year, with this improving to just - 2% for September versus September last year.
This trend, coupled with the operational progress we're making, gives us confidence about our near-term outlook, and we also use this opportunity to reiterate the full-year revenue and EBITDA guidance we provided in August. In summary, Redbubble is a business with some truly unique assets and competitive position, with compelling opportunities and many growth levers available to us in the medium to longer term. We are well-placed to deliver on the medium-term aspirations we have set ourselves for the benefit of the community of artists, their customers, our staff, and you, our shareholders. I'd like to close by thanking the talented and resilient teams at Redbubble and TeePublic for their commitment and dedication and ability to adapt to these trying times, and to Anne and the board for their ongoing confidence and support.
Together, we believe a continued and consistent focus on investing in order to scale and grow our marketplaces is the optimal path for the businesses right now and the best way to generate maximal long-term shareholder value. I would like to thank all of our shareholders for your continued support on this path. Thanks, Anne.
Thanks, Mike. We will now proceed to the formal business of the meeting. The first agenda item is to receive and consider the financial report of the company, being the audited financial report for the company and its consolidated entities for the financial year ending 30 June 2021, and the reports of the Directors and the Auditor. The directors' report, financial report, and Auditor's Report were released to the market with the company's Appendix 4E full-year results on 19 August. They were also published on the Redbubble Investor Center website and in the 2021 Redbubble Annual Report. There is no requirement for shareholders to approve these reports, but there will be an opportunity for shareholders to ask questions about them when we come to question time in a few minutes.
The auditors have not received any questions prior to this meeting, but as I mentioned earlier, Ash Butler from Ernst & Young is online and available to answer any questions about the conduct of the FY 2021 audit. Now, we have six voting resolutions for consideration at this meeting. Resolution 1 relates to the adoption of the remuneration report. resolution two is for the re-election of Jenny Macdonald as a Director. resolution three is the re-election of Martin Hosking as a Director. resolution four is the re-election of Greg Lockwood as a Director. resolution five is for the renewal of proportional takeover approval provisions in our constitution. resolution six relates to other alterations to our constitution.
Resolutions one to four are all ordinary resolutions, which means that to be passed, the item needs the approval of a simple majority of the votes cast by shareholders By shareholders entitled to vote and voting on the resolution. Resolutions five and six are special resolutions, which means that to be passed, the item needs the approval of at least 75% of the votes cast by shareholders entitled to vote and voting on the resolution. As I mentioned earlier, voting on the resolutions will be conducted by way of a poll at the end of the meeting, following the question and answer session. The result of the poll will be announced to the ASX later this evening. I remind you that all resolutions for consideration today may only be voted on by shareholders, proxy holders, and shareholder company representatives.
On all of the resolutions, I will be casting the undirected proxies given to me in favor of the resolutions. I now set out each of the proposed resolutions before we address shareholder questions. Resolution 1 is to adopt the company's remuneration report. Under the Corporations Act, the company is required to include in the Directors' Report, a detailed remuneration report setting out prescribed information relating to directors' and other key management personnel's remuneration, and submit this for adoption by resolution of shareholders at the AGM. Shareholders are asked to adopt the remuneration report. The shareholder vote is advisory only and does not bind the directors of the company.
However, pursuant to the Corporations Act, if the resolution to adopt the remuneration report receives a no vote of at least 25% of the votes cast at two consecutive annual general meetings, a resolution must then be put to shareholders at the second AGM as to whether another general meeting of the company should be held within 90 days, at which all directors who were in office at the time the board approved the second remuneration report would need to stand for re-election. Noting that each director has a personal interest in their own remuneration from the company, as described in the remuneration report, and that each director and any closely related party of a director is excluded from voting their shares in relation to this resolution.
The directors unanimously recommend that shareholders vote in favor of the adoption of the remuneration report. resolution two is for the re-election of Jenny Macdonald as a Director of the company. I would like to ask Jenny to address shareholders briefly regarding her re-election.
Thank you, Anne, and good afternoon, everyone. Thank you for the opportunity to put myself forward for a second term as a member of the Redbubble board. Before I go into my background and credentials for you to consider, I'd firstly like to use some of my time to briefly recognize each member of the Redbubble team who have worked so hard and diligently in responding to the challenges and opportunities that have arisen due to the pandemic. This type of commitment from the team bodes well for the future of your company, and I thank them for their hard work and dedication. I would now like to give you an overview of my qualifications and experience to be elected as a Non-Executive Director of Redbubble, and also as Audit and Risk Chair.
Throughout my executive career, I've worked for a number of listed companies with a focus on financial operations, transformation, innovation, and operational efficiency. As a chartered accountant with over 10 years’ experience with accounting firm KPMG, I'm well-positioned to lead the Audit and Risk Committee on behalf of the board. I also hold a Masters of Entrepreneurship and Innovation, and I'm a graduate of the Australian Institute of Company Directors. My industry experience is wide-ranging and covers digital manufacturing, services, and distribution. I believe that this broad commercial experience puts me in great stead to add value to our company when making decisions on the strategic future direction of Redbubble.
I will continue to commit my time to ensure that Redbubble achieves its potential and that we deliver on our vision and the aspirations of all stakeholders. I hope that you will support my election to the board so that I can continue to serve you as shareholders of Redbubble. Thank you. I'll pass back to Anne.
Thank you, Jenny. I propose the resolution, I note that the directors, with Jenny abstaining, unanimously recommend that shareholders vote in favor of Jenny's re-election as a Director. I will now turn to resolution three, which is for the re-election of Martin Hosking as a Director of the company. I would now like to ask Martin to briefly address shareholders regarding his re-election.
Thank you, Anne. I'm SEEKing your support for re-election to the board. I believe I add value to this role from my experience as a Co-Founder of the company and as a prior CEO. In addition, my broad familiarity with the technology and business landscape allows me to add insight and help the board make better decisions. As a graduate of the AICD, and through prior experience, I have deep familiarity with the governance and fiduciary responsibilities of the board and our obligations to all shareholders and key stakeholders. As a major Shareholder, I am committed to the long-term success of the company and bring this perspective to my decision-making. I thank you for your support. I'll hand back to Anne.
Thank you, Martin. I propose the resolution. I note that the directors, with Martin abstaining, unanimously recommend that shareholders vote in favor of Martin's re-election as a director. Turning now to resolution four. This is for the re-election of Greg Lockwood as a director of the company. Again, I would like to ask Greg to briefly address shareholders regarding his re-election.
Thank you, Anne, and thanks to the shareholders for this opportunity. A short background. I'm one of the founding partners of Piton Capital, a London-based venture capital firm formed in 2010. I've been involved with Redbubble as an Investor and Board Member since 2015. Prior to this, I worked in classified publishing in Toronto, and corporate finance and venture capital with UBS in Zurich and London. During this period, I was fortunate to be involved in two notable businesses, Auto Trader and Betfair. Notable because in these businesses, their customers helped to make their products more attractive for other customers. The more participants that these systems gained, the harder they were to compete with. They had strong network effects, creating deep competitive moats that allowed them to continue growing over long horizons.
Consequently, they became very profitable and valuable businesses and seemed much more attractive than businesses with high competition and low margins. Hunting for and supporting just this type of business became the investment thesis around which Piton Capital was formed. Subsequently, we've gone on to invest in close to 50 such businesses, including many marketplaces, which we think will win with network effects in their respective segments. For us, Redbubble fits neatly into this thesis. Redbubble is a rare marketplace platform with three legs, where more and better artists, fulfillers, and product combinations, and customers create value for each of the other constituencies. It is the leading such marketplace in this arena, which already manifests in a difficult to emulate competitive position.
Alongside my other board duties, I see it as my particular role to share learnings from across our portfolio of such businesses and their various markets in order to help Redbubble fulfill its very significant potential. Thank you.
Thank you, Greg. I propose the resolution and note that the directors, with Greg abstaining, unanimously recommend that shareholders vote in favor of Greg's re-election as a Director. I will now move to the two special resolutions relating to the company constitution. Sorry, resolution five, which is the renewal of proportional takeover provisions in our constitution. The Corporations Act permits a company to include in its constitution provisions prohibiting the registration of a transfer of securities resulting from a proportional takeover bid, unless the relevant holders of the securities in a meeting approve the bid. It is a requirement of the Corporations Act that such provisions in a company's constitution apply for a maximum period of three years, unless earlier renewed. The Constitution was adopted by shareholders in 2016, and the proportional takeover bid approval provisions in the Constitution have not since been renewed and have ceased to apply.
The directors consider that it is in the best interests of shareholders to renew these provisions in their existing form. If renewed by shareholders at the meeting, Rule 82 of the Constitution will operate for three years from the date of the meeting, subject to further renewal. The effect of Rule 82 of the Constitution as renewed, will be that where a proportional takeover bid is made for securities in the company, the directors must convene a meeting of shareholders to vote on a resolution to approve that bid. The meeting must be held and the resolution voted on at least 15 days before the offer period under the bid ends. If the resolution to approve the proportional takeover bid is passed or deemed to have been passed, the transfer of securities resulting from acceptance of an offer under that bid will be permitted.
If the resolution is rejected, the registration of any transfer of shares resulting from an offer under the proportional takeover bid will be prohibited and the bid deemed to be withdrawn. In the absence of Rule 82 of the Constitution as renewed, a proportional takeover bid for the company may enable effective control of the company to be acquired by a person who has not offered to acquire 100% of the company's shares, and therefore has not offered to pay a control premium that reflects 100% ownership.
As a result, if a proportional takeover bid for the company is made, shareholders may not have the opportunity to dispose of all of their shares, and shareholders risk becoming part of a minority interest in the company or suffering loss following such a change of control if the market price of the company's shares decreases or the company's shares become less attractive and accordingly more difficult to sell. For these reasons, the board considers that shareholders should have the opportunity to vote on a proposed proportional takeover bid. I propose the resolution, and I note that the directors unanimously recommend that shareholders vote in favor of the resolution. Resolution six deals with a number of other proposed amendments to our constitution.
It is proposed that the company's constitution be amended to reflect changes in law, regulation, and market practice since the Constitution was last updated in 2016. The proposed amendments are set out in the appendix to the notice of meeting. There are four changes proposed. Three are minor and technical matters relating to, firstly, updating the number of joint holders that may be registered from three to four to reflect the CHESS replacement scheduled for implementation in April 2023. Secondly, adopting provisions in relation to restricted securities to reflect ASX Listing Rules changes. Third, updating the notices provision in the constitution to facilitate the use of electronic documents for offers to shareholders as the current constitution is ambiguous and may be interpreted as requiring any such offer documents to be sent hard copy by post.
The key change proposed is to allow the company to hold general meetings using virtual meeting technology. This amendment is proposed as it provides flexibility to the company in an uncertain environment. It will enable the board to decide each year whether to hold virtual, hybrid, or in-person meetings, having regard to the best interests of shareholders. Redbubble has historically held AGMs physically in person, and this will remain the board's preferred form of AGM, with virtual capability offered alongside the physical meeting in a hybrid format. However, we believe it is important to have flexibility, as there has for some time been a gradual shift in shareholder preferences to digital and virtual communications. We also have many international shareholders, and we need to take their needs into consideration in AGM planning.
Having the power to hold virtual meetings does not mean we will only hold meetings virtually, and we would, of course, continue to listen to our shareholders' preferences going forward. I propose the resolution to alter the company constitution, and I note that the directors unanimously recommend that shareholders vote in favor of the resolution. We will now take shareholders' questions before formally opening voting on the resolutions. We will first take telephone questions, followed by written questions submitted via the virtual meeting platform. Are there any telephone questions?
Chairman, we have one question from John Whittington. Please go ahead.
Hi. Good afternoon, Madam Chair. My name is John Whittington, and I am a Volunteer Company Monitor for the Australian Shareholders' Association. Madam Chair, congratulations to the whole team on a great performance in difficult times. I would also like to commend the people on the nominations committee for producing one of the better communicated remuneration reports I have read. I have one request and one question regarding the remuneration report.
My request is that for the company to follow the lead of the majority of ASX 200 companies and include a table of actual remuneration in the report. My question is regarding how the number of base equity RSUs or ZPOs to be issued are calculated, as this is not explained in the report. Perhaps you can use an example with the CEO's AUD 400,000 base equity, and outline how many RSUs or ZPOs will be or have been issued and how this will be or was calculated. Thank you.
Thank you for that question, John, and thank you for your kind comments regarding the performance of the company and on our remuneration report. I'll make a couple of comments, and then I might ask Ben Heap, the Chairman of our P&C, to comment on the question you've asked. Firstly, I will say we will continue to strive to make our remuneration report coherent and succinct and provide meaningful information that will help shareholders understand the remuneration practices that we adopt. We'll certainly take on board your suggestion about including a table of actual remuneration paid, and we'll perhaps look at some of those comparables that you've referred to. In regards to the calculation of base equity, I might ask Ben Heap if he could provide that detail.
Thanks, Anne, and thanks, John, for the question. Your comment as well, in terms of putting in a table, is a point well made, and that's something we'll certainly consider for next year. With respect to the calculation of the zero-priced option price, which is the instrument we use for the allocation of base equity. We use a Black-Scholes pricing model for that purpose. We don't disclose the underlying assumptions, but we do use a third-party independent group to confirm those calculations. I can tell you, obviously, that the key drivers for purposes of that calculation is the 30-day VWAP price, which is the volume-weighted average price, for the period up until the issue, so that's for the month of September.
I can tell you if you were to go and calculate that price for yourself, you would find it would be in the order of AUD 4.18, which is the underlying price. The other relevant assumptions which have an impact, go to the risk-free rate and the annual volatility of the stock and then the life of the instrument itself. That comes up with a valuation, which we then divide by, in the case of the example you used, Mike, allocation of AUD 400,000 divided by the Black-Scholes value of that option to determine a specific number of instruments that are issued.
Thank you, Ben. Do we have any further telephone questions?
Chairman, there are no further questions at this time.
Thank you. In that case, we will move to online questions. Are there any online questions on any item of business?
Yes, Chairman. We have a question from Jatin Kumar. What action is Redbubble taking to identify its carbon footprint, and does it have any plans for the future to commit to net zero emissions by including all of the Scope 1, Scope 2, and Scope 3 emissions?
Thank you for that question. I'll take that as a general question on the business of the company. I'll say firstly, our business is designed to have a small environmental footprint as all our products are sold on demand, minimizing unsold stock and waste and unnecessary transportation. No doubt, there are opportunities to create greater efficiencies, minimize returns, reduce waste, and set market-wide environmental standards and objectives relating to the environment.
For instance, local fulfillers help to minimize transport distances. We know there are more things we can do to take action on climate change, such as reducing our own emissions and running our businesses with renewable energy. Over the coming year, we will assess our current state, evaluate areas of improvement, and set specific marketplace standards, goals, and targets to track our progress in the years ahead. You will see more from us on this in the coming year. Thank you. Are there any further questions?
Yes, from Kenneth Sazon at Southeastern Asset Management. The iOS 14.5 upgrade in June, July affected paid acquisition of numerous players. Some industry players have said the rollout of iOS 15 will make it even harder to measure advertising returns. How is Redbubble navigating these changes in the Apple iOS?
Well, thanks for that question, Ken. I note it's fairly detailed and possibly delves into technical and operational matters, which I might pass to our CEO, but I'll start by making a couple of comments. As you have indicated, in the near term, the marketing landscape will probably continue to be unpredictable as we try and navigate these changes. Most recently, we undertook some experiments to test a hypothesis we had around attribution of sales between paid channels, and we are trying to remain agile and responsive to the changes that we are seeing. In the longer term, one of the critical things we've been investing in is our customer data platform. This lays foundations for a deeper understanding and engagement with customers, including targeting, as well as enabling us to gain insight into the lifetime value and acquisition costs of customers acquired through different channels at different times.
Using that platform, both Redbubble and TeePublic are investing to create and structure more first-party data to ensure continuity in our marketing effectiveness as Apple's App Tracking Transparency Program and other privacy changes impact the effectiveness and attribution of marketing on third-party platforms. It is helping us to maintain our marketing effectiveness despite these changes. Did you have anything to add, Mike?
Thanks, Anne. Thanks, Ken, for the question. Anne, I think you've touched on the major issues, is one, around ongoing experimentation. Two, the investment we're making in our customer data platform so that we increase our first-party data, because that's very important. Thirdly, which I would just add, too, is we continue to diversify our marketing channels and then work closely with those various providers. This is an issue that doesn't just affect Redbubble or TeePublic. It affects numerous players. The various ad network providers are also working very hard to help them with their customers, which in this case is us, with these issues. We continue to invest in our own data. We'll continue to experiment, move our metrics, and continue to work closely with the various networks. Just finally, what I would add is also continuing to invest in organic.
Our organic channels are actually our largest channels, so our non-paid channels. We produce more of our revenue from non-paid channels than paid channels. Continuing to invest in our SEO and build those earned channels is another way to help us overcome these challenges.
Great. Thank you, Mike. Turn to the next question.
Yes. Another question from Ken Sazon. What are we doing to improve the delivery experience?
Well, thanks, Ken. We're doing a lot. Improving the delivery experience is an important part of the overall improvements that we are undertaking across the customer journey. We're looking at both physical and digital aspects of the whole experience, and this includes testing a number of shipping and delivery experiments to see what this does for initial conversion, retention, loyalty, and repeat purchase. In conjunction, we're continuing to increase localization of our third-party fulfillment network. At the moment, around 90% of orders are already localized in the same region as the customer. That is, as a customer in the U.S. is most likely to receive an order that has been produced and shipped from a U.S. fulfiller. We are making this even better by increasing localization within a region so that a West Coast customer will be receiving their order from a West Coast fulfiller.
This will reduce shipping costs, will reduce shipping delivery times, as well as reduce emissions. We'll continue down that path. Thank you. Moderator, do we have any further questions?
Yes. A further question from Ken Sazon. Where do we lack the most compared to the global leaders? What is the level of difficulty in improving those areas?
Thanks for that question, Ken. I would say firstly that the Redbubble business has grown to be where it is today with a strong focus on the artist experience, on building our network of third-party fulfillers and supply chain partners, as I've referred to earlier, and making it very easy for customers to transact once they land in the marketplaces. All of these will continue to be important. Going forward, I think I would say the main area for improvement is around the overall customer experience. We see an opportunity to incorporate more e-commerce good practices in how we develop the customer journey and adopt a more loyalty-centric view when it comes to customers. This will require, amongst other things, investments in our teams, adding capabilities and skills from e-commerce, from traditional retail, from merchandising, and other customer-focused backgrounds.
I would say the work in this area is not difficult, but it requires persistence, and certainly every aspect of the customer journey needs to be regularly monitored and continuously improved, and that will add to repeat purchase rate. I think there's no single answer or silver bullet in this area. We see it as an iterative process, and we will continue to focus on that over the coming years. Thank you. Next question, please.
The final question from Ken Sazon. How confident are you in profitably increasing customer loyalty?
Well, that's a big question, Ken. Thank you for that one. We know from looking at other e-commerce and marketplace peers that increasing customer loyalty is a significant area of opportunity in driving sustainable and longer-term growth and doing so profitably. Historically, I could say that all of our marketing initiatives have been focused on a first transaction profitability basis, which has served us well because we know it's profitable and it's very efficient. However, what it doesn't allow us to do is open the funnel a bit more for particular customers and on particular channels. This is where we are focusing a number of our retention experiments in combination with insights from our customer data platform that I mentioned earlier.
The more we can measure and, say, gain an insight that customers with these particular attributes from this particular channel have a much higher average annual order rate or order value, then we can put more marketing dollars in to acquire and retain those particular type of customers from those particular channels. We can start to move beyond first transaction profitability. This kind of investment will also include building up our brand awareness investment via different campaigns in different channels. Of course, we will make these type of investments in a disciplined manner. As we've already discussed with the market, we are undertaking a rolling series of experiments, and we're really only going to invest for the longer term where we know that the average order value is going to increase and that retargeting and remarketing dollars are going to generate profitable returns.
Beyond that, as we see more positive signals on repeat rates and average annual order value, eventually we'd also like to see the annual order value increase to become a lifetime value measure with corresponding customer acquisition cost measures. That's down the track a little. Thank you. We'll move to the next question.
The next question is from Tim Jack at EIP. You have been implicitly stating over the last few months that having a small team with limited resources and hiring being difficult, were key constraints after improvements to achieve a basis that can sustainably scale marketing spend. Why are we not investing more in fostering people and systems nonetheless, if we have a large cash pile sitting around? Why does maintaining profitability goals make any sense given we are all waiting patiently to get to the point of the scale that we successfully spend cash on an LTV logic? Doesn't the current pace imply unnecessary risk of being overtaken by someone else?
Thanks for that question, Tim. There's quite a bit bound up in that one as well. I'll make a few comments. I think firstly, I would say that the business has only recently entered a period of profitability, and we've only more recently reached a point where our cash balance significantly exceeds expected short-term operational needs. I'd also say that given the uncertainty of what would happen to demand during 2020 with COVID and post-COVID, coupled with a new CEO and significant change in our executive team, we think a degree of prudence in investment in the very short term has been appropriate. I will say that we do have aggressive hiring plans. Our current people budget has not been reached. Hiring has been going well, but attrition has been slightly higher than hoped, as it has been for many companies.
Even if we wanted to hire more right now, that may not perhaps be possible. We're going as fast as we can. In answer to some of the earlier questions, we've talked about increasing the marketing investment, and again, this needs to be a wise spend. Our cash balance has been hard-earned, and it could easily be squandered. We want to know that we've got the strategy, the team, the operational capabilities in place before we invest, so that when we do invest, we invest well for the medium to long term. I guess in short, what I'm saying is we're going as fast as we can in investing for the medium to long term. We're of the view that throwing money at issues will not necessarily solve them faster, and we're continuing to assess the pace of investment and the competitive environment. I'll stop there.
Do we have any further questions?
A question from shareholder Jeffrey Poon. With a growing artist base and increasing work from Redbubble, how are you enabling customers to more easily find relevant work? Often I go on Redbubble and put in a search term of interest. There are hundreds of pages, and it can become overwhelming to find something truly intriguing.
Thanks for that question, Jeffrey. You've touched on one of our great assets, which is the very substantial content library that we have at Redbubble, but also one of our greatest operational challenges, which is helping customers and users of the platforms discover the unique piece of art that will speak to them. That's an ongoing challenge. I'm going across to Mike to see if he's got anything to add in relation to some of the technical steps we're taking to improve discovery. I will say we have a team of data scientists within Redbubble, and we continue to work hard on this challenge. Mike?
Yeah. Thanks, Anne. I think you summed it up that search and discovery is absolutely critical. It does go to, as you said, the core asset of the business, but also a core challenge. What we're doing operationally is continue to invest and build our search and recommendations team. Some of the hirings that we talked about doing will be going into continuing to build that search and recommendations team, as well as continuing to improve our content graph. The way that the data scientists behind the scenes are connecting and understanding content, and also improving the artist experience to enable them to better tag in the data that they put against their artwork, so that we can better identify what it actually is.
That's a combination of having artists tag correctly, and then how we can use data science and AI and machine learning to correctly identify that ambiguous terms or ambiguous pieces of art are better connected to users as they're searching for it. It is a core area. It's a challenge, but it's something that we will absolutely continue to invest in and improve.
Thanks, Mike. Do we have any further questions?
Yes, Chairman. The first of three questions from shareholder Austin Ross. Do you think that the market will have two to three major platforms, for example, Etsy and a few others? What is stopping Etsy from becoming the winner-takes-all in the field?
Thanks, Austin. Sorry, I didn't catch. I think that was the name of the shareholder who asked that question. What we've seen and what I think we are going to continue to see is consolidation. Whether that means there will be two or three or five major platforms, I don't know. Certainly, we believe we will see continued consolidation. You've mentioned Etsy, we look to Etsy as a company. We look carefully at the growth trajectory that Etsy has had and how they've achieved the success that they have. We see that Redbubble certainly is a few years behind Etsy in its growth. There is no reason why Redbubble cannot continue to grow and achieve the kind of scale that we've seen with Etsy.
We think we're well-positioned, that we've built, as we've already spoken about at this meeting, we've built a phenomenal library of content. We've built a fabulous group of artists that continue to upload works to our platform at an increasing rate. We've built a really strong and highly flexible network of fulfillers, as well as users of our platform. We are a three-legged marketplace, unlike Etsy and unlike most other marketplaces. We see the Redbubble business model as slightly unique. We would hope that we are able to become one of the two or three or five, however many it turns out to be, major marketplaces in the future. Next question, please.
From Austin Ross. Just wondering if you view Amazon as a direct competitor now and moving forward. Mr. Ilczynski, I know you worked at McKinsey and then worked at SEEK. Everyone thought SEEK would be killed by Google, and then Indeed, but they never did. Do you think about this, and how will Redbubble win? Thanks.
Thanks for that question. I'll ask Mike to comment in a minute. Do we see Amazon as a direct competitor? We'd be crazy not to pay attention to what Amazon is doing. We see, as I said in the answer to your earlier question, we see the Redbubble business model as being unique. We have content and variety and are able to offer unique products that is very difficult for companies, even companies of the size and scale of Amazon, to provide. I might ask Mike if he'd like to comment on the competitive environment or any of the other parts of that question.
Yes. Thanks, Anne. Yeah, I do have a history of pretty much every third year being told that there was some large global player that was going to kill our little business from Australia. I think that the reason, which is very relevant to Redbubble, why that didn't happen is the very, very strong focus on what are the genuine, defensible, and differentiated core assets that the business has within its marketplace. That's why I think that we as a business feel so confident around Redbubble, is that the business, not only is it a marketplace business, but it has a core defensible asset that is very difficult for another company to replicate in a short or medium-term, regardless of their money or their resources, in terms of the artist space and the content library that those artists bring to the marketplace.
In terms of Amazon, of course, Amazon are a competitor. They're competing to sell products to end consumers, which is the service we provide for our artists. At the same time, though, Amazon has been a direct competitor to Redbubble for a number of years. They entered with Merch by Amazon, I think, five or six years ago. Despite Amazon entering five or six years ago, despite the growth of Etsy during that time, and despite the growth of other players, you've seen Redbubble and TeePublic continue to grow strongly as well. To me, that says there is something differentiated, unique, defensible around the Redbubble/TeePublic marketplaces. Otherwise, they wouldn't have grown within that strong competitive environment. That doesn't mean that success is guaranteed. Absolutely not. One of the things that I have learned from previous lives, you have to remain extremely humble.
You have to look and treat your potential competitors with the utmost respect, but you also need to be confident around your own assets and ability and be willing to invest for the long term. These players, like most companies that are based out of Australia, are generally competing against companies with much deeper pockets, and therefore we must be prepared to invest and build the best possible business for the medium to long term. I think, both myself, the management team, and the board have all been involved with businesses that have made tough, brave, courageous choices to invest to build the best possible businesses, and that's what we'll continue to do.
Great. Thank you, Mike. I just might now go back to Ben Heap to clarify one aspect of the answer he gave earlier on the calculation of base equity. Ben?
Thanks, Anne, and John, this is just clarifying. I provided an explanation for you which related to our long-term incentive. In fact, I believe your question related specifically to what we call the base equity, where we use a zero-priced option. That's a much simpler calculation. I shared earlier that is based on the 30-day VWAP for the month of September, that if you were to calculate that VWAP for Redbubble, that would be in the order of AUD 4.18. You would simply divide that by the dollar allocation to determine the number of shares issued to Michael and two other members of the senior executive team.
Thanks. Thanks for that clarification, Ben. Okay. Could we move to the next question, please?
Third question from shareholder Austin Ross. You expect new product categories to continue to drive improved CLV, CAC. Can you expand upon what the categories might be and the possibility of improved acquisition and CLV?
Thank you for that question. Physical product is a key part of our platform. Obviously, our customers buy physical products, and we will continue to expand the categories of products that we offer. We plan very broadly, and I don't really want to go into what we have planned ahead, but 1 hint is that apparently pet ownership has increased dramatically during COVID lockdown, and there perhaps may be some categories of products that would appeal to the pet owner. In terms of the part of your question, I think you're asking, how do we plan and know that new product categories will increase profits?
We plan carefully, and we do our best to ensure that we are launching products that are going to appeal to customers and drive improved loyalty from existing customers and bring new customers to the platform. We track performance of those products and ensure that the benefits we expect to see are realized. Thank you. Do we have any further questions?
Yes. A question from Shareholder [Peter Citybon]. I tried to buy a pair of socks, and the shipping cost was greater than the unit cost or very close. Similarly for a hat. In my opinion, this looks really bad. What processes do you have in place to avoid customer experiences like this?
Thanks for that question, Peter. I assume you ordered your socks and hats from Australia. I would point out that although we've launched those products, we haven't yet localized production to Australia. Your socks and your hat probably came from the West Coast of the U.S. I should note that Australia is less than 6% of our sales. It's not typically the first geography to which we localize production of new products. We are working on localizing production. I think that hopefully we will see a much faster delivery date on those products in Australia in future. Mike, am I right?
Yeah, that's correct. Both hats and socks are actually difficult products for fulfillers. The hats in particular were a custom product. We had to work closely with one of the network fulfillers to actually design a hat that would work on a print-on-demand work, both from a functional perspective and then also from an economic perspective. We will be localizing those products over time. Obviously, where we start with the product is in our largest markets, which is to start in the U.S., then to expand localization into the U.S., then into Europe and the U.K. Unfortunately, it does mean that Australia, as the smaller market and with a smaller fulfillment network, does come later. I'm sorry around the shipping cost, but that's the explanation for that.
To the previous question around CLV, CAC is not to overinvest in any new product in case the demand just isn't there. We don't carry inventory, so we need the fulfillment network really to come with us when we launch new products, as they're the ones actually making the investment in the technology and the investment in inventory. So it's important that we can prove scale, and we can prove demand for them as well as they're making their investments.
Thank you, Mike. Do we have any further questions?
There are no further questions, Chairman.
Okay. Well, thank you, shareholders, for all of those questions. That concludes the questions from shareholders. We're now going to move to the conclusion of the meeting. The remaining item of business is the voting on the resolutions. Firstly, resolution one, the adoption of the FY 2021 remuneration report. I move that the remuneration report for the period ended 30 June 2021 be adopted by passing an ordinary advisory resolution as set out in the notice of meeting. The resolution and proxy votes cast on this resolution are now shown on the slide. If shareholders have not yet voted on this item, please now select either for, against, or abstain for resolution one on your voting card. On to resolution two for Jenny Macdonald's re-election as a director of the company.
I now move that resolution two, which is proposed as an ordinary resolution as set out in the notice of meeting, be put to the meeting. The resolution and proxy votes cast on this resolution are now shown on the slide. If shareholders have not yet voted, please do so now. On to resolution three, which is for Martin's re-election as a director of the company. I now move that resolution three, which is proposed as an ordinary resolution as set out in the notice of meeting, be put to the meeting. The resolution and proxy votes cast on this resolution are shown on the slide now. If shareholders have not yet voted on this resolution, please do so now. Now on to resolution four for Greg's re-election as a director of the company.
I now move that resolution four, which is proposed as an ordinary resolution as set out in the notice of meeting, be put to the meeting. The proxy votes cast on this resolution are shown on the slide. If shareholders have not voted, please do so now. On to resolution five, which is the renewal of proportional takeover provisions. I now move that resolution five, which is proposed as a special resolution as set out in the notice of meeting, be put to the meeting. The resolution and proxy votes cast on this resolution are shown on the slide. If shareholders have not yet voted, please do so now. On to resolution six, which is the alteration of our constitution. I now move that resolution six be put to the meeting. The resolution and proxy votes cast on this resolution are shown on the slide.
If shareholders have not yet voted, please do so now. Well, thank you, ladies and gentlemen. That concludes the business of the meeting. As I mentioned earlier, shareholders can submit their votes on resolutions online up until five minutes after the meeting closes. The results of the polls will be announced to the ASX later today. I want to thank you all for your attendance and participation in this meeting. On behalf of the board, I would like to thank you for your ongoing support, and I now declare the Redbubble AGM for 2021 closed. Thank you.