Thank you for standing by, and welcome to the Redbubble FY 'twenty one H1 Results Announcement. All participants are in a listen only mode. There'll be a presentation followed by a question and answer session. I would now like to hand the conference over to Mr. Paul Gordon, company secretary.
Please go ahead.
Good morning, everyone, here in Australia, and good afternoon for our U. S. Investors. This is Paul Gordon, Company Secretary for Redbubble. Welcome to this investor call following the release of Redbubble's FY twenty twenty one half year results and reports earlier today.
With me on the line, I have Redbubble CEO, Michael Ulchinsky and CFO, Emma Clark. As well as the half year results and reports, the key information for today's update is contained in the ASX announcements and investor presentation also released to the market this morning. Please note that unless stated otherwise, the financial results are in the review. The accompanying strategic and operational metrics are from internal management reports and have not been subject to audit review. Mike and Emma will now speak, and then we will open the floor for questions.
Please note that this session is being recorded. Now 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. Now I will pass on
to Mike. Thank you, Paul, and hello, everybody. My name is Michael Luchinski, and I am tremendously excited to be speaking with you today as Redbubble's CEO. I, too, would like to extend a warm welcome to all of you who have joined us. I would like to thank all of those shareholders that have already reached out to me in a number of ways.
I'm sorry that I haven't really been able to respond, until now. And importantly, I'd like to express my, thanks to the board for giving me this opportunity. Twenty twenty was a unique, and tragic year for many across the globe and our thoughts with all of those who have been impacted over this past year. It brought with it a tremendous shift to online activities, of which Redbubble was a clear beneficiary. This has resulted in a record half for the company, and this set of results showcase the strength and economics of the business when
it is able to operate at this level of scale.
At the group level, Redbubble delivered 353,000,000 of marketplace revenue in the half, up 96% year on year and up 105% on a constant currency basis. This growth at the top line translated into strong financial results further down the p and l, with gross profit after paid acquisition of $100,000,000 up 116% year on year and EBIT profit of $42,000,000 compared to negative $1,900,000 in the first half of twenty. We also had a closing cash balance of $130,000,000 at thirty one December, and Emma will go into more details of the financials in a few minutes. Slide three. We believe that the investment thesis for Redbubble is clear.
The events of last year brought about a marked acceleration in ecommerce activity. The structural shift to online has been underway for many years, and we believe that much of the spike during 2020 will prove to be an enduring part of the retail landscape over time. We also believe the trend of consumers designing products that are personalized and unique as well as the focus on environmental sustainability will continue to grow in importance, with Redbubble being an ongoing beneficiary of each of these structural trends. We are on our way to realizing our ambition of creating the world's largest marketplace for independent artists, with rapid scaling enabled by a combination of artist or user generated content combined with make on demand technology. We're in the fortunate position to be the owner of two industry leading marketplaces in redbubble.com and teapublic.com.
Marketplaces are hard to build, and they are even harder to replicate, especially when they are three sided like ours. As the marketplace of flywheel effects start to strengthen, the value and opportunity inherent in these sorts of marketplaces start to become clearer, and I believe that this is the place that we are in now. The businesses have been building this virtuous cycle for some years now, and its power to generate scale economies and financial outcomes has been demonstrated in this latest set of results. The business has also shown that our model is scalable, diversified, and resilient. The benefits of the third party fulfillment network was demonstrated last year with continuity of operations and supply maintained throughout even in the face of surging demand and record volumes.
The flexibility of this third party network also enabled Redbubble to add new product categories, localized production, and manage shipping delays that many companies experienced due to this COVID surge COVID surge during this time. And the scalability of the make on demand network meant that this demand was able to be met efficiently and profitably. This means that Redbubble is positioned to really invest for the next phase of growth. We have confidence in the business model, confidence in the opportunity in front of us, and confidence that continue continuing to invest into all aspects of the marketplace will generate strong growth over the medium to long form long term. Moving to slide four, the importance of the flywheel to our business can't be overstated.
The strong results of the half were only possible because of the strength of all three elements of the marketplace. For those of you unfamiliar with why this is so important, the flywheel creates a virtual cycle across the elements. As more artists enter the marketplace, they provide more content, attracting more customers. More customers create more order volume, and more order volume enables a bigger and better fulfillment network. This in turn bring back more customers, and with more customers, more artists join, and so it goes, creating a reinforcing growth cycle.
And in the first half of this financial year, this reached really significant scale. In the half, there was approximately 572,000 selling artists. Those selling artists attracted 6,200,000 customers. Those customers bought $442,000,000 of products in gross transaction value, and these products were created at 41 fulfillment locations all over the world. Over the next few slides, we'll talk further to each of these in a little more detail.
Slide five. In the first half, approximately 572,000 artists received 65,000,000 for their sales across our marketplaces. As an organization, we are really proud to have been able to help facilitate this level of sales for artists across the globe in a time when this income was really important for many individuals. Growth in selling artists has closely tracked the trajectory of other aspects of the marketplace, and this growing cohort of selling artists is both an asset and a defensive moat for the business. Slide six.
20 20 saw millions of new customers shop online, and we believe many of them will continue to shop this way. Redbubble recorded 6,200,000 unique customers in the first half of twenty one, representing customer growth of 69% versus the previous corresponding period. Moving to slide seven. During this period, repeat purchases grew 98% year on year, which was in line with the overall growth rate. The split of revenue from new versus repeat customers has remained at approximately sixty forty, with loyalty remaining an area of significant opportunity for the business moving forward.
Personally, I've been a customer of Redbubble for a number of years and understand the special nature of our offering and the joy that giving or receiving or purchasing our products can bring. We have a unique opportunity to make the most of the momentum that 2020 gave us and focus on building loyal customers and a global brand. Slide eight. Our mobile apps are an important part of this long term strategy. As such, it was pleasing to see marketplace revenue on our apps grow 163% year on year in the first half, outpacing the already overall strong growth.
14% of Redbubble's marketplace sales are now coming via the iOS or Android apps, and we believe this will be a key part of helping to attract and retain loyal users over the medium to long term. I'll now hand over to Redbubble Group CFO, Emma Clark. Emma?
Thanks, Mike, and hello, everyone. Redbubble's exposure to major and western markets is a key strength of the business, and growth continued across all of the core geographies. North America remains our largest contributor to sales, making up 69% of the total and grew 89% in the first half. The UK was a standout during the first half, growing 105 year on year, and we also saw continued strength in the ANZ and EU markets. Our current key markets have a combined population of almost 1,000,000,000 consumers, so there's plenty of future growth available.
The marketplace has also hosted diverse range of physical product offerings. With 117 products across six major product categories, reliance on any given product is diminished. Face masks were unsurprisingly a highlight during the half, boosting accessories growth to 358% year on year. Their contribution began to moderate prior to the holiday season and was 7% of total sales for the second quarter. During holidays, customers shifted towards categories that are more amenable to gifting, with extremely large percentage growth, albeit off a small base for products like jigsaw puzzles and socks.
Both artwork and home decor continue to grow in of 100% year on year, and encouragingly, T shirts also saw a boost during the holidays. Redbubble has seen a continuation of record results with almost all key revenue metrics doubling from the prior corresponding period for the half. Before I delve into them, please note that unless otherwise stated, the numbers discussed below are on a delivered basis as per our statutory reporting requirements. Firstly, I will comment specifically on the first half results. As Mike has already mentioned, the business delivered $353,000,000 of marketplace revenue and growth rates of 96% in the first half of this financial year.
Customer demand was sustained through the peak holiday season even as offline retail started to reemerge from COVID impacted trading. This revenue flowed through to $144,000,000 in gross profit. The business achieved a 118% growth in gross profit, and margins improved from 36.7% in the first half of last year to 40.8% in this half. Paid acquisition costs were 12.5% of Marketplace revenue for the half, and we delivered GPupper of £100,000,000 at an improved margin of 28.3% compared to 25.7% in the first half of last financial year. Operating expenses were also managed prudently through the first half and grew at a significantly slower rate than GPapa, even as the business continued to rapidly scale.
We have also shown the second quarter results on this page, and I'd like to make the following comments specific to business performance during the most recent quarter. Revenue growth for the quarter was pleasingly strong at 84%. As most of you are aware, Amazon ran their annual Prime Day promotion in October, and we took advantage of this timing, as did most retailers, to kick off our holiday sales season earlier. Customer sales remained strong during November and December. However, COVID related disruptions meant that global shipping conditions were challenging, particularly in December.
This affected many in the ecommerce space, and we too saw an impact as a much higher proportion of our customers selected express rather than standard shipping. This behavior resulted in lower margins for the month of December, and this, along with the reducing proportion of mass sales, is the reason that quarter two margins are lower than in the first quarter. As we flagged in our last quarterly update, we increased paid acquisition during the holiday season to capture additional customers whilst ensuring that we kept an eye on overall GPAPA margins to protect profitability. Operating expenses increased by 19% for the quarter, and the entirety of this increase was driven by the higher sales volumes. Foreign exchange headwinds have started to materially emerge, and thus the strengthening Australian dollar resulted in $2,200,000 of currency losses in the second quarter, which are captured within the other expenses line.
Overall, we are proud to have achieved our largest first half EBIT profit of $42,000,000 The business model is able to scale rapidly and efficiently, and these advantages are clearly seen in both Redbubble's financial profitability and increasing cash balance. Looking forward, the second half has also started well with marketplace revenue paid growth rates of 66%, which is 82% on a constant currency basis for the month of January. I'll now hand back to Mike to close.
Thanks, Emma. To conclude, 2020 demonstrated the potential of the Redbubble and key public marketplaces. Twenty twenty one presents the chance to build on this and to go after the global opportunity that clearly exists for the group. To do this, we will continue to focus on the four key themes Martin and Emma outlined last year. We believe a continued and consistent focus on investing in improving the core aspects of the marketplace is the optimal path for the business right now and the best way to generate long term shareholder value.
As such, we will continue to focus on artist activation and retention at a group level, user acquisition and transaction optimization, customer understanding, increasing our customer loyalty and building our brand, and adding new physical products and expanding the fulfillment network. With that, we will now open the lines for questions.
Thank you. If you wish to ask a question, please press 1 on your telephone and wait for your name to be announced. Your first question comes from Tim Piper from RBC. Please go ahead.
Good morning, team. Well done on the update. And Michael, great to have you leading the team at Redbubble. Just a general one to start with on the competitive position. Just you've given your background, Michael, business with the market leading position in its geography, sort of how do you view Redbubble's competitive position in The US?
You flagged that flywheel effect of growing artists and customers, and that's driving strong growth. But is there sort of a level of scale you say the business needing to sort of drive greater repeat customer share? And, also, is there a level of scale where some defensiveness in the in the business model can come through from a competitive point of view?
Thanks, Kim. Really appreciate the comments and the kind of questions. The the competitive positioning is a is an interesting one. In some ways, Redbubble is is somewhat unique in our three sided marketplace. In other ways, the business is exposed and competing against, you know, some of the biggest and and most sophisticated, retailers in the world if we look more on a product basis as opposed to a make on demand out of services marketplace.
So the competitive positioning for the business is one of the interesting in one is one of the interesting questions. I think that what what the business experienced in the half, as we talked about, is that that level of scale started to be really demonstrated, that there are very positive, economics and feedback loops when the business can operate at the scale at the scale that it that it did. I think rightly, though, you you highlighted that one of the big, opportunities still in front of the business is to is to really focus on moving these customers that have come to Redbubble for the first time into loyal customers that repeat. And then as customers repeat, to turn them into customers that that purchase, invest into numerous aspects of business. That's both the digital experience and also the physical the physical product experience.
And, obviously, the more scale that we have, the more that we can invest into those aspects. More scale allows us to add more fulfillers. More scale gives us more more leeway at both the OpEx and a margin and a margin perspective for those for those investments. So for us, you know, the focus is on investment, and then on and then on top line growth, because we can see, the the impact that that has on the economics as we start to grow.
Thanks. You started touching on on my second question there around investing for growth. In your opinion, sort of what are the priorities for the business in terms of investment, across things like platform, marketing, etcetera? And how do you sort of view the incremental value that investment will create? How do you sort of measure that?
Is it purely on a sort of a gross profit type return, or, how do you measure that?
Look. Measuring measuring know, an excellent question. Over the, you know, over the medium to to long term, you know, the metrics that we first know, that we'd wanna see is is obviously revenue growth and then margin growth and then bottom line growth in, you know, in the in that in that order. In terms of the investment, though, there, you know, there are investments that are required into what I'd call the foundations of the business, whether that's on-site in terms of making sure that the outside is scalable, that we continually invest in as we've highlighted, you know, in our user acquisition, in our transaction optimization, as we invest in, in in our customer understanding, there's work into into our marketing platform, into our data into our data capabilities to make sure that we're capturing and understanding capturing data and understanding our customers. And then, you know, additionally, you know, the work into the new physical products, there's investment required to launch and improve, you know, different physical products.
So customers and across our physical and across the physical product, all of those areas, are are opportunities for investment that we believe will pay off over over time.
Thanks. Just one just one final one for me, maybe for Emma. Just on on the cash flow was very strong, and I you get a seasonal, strength in the in the second quarter there. What do you think the second half kinda looks like from a cash flow perspective? Typically, it's been negative, but you're kind of now firmly in positive EBITDA territory.
Are you expecting an operating cash outflow in the second half?
Yes. Look, obviously, I'm not going to comment specifically on on, you know, give future guidance on that. But you you're right, Tim, in the sense that we we we look a lot like a traditional retailer in terms of the profile of our business over a year. So you would expect to obviously see the largest inflows during that second quarter, and, obviously, there will be net outflows as always in the third quarter as we settle all of the invoices that we effectively got billed for in the second quarter. So, January is always the month that a lot of cash sort of goes out the door, and that's just part of our normal operating, rhythm.
In terms of, you know, moving forward, as you self point out, we're we're operating at significantly larger scale now. So I think, you know, the dynamics of, you know, comparing year on year cash flows are still gonna be favorable. That being said, I I would definitely still reemphasize that there's that there is that retail pattern. So, obviously, the the sales will will come off, seasonally as they as they always do, and so, therefore, that will also have an impact on how much cash we can generate in any given quarter.
Thanks. I'll I'll leave it there. Michael, welcome again, to the group. Thanks. Bye.
Thank you. Your next question comes from Anthony Porto from Morgan Financial. Please go ahead.
Hi, guys. I hope you can hear me. Welcome welcome, Michael. Look, just I know you mentioned some of the issues that, quarter, but 500 basis points down on kind of the first quarter. Is that I mean, how much of that you know, you generally see that at 200 basis point differential.
How much of the other 300 was made up of those two specific, areas versus kind of needing to discount a bit heavier?
Yeah. I think I'll get that one to to Emma. Yeah.
Yes. It's a good question, Anthony. So this is why I called out the specific trends that were at play. So the reason that the margin fell more than it has historically from a seasonal perspective was really that dynamic in December where we saw a lot more people move to express shipping. Redbubble makes little to no margin on express shipping because the cost of the service is so high, and we thought double the amount of customers, swap that shipping option than what we would see in a normal year.
Obviously, because of the broader COVID issues impacting the global supply chain, I think we all got emails saying, you know, shop earlier. We've been the main driver of the of the decline. As I've said, and I think this is now, like, my sixth call, you know, we we consistently want the business to be operating at margins that that are around 40%, and there's nothing in the make me change that view in terms of what the what the BAU margin should actually be.
Yeah. Okay. And I guess, I mean, you have mentioned, you know, increasing repeat usage, etcetera, is a is a key driver. I mean, can we can we get a little bit more tangible, you know, what's gonna what's gonna propel that? And how far behind do you think you guys are there?
Think that the other one I'm not gonna do to other companies. I think, however, that that there is there is opportunities all the way along the the customer experience to to improve to improve the experience, and that will help generate. Since that strategy was announced, there's been a team, you know, pretty focused on on that work and what those different, loyalty waivers might be, whether that's on-site as you talk, you know, about search and discovery, whether that's about ongoing recommendations to customers, you know, when they're on an off platform right through and not forgetting the actual physical experience that someone has with our products, with the products that we help our artists sell. So when a customer receives a a product by an artist on Redbubble, we want them to be surprised and delighted not just by the dot the design, but also by the quality, of that of that product. And and that's that's where that's where there's opportunities all the way all the way along.
So whether it's the on-site experience, whether it's a physical product, whether it's the unboxing and delivery experience. I'm sorry that I'm not giving you specifics, and and that's because we do believe that there are opportunities all the way along the all the way along the experience to continue to invest in the platform, invest in the marketplace, and and improve it. And each one of those, we believe, will go to, driving loyalty. There's not there's what there isn't is there definitely isn't one silver bullet. It's just a whole lot of a whole lot of hard work, and we think there's plenty of opportunity, and this is going to be an ongoing focus for us or not not just, you know, six or twelve months.
This will be an ongoing focus for, you know, a significant period of time.
Yeah. I was gonna ask then dovetailing that into, you know, I I guess, some of Tim's questions there. How do you how do you think about that investment you're gonna make into, you know, the need to cycle the start of the pandemic and and the the uplift you got there? And, I mean, obviously, hundred you know, 90 to a % growth rate. So how do you think about phasing that investment over the next period, or you're not too worried about kind of short term results?
Look. There's a we're we're well, I think what you've seen, you know, well with the business is the business has been pretty pretty prudent in the OpEx over the last six months. That was really clear in the in the results that we've that we've demonstrated. We're, of course, gonna be cognizant of the macro of the macro environment, and at the same time, though, we wanna invest to build a great business over the medium to long term. So so, you know, yes, there's an opportunity given the given the, financial position of the business, particularly the cash position to, you know, very strategically, but very carefully, do some investments in in in OpEx.
But we're not going to, you know, by any means, you know, blow blow it out of the water. But there are where where we think there are clear opportunities, to do some target investments, whether that's into, in particularly focused on internal capabilities, we will do so. But it's not good. It's not gonna be, you know, crazy massive step ups. I'm not gonna talk to exact exact amounts.
But I think what I think what what's on us is to demonstrate those investments are, you know, are are worthwhile and the right things to build the business over the medium to long term.
Great. Thanks for that, Michael. Look forward to catching up in person.
Thank you.
Thank you. Your next question comes from Ash Chandra from Goldman Sachs.
Just a couple for me. The paid acquisition costs in that second quarter stepped up quite a bit. Is there anything here on timing of these costs that relate to revenues that you'll only be booking after thirty one December? I think you've had these timing issues in the past where you haven't been able to get the product delivered. So I'm just wondering if I could ask you, one, is the timing mismatch and two, the underlying trend in paid acquisition costs ticking up.
Is that being anything that you think is now a sustainably high cost of acquisition because of increasing competition across ecommerce?
Yeah. I'll give that to, to Emma. Thanks, Ash.
Hey, Ash. Good questions. So in terms of, you know, the the the overhang in revenue, and you can see this for those of you who like to, you know, look through our financials in our four d, we still have a substantial amount on the balance sheet for unrecognized revenue In total, it's not all delivery date adjustment, but the majority of it is, and it's almost $20,000,000 sitting on the balance sheet. So, obviously, that's unrecognized at this point in time. Obviously, as we've discussed previously, if the business keeps ongoing, that remains unrecognized, but it but it is there.
There was nothing specific in terms of the the delivery date adjustments on the December, you know, month end that were were unusual. So there's there's really nothing nothing there that would be materially affecting the result. The step up in costs across the quarter was actually quite deliberate, Ash. There was really good customer demand out there, and it was profitable. And so, you know, we we still maintain first transaction profitability.
As I said before, we made sure we were keeping an eye on our GPAP and margins. We had room to go and obtain those extra customers, and so that's what we did. So that was a conscious choice rather than than than, you know, external market dynamics coming and making us spend that extra money, if that makes sense. So in terms of, you know, as we as we look forward, does that mean that structurally, you know, we would have to spend 14.1¢ in the dollar moving forward? Absolutely not.
We still stick within our overall range of, you know, 10 to 12. There is, as we said earlier on in our presentation, certainly, some of the offline presentation, certainly, some of the offline, retail is reemerging, from from COVID induced lockdown. So we are seeing more competition on the paid marketing front, but nothing that once again would would make us think that our long term trajectory in terms of of what we pay on paid acquisition is going to materially change.
Okay. Got it. Understood. And in terms, Michael, I don't know how, if you will answer this, but I'll ask it anyway. Know, not too long ago, Redbubble used to talk about, you know, 20%, thirty % sustainable revenue growth year on year.
Just given the global scale of the platform that you've got and the and the breadth and depth of the product portfolio being significantly better today than it it was at the time these were targets. Just in broad terms, do you see those sorts of levels of growth beyond this sort of COVID tailwind as as as still achievable? Do you have any view on on this?
Oh, thank you. Yeah. Thanks. I understand the question and and and, you know, understand you're asking it. To be honest, you know, two things is one, you know, it's way too early in my time to be commenting, on those sort of specifics.
And secondly, to be honest, there is significant macro uncertainty, you know, that we've had this huge surge, you know, really, it's often clearly driven significantly by COVID. We're now going to enter into a really interesting phase as some economies start to open up and some of that pent up demand for services reemerges. And so how that balances out and impacts, short term consumer demand for outsourced products is going to be really interesting to see, and whether there's a bounce back or or where it lands is really interesting. So the next six to twelve months could actually be quite volatile from a consumer demand perspective, and and, you know, the reality is, you know, nobody knows where that where that lands. So, you know, our view is is, you know, we're gonna focus on on ourselves in terms of investing into our into our platform, and we're gonna focus on the on on on the customer and improving that improving that experience.
I do think that, you know, 2020 was so unique. Twenty twenty one will have some very interesting and probably counter dynamics that landing where that then lands up on a on a steady state basis through that is is something that we, you know, we need to work through. And then what that then means for future growth rates is gonna take us some time before I think we can give projections like that. Fair enough. And if I
could just sneak in one last question. Again, it's sort of a a twist on the repeat usage question that you you've been getting. Obviously, you've you've indicated that this requires a a broad range of areas to invest in. Could I just perhaps ask over what sort of time frame though would you expect that, you know, you and we might be able to see an improvement? Like, is this a, you know, three to six month process?
Is it twelve to twenty four months? Yeah. What what would you be hopeful would be visible in what time frame?
Look. Look. It's a it's a it's a, you
know, very fair very fair question, Ash. Again, though, I don't I don't wanna give specifics because I'll be, know, depending to watching a particular metric, you know, go go up and down at the next at the next results, which, you know, which we're not ready, you know, which we're not ready to do. There's a you know, with all the with all businesses like ours that have, you know, digital and physical marketplaces, the combination between investing in the underlying foundations, which don't have immediate business impact that set you up for long term and, you know, medium and long term growth. You need to balance those internal investments in the foundations with specific business impacting initiatives that do hit in more like a three to six month period.
For a business like ours,
as Emma said, we do look a fair bit like a a a traditional retail where, you know, a a large a large percentage of the sales and profit is made in the, you know, back half of the calendar year. So a lot of the work we'll be doing this year will be to will be to focus on impacting into that into that holiday season, But we're trying to balance the short term business impact with really investing now into the foundations because we've got confidence of what the three, five, seven year opportunity looks to this business. Know? And that's one of the challenges that we have as management is, you know, getting that balance right between things that will impact for the coming holiday season and things that really build on the foundation that gives the platform to build on over the next three, four, five years.
Terrific. Thank you kindly. Thanks, Michael.
Thank you. Your next question comes from Owen Humphries from Canaccord. Please go ahead.
Thanks for taking my question, and welcome to Redbubble, Michael. I might just start with, obviously, a couple of questions coming to me from your investors. I might just ask them directly. Just around the margin profile and what in the second half, can you maybe just provide a bit of understanding of the market just that has stepped down in that last quarter and what you're expecting for the next six months around the gross profit and GPAP margins?
I think Emma can speak to that.
Yes. So I think, Owen, it comes back to the question that I answered previously from Anthony on the same topic, which is there were things on the margin that were quite specific to the quarter. And as I've disclosed in previous quarters, masks themselves also have a higher margin than a lot of our other products. So as they decline as a proportion of the mix, they're the two things that were impacting margin for the quarter. You know, Musk, you need to separately make a call on what what you think is gonna happen with that product over the next six months and the impact on margins.
The the express shipping thing was definitely a holiday thing that is is not part of, you know, the the remaining three quarters of the year in terms of behavior.
Okay. No worries. And just to understand, just around the unit economics and sales and marketing, can you just remind me, Emma, what's the percentage of your revenue derived from, call it, paid versus unpaid?
Yes. So it's remained relatively consistent in low sixties, unpaid and therefore high thirties paid.
Good one. And just just last, just on the OpEx step up quarter on quarter, call it 2,000,000, you said in on the call, stepped up due to growth factors. Is that seasonal or is that people costs?
A little bit of both. Largely largely seasonal in the sense of, as you know, having been through a few Christmases with us before, we obviously step up customer service over the over the Chris wanted to deal with the increased sales volume. So, obviously, that's quite seasonal. There is a small step up in in fixed, operating cost expenditure. But keeping in mind, of course, that's coming off a very low base.
We're actually coming in on a lower OpEx base than we were running when we were running half the volumes.
Yes. Okay. Good one. And $130,000,000 of cash on hand, you've built it by $45,000,000 in the quarter. Obviously, part of that was working capital builds and seasonal factors.
Maybe, Michael, a question for you. I'm guessing you're not going to answer it, but being enrolled now for six, seven weeks, a lot of people are asking where the reinvestment will be from your perspective. Obviously, you've stepped up sales and marketing in the quarter. The the team has has the has the team thought about capital management initiatives or where you plan to utilize the excess liquidity on your balance sheet?
Yeah. Thanks. Thanks, Owen. And and, you know, we were expecting that, you know, that question from investors, which which was why we you know, the the board put out a explicit statement in the, in in in the release saying that that there's there's no plan or intention to to pay out a dividend in the, you know, in the in the short to medium term. In terms of other capital management initiatives, I think similar, obviously, you know, incumbent on the board, and they will con you know, can, you know, consistently look at opportunities, but there's no plans in the short, in the short to medium term.
And I think there's two reasons for that. Number one, primarily, is is, you know, we view our our businesses as a as a growth business and that there are significant opportunities to invest in into the business. Now that doesn't mean that we're going to be spending, you know, all of that cash internally. We understand the impact that would have on on profitability and other things, but we do think there is significant opportunity to invest, internally, into the business. And as I said before, we, you we will start that in a relatively, you know, relatively, slow and considered considered fashion.
And then as, you know, as more opportunities present themselves that we think will generate a really strong return on that investment over the medium to long term, then then, you know, having that cash to in order to undertake those activities is something that provides the business with real strategic flexibility moving forward. And secondly, as I said, there is just a general amount of uncertainty as to what the coming calendar year will look like and what, know, whether it was an incredible change in consumer demand in the last twelve months, and just providing us with the flexibility because there is unknowns about what happens to consumer demand in 2021 versus what hopefully by 2223 calendar year looks more like a steady state is something that I think it's, important for the book for the company to know that we've got stability regardless of whatever scenario plays out. So it's a sort of broad answer, but I, you know, wanted to pass on our thinking. You our thinking that we do think there's great opportunities to invest in business. We're also cognizant of the fact that, you know, we're entering into another period of, you know, macro, uncertainty through through '21.
'1, and, look forward to catching up in person.
Thanks, Alan.
Thank
you. That does conclude the question session at this time. I will now hand back to Michael for closing remarks.
Thank you very much. Just to I'd like to close by saying that, you know, myself and the the board and management team, you know, we we truly believe that Redbubble is a unique organization, and it is an immensely exciting time to be to be joining and to be part of the company. The business has experienced a tremendous increase in scale from a year ago, and this has flowed into strong financial results, demonstrating the potential for our business model when it can operate at this sort of scale. All of this has been achieved during a global pandemic with our teams working remotely, which is a testament to all of the group's employees right right across the globe. The strategic priority for the group now is to ensure that we capitalize on this and build from the market position that we've established.
To do this, as I've said a few times now, we're going to focus on the core aspects of the marketplace to make the most of the opportunity and ensure long term levels of growth. I'm personally really excited and looking forward to the journey ahead, and I thank all of you for being part of it. With that now, we will close the call, and I look forward to speaking to a number of you in the coming few days. Thank you.
Thank you. That does conclude the conference for today. Thank you for participating. You may now disconnect.