Thank you for standing by, and welcome to the Redbubble Limited Q1 Market Update. All participants are in a listen only mode. There will be a presentation followed by a question and answer session. Followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Louise Lambert, Head of Investor Relations.
Please go ahead.
Thank you. Good morning, everyone here in Australia, and good afternoon and evening for our U. S. Investors. This is Louise Lambeth, Head of Investor Relations for Redbubble Group.
Welcome to the investor call following the release of Redbubble's FY 2022 Q1 trading update released earlier today. With me on the line are Revolver's CEO, Michael Wilczynski and CFO, Emma Clarke as well as the Q1 results and reports. The key information for today's update is contained in the ASICS announcement and accompanying slides also released to the market this morning. Please note that the financial results and operational metrics are from internal management reports and have not been subject to audit. Mike and Emma will now speak, and then we will open up the line for questions.
Please note that this session is also being recorded. Before we start, I would like to call your attention to the Safe Harbor statement regarding forward looking information in our ASX release. That Safe Harbor statement also applies to this investor call. I will now pass on to Mike.
Thank you, Louise. Hello, everyone, and welcome to Redbubble's FY 'twenty two Quarter 1 Trading Update. Given that this is mostly a financial update, I will shortly be passing Emma to walk you through the numbers in more detail, but I'll just take a few moments to introduce the results. The growth of the business over the last 18 months shows that we continue To make real progress on our mission to create the world's largest marketplace of independent artists. This mission drives our ambition.
We remain passionately committed to it. Red Double is uniquely positioned to capitalize on our medium- to long term opportunity and emerge as a significant winner in what our very large addressable market. Coming into this quarter, we knew that the prior period performance would be a tough comparison, and we had set and hopefully communicated our expectations accordingly. As we flagged in August, 1st part of FY 'twenty two marketplace revenue growth would likely be bigger year on year as the business cycle particularly strong prior period, which was driven by COVID related lockdowns and mask sales. As such, we are pleased with the actual results for the Q1, And what we're sharing with you today are well in line with our expectations.
We're also encouraged to see improving performance during the quarter From July to September, Emma will talk to this in more detail. But in summary, underlying marketplace revenue in July on a paid basis We're down 11% versus July last year, with this improving to just negative 2% for September versus September last year. This trend, coupled with the operational progress we're making, gives us confidence about the near term outlook, and we're also using this opportunity to reiterate the full year revenue and EBITDA guidance The Redbubble business has a truly global footprint and North America is our largest market followed by the U. K. And EU.
There are now early signs of what the post pandemic normal might look like. In those markets, society as a whole and their economies have really opened up. As we discussed in August, offline retail outlets are now mostly all open. People are able to move around freely, dine out, travel with increasingly more choices for their lending. As such, the Q1 essentially captures what a post COVID normal That's a look like across both marketplaces in their larger geography.
In that, we are encouraged to see the shift to online platforms like ours Has we absorbed the opening up of both offline retail and services more generally and that our business has held on to much of the underlying gain that we saw last year? While there will still definitely be some uncertainties ahead, the early data points we've seen continue to give us confidence about our business over the medium to long term. Redbubble Group Now is a significantly larger scale than we were 2 years ago pre COVID. And at the top line, gross transaction value has grown 57% Since Q1 of FY 2020, 2 years ago, artist revenue has grown 53% and marketplace revenue has grown 55% on that 2 year basis. The team continues to pursue initiatives that will expand and scale the business towards our medium term aspiration.
I want to briefly make mention of some of the experimentation and operational highlights We don't provide detailed operational updates on these quarterly trading releases, but given we're still in the early days of developing a culture and process Targeted experimentation and investment across the business. We felt important to share some information on how we're doing, and I'll hit some of those highlights now. Firstly, building on what we shared in August, I discussed how the team launched buy now pay later provider experiment and at the early signs showed us a meaningful increase in average order value per customer. Since then, we've chosen to partner with them, roll out with Afterpay. We launched the U.
S. Customer as a customer a couple of weeks ago and have just gone live and added Canada, the UK and Australia this week. In terms of loyalty, We've conducted 13 loyalty experiments across the 2 marketplaces, with 7 of those experiments showing early positive retention signals And that the repeat purchase rate for those in the experiment was significantly more than those in the control group. Several of these experiments still require more time to reach their 90 day And the next steps for us is to complete our analyses so we can determine which experiments are economic at scale or to repeat at scale next year. In search and recommendations, we've been running experiments to try to improve the discoverability of new artists in New York.
We know that it's quite important to drive sales to artists within the 1st 28 days. And so this recent experiment is taking some artists and giving them additional boost to help them appear more prominently in search results Pages. In terms of products, we talked about being the 1st large scale print on demand marketplace to launch baseball caps and dad hats when we spoke last, And they have performed well in their initial weeks. Redbubble has continued to add new products and extended existing product lines with desk maps, mouse pads And the new iPhone 13 cases now available on-site in time for Thanksgiving and holidays. We've also increased localization to fixed products for fulfillment.
This further enhances the resilience of the fulfillment network as well as moving production closer to customers ahead of And additionally, we ran a significant experiment in our search and shopping acquisition channels across both businesses To test these channels, given the evolving data and attribution landscape prior to holiday, this had a material impact on acquisition spend that Emma will speak These are just a few of the examples of the work the team is doing. For those of you who are familiar with our operating rhythm, You will know that we're now heading into the busy and important holiday trading season. This means we'll be pausing most of our experimentation activities to focus on delivering a great holiday season for artists and their customers throughout this current quarter and into early next year. And finally, I want to touch upon the important topic of ESG. Redbubble's business model is always emphasized for a small environmental footprint, together with a strong focus on social good, including diversity at all levels of the group.
We continue to work to better understand our material ESG impact and more clearly integrate ESG into our business strategy and decision making. I would point you to our just released 2021 annual report, where we have shared an overview of our ESG strategy and approach that we will develop further over the year ahead. Most recently, we were very proud to see the ranked number 10 in the Australian Chief Executive Women's Diversity Ranking in our 1st year as part of the ASX 300. We will continue to champion diversity And inclusion as part of our ESG and people and culture strategy. And I'll now hand over to Redbubble Group CFO, Emma Clarke.
Thanks, Mike, and hello to everyone. Today, I will be discussing the Q1 financial metrics provided in the update and also using this opportunity to reiterate our near term Please be aware that unless otherwise stated, the financial results discussed are on a delivered basis but have not yet been subject to audit. For those of you who have been following us, you will remember that at the full year results in August, we flagged that the first half of financial year twenty twenty two would likely be negative. And so it's important to emphasize that the Q1's results were in line with our expectations. We have added 2 year compound annual growth rates to this class In the quarter, Redbubble recorded growth transaction value of $142,000,000 Year on year, this was down 21% 20% on a constant currency basis.
Compared to 2 years ago, TTVX ranked 57% and so the 2 year CAGR was 25%. Artist revenue was $21,000,000 in Q1, and we are proud of the continuing financial impact that the platform is able to deliver for us. This quarter's marketplace revenue was $106,000,000 down 28% year on year and 27% on a constant currency basis. Again, compared to 2 years ago, marketplace revenue has grown 55%. And so on a 2 year view, the CAGR was positive 24%.
In the Q1, Webexa also recorded gross profit of $42,000,000,000 down 34% year on year and 33% on a constant currency basis. Margin came in at 40% for the quarter. On a 2 year basis, gross profit has grown and was up 64%, representing a CAGR of 28%. As we travel down the profit and loss, I would like to pause on pre acquisition, which as you can see on the income statement detailed in the appendix, Came in at 14.4 percent for the quarter. This is higher than we would have ideally liked to see and is due to a number of factors.
Most of these factors related to iOS 14 ATT update, which has caused the digital advertising environment to become quite chaotic With acquisition attribution by channel difficult and costs subject to significant fluctuation, we had a hypothesis that we were seeing under attribution, particularly in search and shopping, and so ran a tactical experiment during September where we materially increased spend in those channels. This increased spend ran for the majority of the month and while it was the right experiment to do at the right time, it ultimately did not generate the outcome that we had hypothesized. The spend was inefficient and increased our paid acquisition costs materially. Additionally, we undertook prospecting spend during August As our internal data shows us that this is a good time of new to do this as an increased percentage of visitors generated at this time purchased on the platform during the holiday season. Whilst we expect the challenging digital marketing environment to continue, it is important to note that the major drivers of the demand for this quarter were as a result of our own decisions and are not in and off themselves recurring in nature.
Moving on to operating expenses, which hold 11% year on year. This uplift was actually lower than our expectation due to slower hiring and forecast. We had expected increases in web hosting expenses, administration There has been additional employees joined in the past quarter, largely in engineering, product and on our research team. These on boarding employees will continue to increase our operating expenses as we progress through the financial year. Other were particularly low at DKK200,000 for the quarter.
This line incorporates share based payments expense, leasing expenses and foreign currency movements, and the latter is the reason for the low extent. Operationally, currency is quite neutral at the moment as is evidenced by how close to constant currency growth rates are when compared to the floating growth However, approximately 47% of our cash on the balance sheet is denominated in U. S. Dollars. And as such, there can be material clean as this is revalued into AUV at EBITDA was $3,900,000 compared to $25,700,000 in the Q1 of last financial year and $1,400,000 in the Q1 2 years ago.
EBITDA margin for the quarter was therefore 3.7%. Finally, we closed the quarter with $109,000,000 in cash, providing the business with a strong balance sheet and continuing strategic flexibility. Building into marketplace revenue in more detail, I'd like to refer to the bridge that has been provided on Slide 3 in the accompanying slides. We have shared this chart to illustrate how management is measuring and assessing the performance of the business this quarter. Within last year's quarter 1 reported marketplace $148,000,000 There was an $8,000,000 positive delivery date adjustment, which was the slowest at the time.
From there, we have adjusted out the $29,000,000 of mask sale and this bridges us to a Q1 financial 'twenty one underlying marketplace revenue of $111,000,000 Moving to this year, the Q1 of FY 'twenty two reported marketplace revenue was $106,000,000 However, we also adjust at the same Which in this case were $4,000,000 of mask sales and a $2,000,000 negative delivery date adjustment. This results in underlying marketplace revenue number of $104,000,000 for this year's quarter 1, which is 6% below the prior year on a floating basis and only 4% on a constant currency basis. This trend is as per our expectations and flagged with the market in August when we gave guidance that the first half of this year's marketplace revenue growth is likely to be negative. As the quarter progressed, we were encouraged to see the underlying growth in the business without mass sales improved meaningfully from negative 11% in July to negative 2% in September. At this point in time, the year on year growth rates are much less meaningful and the sequential trends month on month provide better signals to managing the business.
During the quarterly update, we do not normally share geographic and product suites. However, we acknowledge that Australia has not yet opened in the 2 largest states and felt that it would be helpful to provide data on how each of our major markets performed for the quarter. As Mike mentioned earlier, Redbubble Group operates truly global marketplaces. North American customers contributed 69% to overall marketplace revenue and remains our largest market. It performed per our expectations this quarter.
We knew coming in at the prior period calls were very strong and driven by confluence of macro housing. This time last year, there was a tremendous surge in online spend, especially around July August 2020. And this is the case for all of our major geographies. Now a year later, as most countries have started to emerge into the post pandemic normal, albeit some of the faster pace than others, we can see that the business remains well The geographies either in or out of lockdown. The U.
S. Is representative of the average. Whilst Australia, with a majority of its citizens The Cillium Wolfram contributed 8% to the total, which is slightly higher than its historical contribution. On the next Slide, you can see that we have provided a breakdown for the Q1 performance by product categories. These numbers include masks, which are captured inside In this quarter last year, masks contributed 21% of total revenue and this is going to weigh 4% in this quarter.
All things being equal, one would expect to see everything else down approximately 6% and this is not the case. The accessories category itself, ex masks, was essentially flat year on year with contributions from other products such as bags and pins. T shirts, which is our largest selling product category, has grown by approximately 8% and apparel is neutral. At the other end of the spectrum, homewares are down approximately 27%, which is unsurprising, as facial and sneaker are down approximately 20%. Finally, I would like to reiterate our near term outlook for the financial year 2022 as we stated in August.
As said then, we don't normally provide any form of guidance, but given the ongoing uncertainties in the MacHome guidance, this can result in the modeling that this is generating widely varying outcomes. We would like our shareholders to be as light as possible with our own internal views on the new transformers. The latter part of financial year 2020 and the first half of financial year twenty twenty one were phenomenal growth in our business. This means that in the near term, RevPAR will continue to suffer from prior As we have previously shared, masks were a significant contributor adding $57,000,000 to last year's marketplace revenue and therefore the underlying financial year 2021 marketplace revenue of $497,000,000 Looking forward, Redbubble expects financial year 2022 marketplace revenues to be slightly above financial year 2021's underlying marketplace revenue. This will still represent solid growth from a $350,000,000 achieved To again reiterate what we said in August, the first half of financial year twenty twenty two marketplace revenue growth will likely be negative year on year as the business From the second half, we expect a steady return to near on the growth rate consistent with the mid term aspiration.
Targeted investments will continue to be made and will affect gross margin, marketing and OpEx lines. Investments in this financial year will focus on key aspects of the customer As noted in the April 2021 release, EBITDA margin as a percentage of marketplace revenue is expected to be in the mid single digit range for FY 2022, with EBITDA margin expected to expand over the medium term along with top line growth. We will now open up the line for questions.
Thank Your first question comes from Owen Humphries from Canaccord. Please go ahead.
Thanks for taking my questions. First question, you just talked about BDA in the first quarter versus HCP. Can you just tell us what the delivery date adjustment was for the Q4 of 2021?
Sure. That's a great question. Thanks for that, Owen. So obviously, when we came out in August and spoke to you speaking loudly for the full year, we had the 4th quarter profit and loss in the appendix of that release, which we always do. So I would refer back to those numbers.
So if you look at those numbers In that release, you'll see that the 4th quarter marketplace revenue was $97,000,000 That was the reported number. If we Adjusted to an underlying basis to be on the same basis that we talk about $104,000,000 in the current quarter, that number is $92,000,000 So between masks And BDA, there was a $5,000,000 adjustment to those numbers that you were comparing underlying. So for ease of understanding, if you're sitting there and saying, What was the 4th quarter underlying revenue compared to the last year compared to the Q1 underlying revenue for this year? That number has moved from $92,000,000 to 100 and
Okay. Thanks for that. And then second one, just around the marketing Invested that you made that you believe that was in effect. Can you just maybe quantify that amount of before 10.4
Yes, absolutely. So if we hadn't conducted the experiment, marketing spend would have been slightly higher than we would have likely realized because of the 16% that would have come in somewhere between 13% 13.5%. But the impact on revenue, and this is going to demonstrate how inefficient that spend was, Would have only taken somewhere between $1,000,000 $2,000,000 off the underlying revenue number of $104,000,000 It was very efficient.
Good morning. Okay, thanks. And just obviously you're flagging a level of investment across the 3 major lines So first, I'll be investing in marketing and then I'll just try and get the volume too. But just can you talk through where the investments could be? You're constantly talking about prices and delivery.
And do you expect to make those investments in the Q2? Obviously, you got $109,000,000 cash, so you have plenty of flexibility. Is that or is it more of a calendar year 'twenty two investment?
Yes. That's a good question, Owen. So it's more of a Calendar year 'twenty two investment for the margin is negative because the reality is the 2 things will happen in this current book of 3rd December quarter. So one is We generally like to pause all those experimentation during that quarter anyway because we really need to just keep things not so smooth to be able to deliver a really great holiday season. So that happens every year and this year is no exception to that.
There will be very little experimentation. In terms of but nothing will happen until we come out. The other thing happened in the If you were to go back and look at the business seasonally, you will see the margin naturally paying with a bit of a bit during holiday anyway due to the increased rate of promotions that we do in that holiday quarter and also just due to the lagginess in some The
results will return going through from that.
So margin in the quarter for the next quarter and the Q3 seems to be slightly lower than 'nineteen in the first and the
Good morning. And maybe last one from Mark. Good Good to see you rolling out some experiments and you said before that it's a cash flow. Can you maybe just quantify Some of the exciting experiments that you're doing and some of the changes in consumer behavior that could be going forward? Yes.
Thanks, Tom. We talked about this before. And particularly when you talk about the royalty share, they're all part of The same thing, Andrew. It's all the same metric in terms of increasing repeat purchase rate over 30, 60, multi day period. We're not I want to talk about the specific experiments that work because to be honest, I don't want to shed any update on the players that now sort of hard earned I pay for us.
But I think if you talk about numbers that are going to double retention or anything like that, very much We're talking about a grind and needing to continue to make healthy improvements to improvement. And that's very much what we see We've seen new services. We're actually really encouraged that more than half of them seem to be positive in terms of the impact they've had on retention. The next step, some of them need to get through the 90 day condition. And then we need to complete the economic analysis because while they might have had a significant Impacts on retention, the next is to compare the incremental costs of those changes that we might have made with the incremental revenues of their volume.
With those, with the ones that are clearly economically positive, that's right. We move either into sale if they're ongoing or moving to scaling and we'll repeat Those initiatives, for the ones that were positive, but maybe not quite economically positive, then we'll try and see if it has more of an impact over beyond 90 days Make an update on food quality or extend the time or are there any tweaks that we can make to those conditions and the cost that we put into it, that would be decreasing in repeat wafer to that do bring down the economics. I'm sorry, I'm not being specific, but you can understand. Some of them Some of them are remarkably straightforward and not ones that we wouldn't put out. Good one.
Thanks guys and thanks for the ongoing transparency in the business.
Your next question comes from Anthony Porto from Morgan Please go ahead.
Hey, guys. Just a few from me. Just the customer data platform that you mentioned at the full year, just the progress here And where you're at, being able to actually have that single view of the customer to really drive those initiatives. Obviously, Delivery and e commerce is a big issue. Can you just remind us the percentage of product sales that you've got through low cost film it now?
And I know you're seeing any impact Delivery there and impact on conversion rates from delivery. And then Emma, so you went through that marketing thing pretty Just can you just reiterate what the impact were on marketing? I guess even from that 13% to 13.5% range, it's probably normal. Marketing, you saw 400 basis points increase quarter on quarter last year. Would you be seeing anywhere near that And obviously, that's the largest segment of that marketplace revenue quarter for tape advertising.
Yes. Thanks, Anthony. I'll speak to the first one and then hand over the second to Heather. Yes, on the CSP, we'll continue to make progress. We've been really sort of 7 or 8 or what you think we saw.
And that team continues to, To be honest, you don't have a really good insight for us. There's a lot of work to continue to do to, I guess, it can't tell a lot of data in different ways to really extract the insights from it from the data we're collecting. But it's coming here. It's coming on really well. It's starting to get shared more openly across the business.
So we're assuming that that will be a good investment, and it will allow us and enable us to continue to be more targeted in our marketing to slowly start to make At the moment, all of our marketing decisions are, as we've talked about, are really focused on that first click and first purchase profitability basis. So we are able to make positive investments where we can see clearly that some of those channels actually have a longer actually have a higher The customer lifetime value that would justify spending more in those channels rather than what we do today, we can see that Starting to come along now. We're starting to see some of those areas. To be honest, as we talked about, we won't experiment too much now, getting into Getting into holidays, it's really important. We deliver a good holiday.
That's part of the reason why we did the marketing spend in our search and shopping channels now in September. Pre holidays is Right. So it's the right month to do that. But yes, we're feeling good about where they're helping the data platform and how that team is. It's a small team, And we'll continue to invest in our discount and build that thing, but we're feeling good about how it's progressing.
Yes. So the two questions that I Anthony, 1 on localization and has the percentage of products being used in location to customers, in location increase? And then the second one The marketing spend and looking forward what might occur in the next quarter as a result of it being higher in the Q1. So on the localization piece, I don't have the exact number to hand, but it's the way we define localized is in geography. So if you think about the U.
S, U. S, U. S, Most of the localization that we've done in the last quarter, actually in fact all of them, have been within the U. S. When you think about bringing it down to more localized regions within the U.
S. So Half level down, which is excellent and what we should continue to do. So that means that the pension quote, which I'm pretty sure off the top of my head is in terms In market delivery, it will be pretty much the same, but effectively the most recent set of localization, take that down to an even more granular and nuanced ePubs, say, Are we localizing on the East Coast and the West Coast Beach of
the product lines?
And we did 5 localizations in the quarter. Now we're really both similar U. S. On those sub regions. Broadly, and once again, I understand the reason for the question because I like everyone else getting the Australia Post email saying they're not seeing nothing, can we do all your Christmas shopping In July, we're not sure we can deliver it.
So I get where the question is coming from. Really, once again, I would say today is a little bit of an outlier In terms of actual performance, like we're actually seeing pretty strong delivery performance across our entire network and think that the conditions for us in terms of holiday this year will actually be Actually better on that basis than last year. So obviously, monitoring Australia as its own separate thing. But overall, in terms of getting product customers, we're feeling like we're in a pretty good place at the moment. And then in terms of the quarter on quarter increase The marketing, so as you point out, and I said even if we strip out the experiment that we run marketing, so it would have been pretty high at 13% to 13.5%.
And when you look at last year and the increase from Q1 to Q2, the question very simply is, would we expect to see it at 4% on top of that? And the short answer to that is no. I would expect to see it relatively flat, if not reduced, across the next quarter.
Great. Thanks, Anna.
Your next question comes from Tyler Gloussos from Dranor Peak. Please go ahead.
Hey, guys. Thanks for the update. Just one quick question. I'm not sure if you said when you're going through the products and segments, Can you give us a sense for the difference between the Seapublic business and the Redbubble T shirt segment? Is there a material difference between the performance there?
Thanks.
That's a great question. Thanks, Tyler. So in terms we don't obviously do reporting we don't split segment reporting by marketplace, so we don't show to public versus Redbubble. But what I can actually say for high level, the differences between the 2 is T Public as a marketplace is much more U. S.
Focused. So obviously, this proportionately contribute The U. S. Geographic split number and is much more T shirt focused, so disproportionately contribute to the T shirt percentage. What I can tell you is that the growth in T shirts, so the $54,000,000 to $58,000,000 was across both marketplaces.
All right, thanks. That was my only question. Appreciate it.
Your next question comes from Shammy Ratanapala from RBC. Please go ahead.
Hi, Mike and Emma. Thanks for taking my question. I just wanted to follow-up on the T Public platform from the previous question. It seems that the T Public platform appears to have sort of outperformed the Redbubble core platform. Correct me if I'm Right.
And could you talk to any differences of I mean, you did say that the growth initiatives are across both platforms, but any differences that you can talk Thanks, Shami. So as we disclosed before we turn into COVID because obviously, for those who have followed us for the longer term, you'll know For the 1st year that we owned Teepublic, we did actually provide the splits of revenue growth by marketplace. We did that at that time to demonstrate to the market that, that was a really good view of Shareholders funds to go off and buy that business. And yes, at the time that we were reporting that C Public came in with a very high growth rate, it Actually got a high 65% per annum, and it happened to coincide at times where Redbubble had a low growth rate. So the difference is coming into COVID quite fast.
During COVID, we've been asked this question a few times over various quarters. And whilst I don't provide those anymore, I have been and will continue to say that The performance across both businesses is quite consistent and there's not anywhere near as much differential between the 2 businesses as they're what's coming in, Which mathematically also has to be the case because we couldn't like double the size of our business the way that we did without Redbubble picking up most of that just due to its larger size. As we go back to the postcode, we've now got our 2nd quarter of more normalized trading. We can see that the performance across both businesses is Strong and continues to not have as much of a gap as they did coming into COVID. Thanks, Emmanuel.
That's very clear. And One more question. Anything that you can talk to on the repeat rate of customers? Yes. So the repeat rate is flat.
So in terms of what we the numbers that we had at year end, it's flat in Q1 repeat ratings. Thanks for taking my questions.
Your next question comes from Ariane Marosi from Barrene Joey. Please go ahead.
First one is just when you're looking at next 12, 24 months, how are you balancing capital allocation between new Customer acquisition and retention. Just give us some more color around that, please? That's your bucket.
Yes. Look, I can have a go at that and then hand over to Mike to add some more flavor to it. So Obviously, one of the hallmarks of Redbubble across its entire history from a transactional perspective is our ability to generate users and At a really good transaction profitability rate. And even though obviously, I made the comment about the experiment, talked about the chaotic visual environment, the reality is There's nothing that we see in the business at the moment that makes me think that we can't continue to generate profitable customers on first transaction, can't continue to get user growth. Obviously, if we're comparing users year on year, the COVID bump makes that look more negative than it actually is.
But if we look to your question at 12, 24 months. We would expect to continue to generate user growth. That being said, as we've said previously in the last couple of updates, We really need to focus into loyalty and we really need to try and get that annual average order value up. And the real way to do that is to obviously, you can get 1st order, AOV, but the more important one is actually over the long term to make sure that they come back to the platform and type and come back to the platform most of the time. So And there will be an increasing focus on that as we build our capability and modify our technological platforms to sort of enable us to experiment more and more into the hype over time.
I don't know, Mike, if you want to add anything to that.
Yes. Thanks, Sharon, for the question. And probably just to build on it a little bit is the reality is that we need to Into both. From a user acquisition point, at the moment, we've talked about that the importance of that first click 1st transaction, there's quick profitability. 1st transaction, profitability.
And as we understand our cohort set out, then that will allow us to open up and there'll be We would expect there to be incremental investment where we can see that, that will be profitable over a second or third transaction when they've got that forward of view. At the same time, though, we know that repeating that repeat rate, increasing that repeat rate is super important. Those change and what for that though is There's no real simple, easy, low hanging fruit. There's just a whole lot of experiments we need to run and improvements we need to make both through our on-site Digital experience and then also the physical product lead experience of customers. And that's why we've talked openly about our OpEx investment increasing Over the next 12 months in this financial year, as Emma mentioned, our actual OpEx increase was below our a bit below our expectation, Mainly this is our hiring.
Our hiring has been okay, but we've had a bit more attrition than we expected, so our net is a bit lower. We will continue to be investing in our people. Those people will be working, particularly in our digital areas and our product and engineering space On building out that digital experience, which we think will lead to better, first transaction conversion And basket size, but then importantly into their repeat rate. Perfect. And in terms of marketing return on investment, can you Give us a update around how the ROI on your customer acquisition cost is this quarter and how that's impacting the time
Sorry, just checking I wasn't on mute. I was talking away. It's Marilyn muted. So in terms of our ROI, as I'm doing, we've been on business for a long period of time also know, we run for transaction Profitability on a monthly basis. So even at that elevated level of spend across that quarter, those they were also like the ROI is still there.
They're still profitable. Obviously, the CACs have gone up a little bit. It's not as profitable as if we had spent $0.12 in the dollar or like last year when we had a consequence of Favorable factors were spending $0.10 in the dollar. So obviously, it's slightly less profitable, and you can mathematically calculate that by using the metrics that we give you. But it's still profitable is the important thing to know.
And so whilst it's still profitable, we're still going to go and spend the money to acquire the customers.
And just last one, just in terms of your exposure to cotton pricing, obviously cotton pricing through the roof more recently. I know you guys, obviously, you said For fillers, but how is that sort of feeding into your costs over the next sort of few months, please?
Yes, thanks for the question. Obviously, inflation is a thing that's on both people's mind. I had a few questions come through in the last quarter about this and unsurprisingly, we will get questions on that this quarter. From our perspective, we have in the last quarter had 3 to 4 very small price increments across like 135 products. None of them are actually related to the cotton price increases.
They're all actually to do with the shipping container rates and the delays and the holding of more As a result of the slowing of getting things across the globe, we have now pretty much locked in almost all of our pricing through holidays. Not sure what will happen after holidays, but certainly for the near short term, we feel relatively comfortable with where our pricing is at the moment.
So just one more, if I can. Just I guess you mentioned the performance of Tate Publican and Redbubble core platform Has been converging more recently with us together. And pre COVID, there were a few issues like competition in T shirts because the Google algorithm changed Like an organic Redbubble growth rate. So I guess what I'm asking is, are those issues now behind you and you're confident that
I've been asked this question before. And so yes, how you characterize it is correct. What we did see is if we think all the way back to January February 2020, we'd already started to see growth back in the core redbubble So as I'm just saying, I was thinking about the March quarter. I'm thinking this is going to be great, like, when I get able to come out and say that This occurred back in the main marketplace and we can sort of put that behind us and move forward. And then of course, COVID has been pretty much haywire.
So So that has actually started to unwind and go back to what I would say on a more normalized basis for COVID. And obviously, everything's happened during COVID still accelerated. And so as we come out of it, we're happy with Redbubble Marketplace are tracking by itself and we're just becoming marketplace Obviously, if Redbubble was maybe more or continuing to demonstrate that it couldn't generate growth, I wouldn't say that. Sorry, Michael is going to hand back over to you.
Yes. Maybe just to build on it and more of a general I think one of the strengths of the group now is we have these 2 businesses that operate in the marketplaces that are a little bit different. They're a little bit different in terms of their geographic coverage. They're a little bit different in terms of their product coverage. And there are some little bit different in terms of The way that the sites are architected in their approach to SEO and SEM in particular, and we think about the real advantage.
So because it allows the businesses talk a lot, the teams talk a lot with what they're seeing on their different platforms, if they're seeing some positivity or some negativity, I'm going to ask, sorry, is that the market is both saying it tends to be external. If one's saying it versus the other, then it That's a real benefit for us. It does mean that potentially there could be external changes that might impact one of the marketplaces more than the other. That's obviously still a possibility because the sites are busy. But as I said, we see that as real strength for us At the moment, having those 2 marketplaces that are in doing similar things, learn off each other and have slightly different From a technical and customer in a geographic and site basis, we feel the real is a positive.
That's perfect. Thanks, guys.
There are no further questions at this time. I'll now hand back to Mr. Ilchinsky for closing remarks.
Thank you very much. We really appreciate all the questions. We have our AGM in a few weeks, And we look forward to speaking to you all again. I'd like to thank you for those we're catching up with over the next few days. We're really looking forward to continuing the discussion.
Thanks again for the support, And we will speak to you again soon. Cheers.
That does conclude our conference for today. Thank you for participating. You may now disconnect.