Hello, and welcome to Virtual Investor Conferences. On behalf of OTC Markets, we are very pleased you've joined us for our AI and Technology Conference. The next presentation is from Articore. Please note you may submit questions for the presenter at any time. You can also view a company's availability for one-on-one meetings by clicking "Book a Meeting." At this point, I am very pleased to welcome Derek Yung, Group Chief Financial Officer, and Virginia Spring, Vice President of Investor Relations of Articore, which trades on the OTCQB Venture Market under the symbol ATGRF, and on ASX under the symbol ATG. Welcome, Derek and Virginia.
Hello, everyone. I am responsible for investor relations at Articore. I am based in Melbourne, Australia, and joining us from our San Francisco office is Derek Yung. Thank you for taking the time to meet with us today. This is our first OTC event after upgrading our listing a few weeks ago. We are delighted to be here. My contact information is contained within this presentation, and I would be happy to answer any follow-up questions. I would like to call your attention to the safe harbor statement in our presentation regarding forward-looking information. That safe harbor statement also applies to this webcast. I will now hand you over to Derek.
Thanks, Virginia, and good morning. I am excited to be talking with you today about Articore. We are an Australian Securities Exchange, or ASX, listed company. About 70% of our sales is in the U.S., and you can see that our executive team, including me, are based in the United States. My background is CFO for the past 15 years in consumer e-commerce marketplaces across a variety of verticals.
Articore is my first foray into the print-on-demand industry, so it has been fun learning and figuring out how my understanding of the general marketplace has applied to this business. I would like to start by giving you an overview of the Articore business today. Articore today owns and operates two established consumer-facing digital marketplaces. Those are the two that you see on the left, which are Redbubble and TeePublic. Alongside that, we have two high-growth businesses in Dashery and Frankly Wearing.
All of our businesses leverage the print-on-demand model. We do not hold any inventory. We do not manufacture. We connect creators with customers to sell individual, uniquely manufactured products. Since our listing on the Australian Securities Exchange in 2016, we have generated over AUD 3 billion in marketplace revenue and shipped more than 250 million products. At the bottom of the slide is our flywheel.
It is the best way to understand how our business compounds over time. Creators upload designs to our marketplace, you can see on the left, and customers purchase products printed on demand by third-party fulfillers, and then we charge a service fee to provide tools and support for creators. You can see some of the examples of the original designs by our creators on the left and how they can show up on the different types of products that we manufacture on the right.
Because creators only earn when they sell, Articore benefits from an asset-light take rate business model. Greater volume drives fulfillment scale efficiencies that will lower the unit cost and expand our margins. Stronger margins allow us to reinvest in customer acquisition and further accelerate the flywheel. As this flywheel gains momentum, it generates compounding benefits for creators, customers, and shareholders alike.
Building and sustaining that momentum towards profitable growth is currently our core priority. Supporting that flywheel are four structural competitive advantages that we have. First, scale of content. We have over 75 million designs with more than 10,000 added daily, creating one of the largest and most dynamic catalog of unique user-generated content in the world. Second, fulfillment scale. A diversified global network of third-party sites allow us to flex volume and optimize costs, and maintain efficient delivery for over 20 million units shipped in FY 2026.
Third, network effects. With more than 3 million creators selling across the group, as more creators and customers participate, the platform becomes increasingly attractive to both sides of the marketplace. Lastly, operational leverage. A global team of around 200 people generate approximately AUD 1.8 million revenue per employee. Together, these advantages make the model defensible, scalable, and increasingly efficient as volume grows within a global print-on-demand market that's in itself growing quickly from around $ 11 billion in 2025 to a projected $58 billion by 2033, which is a 23.6% CAGR.
Our last fiscal year, fiscal 2026, wrapped up on June 30th. I don't think it is a hyperbole to say that fiscal 2026 was a transformative year for Articore. We delivered EBIT of AUD 10.3 million, slightly above the top end of our guidance range, and that's a AUD 21.1 million turnaround year-on-year. Margin expansion has been meaningful and sustainable. Gross profit and Gross Profit After Paid Acquisition, or GPAPA, which is our contribution margin, both grew for the year driven by supply chain efficiencies, pricing, paid marketing effectiveness, and a new artist account fee structure.
Gross profit margin reached a record 49.6%, up 400 basis points. GPAPA margin improved to 28.6%, up 210 basis points. We also strengthened the balance sheet materially with positive cash flow of AUD 12.1 million and a closing cash balance of AUD 40.5 million, giving us flexibility to invest in future growth. I want to show you some highlights on our financial trends over time. We've seen the consistent increase in our margin profile since FY 2023, as we've prioritized improving margins and restoring profit.
We've reduced operating expense every year since FY 2023, with OpEx falling from a peak of AUD 129 million to AUD 85 million this year, a 34% reduction. This has been achieved while continuing to invest in growth, including building Dashery from the ground up and acquiring Frankly Wearing, both of which I'll talk more about later. Together, margin expansion and sustained cost discipline have driven a turnaround in EBIT, as you can see, that I had talked about in the previous slide.
More on our EBIT trend over time. 2026 was the first year that Articore generated positive EBIT outside of the pandemic-driven spike in FY 2021, which we highlighted here. A significant turnaround of profitability compared to all those years in the past is what we saw in this most recent fiscal year. This reflects a sustainable and structural change in the business, in our margins, and our cost structure.
We are confident that we can build on this momentum to ultimately deliver profitable revenue growth with strong cash generation. A bit more on margins, but by marketplace. Looking across our two established marketplaces, TeePublic and Redbubble, both have consistently delivered margin gains over the past four years. TeePublic remains a strong contributor to the group with consistent growth since it was acquired in 2018, and that trend has continued.
TeePublic grew marketplace revenue 2.8% in constant currency with gross profit up 10.9% in constant currency, driven by pricing and promotional optimization and ongoing supply chain efficiencies. This included more favorable costs on blanks, a shift towards more cost-effective third-party fulfillers, and onboarding a new shipping carrier, which has increased competition to offset the rising shipping costs. Redbubble's improvement in unit economics was largely offset by softer marketplace revenue.
The business delivered a record 55.2% quarterly gross profit margin in the fourth quarter, reflecting the new artist account fee structure and continued supply chain efficiencies. Turning to our high-growth businesses, and start by talking about Frankly Wearing. Earlier this year in May, we completed the acquisition of Frankly Wearing, which is an Indian-based print-on-demand marketplace. This acquisition advances our technology consolidation and establishes a Global Capability Center to drive operating efficiencies across the whole entire group.
The acquisition opens access to the India print-on-demand market, worth more than AUD 1 billion and growing around 25% annually. Since we've acquired it a few months ago, Frankly Wearing has delivered year-on-year triple-digit marketplace revenue growth. Integration is progressing well. India-based teams are already providing engineering and other functional support, and we're targeting hiring more than 30 employees by the end of FY 2027. Let's talk about Dashery.
Dashery was launched about one and a half years ago, and it is our platform business in providing creators the tools to build and launch their own storefronts to further monetize their audiences. Fiscal 2026 marked the first full fiscal financial year for Dashery, and the early signs are very encouraging. The platform generated AUD 4 million of gross processed sales, AUD 2.4 million in marketplace revenue, and a GPAPA margin of 36.5%, which is well above our established marketplaces, as creators bring their own demand.
What excites us the most is the number of creators that have already passed AUD 100,000 in gross sales in their first year alone, which we think is a strong signal to much higher lifetime value potential. Our current target customer profile for Dashery is creators with 100,000 to 1 million followers, a segment we estimate at around 4 million creators globally. We are working with Shopify to launch an integrated offering to specifically broaden the target market to creators with millions of followers and who have existing Shopify storefronts.
This launch happened in June, and we're excited about early traction of the work. AI. We very much have focused on embedding AI across every component of the Articore flywheel, and we continue to find new use cases, which is not a surprising event given the continued innovation in AI. On the creator side, our approval workflow is 100% AI-powered, which reduces manual review and improves the speed and consistency. On the customer side, our search is powered 100% by AI algorithms, combining vector search and machine learning ranking to improve relevance, discovery, and conversion. AI has also underpinned our marketing, from content creation to campaign optimization.
Across operations, AI is helping the business run more efficiently, with approximately 80% of our customer contacts anchored by AI-powered chat, which speeds up query resolution. We've also taken a significant step into AI commerce, launching an early advertising initiative with OpenAI's ChatGPT for TeePublic. Buying behavior is shifting from searching to asking, and we're already seeing revenue growth from AI sources, including ChatGPT, Gemini, and Claude, and others, even before this launch.
We definitely see this becoming more of a growing revenue stream for the whole entire group. Where do we go from here? Our vision is to be the leading destination for customers to discover and buy unique design-first products, driven by a global creator ecosystem that's built to turn passion into profits. We'll pursue this through three growth drivers, which focus on customers, creators, and high-growth businesses.
For customers, we will strengthen our competitive moat through our content differentiation, build high-impact customer acquisition retention engines, and then elevate the customer experience through AI-driven discovery and personalization. For creators, we are focused on generating higher value outcomes through incremental monetization opportunities.
We will continue to invest in new high-growth businesses, including Dashery and Frankly Wearing, which I just talked about, leveraging our strategic assets and existing capabilities. Underpinning all three of those growth drivers is a single unified technology platform, one of our core assets. Going a bit more specifics on what we intend to do in FY 2027 to build on FY 2026, we do see a very specific list of initiatives that will unlock each of those three key growth drivers that I talked about on the previous slide.
For customers, we focus on three areas: acquiring and elevating pop culture licensed fan content, improving search and discovery and merchandising across both marketplaces, and building personalization opportunities that let customers express identity and fandom. For creators, we're looking to increase creator earnings in ways that will incentivize value-added behaviors, simplifying the creator experience, including enabling designs to be uploaded once and used across multiple platforms, and then continue to refine our account fee structure.
For our high-growth businesses, we're expanding new revenue streams, such as on-site advertising, adding new features and integration into Dashery, including Shopify, and leveraging the rest of the group's expertise and capabilities to accelerate Frankly Wearing's growth. We've already made good progress working towards operating on a single platform, which we will build on in FY 2027. We're leveraging unified marketing technology across the group, integrating order management and fulfillment systems, and consolidating our content uploader.
Altogether, these initiatives are designed to build on the structural gains we've made in fiscal 2026 and support the group's return to profitable growth. A bit on our guidance. We released our guidance as part of our results a couple of months ago. The group enters into the new fiscal year really in a strong position to get back to profitable growth. Our core marketplace business is profitable and generating cash, and we have a renewed focus on cost discipline, and we are investing in two high-growth businesses, Dashery and Frankly Wearing.
FY 2027, the group expects to build on the structural change to its performance delivered in FY 2026, and we're guiding to a GPAPA margin of 27%-30%, a further step down on operating expenses to AUD 79 million-AUD 85 million, and operating EBITDA of AUD 17 million-AUD 23 million. Thank you for joining us today, and we will now move to the Q&A portion of the session. I'll hand this back to Virginia.
Thanks, Derek. For the first question we've received, revenue per employee is around AUD 1.8 million with a team of about 200. How does that leverage scale as revenue grows?
Yeah, great question. Thank you for that. As you saw in the prepared remarks in the presentation, we've made a lot of progress in terms of optimizing our operating expenses over the last several years, and we don't intend to lose that optimization because many of those components are structural. Between the ability to be able to leverage more of India with a Global Capability Center I talked about that we're launching that will support engineering primarily, but also other functions, and also the use of AI, we do think that there will be increasing operating expense leverage as the company grows again. We will expect over time the operating expenses of personal revenue to be lower as we grow, and that's indicated and implied in our guidance as you saw earlier.
Next question. TeePublic hit a record 75.2% quarterly gross margin in Q4. Is that level repeatable?
75.2%, I don't think that's accurate. That's really, really high. It was close to record margin in Q4 for TeePublic as well, but Redbubble did have record margin in Q4. To generally answer the question, is the gross margin level sustainable? The answer is yes, on a long-term basis, because of the changes we talked about relative to RSP optimization, supply chain efficiencies, also generally shipping optimization as well. There are fluctuations quarter to quarter. We are a seasonal business, so we manage it that way. You do see it fluctuate, but obviously over the long term, given the trend that you saw on both marketplaces, we do expect gross margin to be at the kind of levels that we have been able to get to in FY 2026.
Redbubble delivered strong constant currency gross profit growth. What are you seeing in customer behavior that supports further improvement?
Good question. Let's maybe talk a little bit more about how our customers generally behave in the space we're in and with TeePublic and Redbubble. People come to our marketplaces because of the individual, unique manufactural designs that they are created on. From that perspective, there are, of course, trends that come and go, just from a pop culture perspective, and there are also just world events, and most recent of which, of course, in the United States would be things like New York Knicks winning the NBA championship, and then very recently, with the sad passing of Dolly Parton, we did see a spike in interest in terms of people looking for designs and patterns with Dolly Parton that celebrated her career and her success as an artist.
From that perspective, really what we're looking to build are marketing engines that help people discover the things they're looking for in those moments they're looking for them. As I commented earlier, we have a huge content library, so it does present a specific challenge, and it's a challenge that has definitely been helped with the use of AI in terms of personalization and discovery, which are really, really the key engines of kind of engaging our customers and helping them find the things they're interested in.
What does success look like over the next 12 months for the revised artist fee structure and creator quality catalog health and unit economics?
Oh, wow. That's a very insightful question. It looks like that someone has already been studying the business before this presentation, which is great. We've made a lot of progress on the artist fee optimization. We had 400 basis points of increase in gross margin in FY 2026, and of that, about 100 basis points is from because of the work on the artist account fee optimization. We think we're pretty happy with the kind of level of optimization there from a margin perspective, but there is more work to be done to align incentives between us and artists. Ultimately, when the artists win, we win, and they are excited to continue to produce high-quality art and boost their own sales.
Really here is less about, I would say, kind of margin percentage optimization, but it's really more about aligning incentives for artists that we will enable MPR growth. I think to answer the question around what would success look like, success would be probably similar margin line improvements relative to margin improvement percentages, but certainly the ability to align with artists to enabling MPR growth.
Does consolidating the technology stack create an opportunity to launch product improvements faster across Redbubble, TeePublic, Dashery, and Frankly Wearing?
Great question . Because we have talked about that, historically, mostly on the cost savings side, which has been significant. We can say that of the kind of AUD 6 million OpEx year-over-year improvement, AUD 3 million of that was related to kind of technology consolidation side. It's definitely true. From a strategy and revenue growth enabling perspective, more important that the consolidated platform does kind of two things for us. One is certainly bringing things to market quicker. Second is the ability to share capabilities that are introduced in one marketplace or a platform like Dashery to other places across the group.
The last thing I would say, which just kind of ties into the Frankly Wearing acquisition and the build of the Global Capability Center is, while clearly there is a cost leverage of having an offshore engineering capability, we intend to use the GCC, Global Capability Center, to allow us to build more capacity to engineering as well. The expectation is not only will you be able to continue to optimize on our cost side, we're actually adding more capability, and of course, as the platform consolidates, we'll bring more products to market quicker.
We've received quite a few questions on our high growth businesses. We might do those as a little bit of a group. First one on Dashery. Dashery generated AUD 2.4 million in MPR in its first full year and has more than 1,500 active selling accounts. What has the most validated product market fit so far?
So, maybe this helps to just go back in history a bit as to why we thought Dashery was a good idea and how that has proved out in its first fiscal year, full fiscal year. As the creator economy has evolved and grown, there are artists and creators who have found themselves with bigger and bigger audiences, and of course, a lot of that has been enabled by the continuing growth and maturity of social channels.
As those artists and creators have found themselves with audiences, there was a desire for them to build their own brand and control the shopping experience in order to reinforce their brand. As we saw, and many of those creators and artists were on Redbubble and on TeePublic, and they continue to do so, but they were looking for tools to build their own storefronts.
That's when we said, "Hey, that sounds like that's something we can do," and obviously supports our mission in terms of supporting creators. That's how we launched Dashery. We had a very strong hypothesis, had a good product market fit, definitely has been reinforced with the kind of first year's performance.
Dashery is working with Shopify on an integrated offering. How much does that expand your addressable creator base?
Yeah, great question. By many folds, kind of five to 10 folds. I commented earlier that our current market is for creators who have audiences that's 100K to 1 million followers, and this is really for the 1 million+ . Some of the biggest influencers or creators have Shopify stores. The Dashery integration with Shopify is allowing those creators to be able to keep their investments in Shopify.
Of course, they may have spent already years of investments into those assets. But to be able to leverage our fulfillment network, which is still very much one of the largest by which creators can get access to. The fulfillment network gives them two benefits. One is on cost, and second is in the breadth of products by which they can sell their merchandise on, or sell the designs on.
As the company invests in Dashery and Frankly Wearing, what are the key KPIs investors should watch to gauge whether these businesses are becoming material value drivers?
Yeah, great question. In our financial reporting, we do break out a new kind of business unit, P&L, related to the high growth businesses. We have TeePublic, Redbubble, and other. The best indicator of how we are progressing the high growth business would be the financial results of those high growth businesses as reported.
All right, well, repeat customers account for more than half of marketplace revenue. What initiatives can lift purchase frequency from this valuable base?
Great question. We do see that as a big opportunity for us, as I have mentioned, as part of the growth drivers initiatives of our FY 2027. We do have, given the history of this company, having been operated for a long time, we do have a strong existing customer base. The key thing about us that may be a bit different from other e-commerce consumer businesses is the ability to use AI to personalize how we go about ensuring that customers who have an affinity or a passion get presented with new offerings that are related to that. Dolly Parton was an example we gave earlier, and others as well.
We have people at the company who is passionate about fly fishing. We use that as an example. The tools are getting better, and we are leveraging more of those. We are excited about the possibility. Obviously, without AI, it had been a more difficult technique. With the ability to apply AI to really granular personalization, we think that is a game changer on that front.
Combining Redbubble and TeePublic volume got you better fulfiller pricing. Is there more leverage to pull?
Good question. Not in the manner by which it would show in the way that we sit in gross margin in the past 12 to 18 months. I say we did take a kind of big bite in terms of the degree we can improve our margins. Of course, as you improve, if you scale more, there's always more kind of volume benefits. But we think those volume benefits are ones that could be upsides or there we continue to face inflationary cost pressures, especially on the shipping side. We had to face those the last 12 months as well. If we hadn't had those, our gross profit margin improvement would've been even better. Scale is still important.
I would say that scale, we also want to make sure that is kind of fully available across both the marketplaces and also the high growth businesses, and that's also not just on the supply chain side, but on the content side as well. Making content available that once an artist upload and it actually shows up in all our marketplaces and potentially make it available at Dashery is something that we think is very important.
I'm conscious that we're almost out of time. I thought this might be a nice question to end on, and we will come back to everyone individually who's also submitted questions. The move to OTCQB and the new ATGRF ticker should improve accessibility for U.S. investors. What feedback have you received since the upgrade?
Yeah, great question. That's the right question for the two persons from Articore that are here today. We're very excited about this opportunity. We've been working with OTC to learn, I would say for me personally, the different ways by which we can get access to you, this particular audience. The feedback has been very positive, both, I would say kind of from a technical basis and also from just a qualitative basis in terms of verbal feedback. We would be excited to hear more feedback and certainly engage with you more at this. The intent is for us to be able to engage an audience like this one in the United States because we believe that there is a lot of investors who have not paid attention to us more recently.
Redbubble has been around a long time, and some people still call us Redbubble when the company's name is Articore. There is a degree of kind of exposure that we're looking to get to you and to more people like you, to be more interested in the company, because we do believe also we're an interesting investment for people in this period of the company.
That's it, Derek. We're out of time.
Great. Well, thank you for joining us today, and thank you, Virginia, for joining us past midnight now in Melbourne, Australia. We're happy to take more questions, and we'll certainly address the questions that's been asked and we were able not to be able to get to today because of time limits, and appreciate everyone's time.