The parent company of print-on-demand marketplace Redbubble has reported a $6 million lift in underlying cash flow for the fourth quarter on FY25, hitting $2.5 million.
This comes amid a leadership stoush between the current board of directors of Articore Group and Redbubble founder Martin Hosking and the former board chair Richard Cawsey.
According to its latest trading update, Articore Group claimed this was the strongest fourth quarter in five years for the company, and was driven by stronger gross profit after paid acquisition (GPAPA).
The group’s marketplace revenue was down 6 per cent in the fourth quarter, compared to a 10 per cent fall in full year.
Group gross margin was up 420 basis points to 49.7 per cent, which was driven by supply chain synergies according to Articore. GPAPA was up 410 basis points to 31 per cent due to higher gross profit margins and improved marketing efficiency. Fourth quarter GPAPA was up 8 per cent.
Articore also reported a reduction in operating expenditure of 16 per cent in Q4, with cash ending FY25 at $28.4 million, with the latter down from $36.9 million reported in FY24 year-end.
"Since stepping into the group CEO role, my focus has been on operational discipline and execution to accelerate our turnaround,” group CEO Vivek Kumar said. “4QFY25 marks a step change in performance for Articore as we have delivered positive cash flow in a typically soft seasonal quarter. My priority now is to build on this momentum."
This update comes as Hosking and Cawsey tabled a motion to remove the four current board members at Articore Group – including board chair Robin Mendelson – and replace them with four of their own, including Cawsey as board chair. The board has since announced an executive general meeting (EGM) to vote on the proposal.
In a signed letter to fellow shareholders shared in June, Cawsey and Hosking noted that fundamental issues of delays to take action, and persistent concerns regarding governance, accountability and credible execution of strategy “remain unresolved”.
“Articore’s share price has collapsed from a high of $7.04 in January 2021 to around $0.22 today,” the note read. “This destruction of shareholder value has been, in our view, overseen by a board that has too often been reactive, inward-looking and slow to act in your interests.”
Both Cawsey and Hosking hold approximately 16 per cent shareholding in Articore and at least 5 per cent of the votes.
Alongside flipping the board, Cawsey and Hosking’s proposal also involves pay realignment, with an all-independent director board, and with cash fees replaced with higher-strike options, among other plans.
The Articore board, however, is calling for shareholders to reject the proposals from the duo “to preserve recent gains and keep the turnaround on track”.
The board added it “strongly backs” the group CEO’s “strategic initiatives to unlock new revenue streams by scaling high-performing content, enhancing monetisation opportunities for Articore and creators, and expanding into new sales channels.
The Articore board added that it is now targeting a GPAPA margin between 27 per cent and 29 per cent for FY26. “The group expects to deliver positive EBIT in FY26, representing at least a $10 million year-on-year turnaround, alongside positive underlying cash flow.”