Red Bubble Annual Report 2022

1. Basis of preparation The consolidated financial statements of Redbubble Limited and its controlled entities (the Group) for the year ended 30 June 2022 were authorised for issue by a resolution of the Directors on 17 August 2022. Redbubble Limited (the Company or the parent), the owner of global online marketplaces for independent artists, is a for profit company incorporated and domiciled in Australia and whose shares are publicly traded on the Australian Stock Exchange. The Group, through its websites at, and three foreign language websites, owns and operates the Redbubble and TeePublic online marketplaces. These marketplaces facilitate the sale and purchase of art and designs on a range of products between independent creatives and consumers. The products are produced and shipped by third party service providers (i.e. product manufacturers, printers and shipping companies) referred to as fulfillers. These financial statements: • are general purpose financial statements; • cover Redbubble Limited and its controlled entities as the consolidated Group. Redbubble Limited is the ultimate parent entity of the Group; • have been prepared in accordance with Australian Accounting Standards (AASBs) and interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001; • comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB); • have been prepared on a going concern basis under the historical cost convention; • are presented in Australian dollars with all values rounded off in accordance with the Australian Securities and Investments Commission 2016/191 Legislative Instrument, to the nearest thousand dollars or in certain other cases, nearest dollar, unless otherwise stated; and • apply significant accounting policies consistently to all the years presented, unless otherwise stated. Comparatives are also consistent with prior years, unless otherwise stated. The preparation of financial statements requires the use of certain critical accounting estimates and exercise of significant judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement and use of estimates are disclosed in the relevant notes. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under circumstances. The Group makes estimates and assumptions concerning the future which may not equal the actual results. 2. Changes in significant accounting policies There are no new or amended accounting standards that required Redbubble to change its accounting policies for the 2022 financial year. 3. Revenue from contracts with customers The Group provides internet-based marketplace platforms and associated services to facilitate the sale of goods from artists to those who want to purchase goods bearing the artists’ designs. Artists display and sell art via the Group’s websites. The Group aggregates demand from the buyers to support preferential relationships between third party suppliers, fulfillers and drop shippers and the artists, using the Group’s platforms. Under AASB 15 Revenue from Contracts with Customers the Group is the principal for accounting purposes in the sale of goods bearing artists’ designs. Artists’ revenue is included in revenue with the corresponding artists’ margin being recognised in operating expenses. The Group has concluded there is only one performance obligation for goods bearing the artists’ designs. Both the artist and the Group are involved in satisfying the performance obligation. The performance obligation is satisfied (and therefore revenue is recognised) when control of the goods is transferred to the customer, which is deemed to be when the product is delivered. Amounts disclosed as revenue are net of trade discounts, returns, rebates, taxes and transaction fraud. Critical accounting estimates and judgements All of the unearned revenue balance as at 30 June 2021 was recognised as revenue during the FY2022 year. All of the unearned revenue balance at 30 June 2022 is expected to be recognised as revenue within the following month. Where possible the Group uses delivery tracking information to calculate the volume of goods in transit at the end of the reporting period. When delivery tracking information is not available the group estimates the likely delivery timeframe using average delivery times and information from shipping partners. For information regarding disaggregated revenue from contracts with customers refer to note 24. 4. Employee and contractor costs 2022 $’000 2021 $’000 Salary costs 51,517 41,880 Contractor costs 15,461 13,219 Share-based payments expense 6,887 6,705 Superannuation and other pension related costs(1) 3,312 2,730 Total employee and contractor costs 77,177 64,534 (1) Includes contribution to 401K funds, which is the superannuation equivalent for the US subsidiaries, and contributions to pension funds in Germany. 5. Marketing expenses 2022 $’000 2021 $’000 Paid marketing(1) 76,432 71,208 Other marketing expenses 3,982 1,972 Total marketing expenses 80,414 73,180 (1) Paid marketing represents search and social paid marketing costs, paid on a per click basis. 6. Operations, administration and technology expenses 2022 $’000 2021 $’000 Technology infrastructure and software costs 22,610 19,060 Other operations and administration expenses 13,458 9,887 Total operations, administration and technology expenses 36,068 28,947 7. Income tax Recognition of tax expense/(benefit) The tax expense recognised in the statement of comprehensive income relates to current income tax expense plus deferred tax expense (being the movement in deferred tax assets and liabilities and unused tax losses during the year). The tax effect of share based payment awards granted is recognised in current income tax expense, except to the extent that the total tax deductions are expected to exceed the cumulative remuneration expense. In this situation, the excess of the associated current or deferred tax is recognised in equity and forms part of the treasury shares reserve. Current and deferred tax is recognised as income or an expense and included in the income statement for the period except where the tax arises from a transaction which is recognised in other comprehensive income or equity, in which case the tax is recognised in other comprehensive income or equity respectively. Current tax Current tax is the amount of income taxes payable/(recoverable) in respect of the taxable profit/(taxable loss) for the year and is measured at the amount expected to be paid to/(recovered from) the taxation authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Current tax assets and liabilities are offset where there is a legally enforceable right to set off the recognised amounts and there is an intention either to settle on a net basis or to realise the asset and settle the liability simultaneously. Notes to the Consolidated Financial Statements continued For the Year Ended 30 June 2022 65 Redbubble – Annual Report 2022 64 Redbubble – Annual Report 2022