The Cettire Ltd (ASX: CTT) share price is under the spotlight after the company reported its update for the three months to 31 March 2024.
Cettire is a retailer of more than 500,000 luxury items from thousands of brands.
Third quarter highlights
It reported its sales revenue rose 88% year on year to $191 million – this number includes the effect of allowances and customer refunds.
The business said it generated adjusted EBITDA of $6 million on a ‘delivered’ profit margin of more than 20%. In the first nine months of FY24, it generated $32.1 million of adjusted EBITDA on $545 million of sales revenue.
The customer metrics all moved in the right direction – the average order value (AOV) grew 12% year on year to $832, the number of active customers rose by 84% to 644,026 and the percentage of gross revenue from repeat customers improved from 59% to 62%.
Cettire also revealed it has made “significant progress” regarding entering the mainland China market – it’s going to launch in the fourth quarter of FY24.
The company noted since the implementation of its updated checkout in the US on 19 March 2024, it has observed “stable conversion rates”.
Cettire said its net cash balance at the end of March 2024 was $90 million.
US sales taxes
The company noted recent market commentary of its sales tax registration in California and Texas. It said it is “registered for sales taxes in these states and is in good standing”. Cettire also said it has been “collecting and remitting sales taxes as normal in these states”.
It also said it is registered for sales taxes in the vast majority of US states which have a sales tax regime. Those states, together with states that don’t have a sales tax, accounted for 99% of its US sales revenue in the third quarter.
Cettire is taking steps to register in the other states as and when the obligation arises, such as when it reaches the applicable state-based registration threshold.
In the nine months to 31 March 2024, Cettire said it had collected $18.7 million in US sales taxes.
Management commentary
The Cettire founder and CEO Dean Mintz said:
Market conditions remain constructive and we have supplemented our strong customer proposition with marketing investment. Further, our increased focus on traffic quality has driven significant year-on-year improvement in conversion rate and an uplift in average order values.
Our business is execution focused. We continue to operate the business to maximise revenue growth, whilst also delivering profitability and cash generation. Whilst Q3 is traditionally a seasonal low point, we observed a strong improvement in year-on-year profit trends.
Final thoughts on the Cettire share price
The market currently seems to be impressed, with a rise of around 5% of the Cettire share price. Questions have been raised about Cettire’s business model, the taxes and logistics – time will tell if there is something wrong with Cettire, it’s not the sort of bet I’d want to make for my own portfolio. But, the rapid revenue growth is impressive.
