Articore Group (ASX:ATG) management said the first half of FY 2026 marked “a clear step forward” in the company’s turnaround, pointing to material profitability improvement, expanding margins, and tighter cost control as marketplace revenue declines moderated across the period.
Profitability improves as margins expand and cost base tightens
CEO and Managing Director Vivek Kumar told investors the group delivered its highest first-half EBIT in five years, representing a year-on-year turnaround of AUD 14.3 million. Group CFO Derek Yung said EBIT for the half improved to AUD 12.1 million, compared with a loss of AUD 2.2 million in the prior corresponding period.
Yung said the stronger unit economics reflected supply chain efficiencies, pricing optimization, and the new artist fee structure. Operating expenses declined 4.3% year-on-year to AUD 45.5 million. Kumar also noted operating expenses have been reduced each year since the first half of FY 2023, with OpEx down 35% over that period.
Revenue declines moderate; TeePublic steady while Redbubble improves profitability
On the top line, Yung reported marketplace revenue of AUD 220.3 million for the half, with the rate of decline moderating through the period. He said second-quarter marketplace revenue was down 3.2%, compared with down 6.6% in the first quarter.
By platform, TeePublic posted what management described as a resilient first half. Yung said TeePublic marketplace revenue increased 0.3% for the half, with the first quarter flat and the second quarter up 0.4%. Gross profit grew 10%, and gross margin expanded 420 basis points to 47.3%. GPAPA increased 9.3%, with margin improving to 22.9%. Management tied performance to repeat customer growth and improvements in marketing effectiveness and site experience.
Redbubble revenue declined 10.1% year-on-year for the half, though Yung said the rate of decline moderated in the second quarter versus the first. Despite the revenue drop, Redbubble profitability improved materially, with gross margin expanding 580 basis points to 50.5%. GPAPA increased 7.2% and GPAPA margin reached 32.5%, which management again linked to pricing optimization, supply chain efficiencies, and the artist account fee structure.
Artist fees, repeat customers, and marketplace curation
Kumar emphasized the company’s marketplace “flywheel” model—creators upload designs, customers buy print-on-demand products fulfilled by third parties, and Articore earns a service fee—arguing that higher volume can drive fulfillment scale efficiencies and margins, enabling reinvestment in customer acquisition.
The company highlighted what it called four structural advantages discussed on the call:
- Scale of content: More than 75 million designs, with over 10,000 added daily.
- Fulfillment scale: A global network of 42 third-party sites.
- Network effects: More than 3 million creators on the platform.
- Operational leverage: A global team of about 200 people generating approximately AUD 1.8 million in revenue per employee.
During the half, Articore enhanced its artist account fee “to reward value-adding behavior and support sustainable margins.” Kumar said account fee revenue has increased by more than 35% since introduction.
Management also highlighted repeat purchasing trends. Kumar said repeat customers accounted for more than half of marketplace revenue across both platforms in the half—51% at TeePublic and 53% at Redbubble. He said TeePublic’s repeat purchaser growth has been supported by lifecycle marketing, personalization, and site experience improvements, and that the company is applying similar learnings to Redbubble.
In the Q&A, Kumar said TeePublic has long operated as a curated marketplace, while Redbubble historically has been more open. He described efforts underway to control uploads, incentivize desired creator behavior through fee changes, and improve search and discovery to surface “the right designs to the right customer at the right time.” He said results were encouraging and aligned with moderating revenue declines and margin expansion.
Technology consolidation, AI adoption, and Dashery investment
Management said technology consolidation is a key next phase of the turnaround. Kumar noted technology costs represent roughly a third of group operating expenses, and that the company currently runs two technology stacks. During the half, Articore consolidated its engineering and product teams into one function and began stack consolidation starting with marketing technology (MarTech), which management tied to its repeat-customer strategy. Kumar also said the company is exploring an offshore capability to augment U.S.- and Australia-based engineering teams.
The company also outlined expanded AI usage across operations, including:
- AI powering 100% of artist approval workflows to detect fraud patterns and reduce manual reviews.
- AI “touching” 100% of search, using vector search and machine-learned ranking.
- AI handling about 80% of customer service chats.
Separately, Kumar said the company is encouraged by momentum in Dashery, which it described as a strategic investment enabling creators to launch branded storefronts. For the half, Dashery generated AUD 1.3 million in NVR and a 35.5% GPAPA margin. Since launch, it has more than 1,200 active selling accounts, with most creators new to the group’s ecosystem. Kumar said Articore invested AUD 1.8 million in the first half and expects a similar level of investment in the second half.
Guidance upgraded; cash balance improves
Reflecting confidence in the sustainability of improvements, management upgraded FY 2026 EBIT guidance to AUD 6 million to AUD 10 million, from prior guidance of AUD 2 million to AUD 8 million. The company also tightened underlying cash flow guidance to AUD 8 million to AUD 12 million from AUD 5 million to AUD 12 million, while reiterating an expectation for FY 2026 GPAPA margin of 27% to 29%.
Yung said the cash position improved alongside profitability and cost discipline. At the end of January 2026, Articore had a closing cash balance of AUD 47.8 million, up AUD 12.1 million from the January balance a year earlier. He described underlying cash flow as a proxy for free cash generation, calculated as operating EBITDA plus net interest earned, less payments for capitalized development costs, leases, and PP&E.
In response to an analyst question about OpEx sustainability, management highlighted comparability items within first-half operating expenses, including Dashery investment, the change in capitalization policy, and compensation changes that shifted performance-linked equity rewards to cash rewards recorded in operating expenses. Management indicated these items totaled “a little bit over AUD 4 million” in year-on-year comparison differences.
Management said second-half priorities include acquiring new customers, expanding the repeat customer base through lifecycle marketing and personalization, continuing margin improvement via AI and supply chain optimization, and advancing technology consolidation to improve scalability and cost efficiency.
About Articore Group (ASX:ATG)
Articore Group Limited operates as an online marketplace that facilitates the sale of art and design products. It offers clothing, stickers, face masks, phone cases, home and living products, wall arts, kids and babies clothing, pet products, accessories, stationery and office products, and gifts. The company provides its services through its website Redbubble.com and TeePublic.com in Australia, the United States, the United Kingdom, and internationally. The company was formerly known as Redbubble Limited and changed its name to Articore Group Limited in October 2023.
