Envato records dip in profits

Digital marketplace Envato has posted a dip in profit despite revenue increasing about 20 per cent in the 2019 financial year.

Envato co-founder Cyan Ta’eed Picture: Stuart McEvoy

Digital marketplace Envato has posted a dip in profit despite revenue increasing about 20 per cent in the 2019 financial year, accounts lodged with the corporate regulator reveal.

The firm, which runs a collection of marketplaces for creative digital assets including ThemeForest, CodeCanyon and VideoHive, made a net profit of $US6.99m ($10.24m) from revenue of $US113m, its 2019 financial report showed.

Those figures compared with $US8.14m net profit in 2018, a year in which Envato generated revenue of $US95m. It was the second consecutive year of falling profits for the firm, which recorded a $US17.6m result in the 2017 financial year.

Envato is majority-owned by co-founders Cyan and Collis Ta’eed, members of The List — Australia’s Richest 250. It has not taken external funding since its founding and has more than 7 million community members.

The firm’s 2019 accounts revealed increases in marketing costs ($US16m) and a small rise in employee benefits expense ($US39m), which offset the large revenue gain.

Envato declared $US40m in dividends paid or provided for, though a portion of that was due to a retrospective employee profit share program that was announced in October last year. Envato also pays 1 per cent of pre-tax profits to its charitable foundation.

The firm’s accounts revealed it has spent more than $US8m on acquisitions in the past two ­financials years, with further payments in the future dependant on performance of the assets it has bought.

In April, Envato announced the acquisition of Los Angeles-based stock photo subscription service Twenty20. It has more than 45 million photos and 350,000 creative contributors to its library, and counts the likes of Google, Hulu, Lyft and Vice among its clients.

Twenty20 was the second North American acquisition by Envato, after it took over the Mexico-based Placeit in 2018. Placeit, a digital mock-up and templates tools business, reportedly had annual recurring revenue of more than $US3m last year.

Envato has also launched an Envato Elements subscription service, which costs $29 a month and allows users access to all the firm’s digital elements.

The Envato accounts showed Envato has almost $US60m in cash and cash equivalents sitting on its balance sheet. The firm was established by the Ta’eed husband and wife team with lifelong friend Jun Rung in the couple’s Bondi garage in 2006. Rung still owns shares in Envato, as does Vahid Ta’eed, the elder brother of Collis.

Cyan Ta’eed also runs chocolate business Hey Tiger and in April announced the establishment of a platform designed for Instagram users dubbed Milkshake. Milkshake is aimed at helping women build online businesses and commercialise their social media presence.