Release Date: July 10, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue increased by 2.2% year-on-year to EUR 580 million.
- Adjusted EBITDA more than tripled to EUR 50 million.
- Gross margin increased by 380 basis points to 43.2%.
- High positive IFRS free cash flow of EUR 46 million.
- Confirmed FY24-25 guidance for revenue growth in the range of 1% to 10% and adjusted EBITDA between EUR 10 million to EUR 30 million.
Negative Points
- Number of active customers declined by 4.4% year-on-year.
- Q1 revenue in the TME segment declined by 3.1% year-on-year.
- Fulfillment cost ratio increased by 40 basis points to 24.2%.
- Marketing costs increased by 160 basis points to 11.7%.
- Customer engagement metrics showed muted frequency at 3.1 transactions per active customer.
Q & A Highlights
Q: Congratulations on the great EBITDA improvements. Given the strong Q1 performance, why did you remain conservative with your full-year EBITDA guidance?
A: We are happy with the Q1 profitability but remain conservative due to seasonality, with Q1 and Q3 typically being the most profitable quarters. We also plan to invest in strategic growth initiatives, including marketing and SCAYLE, which justifies maintaining a buffer in our guidance.
Q: Can you provide more details on the sentiment improvements in the online fashion sector and their sustainability?
A: We are seeing consumer sentiment improvements in our core markets, driven by a low base and long-term growth potential in e-commerce due to low penetration levels in Europe. We are confident in the mid to long-term tailwinds for e-commerce.
Q: Despite the 10-year anniversary campaign, active customers declined by 4.4% in Q1. Can you explain this?
A: The decline in active customers is slowing down, and we expect it to bottom out over FY24-25. The 10-year campaign was an upper funnel marketing effort aimed at long-term customer awareness, which will translate into new customers over time.
Q: Could you explain the slowdown in growth from Q4 to Q1 and provide an update on current trading?
A: Growth slowed in May due to tough comps from aggressive campaigns last year. However, we saw an acceleration in June, indicating a positive trend.
Q: What can we expect from the SCAYLE event in November, and how are the investments in SCAYLE progressing?
A: The SCAYLE event will cover product demos, team presentations, financials, and strategy. We have already started investing in market expansion, particularly in the US and UK, with a low-single digit million amount spent in Q1.
Q: Can you break down the gross margin improvement in Q1?
A: The main driver was lower discount levels due to improved inventory positions, both for ABOUT YOU and the broader fashion industry. The higher share of profitable tech revenues also contributed, but to a lesser extent.
Q: Are you seeing an increase in customer acquisition costs, and how do you expect this to trend?
A: Customer acquisition costs increased in 2023 due to new market entrants but have stabilized at those levels. We expect these costs to come down slightly over the mid to long term as competitive pressure eases.
Q: Can you provide an update on SCAYLE's ARR growth and the impact of phasing out implementation services?
A: SCAYLE's ARR continues to grow strongly in double digits. We expect the mix effect of strong ARR growth and declining service revenues to continue throughout FY24-25.
Q: What is the outlook for media services, given the focus on higher-margin products?
A: We expect media services to return to growth in the second half of FY24-25 as we complete the shift to higher-margin products. The bottom line is already improving, and we anticipate a healthy long-term growth trajectory.
Q: Can you elaborate on the factory-to-consumer strategy and its expected revenue contribution?
A: We are already generating revenues from fast science plus capsules and plan to scale this further. We expect modest revenue contributions in FY24-25, with more significant impacts in subsequent years, potentially reaching high-single to double-digit revenue shares by FY26.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
