Release Date: October 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- HelloFresh SE (HLFFF, Financial) reported revenues of over EUR1.8 billion for Q3, in line with expectations, with a year-over-year growth rate of about 2% in constant currency.
- The company achieved an increase in Average Order Value (AOV) to EUR66.2, marking a 3.8% year-over-year growth.
- Marketing efficiency improved following a strategic shift to focus on high-value customers, resulting in reduced marketing expenses both relatively and absolutely.
- HelloFresh SE (HLFFF) expanded absolute EBITDA to over EUR72 million for Q3, with an EBITDA margin of 8.5% for meal kits.
- The company generated a positive free cash flow of about EUR30 million year-to-date, with expectations to increase further based on improving marketing efficiencies and reduced CapEx spend.
Negative Points
- Total orders for the group decreased by 1.9% year-over-year, from 28 million orders in Q3 '23 to 27.5 million orders in Q3 '24.
- The meal kits product group experienced a 9% decline year-over-year, attributed to a strategic shift in marketing and a lower number of new customers.
- Contribution margin was down by 1.3 percentage points year-on-year in Q3, impacted by ramp-up expenses of new meal kits fulfillment centers in Germany and the UK.
- Free cash flow in Q3 was negative by around EUR20 million, contributing to a year-to-date free cash flow that is approximately EUR50 million lower than the previous year.
- The company revised its revenue growth outlook for 2024 on a constant currency basis from 2% to 8% to now 1% to 1.7%, indicating a slightly negative growth expectation for Q4.
Q & A Highlights
Q: How should we think about the normalization in meal kits and when should we expect stabilized revenue trends?
A: Christian Gartner, CFO: We are still planning for negative growth in meal kits next year, with greater stabilization expected thereafter.
Q: How long does it take to determine if a customer will be high-value?
A: Dominik Richter, CEO: It takes about three to four weeks to have high predictive power on customer quality, thanks to our extensive data and machine learning models.
Q: Can we expect sequential improvements in meal kits from H1 2025 as you shift your strategic approach?
A: Dominik Richter, CEO: We expect moderation in declines over the course of 2025, with potential stabilization or moderate growth as we lap larger customer cohorts.
Q: What were the one-off costs in Q4 last year, and is the expectation for Q4 EBITDA still higher than Q2?
A: Christian Gartner, CFO: One-off costs were mainly severance and production rationalization. For Q4 EBITDA, stick to the guidance range of EUR125 million to EUR160 million.
Q: How should we think about meal kit margins into 2025?
A: Christian Gartner, CFO: Key levers include productivity, fulfillment center rationalization, and marketing efficiency. Quantitative guidance will be provided in March.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
