ABOUT YOU Holding SE (YOU) Earnings Call Transcript & Summary

Dear ladies and gentlemen, welcome to the conference call of ABOUT YOU. At our customers' request, this conference will be recorded. [Operator Instructions] May I now hand you over to Frank Bohme, who will lead you through this conference.

Good morning, everyone, and welcome to our Q4 '22/'23 results presentation. Today's conference call will be hosted by Hannes Wiese, Co-Founder and Co-CEO of ABOUT YOU. Hannes will walk you through our Q4 results in just a second. The corresponding slides to this presentation have been published on our IR website under the Publications section this morning. After his presentation, Hannes will be happy to answer your questions. And with this, I hand it over to you, Hannes.

Yes. Thanks, Frank, and good morning to everyone also from my side. Today, as usual, we are focusing on the following topics: update on our business, which largely consists of a recap of FY '22/'23, including additional disclosure on core performance; operating models and TME. In our financial section in turn, we focus on the Q4 results and operating performance. In our outlook section, we will provide our new guidance for FY '23/'24. And we'll close this call, as usual, with Q&A. So let's directly jump into the business update, starting on Page 4 with the key takeaway of the financial year '22/'23. Despite a continuously volatile and uncertain macroeconomic environment, we managed to achieve our updated guidance with a top line growth of 10% year-over-year and an adjusted EBITDA of a negative EUR 137 million. The number of active customers in the commerce segment increased by 11.8% and the average order frequency by 7.1% in the last 12 months. In FY '22, '23, DACH revenue growth came in at 9.1% and ROE at 17.3%. TME, our B2B segment, saw revenue growth of 16.5%, driven by our highly profitable SCAYLE business. The EBITDA margin of TME remained on high levels at 16.1%, despite impaired client revenues and growth investments. All in all, FY '22/'23 was characterized as a year where high growth expectations and investment commitments were executed in what turned out to be a challenging market environment. While we made strong progress in our strategic initiatives around products, markets, assortment and scale, we have seen a significant negative impact on profitability from the related growth in this investment commitment. Now for '23/'24, our #1 priority continues to be to reach adjusted EBITDA breakeven. This is a target we already outlined at the time listing at June 2021. We have not implemented a broad range of self-help measures that give us a high level of confidence to achieve the targeted profitability improvements. We are [ comfortable ] to translate this adjusted EBITDA, but even target also into our guidance for FY '23/'24. Despite the strong focus on profitability this year, we continue to be a growth company and expect revenue growth in a range of 1% to 11%, even in a continuously challenging market environment. Let's talk about our FY '22/'23 in a bit more detail now, starting on Page 5. As you know, the macroeconomic environment has been challenging throughout the year. The inflation in the Eurozone remained on elevated levels and surpassed levels of 20% in our important CE market. Consumer confidence has been adversely affected across Europe and is now only slowly improving from historic lows. Withstanding these headwinds, we were able to grow our revenue by 10% year-over-year. This corresponds to a 3-year CAGR of 37%, which is a clear outperformance of the overall market and underlines the strength of our business. Moving on to our cohort performance in FY '22/'23 shown on Page 6. Here, we can also analyze the different dynamics caused by the pandemic. Let's start with the cohort acquired pre-COVID that is before FY 2021. And what we see is a peak in spending due to the pandemic, which is now normalizing in a moderate year-on-year decline in FY '22/'23. But for all pre-COVID cohorts, revenue remained clearly above pre-pandemic levels despite the difficult market environment we faced in '22/'23. This is also a clear indicator for the strong and sustainable progress in our proposition, which we've delivered over the last years. For our new customer cohorts acquired during COVID that is FY 2021 and FY '21/'22, we also see a normalization in revenues after the pandemic. But revenue retention on first cohort -- of first orders, also of these cohorts remained clearly above 100%. That means that the new customers acquired during COVID remained loyal or after the pandemic, despite the difficult market environment we faced in '22/'23. One important factor, which drives customer retention is the evolution of our assortment over the last years shown on Page 7. We've grown both 1P and 3P item count, onboarded several new brands and strengthened underpenetrated categories. If we look at growth from an operating model perspective, we see that our own labels and fulfilled by our [indiscernible] assortments, continued to grow overproportionately in revenue. The growth driver for our own levels and exclusive assortments are the numerous co-ops, which we've launched with influencers on international scale. In FY '22/'23, fulfilled by our 2 assortments generated more than 40% of our 3P revenue. The shares constantly growing, which is intended as this is a strong lever to further improve customer experience and margins from 3P assortments. Moving on to TME, our B2B segment, starting on Page 8. We provide more disclosure with this full year release again, showing the revenue and adjusted EBITDA performance of our 2 TME subdivisions. On the one hand, our SCAYLE business, comprising our SaaS and operation services, which are offered to external clients on a stand-alone basis. On the other hand, commerce adjacent services like media and fulfillment, which are offered primarily to our suppliers as part of the -- commerce ecosystem. So let's start with our SCAYLE business on the left-hand side. In FY '22/'23, we have successfully executed a number of SCAYLE growth initiatives. We improved our product and implementation processes. Further, we've invested into the SCAYLE brand in various B2B channels, and we professionalized our sales processes and there is local sales team [indiscernible] as well as the U.K. These efforts have contributed to a SCAYLE revenue growth of 31.5% to EUR 88 million in FY '22/'23. SCAYLE's adjusted EBITDA is also growing, although we are seeing a slight decline of the EBITDA margin to 32%. This decline is driven by our accelerated growth and revenue mix effect with a currently relatively high share of lower-margin implementation revenue in the mix. Despite the challenging market environment, where many of our suppliers are cutting their marketing budgets, revenues for the commerce adjacent services increased by 6.6%. Adjusted EBITDA, however, remained flat at EUR 3.7 million due to revenue mix effect. Let's now take a closer look at SCAYLE and the progress we are making on the client acquisition front. In FY '22/'23, an external transaction volume of EUR 2.7 billion was powered by SCAYLE. This is another increase versus last year, although many of our clients faced muted to decline e-commerce revenues this year. We still managed to grow total client GMV as we are constantly onboarding new clients, reaching more than 140 center shops, which were operated by SCAYLE in the last year. As you can see on the right-hand side, these clients do not only include large fashion players like it's s.Oliver or Deichmann. Our client base is also expanding outside [indiscernible] with a growing number of clients in lifestyle and adjacent categories like the eye wear retailer, Fielmann; or the sports specialist, Ochsner. This clearly proves the adaptability of our SCAYLE technology to different market segments and provides huge growth opportunities going forward. Let's now move on to ESG on Page 10. Here, we want to give you another update on the progress made and the initiatives, which are closest to our heart. Let's start with our carbon footprint on the left-hand side, where we are showing the advances made in our science-based targets. By incorporating these targets into our business processes, we've seen further progress in FY '22 to '23 and remain confident to reach our FY '25/'26 targets. We've also significantly increased the share of more sustainable product revenue. As you can see on the right-hand side, 24.6% of total revenues were generated by more sustainable products in '22/'23. With that, we've almost already reached our '23/'24 targets of 25% revenue share. Moving on to the financial update, where we focus on our performance in Q4. Starting with our top line on Page 12. Once again, all our segments were growing despite the difficult market environment. But let's start with the group trading on the left-hand side of this chart. We grew our revenue by 3.4% in Q4, which corresponds to EUR 415 million in revenue. This growth rate is clearly below our own ambitions, but in line with our latest expectations. This is, as the market situation remains challenging with high inflation rates, putting pressure on discretionary spend. And in the resulting promotional market environment, consumers were not yet back in full prices [indiscernible] shopping mode. Let's take a closer look at our segments to analyze this. Starting with DACH, where revenue increased by 14.7% in the fourth quarter, accelerating growth versus Q3. While Austria and Switzerland continued to grow stronger than Germany, also the German market saw an acceleration in revenue growth. This was partly driven by higher discounts to clear inventory and stipulate demand. But also the German consumer sentiment is now slowly improving, making us cautiously optimistic on the performance of our DACH core markets. In the Rest of Europe segment in turn, revenue was up by only 8.9% in Q4, meaning a slight deceleration in growth versus Q3. This moderate top line development in our international markets is caused by a mix of factors. Firstly, we continue to see our large CE market adversely affected by weak consumer setting very high inflation rates of partly more than 20% and corresponding pressure on new disposable income. Secondly, globally tightened marketing ROI targets affect our less mature ROE markets disproportionately. This is because new customer shares are naturally higher and breakeven target has previously been elevated being extended here. Lastly, we are coming from an elevated ROE comp base in Q4 '21/'22 due to large-scale market entry campaigns in the Southern European countries last year. Moving to our TME segment, where revenue grew by 1.9% in the fourth quarter. Top line performance [ were high ] rise across the different TME divisions. On the one hand, as outlined in the business section, we've seen healthy growth for SCAYLE also in Q4. This is as challenged revenues from our DACH client base, which sees their own revenues adversely affected by the current market environment are overcompensated by the recurring and differentiation revenues from new clients. On the other hand, especially our media revenues are under pressure as we continue to observe a relatively low spending willingness also among B2B customers. This is a reaction to the current market environment and especially affects our relatively high margin media campaign revenues. Let's move on to our customer engagement metrics in the commerce segment, shown on Page 13. We were able to grow our active customer base to 12.7 million in the last 12 months. This is a heavy increase of 11.8% versus last year. The average order frequency per active customer still increased by 7.1%, reaching 3.1 transactions per active customer over the last 12 months. This increase is the result of the expansion of the product range, the improved customer experience, the increase in brand awareness and a structure effect of the customer cohorts. The average order value, however, declined by 5.2% in the last 12 months. This development is largely driven by increased discount levels as well as higher run rate compared to the previous year. For FY '23/'24, we'd expect AOB to stabilize as the compare normalizes and our unit economic measures become effective on a full year basis. With that, let's move on to our bottom line on Page 14. Our profitability continues to be under pressure. Although adjusted EBITDA losses have been reduced versus financial Q2 and Q3 this year. Let's start again on the left hand side of this chart, showing our group adjusted EBITDA margin at a negative 5.4% in Q4 '22/'23 versus negative 2.7% last year. The driver of the adjusted EBITDA loss in Q4 was the high need to clear inventories in a highly promotional market environment. Also, our DACH business was burdened by the resulting low gross margin, but returned to positive EBITDA territory again, reaching an adjusted EBITDA margin of 3.5% in Q4 '22/'23. While recent development in DACH are encouraging, profitability still declined versus last year. Next to gross margin pressure, the margin decline from a higher fulfillment cost ratio, which was mainly impacted by inflation rate unit cost increases as well as an increased return ratio. Moving on to our ROE segment, where we are still seeing significant EBITDA losses of a negative EUR 36.5 million in Q4 and an adjusted EBITDA margin of a negative 18.7%. The main driver for the losses were a lower-than-expected revenue base and usually high discount levels to key inventories, in combination with elevated fulfillment costs due to the logistics network expansion and inflationary rate cost increases. Now on TME. Our TME business achieved an improved adjusted EBITDA margin of 26.5% in Q4, up from 24.8% last year. The margin increase is the result of the growth in B2B revenues, which scale against the predominantly fixed cost base. As discussed in the business update section, the adjusted EBITDA is increased, it is largely driven by SCAYLE, while Media and Enabling screens show a muted EBITDA development. Let's now move on to Page 15 and take a closer look at the key cost lines of the group. Starting with the gross margin, where we saw a decline of 9.4 percentage points to 34% in Q4. This decline was driven by sales campaigns in high discount levels, which were necessary to the clear inventory in a highly promotional market environment. These measures have helped us to develop a cleaner inventory position for the start into the spring/summer season. Our stock levels still remained slightly elevated going into our '23/'24, which will moderately weigh in profitability in H1. Next, our fulfillment cost ratio, which increased by 2.7 percentage points to 25% in Q4. This year-over-year increase is attributable to several factors. First as expected, we are seeing an increase in return rate towards pre-COVID levels. Second, logistics costs [indiscernible] for inflationary dynamics. Third, the expansion of the European distribution network rate nonrecurring costs and operational complexity. And lastly, the lower-than-expected revenue levels continue to cause underutilization in our DCs. The year-on-year increase in the fulfillment cost ration in Q4 '22/'23, therefore, continues to be a mix of temporary effects, which are expected to ease in the coming quarters and structural effects are expected to persist over a longer time horizon. Let's now move on to our marketing cost. The marketing cost ratio declined to 9.4% in Q4, down 7.9 percentage points compared to last year. This is the result of 3 factors: first, the fade out of large-scale market entry and branding campaigns; second, a more conservative steering of performance marketing channels with tight return on investment targets; and third, cost discipline and process improvements across marketing functions. Lastly, our estimate and other cost ratio declined by 1.5 percentage point, despite a generally high level of inflation. This is due to overhead efficiency measures and the slowdown in new hires. All these factors combined, we have a decrease of our group adjusted EBITDA margin by 2.6 percentage points to a negative 5.4% margin in Q4 '22/'23. This is as the already visible efficiency improvements in our marketing and admin cost lines were not yet able to offset the current pressure on gross margins and fulfillment costs. Let's now take a look at our cash flow drivers on Page 16. Our net working capital returned to positive territory and is at EUR 40.7 million at the end of Q4 '22/'23 which is an increase of around EUR 30 million versus last year. This is because our stock turnover is still not fully back to where it should be and other net working capital levels are not fully compensating this. CapEx, in turn, amounted to EUR 16.3 million in Q4, which is slightly below last year level as a result of increased investment discipline. Moving on to our cash position on Page 17. Let us first look at our operating cash flow, which is at a negative EUR 77.1 million in Q4. This is due to net working capital dynamics, partly relating to the intake of fresh spring/summer '23 stock as well as the EBITDA loss in Q4. CapEx translates into investing cash flow and our financing cash flow is at a negative EUR 7.9 million in Q4. Financing cash flow is driven by payments for leasing agreements, largely relating to our DC network rollout. We ended the quarter with cash and equivalents of EUR 205 million. While this is a comfortable cash position, we have evaluated different measures to further optimize our liquidity buffer as announced in the Q3 earnings call. As a result of this process, amongst other measures, we have agreed with our main shareholders on a bank loan facility in the amount of up to EUR 97.5 million. Upon signing, the loan agreement has a term of 2 years and can be actively drawn on request of ABOUT YOU. The credit facility fits well into our levers to see our liquidity buffer, which are, among others, the targeted improvement in profitability as well as the optimization of our net working capital. We believe that this set of tools gives us enough buffer and flexibility to successfully navigate to the current market environment. Hence, we don't plan any further capital measures in the near future. Let us now move on to the final section of this presentation, the financial outlook. Starting with our FY '23/'24 guidance on Page 19. It should not be surprising that our guidance for this year is a reflection of our strong focus on profitability and the high level of uncertainty that we are still observing in the market. For our revenues, this translates into an expected growth range of 1% to 11%. The current market environment is not supported for high growth. And at the same time, we expect some of our profitability measures to adversely affect our top line in FY '23/'24. Given the extent of the year-over-year improvement in profitability we are targeting, we believe it is sensitive to see FY '23/'24 more as the transition year towards the more balanced top and bottom line for the company. So on profitability. Our #1 priority remains to achieve adjusted EBITDA [ breakeven ] in FY '23/'24, and we are confirming this target as part of our guidance today. The implied bottom line improvement in FY '22/'23 with a triple-digit million range and hence, certainly ambitious. But we leverage a broad set of safe measures, which make us confident to achieve our goals. We'll get back to these in a minute. Let's move on to CapEx first, which is expected to be around EUR 30 million to EUR 50 million in FY '23/'24. That means we target another model introduction in investments compared to FY '22/'23. Our net working capital is expected to remain broadly around the levels seen at the end of our FY '22/'23. On the one hand, we expect a moderate decline in inventories. On the other hand, we also target a moderate reduction in utilization of working capital financing to save costs and have a comfortable liquidity buffer. Let's move on to our segments on the right-hand side to see how the expected P&L dynamics in our FY '23/'24 break down to the different revenue streams. We expect slight increases for both revenue and adjusted EBITDA and DACH as the segment continues to contribute to our [ target ] profitability. For our ROE segment, revenue is expected to increase moderately, while EBITDA is expected to improve significantly. This is largely the result of lower marketing investment in recently launched markets and tighten ROI targets. Our TME segment is expected to see moderate increases for both revenue and adjusted EBITDA. These improvements are largely driven by SCAYLE, while our Media and Enabling revenue streams are expected to show a comparable performance to FY '22/'23. Before we move on to a deep dive on our profitability measures for FY '23/'24, let me briefly discuss [indiscernible] trading and the expected shape of our P&L over the year. In terms of top line growth, we expect a relatively slow start into the year. We are facing a comparably high comp base as revenues were boosted by several campaigns, especially in the second half of our financial Q1 last year. Furthermore, the market environment remains difficult in Q1 '23/'24, and we encountered top optimal weather conditions during the start of the spring/summer season. Current trading also implies that we are targeting a slight acceleration in top line growth throughout the year. This is explained by easing comps and expectations of a moderate improvement in consumer sentiment. For our adjusted EBITDA in turn, we expect to see a substantial year-over-year improvement already in Q1 '23/'24 as our profitability measures show the expected effects. These effects are expected to materialize throughout the year, meaning profitability for the group should be skewed towards our financial Q3. This is also the usual seasonality pattern, which we observed in more mature markets. Let's now move on to Page 20 and take a closer look at the many [indiscernible] measures, which we are implementing to achieve our profitability target. Let's start with the gross margin levers. The biggest impact here is certainly the adjusted ordering for the spring/summer and autumn/winter '23 seasons, which is more in line with current demand levers and should ease pressure on gross margins. The new commission scheme for our 3P model, which we've announced in our Q3 call has now actually been rolled out, and we are observing the expected positive effects. Further, we have also implemented a new prices for logistics services to offset some of the underlying cost inflation. Moving on to fulfillment costs. As discussed in our Q3 earnings call, we have introduced shipping costs below our minimum order value. Rollout of this measure is now largely completed, and we see the expected positive effect on new economics. We are also taking action on utilization levers. We have progressed well with the rollout of our European DC network, and we are currently operating 3 DCs, which are located in Germany, Slovakia and Poland. Our fourth DC in France is also ready to go live, but we made a deliberate decision to postpone this to increase utilization of the existing warehouses and that's the part of the fulfillment cost ratio. We remain, of course, committed to the warehouse in France because we will need the capacities to support our medium-term growth ambitions. So this measure is more about realizing short-term efficiency gains rather than a change in our distribution strategy. Moving on to the next measure, which is targeting unit economics again. Encouraged by the positive results of the introduction of shipping costs below MOV, we are now also testing return fees below a certain net MOV that is the order value after returns in selected markets. Testing is in very early stages, and we will keep you updated on our impact here. Coming to marketing costs, which are expected to significantly decline in FY '23/'24, providing the largest efficiency lever compared to last year. We plan to lower our brand marketing costs as large scale events and branding campaigns are reduced, and there won't be any major new market entries. On top of that, full effect of globally tightening our own target will become visible on a full year basis. We are also targeting cost reduction for content production in [indiscernible] as part of a fixed marketing cost efficiency program. Lastly, admin expenses will benefit from operating leverage as we further grow the business and continue to see positive result from a slowdown in new hires and all operating efficiency measures. Let's now move on to Page 21, where we want to update you on our thinking beyond FY '23/'24 and put this into the broader context on the time line. Calendar year 2020 and 2021 were 2 years of strong growth for the company as the tailwind from cohort-boosted revenues allowing us to focus on top line growth and new market expansion. For 2022, we had similar growth expectations, but we were surprised by a challenging market environment, leading to a substantial shift in priorities over the years. Now for 2023, we expect this transition phase for the company to continue with a strong bottom line focus in FY '23/'24 and several measures being rolled out in parallel. Going into '23/'24, these measures will enable us to switch back into a more aggressive growth mode coming from a healthy revenue and EBITDA base. ABOUT YOU is a growth company, and there's a huge growth opportunity ahead of us. So after achieving adjusted EBITDA breakeven this year, it is our target to accelerate top line growth towards clear double-digit growth levels again while remaining adjusted EBITDA-positive in the future. This should also be supported by an expected improvement in consumer sentiment and the normalized market environment. Thanks for joining us on this exciting journey. I'm now looking forward to answering your questions. So moderator, handing it back to you.

[Operator Instructions] Our first question comes from Nicolas Katsapas from BNP Exane.

Thank you for a very comprehensive and clear presentation. I just had a question, firstly, on the expected revenue growth for '24 from a basket and customer metric perspective. You're guiding to plus 1% to plus 11%, but you commented that you expect basket values to normalize and you are going to be tighter on your marketing. So I just wanted to now what do you see as a driver for growth if it's not -- if it looks like new customers and the average basket size is being hold back. And maybe if you could just put in the color on the average basket side because we've obviously seen average price inflation and you've implemented MOVs. So why is that only going to be stable and not growing? And then the second question I have is on the guidance for your adjusted EBITDA breakeven. And I'm thinking just want to sort of understand if I through the quarters of the year, how does the gross margin develop to reach the 700 basis point improvement for the full year?

Sure. Thanks for the questions. The first one on the different drivers of growth. So indeed, AOV is expected to be rather flat in total. And then we would expect an improvement in the frequency driven by the improvement of the proposition, but also a structural effect in the customer cohorts. And then probably also slide uplift in the total number of active customers, driven by both continued acquisition of new customers, but also retention of previous customer cohorts. And this then is up to a positive redevelopment in total. And on the AOVs, why is it expected to be rather stable and not growing. If we look at this on a market by market basis, I think the expectation would be that we see a slight growth in the AOV, but then we have revenue mix effects. So we are growing faster in markets that have slightly lower AOVs, which then means that in the mix, in the total, rather flat development expected. And the gross margin, we would expect, as outlined in the presentation, moderate headwinds still in the H1, given inventories are still slightly elevated. And then this should improve in the second half of the financial year, meaning we expect a substantial year-over-year improvement in the gross margin for the second half of the year, given weak comps in the H2. And at the same time, stabilization of the gross margin towards normal levels.

All right. I just wanted to have a small follow-up. If you've seen the frequency of orders pickup, then how do I think about the leverage in the fulfillment line feeding through? Maybe you could comment on that. But otherwise, very clear.

So there is definitely operating leverage on the fulfillment cost line given that we expect growth and we have quite a substantial portion of the fix cost line in our fulfillment cost line. And on top of that, as outlined, we are also targeting unit economic measures that should give some support on cost per order. At the same time, however, we also are still in a somewhat inflationary environment. So they are still of headwinds, especially on distribution, but also wage inflation. So at this point, it is not, not fully transferring to us as to which of these effects will outweigh.

And our next question comes from Georgina Johanan from JPMorgan.

I've got 2, please. Firstly, just on the full year marketing ratio that you should -- we should expect. Is that Q4 levels, something sensible for fiscal '24 overall, please? And then secondly, I appreciate it's still early days, but obviously, lots of changes have gone in, in terms of minimum order value introductions and so on and so forth. What do you think -- what can you see from the data? Is the impact that that's having on sales? So in the areas where you've introduced that, have you seen a sort of directly negative impact from some customer behavior on the top line as a result, please?

Sure. Thanks. On the first one, marketing, I think for the full year '23/'24, the Q4 is not an exact proxy. So it will probably be higher than in the Q4. That's first explained by seasonality. So usually, we tend to have higher marketing cost ratios in the full price quarter, so Q1 and Q3 for us and lower marketing cost and revenue ratios in Q2 and Q4. That said, we do indeed expect a substantial improvement in the marketing cost line for the full year, but it will not be in the high single digit, I would assume, but rather in the low teens or maybe slightly below. Then second part, MOV introduction. So first, the rollout is now largely completed. So we are basically live with MOVs in major markets. And what I can say is that it has a certain impact -- positive impact on contribution per order, but it also has a clear impact on revenues. So the MOVs usually target a high single-digit share of revenues, which fall below this MOV and out of these transactions, there's definitely a significant churn. That means top line is adversely affected but bottom line is also definitely supported by the measures.

Is that the high single-digit share of revenues that you mentioned, like if we were to assume, for example, like half of that been away? Is it fair to assume that even in Q4, there was a 4% to 5% drag on top line from the introduction of both measures then, please?

I would say it's lower than the 50%. But yes, there is a drag from that, but I wouldn't relate top line dynamics exclusively to this future. I mean there's a lot of moving parts, there's dynamics in the consumer environment, of course. There's also other profitability measures, but there's also other which support the top line. So yes, let's not say there was [ paribus ].

And the question comes from Anne Critchlow from Societe Generale.

Hannes, I've got a few questions, please. First of all, I'm just wondering how you might pursue aggressive growth beyond full year '23/'24. For example, with marketing cost to sales need to rise again? And then the second question is on the new 3P commission scheme. Could you let us know, please, how commission percentage has changed?

Sure. So growth beyond '23/'24, I mean, first, I think we will see substantial growth support from the existing customer base in the sense of many measures that we're implementing right now, will lead to a profitable base line. And what we see is that in our core customer segments, which are already heavily profitable today, there is already substantial growth, which will then be attributing going forward. So we expect continued growth from existing customer cohort. And then on top of that, we may accelerate growth on new customer acquisition in markets where we see lower penetration rates as of today. These are some of the recently entered markets where we are right now, a bit more conservative on spending. And we may also enter further markets in a time period where the market environment is more supportive for that. And we have leveraged a positive EBITDA. Next to that, some of the levels that we've already discussed, I think over the last quarters, improving extending our assortment, improving our digital product proposition and so on. This will also lead to potential incremental revenue growth, existing and new customers. So that said, we expect a continued positive EBITDA development beyond '23/'24. But we would also certainly be willing to continue to invest some of the remaining margin then into future growth if we believe that's where you're creating. And on the 3P commission scheme. So it is -- I think we have briefly discussed it on the last call, this is largely a function of the selling price of the item and the product group, the single product comes from. And the uplift on the total commission is definitely in and around the low to mid-single digit [indiscernible]. So there's a substantial uplift coming from that. But that said, we believe the current commission scheme or the new commission scheme is also much better aligning the interest of our supplier partners and the platform than the rather flat commission scheme that we had beforehand, which was not supporting economics in a lower price, high return category that much.

And our next question comes from Nizla Naizer from Deutsche Bank.

Great. My first question is on the new sort of shareholder loan facility that you mentioned, Hannes. Could you provide us a bit more color as to maybe the interest rate that it's coming with? Any covenants, which shareholders, just to be precise, from my end that hasn't been signed already. So some color there would be great. And secondly, on the breakeven target for FY '24. Could you remind us, is this an annual number? So you expect the group EBITDA at the end of the year to be in positive territory? Or is it certain quarters of the year where you expect to be breakeven and the full year might still be in loss making territory? So some color on the direction of travel would be great.

Sure. Thanks for the questions again. Starting with the loan. So that is a facility from which we can actively draw. And on the drawn amounts, interest would be paid of 12%. And on the undrawn amounts, there's a commitment fee of 2%. No covenants, it's subordinated. It's being led by Auto, Auto Heartland and Auto family. So basically the large, the 3 large core shareholders of ABOUT YOU. It has a duration of 2 years. It will be signed in the course of today -- over the course of today. And then we will have also scenario notification as a related party transaction. And on the breakeven target for '23/'24, that is for the full year. So that means we expect the full year '23/'24 to be in positive adjusted EBITDA territory. And in terms of the shape, profitability is expected to be skewed towards our financial Q3, which is also the seasonality pattern that we observed in more mature markets. And this positive EBITDA, and I would also expect a more like neutral EBITDA in the financial Q4. This will then lead to the full year positive adjusted EBITDA. So overcompensating the expected negative EBITDA in H1.

And our next question comes from Andreas Riemann from ODDO BHF.