Bike24 Holding AG (BIKE) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and a warm welcome to today's earnings call of the Bike24 Holding AG following the publication of the Q2 financial figures of 2025. I'm delighted to welcome the CEO, Andrés Martin-Birner, who will speak in a moment and guide us through the presentation and the results. After the presentation, we will move on to a Q&A session in which you will be allowed to place your questions directly to the management. So I would say, let's jump straight into the numbers. Andrés, the stage is yours.

Thank you very much. A warm welcome to today's earnings call presentation for the second quarter of 2025. My name is Andrés Martin-Birner. I'm the Founder and CEO of Bike24. Let me now start with the general update on the second quarter of this year, followed by the business update and finishing with a general summary, the confirmation of our 2025 guidance and the Q&A session. The second quarter was again very successful overall and once more clearly shows the positive trend. Despite a difficult market environment, we achieved a revenue growth of 25% and an adjusted EBITDA margin of plus 6.3%. At EUR 80 million, it was the quarter with the highest revenue we ever achieved, and we have now been growing for 5 consecutive quarters. Our cost discipline, our efficient processes and our attractive and highly available product assortment are the main reasons for the almost doubled adjusted EBITDA alongside the jump in revenues. In particular, the continuous improvement of our offering for our customers led to strong growth in all core markets. GSA, almost 28%; the localized markets, Spain, Italy, France, Benelux, plus our new markets, Finland and Poland, with sales growth of also 28% and rest of Europe, plus 12%. It is pleasing that the newly at the end of February, localized markets of Finland and Poland grew disproportionately in the second quarter as expected, recording a 46% increase in revenues. I would particularly like to emphasize that we achieved the results with performance marketing costs of 1.2%. This is exceptional low for e-commerce business. Moving on to our assortment segments. Our core PAC segment, parts, accessories, clothing, reported sales growth of plus 25%, which once again demonstrates the importance of the expert enthusiast bike market. On the other hand, despite a difficult market environment, we achieved unexpectedly high revenue growth of plus 26% for full-bikes. In terms of inventory, we have made further progress. PAC inventory was reduced slightly compared to June 2024, while the full-bike inventory increased due to attractive orders. Inventory levels are now at a healthy level, driven by optimized purchasing and the SAP implementation. A further optimization is expected going forward as these changes continue to take full effect. Looking ahead, we confirm our 2025 guidance and expect revenue and adjusted EBITDA to be at the upper end of the range. We therefore expect the positive trend of the last few quarters to continue, and we consider the results of the last few weeks with double-digit sales growth to be promising. So now, let us move to the financials. Let me start by working you through the figures for the second quarter of 2025. Over the past 5 quarters in a row, we have continuously improved our growth rates. In Q2 2024, we see a 1% increase, followed by 3% in Q3 and 7% in Q4 and 18% in Q1 2025. In Q2 2025, we achieved revenue growth of 25% compared to the same quarter last year, again, a significant acceleration. Let's look at the numbers in detail. In Q2 2025, we generated EUR 80 million in revenue, the highest quarterly revenue Bike24 has ever achieved, up from EUR 63.8 million in the same quarter last year. Both of our main product segments, full-bikes and PAC grew by around 25% year-over-year. That's a remarkable achievement in itself, but full-bike stand out even more considering the challenging market environment with ongoing overstock and heavy discounting. In this context, attracting more and more customers to purchase such an expensive and technically sophisticated product on our platform is great. Our success is fueled not only by our attractive product assortment, but also by our scale and long-standing partnerships with manufacturers. These relationships enable us to secure highly attractive special batches, which we can offer at an outstanding price-performance ratio, creating compelling reasons for customers to choose Bike24. Let's take a look at our customer base. On the left, you can see a major milestone in Bike24's history. For the first time ever, we have more than 1 million active customers, that is customers who have placed at least one order with us in the past 12 months. We grew from 93,000 to 1,022,000 this year, a clear sign of our strong appeal to new customers. On the right, you see the orders from our existing customers. They increased from 1.108 million to 1.238 million in the past 12 months. This shows that we are continuing to successfully encourage our customers to make repeat purchases, demonstrating the strength of our customer relationships and the relevance of our assortment. Looking at regional performance, we see a broad-based growth pattern. In all strategically important European markets, we achieved double-digit growth rates. In the rest of Europe, where we haven't yet localized, we still managed to grow revenue by 12%. The Rest of World segment remains in decline, but with just around 2% of total revenue, it has a minor impact on overall performance. Let's now take a closer look to our key regions. First, let's look at the drivers in our GSA region. The 28% revenue growth was supported by an increase in both new and existing customers. The average revenue per customer was relatively flat and the number of active customers increased by 29% year-over-year. Same picture in our localized markets, France, Italy, Spain, Benelux countries and Poland and Finland. The number of active customers increased by 27%, while average revenue per customer remained more or less stable. As a result, we achieved 28% revenue growth in this region. In rest of Europe, meaning countries without the localized web shop that mainly order via our dot-com domain, we also saw strong growth, plus 12% revenue growth in Q2. This was mainly driven by improved product availability and ongoing inventory reductions across the market. As a result, customers are increasingly returning to platform like Bike24 that offer the full product portfolio of the bike industry. Now, let's have a look to the balance sheet and the cash flow development. Let's move on to our inventory situation. We have continued our inventory optimization journey by making targeted investments in full-bikes to meet the still very high demand in this category. On the left, you can see that our total inventory stands at EUR 72.2 million, slightly above last year's level, driven by an intentional buildup in full-bikes from EUR 16.8 million to EUR 19 million. Pack inventory in contrast has been further optimized, going down from EUR 55.1 million to EUR 53.2 million. Looking at the inventory-to-sales ratio on the right, we are now back at 29%, a very healthy level that we had before the pandemic. And with the recent implementation of SAP and our updated purchasing strategy, we expect to unlock further optimization potential in the months ahead. In short, we are keeping our inventory lean by making sure we have the right products available in exactly the segments where demand is strong. As a reminder, at the peak of the crisis in the bicycle markets, we held over EUR 90 million in inventory. Let's take a look at our free cash flow. We went down from EUR 4.9 million in the first half of last year to EUR 2.4 million this year. At first glance, this might seem below expectations, but it's important to remember that last year's figure was positively influenced by a one-off effect on our trade working capital. At the beginning of 2024, we still had overstock in certain categories, which we were able to sell down over the course of the year, generating EUR 4.9 million in additional liquidity. In 2025, however, our inventory was already in a healthy position from the very start. So the special effect is not the cure, resulting in a lower but very positive normalized cash flow figure. Let's take a look at our operating results. Our gross margin is flat comparable to last year, a notable achievement given the still challenging market environment. Not to forget here, we grew revenue by 25%, underlying the competitiveness of our pricing strategy and its success in attracting new customers. We have kept our marketing strategy conservative with just 1.2% spent on performance marketing, we reached 25% revenue growth. We are returning to a highly efficient marketing level. We also saw a 0.3 percentage point increase in selling costs, driven by disproportionate growth in the localized markets, a region with higher shipping costs compared to the German-speaking market. One of the biggest levers was the reduction in personnel expenses. The measures we introduced in November last year are paying off. Here alone, we improved our EBITDA margin by 2 percentage points. In total, we achieved an adjusted EBITDA margin of plus 6.3% in a still challenging market. Closing with that, I will conclude the business update. Following an already successful first quarter, we were able to increase revenues and profit in the second quarter. The turnaround that started in Q2 last year has gained even more momentum, outperforming expectations with 25% revenue growth. And it shows again that our focus on profitability is paying off. The fact that we were able to increase sales in all important focus markets is a good sign of a turnaround, and we gained strength in our core market GSA, in particular, gives us confidence for the coming quarters. As you know, localization is an important part of our 3-pillar strategy. We are also pleased to report the highest sales of bikes we have ever had in the second quarter. Inventories were at around EUR 72 million, now at a healthy level, driven by optimized purchasing and the great success and that is accompanied by significantly higher sales and improved product availability. Before we come to the confirmation of our guidance, the first results in July and August, which showed double-digit growth, sales growth are very promising. To finish, let's look ahead. With a significant growth in Q2 and the promising results of the last few weeks, we anticipate a revenue growth between EUR 248 million and EUR 261 million for 2025. We are currently assuming that we will end up at the upper end of the guidance. We also confirm our guidance for adjusted EBITDA of between EUR 7 million and EUR 12.1 million. At present, we also assume that we will end up at the upper end of the range. As you can imagine, our guidance is based again on the assumption that both the macroeconomic environment and also the consumer sentiment will not deteriorate significantly. Now, I would like to thank you for your attention, and I'm open for your questions.

[Operator Instructions] Wolfgang Specht, you should be able to speak.

I would have 3 questions to start with. First, on the assortment of the stock keeping units you're currently holding. Is the figure broadly stable to what you had, let's say, a year ago? Or are you really broadening the assortment? That would be interesting. Second question is the increase on your active customers. Where are these customers coming from? Are these, let's say, returning customers that have not done a deal in the last 12 months? Or are that really new names with new addresses? And third, do you see any upside on purchasing conditions? I mean, most of the equipment, both full-bikes and PAC is coming from the Asian area, a lot from China. Do you expect any deals you can make maybe that, let's say, shipping into other world regions like U.S. might get more expensive over time? That would be helpful.

Okay. Thank you for your question. Yes, I'll start with your questions regarding the assortment, our SKU level. Our SKU level in absolute numbers is a little bit less than last year. I don't know exactly the percentage, but it's a little bit less than last year. So we do not grow in SKU in absolute numbers, but the main reason for our growth is that our availability is good, that the SAP implementation is paying off. So the reordering process is better than last year. This is one of the main driver of our results in the second quarter. The second question was regarding when I understand you correct, our active customer base. So we see, of course, yes, a lot of new customers from all markets. That is 100% clear. And yes, but of course, also it is a little part of our active customer base is from existing customers, but also new customers have increasing repurchasing quotes. This is seen in our -- yes, in our results. And the last question is regarding PAC and bikes and especially the question to maybe Asian situation or the tariff situation, what we see. To be honest, we see it in an unbroken offering in full-bikes. So that we see there's also, yes, still overstock issues in the market. And I would say, in the PAC segments, it's a little bit similar and comparable to last year, but it's very clear that we are one of the biggest players in Europe. So -- and we have very good relationships to the manufacturers and also to all the distributors. And that is the reason why we have a very high level of offering from manufacturers or distributors that they come to us and offering clearance deals. So there's no big change to last year, and we do not see also a big change regarding all these things regarding the tariff situation in the U.S.

And we move on to the next participant with a raised hand. Ingo Schmidt, you should be able to place your question, please.

This is Ingo Schmidt from Montega AG. First of all, congratulations on the excellent Q2 results. There was certainly a lot of momentum there. Now, as analysts, we always need to look a bit further ahead and are, of course, interested in what lies before us. Therefore, the following questions. How far does visibility extend beyond 2025? Is this now the sustainable growth path we had hoped for? And what does that mean for 2026 and beyond? Are double-digit revenue growth rates realistic?

Yes. Thank you for your question. To be honest, and what I mentioned in my presentation that we see double-digit growth rates also in July and August. And on the other hand, we see -- yes, when you see the first quarter and the second quarter, the reasons behind our growth rates or great growth rates is a little bit a catch-up effect because of the SAP introduction last year. So we -- I would say we didn't do full speed last year because of this implementation. This is a little thing, a catch-up effect. On the other hand, the market is good with us, I would say. So when you see our assortments and our historical strength, so it's first our core segment, the enthusiasts. And also when you see the assortment, our core focus is road and also gravel. And this is really a tailwind in the actual situation. And on the other hand, I would say it's a little bit the weakness of off-line competitors. And the main thing I also mentioned before is the higher availability because of our better processes and the SAP implementation. So we are -- we see the July and August figures. We are very promising also figures for the second half. But on the other hand, we are a little bit careful regarding the second half because of the tariff trade discussions, macroeconomic effects and also the German consumer sentiment. So that's the reason why we are a little bit careful, but when we look ahead for also 2026, as you know, it was always our ambition to grow and our ambition is also for 2026 and also the coming years to not only to gain market shares, we are also looking for a double-digit growth rate in revenues. And profitable -- and to be profitable, this is the main point.

And we move on to one participant with a question in our chat box. I'll read this out for you. For complete bikes, you currently offer high discounts compared to RRP. Was this stock purchased under regular conditions? Or have you already been able to pass some of the price pressure on to your suppliers?

Yes. Thank you for your question. Of course, when you see now our offering, we are -- yes, it's sale time. It's naturally starts in July and August. So that is the reason why you see heavy discounts in bikes. But on the other hand, and this is what I mentioned in my presentation that we used our strength, our financial strength and also the team did great success regarding that we are looking also for clearance deals. And of course, clearance deals have better conditions, and that is the reason why we can offering also attractive prices really lower than RRP. And on the other hand, when I look to our gross margin level, it is comparable to last year. And yes, the main reason is that we had many, many good offers from manufacturers. And here in this point or in this case, it helps that we have such a good relationships to get to many, many different manufacturers and distributors.

Okay. There is another question in the chat box. I read this out in German [Foreign Language].

[Foreign Language] In English, I will answer in English. The goodwill depreciation was EUR 4.8 million when I see it correct.

Yes.

And the depreciation and amortization and also as I mean, the additional was in the first half, EUR 3.4 million.

Okay. And there is a question with a raised hand. Please state your full name when I take you.

[indiscernible] from MS Invest. Can you hear me?

Yes, we can hear you.

Okay. I have actually 2 questions. One question is to the market growth or market in general. What was the market growth in Q2 or in the first half in your -- probably in DACH, I assume it's the most relevant figure. And what is your market share more or less?

Do you mean the whole market share or the market?