Marley Spoon Group SE (MS1.F) Q2 FY2025 Earnings Call Transcript & Summary

Hello, ladies and gentlemen, and a warm welcome to today's conference call of the Marley Spoon Group SE following the publication of the preliminary Q2 and first half year financial results of 2025. Marley Spoon is represented by CEO Daniel Raab and CFO Thorsten Struck. So the gentlemen will speak shortly and guide us through the presentation and the results. [Operator Instructions] And having said this, Daniel, we're looking forward, and the stage is yours.

Thank you, Sarah. Good afternoon, everyone, and welcome to the presentation of Marley Spoon Group's Q2 and Half Year 1 2025 results. My name is Daniel Raab. I'm the CEO of Marley Spoon Group, and I have with me here today our CFO Thorsten Struck. We will start the presentation with an update of our strategy, followed by the operational performance in Q2 and the first half year '25. After that, I will hand it over to Thorsten for a closer look at our financials. I will round off the presentation with an outlook for the remainder of '25, and then we will open up the call for all of your questions. Let me start with an update of our strategy. We remain intensely focused on our strategy to become one of the world's leading food and nutrition platforms. We are making significant progress in broadening our offerings, creating a single destination to better serve the diverse needs of our international customers. Our transition from a traditional direct-to-consumer meal kit business to an integrated platform will continue to drive both customer value and financial success. This shift will position us well to generate income from a wider range of adjacent categories beyond meal kit subscriptions. By maximizing cross-selling opportunities across expanded -- our expanded portfolio, we can take full advantage of different growth drivers and enhance customer lifetime value at the same time. In the first months of '25, we've continued to improve our product, launched new categories and made significant progress to operate under one single brand, Marley Spoon. Most recently, we launched ready-to-heat customer acquisition funnel in the U.S. under the Marley Spoon brand. We introduced a fresh and not frozen ready-to-heat range in Europe and closed the sale of Chefgood, a step in our strategy to become a food solutions platform focusing on one single brand and to strengthen our profitability and cash position. I can assure you that our global teams are actively working on launching more initiatives for the rest of '25, but they're also working on initiatives for '26 already. Let's now go over the results for Q2 '25. In Q2 2025, we have continued to set new records for the group and made significant steps towards becoming a food solutions platform. Operating EBITDA was 7.8% up, representing 652 basis points improvement year-over-year. Contribution margin was at 37.6%, increasing 295 basis points versus last year. Net revenue was down, decreasing 21% to EUR 64.2 million in constant currency versus prior year. Driven by a deliberate reduction in marketing investments of almost 50% and the successful sale of the Chefgood business in Australia. At the same time, average order value increased by 5.8% in constant currency. Net revenue was EUR 64.2 million, decreasing 21.6% in constant currency in Q2 2025. Despite being driven by the deliberate reduction in marketing investments by almost 50%, we were able to increase the average order value by 5.8% in constant currency. As a result, we also now have a much stronger customer base with 6.9% higher average order frequency and an improved skip and churn rate from those customers. Lastly, the divestiture of Chefgood in Australia was closed midway through the second quarter, impacting the year-over-year development in Q2. As communicated before, our full focus this year is on profitability and efficiency, and our Q2 results are a clear reflection of the strategy. We are continuing to inform our marketing decisions with discipline, data-driven approach, investing when we see attractive returns and only that. Our strategy to operate as a food solutions platform will allow us to take advantage of several growing categories beyond meal kit, and it will allow us to accelerate investments going forward. To note that with each additional category we add already to our already existing product range such as ready-to-heat and specialty items, we unlock a wider audience and enable improved marketing efficiencies. In other words, we are solving for more problems for our current customers and those of our future customers. Our customer base is now stronger than ever before, growing order frequency by 23.5% in the last 2 years. Each euro spend now has a primary focus of acquiring more of the customers we know will frequently and will order frequently and with higher baskets. With profitability in mind, we continue to allocate more resources into Marley Spoon over Dinnerly as part of our strategy to develop Marley Spoon into an integrated platform. We are following a careful and phased approach, balancing absolute and relative profit. Despite the headwinds from FX, average order value continues to grow 5.8% to EUR 67.3 as a combined result of an expanded offering, lower discounts and higher value product lines such as premium recipes and specialty grocery items for the full family. Contribution margin continues to increase, having grown by over 290 basis points year-over-year. High average order value and cost efficiency have contributed to deliver 37.6% margin in the quarter and a new record for Marley Spoon Group, confirming our full year commitment to increasing efficiency and profitability globally. Also, our cost efficiency measures continue to return significant results, having achieved this quarter an overall reduction of 19% versus prior year and a reduction of 29% compared to Q2 '23. It is to note that those initiatives are not limited to the reorganization we conducted earlier in the year, but take into account the ongoing review of all our cost lines. It is remarkable to see that the team is determined to deliver more with less, focusing on what is absolutely essential to increase value for our customers. As a result of all the drivers trending in a positive direction, in H1 '25, we managed to achieve a EUR 4.3 million higher operating EBITDA year-on-year and a EUR 9.5 million improvement versus half year 1 in 2023. To sum it up, our teams delivered a better value proposition for our customers while achieving a record high contribution margin at a lower cost base than ever. With that, I would like to hand it over to Thorsten, who will talk you through the regional performances as well as the financial statements.

Thank you, Daniel. So let's look at our performance by region. In the U.S., net revenues were 24.6% lower versus prior year, and this is mainly driven by reduced marketing spend. However, the average order value increased by nearly 6% year-over-year and the order frequency by around about 7.5% versus Q2 2024. The U.S. delivered a strong contribution margin in Q2 year-over-year, an improvement of 520 basis points. And this was mainly driven by the increase in net average order value as well as lower operating expenses. So our operational synergies with FreshRealm continue to materialize. The margin improvements helped the U.S. region to deliver EUR 6.2 million in operating EBITDA in Q2 2025, which equals an improvement of over 63% versus Q2 last year. In Australia, net revenues were impacted by the sale of Chefgood and were 17.8% lower versus prior year. However, the average order frequency improved by 6.9% when we exclude the effect of the sale. So Australia delivered an operating EBITDA margin of 15.5%, representing a growth of 660 basis points year-over-year, which also is the highest quarterly margin of the last 4 quarters. So ongoing operational improvements, leading to a contribution margin of 33.5%. This represents a 109 basis point increase year-over-year and the continued focus on increasing the average order value, plus 7.5% year-over-year, reflects our strategic focus on refined customer targeting and a broader product offering. Unfortunately, seasonal flooding and weather incidents nationwide were temporarily impacting the ingredient supply lines and customer deliveries in New South Wales and Queensland. However, the business and teams were able to navigate disruptions -- those disruptions through a continued focus on operational efficiency. Moving to Europe. In Europe, we fully operated under the single brand, Marley Spoon. The European region showed improved performance in order frequency, up plus 8.8% year-over-year and average order value up 6.8% year-over-year. The slight decrease in contribution margin below 1 percentage point is mainly driven by food cost inflation. So all effects mentioned and combined with lower marketing spend and significant fixed cost reductions drove the increase of operating EBITDA by EUR 0.8 million, delivering a positive EUR 0.3 million operating EBITDA. So let me summarize all drivers of our business performance. A combination of improved marketing efficiency and active customer base ordering more frequently and significant cost reductions improved the operating EBITDA by EUR 3.9 million in Q2 2025 versus prior year. And also, I want to say at this point, a big thank you and congratulate the team for those achievements and look forward to working on the next steps to get closer to a positive net income. And last but not least, in Q2, we ended our cash position at EUR 5.2 million. As a highlight, the operating cash flow was EUR 2.4 million better than in Q2 2024, driven by a EUR 4.7 million improved net income. And with this, I would like to turn it back over to you, Daniel.

Thank you, Thorsten. With our Q2 results, we confirm our latest guidance for full year '25. Net revenue to be EUR 250 million to EUR 270 million in constant currency, a contribution margin between 36% and 37.5% and an operating EBITDA growing 30% to 50% versus last year. For the rest of '25, we continue to expect similar positive developments by prioritizing higher profitability and carefully allocating our capital, setting ambitious financial and operational goals to advance our platform vision of empowering people to enjoy healthier lives through personalized and tasty food nutrition solutions. With that, I would like to open the call for your questions.

Thank you so much for your presentation, Daniel and Thorsten. So dear ladies and gentlemen, we are now happy to take your questions if you may have. [Operator Instructions] So having said that, let's take a look in the chat now it's empty and the queue is empty as well. And as I directly said that, Christian Sandherr raised the virtual hand. So Christian, please go ahead with your question.

Maybe first question on the sales decline. Can you split it between organic and inorganic sales decline?

Christian, you are referring to the divestiture of Chefgood?

Yes.

Yes. We'll come back to you on that one. We have never reported Chefgood separately. So let me come back to you on this one.

Okay. Perfect. And then maybe in terms of subscriber numbers, I mean you've always stated that the cohorts that you have acquired towards the last few quarters -- in the last few quarters are much higher quality. So do you have some kind of visibility as to when the decline of subscriber numbers should level off or should start to bottom out and maybe return to a slight growth?

Look, we have not provided a guidance for '26 yet. So it's hard to specify specific targets for '26 yet. But for now, the basis that we are building, and I think we've shown that provides a much, much better outlook based on the cohort level as it did in the past. And we are not even ready having fully -- not fully launched our platform yet to really serve those customers as we want them to be served. The product range, as I mentioned, in the U.S. has been widened significantly with ready-to-heat. We just launched ready-to-heat stand-alone in Europe. Obviously, you can imagine that we are working on something in Australia, and we will significantly increase LTVs with those initiatives and therefore, also have more marketing investments available to grow our platform.

All right. And then a question on EBIT. So it's -- you were in the profitability -- profitable on the EBIT level for Q2. Would you expect going forward to have further improvements quarter-by-quarter? Or were there also maybe some positive or even negative topics that impacted the second quarter?

I mean, Christian, you know the phasing of the marketing investments, right? Q1 is our core investment period. There's a little bit of an investment also in Q3 after back-to-school. So I don't want to comment on a quarterly guidance here. But ultimately, as I've always said since joining Marley Spoon, I don't care about quarterly profitability. We want to be profitable at any point in time and not only EBIT profitable, but net income profitable, right? But we have not given any long-term guidance on when this will happen yet.

Thank you so much for your questions. So in the meantime, we did not receive any further questions. [Operator Instructions] But it seems everything is answered so far. And then we come to the end of today's earnings call. So thank you very much for attending and your interest in Marley Spoon. Yes, should further questions arise at a later time, please feel free to contact Pascal. And then a big thank you to you, Thorsten, and Daniel, for the presentation and the time you took today. So from my side, I wish you all a lovely remaining week. It was a pleasure to be your host today. And yes, we say thank you, and goodbye.

Thanks, everyone. Bye-bye.

Bye.