Mister Spex SE ($MRX)

Ladies and gentlemen, thank you for joining us, and welcome to the Mister Spex First Quarter 2026 Results Call. [Operator Instructions] I will now hand the conference over to Anke Bernesowski, Investor Relations and Mister Spex. Please go ahead.

Yes. Good morning, everybody, and a warm welcome from our side as well. With me today are Tobias Krauss, our CEO. He will lead you through the strategy update of the company; and also Benjamin van Schenck, our CFO, who will give you an insight into the Q1 '26 financials. With this, I now hand over to you, Tobias. Thank you so much.

Thank you, Anke. Good morning, everyone, and thank you for joining us today. I am pleased to present Mister Spex's Q1 2026 results. This is the first quarterly update since we concluded our spec-focused restructuring program and entered into the next horizon. Over the next 30 minutes or so, we will walk you through what we are building structurally, how Q1 performed financially and where we stand relative to our full year guidance. I will begin with a strategy update, covering the foundation we have built and the operating model we are now scaling. Benjamin will then take you through the financial update in detail. We will close with our 2026 guidance and then open up for Q&A. So let's get started. As you know, in 2024 and 2025, we completed a comprehensive restructuring of the core business. The core business is now on a solid foundation. We exited unprofitable international markets, rightsized the store network, completed a discount Cocks and structurally reduced our cost base. With the next horizon, we now focus on building a scalable and resilient operating model on top of that foundation. Let me briefly ground you where we stand today. Mister Spex is built on four pillars that together form a differentiated position in the optical market. The first is optical expertise. This is at the heart of what we do. We employ more than 120 qualified opticians across our network. Since launching the eye health check, we have conducted over 8,000 screenings, and premium classes now represent 26% of our sales. We have expanded our service from product sales into preventive eye health care. The second is customer convenience. We offer a curated portfolio of around 80 brands, our home trial service and the Mister Spex switch subscription model. The goal is to make every step of the customer journey as simple and as accessible as possible, whether that journey starts online or in a store. And we will double down on this in the next horizon. The third is our digital native DNA. We have been building the business for 18 years, and we have served 8 million customers through our online platform. That heritage gives us a technology foundation and a data asset that traditional opticians simply do not have. And the fourth is our store network. As of Q1 2026, we operate 66 Mister Spex stores, work with more than 250 partner opticians, and we have completed 4 bolt-on acquisitions of premium optical stores. Stores are where we bring our expertise to life and where we build lasting customer relationships. Together, these 4 pillars form a strong foundation. And importantly, these -- they position us exactly where the market is heading. Let me illustrate this. A recent report by Stifel identified a range of disruptive trends reshaping the optical and eyewear markets. I want to highlight four, that are because they illustrate where Mister spex is already well positioned. First, subscription. Customers are moving from one-off purchases towards recurring models, shortening the replacement cycle from approximately 3 years to 1. We are already addressing this with Mister spex Switch, where customers rent instead of buy, gaining easier access to premium products and driving significant higher AUV. Second, health care. Eyewear is becoming part of the preventive health and the total addressable market is expanding from approximately $143 billion to $360 billion. Our iHealth check positions us exactly in this space, shifting us from product sales to preventive care and building trust as a retention driver. Third, premiumization. Premium eyewear continues to grow at 2 to 4 year year-on-year even in a weak cycle. We are actively curating our brand and lens portfolio, prioritizing quality and breadth. And fourth, digital transformation. virtual try-on, online booking and AI-powered advice are reshaping the customer journey. With 18 years of digital native DNA, we are uniquely positioned to adopt these technologies faster than traditional opticians and deliver a seamless customer experience across online and store. The point is clear, we are not building towards these trends. We are already executing on them. Now let me turn to how we intend to scale what we have already built. When we presented our full year results 2025, we already introduced continuous improvement as the core company culture. We have now developed this further into continuous improvement flywheel, four structural enables that enforce the other and generate compounding momentum driving us towards a scalable operating model. Our flywheel gains momentum not from any single push, but from compounding effects of many consistent efforts in the same direction. That is exactly how these enablers work. Each one feeds into the next, and as they compound, the business becomes harder to replicate and easier to scale. The four elements are the unified stack as our scale engine, artificial intelligence as a business accelerator, operating leverage as our efficiency engine and value creation as the growth driver. Let me now take you through each of them briefly. The first enabler is the unified stack, and it is the starting point for everything that follows. Today, we still operate on a patchwork of legacy systems across our online and offline. We are now changing that. We are migrating our technology infrastructure to an integrated Salesforce platform. Salesforce Commerce Cloud for our online business and Salesforce Retail Cloud for our stores will replace our legacy systems and create one platform, one data layer and one customer view. Why does this matter? Because it is the technological backbone for all other enablers. Without a unified data architecture, you cannot automate, you cannot personalize and you cannot scale efficiently. Once the unified stack is in place, every new store, every partner and every new service connect seamlessly. And over time, it enables integrated customer relation management and a consistent customer experience across online and offline. The core KPIs that tell us whether this enabler is working on net sales because they show whether the integrated platform carries the business overall, like-for-like store sales because they show whether existing locations become more productive on the platform and time to market because it measures how quickly we can deploy new features, integrate new locations and scale services across the platform. The second enabler is artificial intelligence, and it builds directly on the unified stack. Once you have a unified data layer, the question is, what do we do with it? Our answer is to deploy AI across core business processes to enable automation, personalization and predictive steering. Let me make this concrete. In marketing, AI-driven allocation helps us direct spend towards the channels and audience with the highest return, reducing customer acquisition costs. In our product journey, AI-powered personalization and upselling shifts the mix towards higher-margin products, particularly premium lenses. And across customer interactions, predictive models help us anticipate needs and serve customers more efficiently, increasing the value of every transaction. This is how we turn data into a better commercial decision at scale without proportionately scaling headcount. The KPIs that measure progress here are average order value because personalization increases the value of each transaction. Gross margin because AI-driven upselling shifts the mix towards higher-margin products and marketing efficiency because AI-driven allocation lowers acquisition costs. The third enabler is operating leverage, and this is where the first two enablers reshape our cost structure. The process optimization enabled by the unified stack and AI creates the conditions for structurally decreasing marginal costs. Manual workloads are reduced and resources are redirected towards value-adding activities. As a result, fixed cost structures become more flexible and the organization becomes leaner. Revenue can grow without proportional cost increases. And as the unified stack and AI scale, they will accelerate this effect further. The KPIs here are personnel expenses because they show whether automation is replacing manual workloads, other operating expenses because they reflect the structural streamlining of the organization and adjusted EBITDA margin because that is ultimately the proof that the lever is working. The fourth and final enabler and the one at the core of everything we do is value creation. This is where it all comes together. The objective is to develop a value-maximizing operating model through structural improvement of revenue quality. Revenue scales with the cost base disciplined, driven by operating leverage. The unified stack and artificial intelligence increased scalability and precision, creating the condition for adjusted EBITDA growth. As adjusted EBITDA expands, the operating model demonstrates increasing returns. And those returns convert into free cash flow, we gain real financial flexibility. And as the market recognizes the quality and durability of that earnings trajectory, we expect this to be reflected in a multiple expansion. That is the direction Mister Spex is taking, a solid core business and continuous improvement flywheel that compounds our progress and a clear structural path toward a scalable and resilient operating model. We are confident in this path. With that, let me now hand over to Benjamin, who will take you through the numbers.

Thank you, Tobias, and welcome, everyone, on the call. Let me walk you through Q1 '26 financial highlights. The headline for this quarter is clear. Profitability improved despite a challenging macro environment. Net revenue came in at EUR 40.7 million, in line with our full year '26 guidance. This reflects the continued normalization of our revenue base following reduced promotional activity as well as the discontinuation of 5 unprofitable international online shops, which we closed in the second half of '25. This development takes place against the backdrop of a persistently weak consumer environment. According to GFK, the consumer sentiment remained at a low level in Q1, driven by declining income expectations, rising inflation concerns due to higher energy prices and global turmoil and a weakened consumer demand. Adjusted EBITDA improved to EUR 1.3 million, which is an increase of 88% year-over-year. reflecting the combined effect of the structural margin improvements and the lower fixed cost base that we have been building over the past 2 years. Gross margin expanded to 58.8%, up 234 basis points year-on-year. The primary driver was a higher share of prescription glasses in total revenue, which increased to 57% from 53% in Q1 '25, supported by the targeted expansion of our lens portfolio. Additionally, Mister Spex Switch contributed positively to gross profit with approximately 13% of store revenue now generated through the subscription model at an average order value of 2.4x higher than nonprescription purchases. Cash and cash equivalents -- sorry, one slide back. Forgot that one. Cash and cash equivalents stood at EUR 47.9 million at the end of Q1, in line with our full year guidance. liquidity carefully as communicated earlier. The cash position reflects both the disciplined capital allocation and the seasonal. Now let me break this down at group level. Revenue declined by 9% to EUR 40.7 million. What matters more is actually what is happening beneath the top line. So revenue mix continues to shift towards prescription glasses, which represent now 57% of group revenue, up from 53% a year ago. Sunglasses remained broadly stable, while contact lenses declined to 25% from 29%. Overall gross profit came in at EUR 23.9 million compared to EUR 25.2 million in Q1 '25. This lower absolute number is a direct function of the lower revenue base. On a margin basis, however, we expanded by 234 basis points to 58.8%, reflecting the higher prescription mix and the premium lens portfolio. Our adjusted EBITDA nearly doubled to EUR 1.3 million from EUR 0.7 million in Q1 '25. Offline outperformance and online efficiency measures are working together to drive this improvement. The structural changes we have made over the past 2 years are translating into results. As we communicated with our reporting the business through two clearly defined segments, each with a distinct role for value creation. Online is focused on quality over volume. We're now normalizing the pricing environment following the reduction of promotional activities, shifting the product mix towards higher-margin private label and premium brands and reallocating marketing spend towards higher-margin traffic sources. The key objectives for online are to expand gross profit and to build a scalable web shop architecture for the future. Off-line is our growth and margin engine driven by optical expertise. Stores are where we differentiate, particularly through prescription services, switch subscription and the iHealth check. We continue to see strong like-for-like momentum. The key objectives are to bring more stores into the 10% EBIT target store band and to further increase prescription share. We're also selectively expanding our store network with up to 3 new stores in proven catchment areas and considering bolt-on acquisitions of independent opticians where immediately margin accretive. Now looking at the online segment in detail. Revenue declined year-over-year by 19% to EUR 24.5 million, which amongst others, reflects the continued impact of our pricing discipline as well as the international web shop consolidation. The product mix is shifting. Prescription glasses now represent 41% of online revenue, up from 38%, while sunglasses account for 16%, down from 17%. Gross profit came in at EUR 11.9 million compared to EUR 40.6 million in Q1 '25. And this lower absolute number, again, is a direct function of the low revenue base. However, on a profitability basis, the quality of revenue is improving. Adjusted EBITDA for the online segment was EUR 1 million, up from EUR 0.6 million in Q1 '25. This is an important signal. Even with lower revenues, the online business is generating improved profitability. The structural cost reductions and marketing efficiencies are paying off. Turning to the offline segment. This continues to be our growth engine. Revenue increased by 11% to EUR 16.2 million with a like-for-like growth of 7%. Prescription glasses account for 82% of offline revenue, underlying the strength of our optical services positioning. Gross profit rose to EUR 12 million from EUR 10.6 million, supported by both revenue growth and a favorable mix shift towards higher-value products. Adjusted EBITDA for the off-line segment improved to EUR 0.3 million from EUR 0.1 million in Q1 '25. While this is a seasonally weaker quarter, the improvement is encouraging and confirms that the store network is on the right trajectory. Looking at the store network, the development continues to show strong progress. In Q1 ' 26, 20 stores were -- achieved EBIT margins above 10%, while a further 16 stores were in the breakeven to 10% range. This means that 36 stores are now at breakeven or above. At the lower end, 15 stores were in the minus 10% to 0% range and another 15 stores remained below minus 10%. To put this into context, in Q1 '24, 32 stores were in the deepest loss-making category. We have since reduced this number to 15 despite adding another store to the network. Against the challenging consumer environment, this reflects a resilient performance and demonstrates the structural improvements achieved to date. There remains clear potential for further improvement as additional stores mature towards our target EBIT band. Let me give you an update on Mr. Switch, our subscription model, which Tobias also mentioned earlier. Switch continues to account for roughly 13% of offline segment revenues in Q1 2026, indicating a stable and sustainably established contribution following prior growth. Our target for Q4 '26 remains up to 20% of our off-line segment revenues. The economics of this model are compelling. Switch customers generate an average order uplift of 2.4x compared to non-switch customers. Total subscriptions reached 14,000 by the end of Q1 '26 and customer receivables stand at EUR 5.2 million. These receivables are financial lease assets, as you can see on the balance sheet, current and noncurrent, and they will convert into cash over the next 24 months as this is a customer subscription model. Switch was launched offline in May '25 and online in August '25. So we're still in the early stages of scaling this model, but the trajectory is encouraging, and it remains a key driver of recurring revenue and customer loyalty. Let me now turn to guidance. We're confirming our full year 2026 guidance as communicated in March. Net revenue development of 0% to minus 10% growth versus the last year, adjusted EBITDA margin of breakeven to mid-single-digit percent and year-end cash and cash equivalents of approximately EUR 25 million to EUR 30 million. Current trading is in line with guidance expectations. For Q2 '26 specifically, there are 2 items to be aware of. On the one hand, purchase price payments for bolt-on acquisitions that will total around EUR 1.3 million will impact the cash, and there will be a low single-digit EBITDA adjustment relating to transformation effects and special projects. Looking ahead at the Investor Relations calendar, our AGM will be held virtually on 11th of June 2026. H1 '26 financial results will be published on 13th of August 2026 and 9 months '26 financial results on 12th November 2026. We will also be attending the EF Equity Forum in Frankfurt next week from Monday to Tuesday, and we look forward to meeting many of you there. Thanks for your continued support. Let me now hand back to Anke to open the floor for questions.

[Operator Instructions]Your first question comes from the line of Cedric Rossi with Stifel.

I have three questions, please. The first one is referring to what you were seeing given the month of April and current trading. Some of your peers mentioned that they were negatively impacted by unfavorable weather conditions in January and February. So I was curious to have your observation on March and April, whether you have seen also some signs of an improvement there. So that's my first question. And the second regarding the subscription-based model. So very interesting to see the positive trend going on. Do you feel that according to your data, what's the main rationale behind the switch of subscribers when they decided to choose this subscription model? Is it helped by the tough environment? Or is it also your differentiating offering? So curious to have your view on that. And my third question is regarding the one-off impact. So if I heard it correctly, Benjamin, so you were mentioning a low double-digit impact on Q2. So does it mean that the bulk of the impact you were expecting for the full year will occur in the second quarter?

So let me take the first two questions. So regarding fees in retail in Q1 2026. So we have walked through the different phases within these different months. So the year started quite difficult because of weather conditions, as you already mentioned. improved a little in February. And when the war in Iran started, it declined again. So it started bad. It improved a little and then went back down again. So this again shows the resilience of our business model is better compared to many of our competitors who are pure-play retail or offline players. So as you could see, even though we have a declining revenue in online, we could still, as we say, start the online machine and the drive-to-store machine in order to really push against these trends and trying to keep the frequency of people coming into our stores, especially having eye health checks or eye tests up. So there, again, resilience of our business model is good and is improving. If we compare ourselves to competitors, we need to make sure that we compare things which are comparable. So the best way to compare us to our competition, especially the listed competition, for example, companies like Ferman is to compare our offline business with these businesses since they don't have a large online business. And if we compare these businesses, as you could see from the numbers of Ferman in Germany, they grew by 1.5%. We grew like-for-like by 7% in off-line. So we do not only see that our business model is resilient and is improving, but we also see that our offline operations are very strong. And one part of this is, as you already mentioned, Switch. So especially in times like this, when we see that customer sentiment is down and people really consider every euro they are spending, it is helping them that they don't have to pay for their glasses in a one-off, but they can pay it over 24 months. So argument #1 for Switch for sure is that it is somehow not as dependent on consumer sentiment as a onetime payment is. Second one, for sure, is the additional services. So customers are asking for the insurance of their glasses. As you know, that this is included within our Switch product. That's number two. And of course, the eye health check, we see a growing number of eye health checks we are executing on. The topic as part of this whole longevity development is getting bigger and bigger, and we do have it in our stores. We do have it as a part of our Switch product. So this is why another good argument for Switch. And then again, it goes back to the product itself for themselves. Many of our customers, they don't have a second pair of glasses for them. It's very important to have them. And there, again, Switch helps to bring especially younger customers into a second pair of glasses.

And so regarding your third question on the one-off impact. So First, on Q1. In Q1, the majority was related to special projects like the implementation of Salesforce that we're doing there. We're going to see a similar development in Q2. It's not that we're -- that the bulk of the overall transformation cost in '26 will be in Q2. That's not it. We communicated in the last call a total cost of EUR 40 million kind of adjustments for this year. So it's not going to be the majority. I guess it will be roughly comparable to Q1 and Q2.

[Operator Instructions] There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect.