RugVista Group AB (publ) ($RUG)

Welcome to the RugVista Q1 2026 Conference Call. [Operator Instructions] Now I will hand the conference over to the speakers, CEO, Ebba Ljungerud; and CFO, Joakim Tuvner. Please go ahead.

Hi, everyone. Good morning, and welcome to our Q1 2026 earnings call. So I am Ebba Ljungerud, and Joakim Tuvner, our CFO, is here with me as well today. Today's presentation will, as always, start with a business run-through and then more deep dive into the numbers by Joakim. But first, I would just like to point out that the images in the presentation today come from our outdoor campaign that we launched during the quarter. And as you might have read in the CEO word that collection has started off really, really well. It has been growing for a couple of years, and we see -- we continue to see potential in that part of the business. So that's really nice. Going into the business update. We have continued double-digit growth in the quarter with net revenue coming in at SEK 212 million compared to SEK 197 million last year. So that's a 7.6% growth, which organically then ends up being 12.5%. We're very proud of this, I have to say. I think it's a really good result for us. Moving over to orders. They ended up on 103,000 compared to 96,600 last year. And looking at these charts, you see that, that's a 6.5% increase quarter-on-quarter. And rolling 12, we continue to grow over time, which, of course, is something that we want to do. So also happy with this result. New customers came in at 75,000 compared to 69,000 last year. So that's just above 8% growth on that metric as well. And then AOV, average order value, you've heard us talk a lot about that in the last 18 months, ended up on SEK 2,874, which looking at this chart, you see, is pretty much flat year-on-year. But if you take the foreign exchange effect into consideration, it's just above 5% growth. So that means that the top line growth came from more or less half orders, half average order value, which is -- it's nice for us to see the balance and see that we grow in both. You've heard me talk about before that we really want to balance these 2, and we see that if one goes up too much, so to speak, it tends to have a negative effect on the other. So we want to balance them over time. We've made a lot of changes over the years, and we actually yesterday launched a new A/B test to try to improve AOV as well. So this continues to be something we work on and it'll always be something we work on. But we are very happy with having stabilized this, as you can see, for quite a few quarters now. Then moving a little bit further down in the P&L. We had a strong gross margin and also high marketing investments in the quarter. The gross margin ended up on almost 65%, 64% last year. This is in spite of increased freight costs. We can see it both in the carrier mix and in the carriers or the companies themselves having increased prices. Moving over to the marketing. It ended up on 32.3% versus 29% last year. 32.3% is definitely on the high side, but we started the quarter a little bit slowly. We saw momentum when we invested more, so we decided to increase the investment for the quarter. I think this is something we've flagged many times. This percentage goes up and down. And I think it's also relevant to point out that 29% last Q1 was very low. But of course, this is something that we keep our eye on and the trajectory over time rolling, we want to trend slightly downwards. This in itself then led to sessions on site increasing by 23% to just above 14 million visits. We see this growth not stabilizing, but slowing down a little bit. You see it was 52% Q1 last year. This is, of course, because now we are comparing more like-for-like. We have shifted our marketing investments from being primarily Google to being much broader, which increased the sessions a lot now that now we're comparing a more similar quarter. But of course, we still want this to grow. This, for us, will lead to that conversion becomes a more and more important KPI for us to keep track of. Having -- last year, you've heard me talk about average order value all the time. We are increasingly looking at conversion. And this has to do, of course, both with that we have stabilized the sessions. So now we have similar comparisons, but also that we see that currently not that big increase in AI search, but we see that it's growing, and we all know that it's growing. It looks like the efficiency in that group is a little bit better, which means that we will want to increase conversion rate over time. Having said that, having this high average order value average cart tends to also bring slightly lower conversion rate just if you compare to other companies because we just have a high average order value basically. Yes, I think that was it on that part. And then EBIT, we ended up on SEK 23.9 million versus SEK 27.2 million last year. So that's a margin of 11.3% and last year it was 13.8%. This quarter as well, we have seen an FX effect that we will go into more detail. So that drives the results quite a bit. And then, of course, also there is marketing spend in there. Looking at the markets and the customers. Different markets continue to differ how much they grow, and we are quite happy with our strategy that we move investments to the markets where we see the best exchange. This quarter, France was very strong, growing around just above, I think, 12%, which is out of the bigger markets, one of the higher growth numbers. And I think it's worth pointing out that we will continue this strategy to move money. So we're not so focused on one individual market growing at a certain pace. It's much more about how the portfolio of markets grow. Looking at the consumer confidence, it's continued stable, low, I would say, in the quarter. This is not so strange considering the state of the world. But we also see that it's -- we have seen some numbers for April, right, Joakim?

Yes.

Yes. And they are also continuously quite low. So of course, there is a concern in the world, which affects the consumers. And then looking at what we see more due to what the state of the world is, the war in Iran affects us both really for the prices for the oil that we need both for our machine-made rugs, but also for the freight. So that's, of course, something that we keep very, very close track of. And then we see a lot of movements, thanks to or maybe because of AI. And for us, it means a lot of opportunities, but of course, also some challenges when our customers are moving to different types of search and how they find us. We think that we are in a pretty good place. We have changed the whole structure of our site in the past year to more adapt to this, and we see good effects of that. But of course, this is something that is incredibly important, both in how we work in the company, but also how we build our tech stack and how we work with the different networks that are out there for getting customers into the site. And then we have continuously stable and high Trustpilot scores. We are on 4.6 for the quarter. You might remember that I said in Q4 -- the Q4 report that we had some challenges in the warehouse over peak. It was a lot of rugs going hot, and that spilled over a little bit into Q1. So we're very happy that we have managed to keep this up going forward. And this will also be a very high focus for us both because we think it's very important. We want to live by our purpose to help people to a home they love, but also because we know that these types of indicators are very important in the AI search tools. So with that, I hand over to you, Joakim.

Thank you, Ebba. And as you said, yet another quarter with a double-digit organic growth. So in local currencies, we grew by 12.5%. And as you can see here, the negative currency impact, then it was 4.9%. So when you look at the right here, you need to add on another 4.9% to get to the organic growth number. So DACH grew by 17.2%, hence, 22% -- about 22% in local currency. And the biggest region here is Germany that grew by 10.5%. The Nordics grew by 9.6% and then Sweden without the currency effect, of course, grew by 6%. Rest of World was growing 3.2% and the biggest market there is France.

And in general, it's mainly Europe, right?

Yes. And Rest of World is mainly Europe. We have a site in Japan that it's really immaterial, the sales we have from there. So France continued from a very strong quarter 4 and grew by 12.3% in this quarter and plus the currency impact, so around 17% in local currency. So again, like you said, Ebba, we see some big variances between the markets, but overall, a very good growth. So moving on to the cost ratios here. The product expenses came down the cost by 2.8 percentage points. And this is, of course, due to our price increases that we did one in September. We also made minor adjustments since quarter 1 of last year. And then the dollar depreciation that started to kick in already in H2 of last year. Shipping and other selling expenses came up due to a carrier mix. We, for operational reasons, choose to have a certain carrier mix that was more expensive, and also the carrier price increases that we got in January. And that, all in all, despite those increasing shipping expenses, landed on a gross margin that is 0.9 percentage points higher, 64.9%. We have actually never been above that, but we have been at 64.9%. If you look at the numbers since 2018, there are 2 quarters where we have been on 64.9%. Then on to the other external expenses. This is 3.1 percentage points higher than last year and 3.3% comes from the higher marketing costs that Ebba spoke about. Personnel expenses are down percentage-wise, up just with the salary increases in fixed amount, and we get some economies of scale here from the growing sales. And then the other operating expenses actually takes SEK 2.5 million out of our P&L. It's better this year. And hopefully, moving forward, if the Swedish currency can remain stable, we hope this can be kept at a lower level. But now it takes out 1.2 percentage points out of our EBIT. Depreciation and amortization, now we have a little bit higher cost here. We have the increased depreciation due to our fixed assets, the SEK 45 million we invested in the new warehouse and logistics center in Malmö. And we also have the new lease agreements. So that, all in all, is 1.1 percentage points higher than last year. So summing it up, we have a 2.5 percentage point lower EBIT margin due to the marketing expenses. A quick look at the inventory. We are roughly at the same level as last year. And if you look to the right here, it seems that we are almost too low in inventory. I don't think that is the case. I think we have a well-balanced inventory. We have the fresh inventory, and we are more or less where we want to be, 16.8% of the last 12 months of net revenue. So moving on to the cash balance. If we take a look at the cash flow from operating activities, top left here in the graph, we didn't have a fill up tax payment this year. We had that in last year, but that was positive. In the working capital, we have a working capital increase that decreases the cash flow, and that is the payables that went down quite a lot in quarter 1. Here, we see actually a different purchase pattern compared to prior years. So in 2025, we kept the inventory as low as possible up to the summer because we wanted to move less products into our new warehouse, of course. So we made more purchases in end of quarter 3. And also, thanks to our new higher inbound capacity during peak, we also made more purchases and received more shipments during the peak season. And then, of course, those invoices are due later, which is in quarter 1. And that's why we have a decrease in the cash flow here due to an increased working capital. If we look at the cash flow from investing activities, you see the start of the investment in prior year that we did in the new office and warehouse building. And this year, you can say it's more normalized, almost no investments. And that gives us, to the right then, a very good cash position. So despite that we, from quarter 1 last year until now, have paid a dividend, we have paid the investments, and we still have SEK 13 million more in cash compared to last year. And we have a cash balance of SEK 235 million at the end of the quarter. And I think that puts us in a very good position to sustain the proposed dividend by the Board of Directors of close to SEK 104 million. So with that, Ebba, I hand it back to you to sum this up.

Thank you. So yes, strong top line growth and good customer KPIs. Actually for the quarter, all-time high in both the top line and the customer KPIs, which we, of course, are very happy about. It is a challenging world that we are in, and we are mindful of that, of course, and really keeping track of both what's happening in the macro space globally. But also AI is a big topic for us that we follow closely and adapt to continuously. And I think that is really the trick that we see that it's not -- it's very much about shifting continuously all the time because the tools that are available are developing so fast. So we try not to lock ourselves into any given corner, so to speak. We have our AGM on the 21st of May in Malmö. We hope to see many of you there. You are all very welcome. And then as Joakim already mentioned, we have a proposed record dividend, which is the, so to speak, normal dividend of half our profits, which is about SEK 1.5. And then it's an additional extra dividend, so to speak, of SEK 3.5. So SEK 5 per share, basically. And that's it, I think, for the presentation. So over to Q&A.

[Operator Instructions] The next question comes from Johan Fred from SEB.

Starting off with the question around marketing here. Marketing spend rose roughly 3 percentage points year-on-year. Yes, that is versus a low comparison, but still high in a historical context. Could you elaborate on what drove the higher marketing spend in the quarter? Was this solely driven by higher performance marketing? Or were there any, call it, long-term investments into brand or the likes that drove the step-up this quarter?

Johan, thank you. The short answer is that the majority of this goes to -- the vast majority goes to performance marketing. But the fact that we have changed our strategy here, and we are trying to be much more brand building in the performance marketing as well. I see it as hard to keep up investments if you split them too much. That said, we are also doing some brand -- more specific brand work, which is more really about how we make the rugs, for instance, that are more long term. But the vast majority is performance marketing.

Okay. And sort of in that context, how should we think about the level of marketing spend going forward? You mentioned that marketing should come down slightly on a rolling basis, which essentially implies that we could expect a significantly lower marketing spend coming quarters. Will you be able -- or my question is really, will you be able to continue to deliver double-digit organic growth with a lower marketing spend? Or should we assume that the higher level seen in Q1 is sort of a requisite for you to deliver on that double-digit growth?

We don't see that this is a shift in our strategy. We think Q1 was -- yes, as we say, it was high, but we see that we can drive this percentage down over time. I would like to be very clear on that it might not be like year-over-year. So it's a very long-term target, so to speak, to match also our bottom line target over time to reach 15% EBIT. But we don't see it as a structural shift as such. I don't know if you want to add anything to that.

No, that's -- no, not really. No.

Okay. So higher marketing spend in Q1 was a Q1-specific event. And -- but in that context, could you help us sort of understand the bridge to the 15% EBIT margin, how much does marketing need to come down structurally as a percentage of revenue for you to reach that target?

I don't have an exact number for that. And it's also -- it also fluctuates over time, right? But the aim for us is to -- we're not talking about coming down multiple percentage points. It's more the aim over time is like slowly downwards trend.

Yes. And I think we have so many projects ongoing within the company that are -- I mean, one is assortment that is improving by the quarter, by the launch that will drive conversion. And then we have so many site improvements. I mean we're just A/B testing one now that is really interesting on site that will improve the customer journey and drive conversion. And so I think, over time, it's not more traffic we need. We have a very good traffic increases, and we have a very big traffic. We need a better conversion. And for that, we have just a big number of projects going on in the company.

Yes, that was my next question actually. So you mentioned it as an important KPI, the conversion rate. And how more specifically do you work to improve the conversion rate and essentially the ROI on marketing?

So it's the same answer as we had around AOV, which is that it's not really one thing. It's a lot of small adjustments. And for us, it's a lot about how can we work in this efficient way that we do with a quite small workforce and being in 30 countries and still manage to be more personalized for the customer, have better customer journeys. We've done one very big project, which is more AI related, but it's about basically how the product list pages load. And that in itself enables us to do other small changes on the product list that then leads to the product pages. So it's like these small incremental changes that we A/B test continuously with the aim to drive down conversion over time. But the one thing that we have now that we -- that has been a little bit difficult for us in this past, let's say, 18 months is that it has been a little bit difficult to see the -- what is sort of the baseline for the conversion because the traffic mix has changed so much, and that we see a little bit better now. So it's -- I'm not going to say it's easier to A/B test, that will be maybe overly positive, but it makes it easier to compare results for us, which is a good thing.

I've asked a lot of questions here, but just one more, if I may. So on the shipping cost that rose 14% or to 14% of sales, is this sort of -- would you say that this is a persistent headwind throughout 2026? Or do you expect this to come down the carrier mix and the high freight rates, et cetera?

I mean the carrier mix, we can steer ourselves, and that was maybe more of a -- that's more of a high season thing. So those are things that we can avoid better. And...

Maybe we can just explain exactly what it is. Not very many carriers take rolled rugs for shipment. Most of the carriers in the world actually want them to be folded. And that, of course, takes a lot more time in the warehouse. So when we have a very high number of orders, we ship more rolls, which drives the cost up a little bit. So that's one of the carrier mix reasons.

Yes. So it saves some in the personnel line, and it gives us a better capacity, but it increases the freight cost. So it's a bit of a high season effect. The price increases that we saw in the beginning of the quarter will, of course, remain. And we can also see that there are more coming up. We don't know what happens in the Strait of Hormuz, but we have seen the fuel prices go up, which will come in on top of this. On top of that, we can, of course, also optimize our costs and taking that down with time. But in the short term, this is not something that we will get rid of other than that the carrier mix will be more favorable in the coming 2 quarters.

Got it. Got it. And if I may squeeze in another. At the last -- or at the end of the presentation, you mentioned that you were going to sustain the dividend of SEK 100 million. What does that mean? Does that mean that the SEK 100 million is the goal going forward also? Or...

No, no, no. Yes. Sorry, that was the wrong word. We have good support in paying that dividend. We have a solid balance sheet to support the Board of Directors proposed dividend. That was what I meant. And we have some questions here from...

No, I think some more is on the line.

Okay. Some more is on the line.

The next question comes from Emanuel Jansson from Danske Bank.

Also some questions from my side as well. I think we could start off with the sales growth during the quarter. Is it possible to maybe give us some more color of the trend during the quarter from January until March?

It started a little bit slower as -- and that's one of the reasons why we decided to invest more in marketing, also, of course, because we saw effects of the marketing investments. And then it picked up. So I think, in general, it was quite stable over the quarter, but a little bit slow in the beginning.

Yes.

So from that point of view, you spend less amount on marketing at the end of the quarter, right?

Yes, but fairly stable.

Yes, I understand. I understand. And just looking in the short term, looking at the Q2 -- the second quarter this year, you faced quite tough comparables. I think you grew over 20% organic last year. And I can also see that you spend around 29% of sales on marketing in that quarter as well as similar as in last year's Q1. I mean, should we expect then marketing spend to be in similar levels as we have seen in Q1 you expect for the second quarter?

No. And now I'm sticking my chin out and saying no. But we think it will not be on that level for Q2. Also, it's important to remember that there are 2 biggest quarters, so to speak, are Q4 and Q1. So the momentum in Q1 is also important to us, whereas Q2 tends to be a little bit slower, which also affects this, of course.

Perfect. That's very clear. And just moving to the average order value, very positive to see the underlying growth in local currency here. What is driving this recovery? Is it lower discounting, a shift in assortment mix or changes in which customer segments you are attracting at the moment?

I think all of the above to complicate matters. We both -- we haven't -- we are -- Q1 was fairly stable, I think it's fair to say, discount level-wise. We did discount a lot last year, but it started at the end of Q1, and that was, as you mentioned before, Joakim, very much to sort of clean out the warehouse a little bit ahead of the move. So there is a part that comes from that. Then we -- last year, we started with all the site changes really during Q1 last year or we maybe started a few before, but we also had a peak in Q4, and you don't want to mess too much with the site during peak. So a lot of the things happened in Q1. So the comparables now it's like full years of having a different type of algorithm on the product list pages, et cetera, et cetera, lots and lots and lots of changes. The front page looks very different today from what it did a year ago, et cetera. We also -- we actually -- when it comes to the product mix, we are growing a lot in the more expensive rugs. But since outdoors is performing very well and it isn't really a high-cost product, those 2 balance each other out, I would say. Yes, so a lot of different, both things that we drive. We also see that we continue to get a lot of traffic and a lot of purchases from people who come up higher up -- come in, sorry, higher up in the purchasing funnel, which we believe also drives a slightly different behavior from the customers.

Perfect. That's a very clear answer. And is it possible any way to quantify the growth in the outdoor segment?

No, we don't disclose that.

Okay. I understand. And just coming back to marketing again, just interesting subject around AI. I mean, as AI search changes how customers discover products, I mean, are you seeing the balance between performance marketing and brand building activities? And if so, how does that affect the short-term conversion metrics, you think?

I think the main aim for us is to drive brand building through everything we do. And I think that's really the key. We try not to separate the 2 too much. Having said that, we also see that we get very good effect, long-term effect and we get more organic search when we do good brand building. So there is an element of that. And as you say, it's also very important for the AI. But I think it's both about being found and that at least today, then that comes down a lot to how the site is built. And we're very happy that we have pushed this very big sort of structural project through that really took all of last year to do, which you don't really see on site, but it's like how do the search engines, whether it's AI engines or other engines, how do they search and crawl the sites. So that is a very big part of it. And then the brand building is absolutely important, but we also have other parameters there, which, for instance, that our many, many, many Trustpilot reviews are also a very good tool for this. So there's a lot of different initiatives that go on, yes.

Perfect. And final two questions. On the gross margin, you still have some tailwinds from FX, which is supporting your gross margin. Should we expect that to continue to improve throughout the year?

Do you mean continue to increase or to stay at this level?

Continue to increase from lower purchasing costs?

Yes. The dollar hasn't depreciated further, right, in -- since quarter 1. And so you have to look at what the comparison is there to prior year. And then on the expectations going forward, we have the freight cost that we discussed earlier. We have some headwind coming up due to the Strait of Hormuz, where there will be fuel surcharges coming into our P&L in the coming quarters. And of course, we can manage that with price increases that will be probably expected by consumers as well. And the lead time for implementing those price increases is very, very short. We can do it within the same day. So I think we have -- there is some headwind coming up on the cost, but I think we have control over it.

Perfect. And I think you just mentioned -- my final question, but have you done any price increases so far this year? And if not, what should we expect going forward, do you think?

Should I take?

Yes, yes, yes. Go ahead.

Yes, we have made price increases.

Price adjustments.

Yes, we call it price adjustments. We made a price increase about 2 weeks back, seeing some of the fuel surcharges coming in to April. We acted...

And also the raw material.

And the raw material that we've been advised by our suppliers. And that will, of course, take some time before that kicks into our P&L because it's ordered now and then shipped and maybe in our P&L much after the summer. But we still took a decision to increase the prices now. So we normally increase the prices in September, but we did that a bit earlier now in end of April.

Do we have any more questions on the line?

The next question comes from Victor Hansen from DNB Carnegie.

Two follow-up questions from my side. First one on marketing spend. So you previously mentioned, not today, but earlier, you mentioned that you've seen more competition on ad words from, for instance, [ Temu and Shein ]. Have you seen any of this in Q1 -- any more of this in Q1 versus previously? So a higher marketing cost per ad? Or is it mainly due to higher marketing volume that your marketing spend is up?

Possibly a little bit. We haven't seen exactly where, but we see that, and we also believe that, that's a little bit connected to the -- that people are just a little bit worried and maybe not so quick to make large investments for their homes. So we think that there is an element of that, but it's hard to say that it's exactly that.

Okay. And then I had a question on the cash flow. So free cash flow was quite weak due to the large working capital buildup here. You released a little bit of inventory, but had less payables. Should this normalize ahead? Or what are your thoughts here on working capital and cash flow?

Yes. This working capital was a shift due to -- normally in the other years, we have been having to stock up well before we get into the high season, the quarter 4, because we didn't have the capacity to take inbound shipments during the high season. Now there are 2 factors in 2025 that made us take a lot more shipments. One is that we could. And the second one was we didn't want to go into the summer with high inventory to move from one warehouse to the other. So we actually came with a low inventory after the summer, and then we started to get the shipments in August, September, October, November. And that's why we have much more payables that are due in quarter 1 than we normally have because those purchases are quite substantial to support the high season. So it's not -- maybe this is the new pattern that you see so that the comparison next year will be more even.

There are no more phone questions at this time. So I hand the conference back to the speakers for any written questions.

Okay. Do you want to read? We have...

Yes, I can read it. We have a question here from -- some questions from Benjamin Wahlstedt, ABG Sundal Collier. First one is about marketing. I think we have...

Can you may be read the question?

Could you talk a bit more about the marketing ratio, please? What is driving the higher marketing ratio in this quarter? And how confident are you that this is not a new normal level?

So yes, just repeating, we had a little bit of a weak beginning to the quarter. We decided to invest more because we saw that it converted. We are -- it has not changed our strategy to drive slowly, slowly, slowly and a little bit down over time. But take this as -- that it's over a long time, it's not -- it can jump up and down quarter-by-quarter.

Next question is from Benjamin. You exit 6,500 square meters of warehouse in Malmö during the quarter. Could you elaborate a bit on the annual cost related to this lease? Yes, we haven't disclosed what that is, and you can't read it out, but I can elaborate a bit on it. If you look into the quarter 4, Ebba wrote in the Q3 CEO word that we were almost done with the investment. Hence, you have the full depreciation of the new warehouse and office building in quarter 4. So that's a normal quarter, quarter 4. And in quarter 1, the big difference is that we have left this building, 6,500 square meters, in March. So you could almost say that the difference between Q4 and Q1 is 1 month of lease in that warehouse. And that is about SEK 400,000. So I mean, that's how I would think as an analyst. So you write about -- here's the next question from Benjamin. You write about an early start to the outdoor season despite our cooler weather. And I was wondering how you weigh this impact against the implicitly stronger performance for indoor products.

I think you can see it in the AOV. Having said that, a lot of -- there are a lot of factors that impact the AOV. But of course, the product balance is a big part of this. Yes.

Yes. And we have a question about the gross margin. The gross margin was very strong. Could you talk a bit about the gross margin bridge in terms of what is FX and what is price adjustment and what you believe is fair to assume will impact coming quarters as well? Yes, we don't -- there are so many factors on the gross margin, so we don't disclose the bridge here. What we believe going forward is that we can adjust as freight costs go up. We do believe that fuel surcharges, and we see that fuel surcharges are coming due to the higher price. We also got advised from suppliers about price increases that will kick into our P&L after the summer. As it looks now, we have also seen some suppliers actually coming back and lowering their price again. So it moves up and down.

Yes, on a weekly basis really.

On a weekly basis. But what is good is I think we are in control. We have non-branded goods. We have a very short lead time when we change the prices. And I think we are competitively priced despite the margins that we have. So yes.

Could you say whether the AOV improved also if not -- whether AOV improved also if not taking any price adjustments into account, i.e., what is the direction of demand-driven AOV changes? Can we -- do we have that exact split? So many things that are affecting the AOV.

Yes. I mean a lot of that is driven by price, it is. But on the -- beforehand, we were on a spiraling downward trend. And I think that we have stopped in the customer journey that we have a better algorithm for presenting products. So we don't get into a spiral, whereas the cheaper products are sold more and they are presented more as best sellers. So I think, yes, a lot of that is price and less discounts in the quarter.

But it's also fair to say that the outdoors impact downwards, even taking this into account. So it's also a balance. A lot to contribute.

They do. They do. And every season, the outdoor goes better and better. And that drives AOV more and more down.

And the last question from Benjamin. Your gross margin improved quite nicely despite the tough headwind from shipping. Could you explain the significantly higher shipping costs? Please, the shipping component only takes outbound shipping into account, right? Yes, that is correct. And I think we have mentioned this before, but it's really both the mix of carriers, which is very much related to that. We had a lot of orders in the quarter as well and also that they have increased prices in general. Thank you, Benjamin. And then we have a question from Oscar. The increase in performance marketing costs, are these due to increased prices on the marketing platforms? Or is it due to increased volume? Trying to understand if Meta, Google are eating your lunch. Yes, I think it's a combination of both, I would say, but it was also a conscious choice by us to invest more, to buy more basically. But of course, it's -- we -- over time, we also want to increase our organic growth to not be too much in the hands of the platforms.

And then we have what seems to be the last question from [indiscernible]. Have you tried affiliate marketing? What's your thought on that for you since you are talking a lot about performance?

We -- yes, we are on some affiliate networks, not very many. But we -- what's my thought? What's our thought? We like it when it leads to good traffic. We also think it's important who the affiliate is and what the impact on the brand is from that affiliate. So that's also a parameter that we take into account when choosing where to be visible. Back to this thing that I said about branding is an important part of everything we do really. I think that was the last question, right?

It was.

Yes. So with that, we say thank you very much for listening in. Our next report is in the middle of the summer, 17th of July. So we hope to see you then. Thank you very much, and AGM.