The Platform Group SE & Co. KGaA (TPG0) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and a warm welcome to today's earnings call of The Platform Group AG following the publication of the Q1 financial figures of 2025. We are delighted to welcome the CEO, Dr. Dominik Benner, who will speak in a moment and guide us through the presentation and the results. The floor will be open for all upcoming questions following the presentation. We are looking forward to the results. And having said this, Mr. Benner, please the stage is yours.

Thank you, Ingar, for the introduction and a warm welcome from our side. So today, we would like to give you an overview of our current status and the Q1 figures. We have good Q1 figures. That's what I can also mention in advance of this call and just to give you a brief update on our company before we do that. So first of all, welcome from my side. We -- as The Platform Group, we have a very strong growth this year regarding our partners because, as you know, the partners, the retail partners and the manufacturers they are basis of our growth, and they are the basis of our revenue. And we have a very good development there. That means we have a stable growth rate here. Around 14,000 partners are working with us together and they list all their products on our platforms. And with this, we have a good combination of new products, getting more customers and we are almost covering 26 industries. And this is a big difference for what -- for example, we have been 3 years before, 3 years before, we've been active in 14 different industries. Now it's 26. So you can imagine how many partners we have more with this double number of industries and how many customers we can achieve with that. We can be quite happy about the stock development. I share the development since we acquired the former Fashionette AG. And since that, we have a development of more than 170% compared with the DAX and MDAX I think it's quite a good development. And also when we have a short look on this year, we can see that we have almost 50% growth rate in our share and we are quite optimistic that we also overachieve the other benchmarks like DAX and MDAX this year. And the research coverage is quite positive. So currently, we see recommend rate between EUR 16 and EUR 19 per share. So you see there's quite a good uplift, which we can see as a good potential for the upcoming months. What happened the last 4 months? So we acquired the Fintus. Fintus is a SaaS company for banking software, for banking technology. And we had the closing just some days ago by May 2025. We had a great process -- progress in the TPG payment project. In the last call, our COO, Christoph Wilhelmy, showed you the development and how far we are already, and you will see this program live by October. So we are right on time with the project, and we see a great potential behind that. On the right side, you can see that we acquired Joli Closet. That is our latest acquisition by last month. We expect the closing by June, so by next month. And this is really a great luxury platform. They are only focusing on vintage products and you will know the big market for vintage luxury products like Louis Vuitton, Hermès and so on, and they are one of the market leaders there in France. Additionally, I would like to mention the acquisition of Herbertz Group. It's a company for outdoor. We've made the closing by March this year. And also Lyra Pet, this is a company for pets, pet food and so on. It was also closed by March. And on the right side, you see our latest development. You have the press release yesterday that we signed a contract and started our own facility unit. So we have our own SPV, which is managing all our full service for logistics and for freight goods for our partners. If you are a partner and work together with us, you can directly deliver from our inventory hub from our logistics hub in Gladbeck, that's in Western Germany. And we ramped it up already. So it is fully active. And I think it's one parcel -- a piece of a parcel in our strategy to have more and more services for our partners and to cover all their needs when they do e-commerce with that. You already know our TPG strategy. So we want to become in Europe, and that means we have to cover more and more industries with our software and platform solutions. And we always want to have a balanced growth rate between organic and inorganic growth. And that means if we do not find good targets or if the valuations are too high, it is not for us, although we will not buy. But on the current time under the current perspective, we see very good developments, and we see very fair valuations. So I think we are right on track. We made 4 acquisitions already this year, and we expect another 4 to 5 acquisitions until the end of this year. And here you can see our growth model because I really want to mention this because this is the backbone of how we work and the most people do not understand our business model because we are not based on the consumer confidence, for example, we are really based on the partner development because a partner means a retailer. And if we connect more retailers, we get more products and if we have more products, we immediately get more customers because we have new brands, we have better assortments, we have better products. And so with more customers we get, of course, more GMV and more revenue. And this circle is very essential to understand how we grow and how we can also have extraordinary growth rates in stagnating markets. So here, you can see the number of our backbone. So this year, we expect more than 16,000 partners working and connecting on our platforms. And we have more than 4 million, 4.2 million additional SKUs. So these are products compared to last year. So this is an uplift of more than 20%. And you can imagine that this is a really high impact if you have 20% more products as a company and you get directly more customers because just of that. All right. Let's go to the financials. The financial side from our perspective, definitely above our own expectations, and it outperformed our -- the market expectations. So starting with the GMV, the GMV increased by 87% to EUR 356 million. The net revenue also increased by almost 50%. I will show you later what effects were relevant for that. The other revenues were very stable, though, there's no big difference. The gross margin is lower, but this is automatically a development because we acquired last year, several companies, which had very high GMV, but very low revenues like Avocadostore and Hood. They are both profitable. They are wonderful companies. But through these acquisitions, we have just the statistics effecting the gross margin. It's a little bit lower because of these consolidations. But overall, the numbers are -- through the development very positive. When we have a look on the marketing side. We are happy that we reduced the marketing cost ratio. It was very effective. And we saw that some of the Asian competition or competitors reduced their marketing spend a little bit in Europe, and we see that the competition is not so high compared to last year. The distribution cost ratio, and this is one of our most important things because in the last 8 quarters, every time it was raising, raising and raising. This is the first quarter where we see no raising anymore, so we see no increase here. And so this is I think a very positive aspect because we see that our actions, which we have taken, they are working now. And we see that the implementation of these actions have an effect on the distribution cost ratio. The HR cost, there is no change. It's around 4.6%. Overall, and this is our most important number, it is always the adjusted EBITDA. We have achieved with EUR 15.9 million, which is in terms of the percent margin, it's almost 10%. This is one of the highest values we've ever had in our group, and we are quite optimistic that we can have this good development also by the rest of this year. The reported EBITDA, it is EUR 19.6 million. So this is just because we have some PPA effects, which are diluting our EBITDA and are cleaning it out of the EBITDA. The net profit achieved EUR 18.2 million. This is also the highest net profit in the quarter. So we can be quite happy with that and achieved an increase of more than 41%. The earnings per share were also above our expectations. So we had achieved an EPS of EUR 0.9, which is a very good and the highest number in the quarter, which we've ever had. And maybe just to mention this here, you see that the net profit of continuing and noncontinuing operations, there is no difference anymore in this year because we have no operations, which are not continuing. So all in all, we just have one stable business. There is nothing sold. There are not any operations, which were closed or shut down. So these numbers will not show again this year. So we only have one net profit number. So overall, we can make a short summary on that. We see in general that the consumer confidence, especially in a lot of European markets are pretty good and that we have a very positive turnaround after this post-COVID decline. We also see that a lot of companies like Zalando, Mytheresa and so on, they increased their guidance and they are positive on the future development with the markets, and we also see this tendency here. We [indiscernible] profitability to the good cost efficiency program from the last 2 years. And our cost structure is very stable and very scalable. Scalable is important because when you see that our revenues go up by 50%, you can imagine that we also have to make sure that our cost structure is not getting into the wrong direction and we're not hiring too many people. We are very conservative with that. And as I mentioned already, after 8 quarters with increasing distribution costs, it is a first quarter where we have stable cost ratios here. It took us a lot of time and effort to do that. But after all, we are positive that we have now a stable -- more or less stable cost development here. On the M&A side, we see a very good surrounding here. So we have good conditions, we have excellent conditions here to get new companies for fair valuations, and we are positive to acquire them also this next year. And you see the last point, all of our 4 segments are growing. So none of the segments stagnating, all of them are growing. And the one segment, which has last year, not such a good margin, it was the Industrial Goods segment. Now they have also a positive margin development this year. So we can be quite positive about the forecast also regarding this segment. So when can see it also in the graph, you can see that our GMV has a good increase here, also the revenue growth was almost 50%. And here, you can see the EBITDA adjusted compared to the reported one. All right. So again, I would like to mention that we always have a conservative forecast. We already increased it by April this year, so by last month. And here, we just want to show you the lines from 2023, 2024 and the forecast for this year. So you see that our growth rate it's not going down. It's getting up. And you can see this growth rate in the GMV and also in the net revenue, where we expect the net revenue to go up to EUR 700 million. The adjusted EBITDA, we expect to average with EUR 47 million to EUR 50 million. And so we currently see that we can confirm our outlook, our guidance from April 2025. And this guidance, of course, is always from the current status. So if we acquire more companies, we have to adjust that, which I also would like to mention is our return on capital employed and the return on equity because sometimes people ask as well if you have a bond with 8% or if you have interest rate like that, how can you earn money with that? And this is also a very important number, which we added in the last annual report. You can see that we have a return on equity of more than 26% and then return on capital employed was almost 20%, so 19.8% last year. And we expect to have the same numbers, more or less 2% also this year. So we think about making a guidance on these 2 figures for the full year by our next earnings call because here you can see that all the capital in which we invest in our new companies and our software, it has a good return, and we have a very good investment starting with that. When we have a short look on our segment overview, we see a growth rate in all our segments. So here you can see some EBITDA figures. So overall, consumer goods is our biggest segment. We have an EBITDA level of more than 7% to 8%, and it has a very strong increase in the revenue last year and also in the Q1. The segment which has a lowest EBITDA level is always the industrial goods segment because the competition is very high there. But here, we see a positive development. So right now, we have 3% EBITDA. We expect an increase up to 5% by end of this year. So we are very happy that now after 2 years, which is not such a good number, we see a good development to get higher earnings level here. And on the right side, on the bottom, you see the service and retail segment, which is very stable. It's a very small segment. But you know that we acquired 2 companies here. We acquired -- first we acquired Fintus group, the SaaS group for banking software. And this will have a huge impact on the numbers. We expect Fintus to be consolidated by May. So you can see all the full year figures from Fintus starting from June. And now you see the nonfinancial KPIs. The number of orders had pretty much increased to EUR 1.5 million. So this is really good development. And in addition to that, our average order value also increased to EUR 125 and the active customers reached an all-time high with 5.7 million. So it is always LTM last 12 months. And so we can be very happy about this development because in such times, it's not so easy to always keep customers active and not to have just a onetime pay and a onetime purchase. So we are happy about this development and the number of employees also increased. In our headquarter, we did not hire more people. It is just because of consolidation effects. And here, you can see the number of partners by end of March. So we have more than 15,300 partners working on our platforms. And below, you can see also here that our growth rate, so we take the full growth of the revenue, which was EUR 52.9 million, and then we divided it into nonorganic and organic growth. And this is one of first quarters after 1.5 years, which has such a good organic growth rate. So we see 59% of this growth by organic -- by organic growth and 41% developing from new companies consolidated in our company. Our guidance is unchanged. We already raised our guidance by last month, and we are very optimistic that we will achieve that. And again, it is always from the current perspective. So if we acquire more companies this year, in the relevant number, we have to change and adapt our guidance. And also to make sure that you also understand our midterm guidance, we also give you always for the next year guidance for our group. So next year, we want to achieve more than EUR 820 million. And the EBITDA level, it is the same like this year. So we expect 7% to 10%, which is very good. It's higher than the last year. And our leverage will also be between 1.5x and 2.3x on the net leverage. So all in all, you see a company with a very stable growth rate. You see a company which has a really long-term development of positive earnings. As a family business, we never made any negative earnings since a lot of decades now. And I think this is quite an impressive development. And if you would have asked me 5 years before, we would not expect it like this, but we see just the beginning of our journey. And we see really a very great potential to get this company to a much higher level. And this is just the start of this journey. That's one of the last pages here, you see the debt situation. We also have a forecast on how it should look like at the end of this year. Of course, it cannot be precise, but we think an estimation is always useful for you as an investor. And totally, we see a net debt of around EUR 106 million by end of this year and an EBITDA up to EUR 50 million. So all in all, we have a leverage of 2.3x on the full year perspective. Our last page is covering our financial calendar. So you can meet us in our next investor conferences here in Germany and also in Paris and also in London. So we are happy to meet you there. And yes, now we are open for questions.

Yes, thank you very much for your presentation. [Operator Instructions]. Mr. Pointon you should be able to speak now.

Dominik, congratulations on the results. A couple of questions, probably a bit less to do with the results really. First of all, I'm interested in the fulfillment center news yesterday. I was just wondering if you could just talk about what that enables you to do now, what -- versus what you had previously? And are there more requirements to do this type of thing in perhaps other countries as capacity builds? And my second question is following on from the tariffs, really. We listened to lots of company calls, a lot of uncertainty. I was just wondering if you've seen any disruption in particular verticals? Or is there more angst in certain verticals than others?

Yes. So thank you for this. Our logistics hub is important because as you have seen in the press release from yesterday, you see that we have 2 reasons for that. First, we already have some decentral, small logistics solutions for our partners, but they are very cost intensive, and we had no scale effects. And last year, we decided to consolidate everything into one logistic hub, and that was the reason why we found this company, why we take a huge logistic hub in Gladbeck, and why we want to make sure that all our partners if they want, I mean, it's their own decision to do that. But we want to make sure that all our partners can deliver their products to our logistic hub and can have the full service there. For example, returns. It is a big work and big effort to make on the return work. You have to check the products, you have to check the quality and it takes a lot of time and it's very cost intensive. And if the people say, "well, just do that for us. We don't want to make it on our side." Then we have this full service approach. It's not a new thing, to be honest, of course, other companies like us and Zalando and so on, they also offer that. So we are not unique to that. But from our perspective, it was quite new to make such a -- yes, to make it such a big way that all our partners can work with it now together and that we also stopped all our decentral logistic hubs. Your next question about the tariffs. To be honest, we are not affected by the tariffs from the U.S. because our U.S. export rate is very low. But I think we want to change that. So we see the U.S. market as a very good opportunity to ramp our business there. We see it as the biggest market in the world for our product. And it is a disadvantage of our group that we are not active there. So right now, you would say, well, it's great that we are not active there, but we think it's a disadvantage. We have to expand there. We have to set up our own headquarter there, a new headquarter just for the U.S. corporates and the business there. And we want to make sure that we have a good and stable business as The Platform in the United States. Do we see any relevant tariff developments from our segments? No. We only see in one segment, it is the machine trade, where, of course, we have a lot of U.S. customers there. And of course, we see some effects. But at the end, we just charge 20% additionally, and then the customer know that it's higher because of the tariffs. And so there's not such a high discussion.

Dominik, may I just have a follow-up on the fulfillment center. It's obviously going to be more efficient for you. Have you quantified or thought about what potential savings it opens up to the Group?

Yes, definitely. So actually, we did not prepare a slide for that here because we just mentioned or announced it yesterday, about this development. But you can be sure that in the next presentation, we will show you the cost savings for this and for next year. Because this year, we only have half year effect. But next year, we have a full year effect and we will transparently show you that. The effect will be around EUR 1.2 million to EUR 1.5 million, by the full year because right now, we have in 6 of our portfolio companies decentral logistic hubs in the Netherlands, Germany and so on. And we will centralize the most of them, not everybody, but most of them to the logistic hub. And so this is an estimation about the potential cost savings. So all in all, it's not big. We are not a logistic company. It's not so relevant, yes, but it's a part of our profitable strategy.

We have some participants in the audio line, but I'll read some questions out of the chat box. The first is the cap guidance for 2025 implies negative quarter-on-quarter sales and EBITDA growth, should we expect a slowdown in the rest of the year? Or what is the reason for not raising guidance again.

So basically, we think that the first quarter last year, so the first quarter 2024 was not so high in the development. So it was more an average quarter last year. And so this quarter is much better. We do not expect the growth rate by 50% or more. That's not realistic. Right now, we see organic growth rates, which are quite impressive for us. But all in all, we think that we always make a conservative guidance and we never want that to make a bad guidance, which we'll not achieve. So overall, yes, we think that this is realistic now from a conservative perspective. But again, if we will acquire bigger targets, we have to adapt the forecast, the guidance again.

And there's another question on our chat box. What was the cash flow from operating activities in Q1 2024 and Q1 2025? And for the same time, or as of the position of March 31, what was the receivables position in that time?

Well, we did not have a slide here because in our Q1 report, we always focus on the P&L. And in the half year report, you can see a detailed cash flow statement. But to mention this, we had a cash flow in the first 3 months of an operational cash flow of more than [ EUR 60 million ] the small the number and I have to find out the last year comparables. We don't have it in mind right now. So sorry for that. But as you can see in our half year report, which will be replicated in 2 months, you can focus.

And [ Mr. Rehan ] you can speak and kindly state your question.

Congratulations on the record results. I've just got a couple of financial questions. So for the net income and the adjusted EBITDA, how is it -- how did you go from EUR 19.6 million -- maybe if you could go back to the slides where you have the results. I sort of want to understand you go from EUR 19.6 million in adjusted EBITDA to EUR 18.2 million in reported net income. If you have about EUR 100 million of net debt, including lease liabilities at year end?

Yes. I mean the reported EBITDA is also including the PPA effect, that is basically the result. When you ask for the depreciation, the depreciation we expect this year in total of about EUR 11 million. So if you divide it by this EUR 11 million by the quarters, you can estimate our figures for that. So basically, this is the same development which we had also in the last quarter. But in the last quarter, the PPA effects were a little bit higher compared to this. So you can see here, we mentioned that marginal increase due to lower purchase price allocation effects in this quarter. So the increase of the EBITDA was not so high as you can compare it with the last quarter in 2024.

Okay. Well, if we've -- thank you for the information, but if we've got EUR 19.6 million in reported EBITDA and the net profit at the bottom, I assume, is also not adjusted. So it's the regular net profit. There's a EUR 1.2 million discrepancy roughly between the EBITDA and the net income.

Yes, definitely. I can -- if you want, I can give you later the information on that. To give you more, how should I say, a more detailed split on that because we had one amortization effect, which was relevant in this first quarter. It was not so high. But on the other side, we also have a very low interest costs in the first quarter. So there was not such a high interest cost. So overall, these 2 effects were not so big. In the second quarter, we usually have higher effect on that, and that is the reason for this very small discrepancy. Yes.

Okay. That makes sense. I would appreciate the information later. And regarding the fulfillment center, one more question on that as well. What were the costs associated with that?

Basically, we had no cost because 1 of the companies which we acquired, it was the Herbertz group. It was all the furniture and so on and the technique and the pick towers and so on. It was included in the company. And the building, of course, we did not buy a building. We don't want to have properties in our balance sheet. So this is just a typical rent contract, but we did nothing to invest in that. And we just have one-off costs when we consolidated the other logistic hubs. So this is what we have on additional costs, but we had no additional investments.

And there's just one question in our chat box because that was not heard very properly. Can you repeat the operating cash flow in Q1, Dr. Benner? That was not very good to hear on the audio line.

So if you want, maybe it's the easiest way. We will add one slide into the presentation that you can see our cash flow in the first quarter, and we will do that with our financial department within the next 3 hours, and then you have it online. So it's transparent for everyone. So everybody can find it.

And there's one other question in our chat box. Was your tax rate negative in Q1?

No. We have no negative tax rate. We had to pay in total tax, yes. But in the first quarter, again, is not so relevant. Usually, we have the highest taxes in the quarter 3 and 4, in the first quarter, it's not relevant. But overall, you know that we had in 2023, a negative tax rate because we acquired a lot of companies with loss carry forwards. But this effect will someday end. And so every year, we have more and more tax effect that we have to pay taxes to the state.

Mr. Rüzgar, you should be able to speak now.

I hope you can hear me.

Yes.

One question on the gross margin. You mentioned the reason for the weaker gross margin in Q1. How should we think about the gross margin in the coming quarters? And what is the target for the full year?

We have no gross margin target because actually, just to make one example, if we would acquire a company with let's say, EUR 30 million revenue. So not big, EUR 30 million is not so big in our company on a full year perspective, but with EUR 1 billion GMV, yes. So just imagine, if you would do that, what would happen, the GMV would jump up. The revenue would only increase by EUR 30 million. And the gross margin, which will result of that, it is just the payments to our partners on this platform. So the gross margin would also decline if we would do that, if we would buy this fictional company. So the gross margin actually is not relevant for us because we are not a producing company. We are not a retail company, like Zalando and so on with own big inventory. So this number is not so relevant. There's always the result between our net revenues from the company, which we acquired in our own net revenue and the difference what we pay to our partners. And so we have no estimation for the full year. In our own internal perspective, we think that it should be around 35%, 36% on average for this or next year. But again, if we buy a company with a big change in the gross margin, it could affect us in gross margin in a negative way. It could do. But from our perspective, this is not negative at all because the total figures are important. So we have to earn money in our total figures and our EBITDA and net profit. This is relevant.

Okay. That's very clear. And then the second one is on M&A. And maybe you can share with us the amount you spent for acquisitions in the first months and probably also the budget for the M&A in 2025. You mentioned probably 4 or 5 more acquisitions this year.

So overall, we expect a total investment for acquisitions between EUR 30 million and EUR 50 million. This is more or less the same what we also invested in the last 2 years. So we really continue to track always between EUR 30 million and EUR 50 million per year. I think this is very predictable. Yes.

Okay. So that's the total amount, including spending for the already made acquisitions, right?

Absolutely -- no, no, no. This is a total amount for the full year. So the total amount for the full year is EUR 30 million to EUR 50 million is not for the first quarter. In the first quarter, we have I don't know exactly the number, but it should be something between, I think, around EUR 10 million or EUR 12 million, yes.

Okay. And maybe finally, if you want to add the slide of the cash flow, probably, we can also add a slide with some balance sheet numbers, in particular, cash, net debt and so it would be also helpful to have these numbers after the Q1.

We publish a full balance sheet for the quarter, we make it for the half year. But absolutely, we can give you also the liquidity for end of March. No problem. We will add this.

Yes. Thanks for the question. And there are no more questions on the audio line and in our chat box. I'll wait a few moments, but if this is not the case, then we come to the end of today's earnings call of The Platform Group. Should further questions arise at a later time, please feel free to contact Investor Relations. A big thank you to Dr. Benner for the presentation and your time to take all the answers -- the questions and answer them, I wish you all a lovely remaining week and weekend. With this, I hand over to Dr. Benner for some final remarks.

I have no final remarks. Thank you very much, and have a good day. Bye.