CONTINUED GROWTH AND MARGIN IMPROVEMENT IN Q3
2021
Marley Spoon AG (“Marley Spoon” or the “Company” ASX: MMM), a
leading global subscription-based meal kit provider, is pleased to
share with investors its highlights from the quarter ended 30
September 2021 (“Q3 2021”).
Conference Call
Management will present a business update to investors on a
conference call at 6.00 pm AEDT on 28 October, the details of which
have been released separately to ASX.
Highlights
- Q3 2021 net revenue at €79.2m, +14% versus the prior
corresponding period (PCP) resulting in a 2-year Compound Annual
Growth Rate (CAGR) of 55% on a reported basis.
- Globally, Q3 Contribution Margin (CM) is 28%, up ~1.5pts
compared to the previous quarter and in line with the PCP.
Operational improvements in the US delivering margin gains.
- Q3 Operating EBITDA of ~€(13m) driven by investment in growth,
capacity and talent.
- Finished Q3 with a total cash balance of €33m, up ~€17m vs. the
PCP.
- Full year net revenue guidance revised given volatile consumer
behaviour: now expected to grow between 26-28% (revised from prior
guidance 30-35%)
- CM guidance maintained at ~29%, in line with CY 2020
Marley Spoon CEO, Fabian Siegel, highlighted, "Q3 net revenue
growth is broadly in line with our expectations and an acceleration
vs. the last quarter. Nevertheless, volatile customer behaviour
during the Northern Hemisphere summer resulted in
higher-than-normal skip rates and a higher cost acquisition
environment. In order to maintain attractive unit economics, we
reduced customer acquisitions, which will impact Q4 and therefore
require us to revise our 2021 net revenue growth to 26-28%.
We have since seen a recovery in base behaviour and improved
customer acquisition costs. Given these factors, Q4 net revenue
growth is trending higher than Q3 2021 and the PCP. The overall
structural growth trend for online groceries remains intact and
gives us confidence that we will continue to sustain high growth
rates at attractive unit economics.
We are also encouraged by our margin trajectory, having improved
operational contribution margin quarter over quarter, with
progressive improvement within Q3. These gains are driven primarily
by improvements in our US operations and the successful
implementation of price increases toward the end of Q3. This
positive trajectory is expected to continue in Q4.
In Q3 2021 we continued to invest in people, processes, and
infrastructure that were necessary after doubling our business in
2020 and that will lay the foundation for further growth in 2022.
These investments were balanced with disciplined investment in
marketing, but also resulted in negative Operating EBITDA of
€(13m).
In Q4 we expect continued revenue growth and expanded margins to
lead to a significantly lower level of Operating EBITDA losses vs.
Q3.
I would like to thank our teams that are working hard every day
to build manufacturing excellence at scale and to delight our
customers globally, even while facing a volatile operating
environment.”
Q3 2021 BUSINESS UPDATE
Marley Spoon reported net revenue of €79.2 million for the third
quarter in 2021, an increase of 14% vs. the PCP.
The net revenue growth was driven by all regions, with Australia
leading at 30% growth compared to the PCP as the Company continued
to invest in marketing to build its back-book of business.
Globally, CM landed at 28.1%, up ~1.5pts quarter over quarter
and in line with the PCP. Operating Contribution Margin (Operating
CM), defined as CM excluding the impacts of marketing vouchers and
fixed costs such as expenses relating to site leases, reached 38%
in Q3 globally, up 1.7pts vs. the previous quarter and up 1.5pts
vs. the PCP. The quarterly margin performance was supported by
operational improvements as well as the successful implementation
of price increases to offset inflation, particularly in the US.
The continued investments in marketing to drive growth and in
G&A to strengthen our operational bench, processes and systems
led to an Operating EBITDA loss of €(13m) for the quarter.
Consolidated Income Statement (unaudited) € in
millions
Q3 2021
Q3 2020
% vs. PY
Q3 2021 YTD
Q3 2020 YTD
% vs. PY
Revenue
79.2
69.3
14%
237.2
185.5
28%
Cost of goods sold
43.0
36.8
17%
128.9
96.9
33%
% of revenue
54.3%
53.1%
1.2 pts
54.3%
52.3%
2 pts
Gross Profit
36.2
32.5
11%
108.3
88.6
22%
% of revenue
45.7%
46.9%
(1.2 pts)
45.7%
47.7%
(2 pts)
Fulfilment expenses
14.0
13.2
6%
42.9
34.2
25%
% of revenue
17.7%
19.0%
(1.4 pts)
18.1%
18.5%
(0.4 pts)
Contribution margin (CM)
22.2
19.3
15%
65.4
54.3
20%
% of revenue
28.1%
27.9%
0.2 pts
27.6%
29.3%
(1.7 pts)
Operating CM %
38.0%
36.6%
1.5 pts
37.5%
37.1%
0.3 pts
Marketing expenses
22.2
9.9
125%
54.5
31.3
74%
% of revenue
28.1%
14.2%
14 pts
23.0%
16.9%
6 pts
G&A expenses
15.6
10.7
46%
45.7
29.5
55%
% of revenue
19.7%
15.4%
4 pts
19.3%
15.9%
3 pts
EBIT
(15.6)
(1.2)
(14)
(34.8)
(6.5)
(28)
Operating EBITDA
(12.7)
0.4
(13)
(27.5)
(1.6)
(26)
% of revenue
(16.1%)
0.6%
(17 pts)
(11.6%)
(0.9%)
(11 pts)
SEGMENT REVIEW
United States
- Q3 2021 net revenue up 3% compared to the PCP
- Q3 2021 CM at 23%, 40bps better vs. the PCP; Operating CM
reached 34%, nearly 2pts better vs. the PCP
- Operating EBITDA landed at ~€(5m) in Q3 2021
While Active Subscribers grew 5%, extensive post-lockdown summer
vacation behaviour led to higher skip rates and lower acquisition
volume, resulting in lower average orders per Active Subscriber as
well as lower Active Customers.
Staffing challenges, higher labour rates and food cost inflation
are continuing to impact contribution margin. In Q3 the team was
able to offset those impacts and expand margin vs. the previous
quarter through operational improvements and successful price
actions that were taken in Q3 on both brands. Operating CM improved
by ~2pts year-over-year.
In September, the Company moved into its new manufacturing
centre in California, tripling its footprint and adding additional
capacity for future growth. The roll-out of the Company’s new
manufacturing process in all three sites in the US also took place,
simplifying our operations, improving the customer experience and
enabling further order personalisation.
Australia
- Q3 2021 revenue up 30% compared to the PCP
- Q3 2021 CM at 34.2% vs. 35.6% in the PCP; Operating CM reached
43.5%, flat vs. PCP
- Operating EBITDA landed at €(1.1m) in Q3 2021
Due to lockdown related tailwinds, Australia delivered 30%
revenue growth while Active Subscribers grew 35% year-on-year.
Despite operating in a challenging lockdown environment, the
team delivered strong operational performance, with Operating CM of
43.5%, in line with the prior year. CM was down year-over-year,
primarily impacted by higher investments in customer acquisitions,
leading to a higher acquisition voucher share, as the Company took
advantage of the favourable customer acquisition environment.
The Company has just launched its Marley Spoon brand in WA,
making both of its meal kit brands available in all states and
mainland territories across the country. Early data suggests a
strong uptake of Marley Spoon in WA, adding a further growth
opportunity for 2022.
Europe
- Q3 2021 revenue up 15% compared to the PCP
- Q3 2021 CM at 25.8%, in line with the PCP; Operating CM reached
34.3% also in line with the PCP
- Operating EBITDA loss of €(2m) excluding global headquarter
costs in Q3 2021
As in the US, Europe saw extensive post-lockdown holiday-related
customer behaviour impacting revenue which grew 15% vs. the PCP,
while Active Subscribers grew 34% year-on-year.
Europe also experienced some labour shortages as well as wage
rate and food cost inflation. Nevertheless, the Company improved
its Contribution Margin and Operating CM vs. Q2.
KEY OPERATING METRICS
Customer behaviour remained volatile in Q3, with customers in
the US and Europe demonstrating extensive post-lockdown vacationing
behaviour while Australian customers went back into lockdown. This
impacted base sales as well as acquisitions and as a result Active
Subscribers were up 20% YoY, but slightly down vs. the prior
quarter. Customers in the Northern hemisphere demonstrated lower
order frequency and basket size while the opposite was witnessed in
Australia (increased order frequency/basket size).
The Company's Active Subscribers generated on average 6.4 orders
in the quarter, down 10% vs. the PCP. However, the Company saw a
sizable increase in average order value, reaching €46.8, a 5%
increase vs. the PCP, thanks to a successful price increase to
offset input cost inflation.
Operating KPIs preliminary & unaudited
Q3 2021
Q3 2020
V%
Group
Active customers1 (k)
413
362
14%
Active subscribers2 (k)
265
220
20%
Number of orders (k)
1691
1563
8%
Orders per customer
4.1
4.3
(5%)
Orders per subscriber
6.4
7.1
(10%)
Meals (m)
14.4
13.1
10%
Avg. order value (€, net)
46.8
44.4
5%
Avg. order value (€, net) in CC
46.3
44.4
4%
Australia
Active customers1 (k)
169
123
38%
Active subscribers2 (k)
93
68
35%
Number of orders (k)
710
545
30%
Meals (m)
6.6
4.8
35%
USA
Active customers1 (k)
173
180
(4%)
Active subscribers2 (k)
114
108
5%
Number of orders (k)
705
772
(9%)
Meals (m)
5.7
6.4
(10%)
Europe
Active customers1 (k)
71
60
18%
Active subscribers2 (k)
59
44
34%
Number of orders (k)
276
245
13%
Meals (m)
2.1
1.9
14%
- Active Customers are customers who have purchased a Marley
Spoon or Dinnerly meal kit at least once over the past 3
months.
- Active Subscribers are customers who have ordered or skipped a
Marley Spoon or Dinnerly meal kit, on an average weekly basis,
during the quarter.
CASH FLOW
The Company ended Q3 2021 with a cash balance of €33m, an
improvement of ~€17m vs. the PCP. Cash from operating activities
landed at €(7.7m), better than our Operating EBITDA landing, thanks
in part to the Company’s negative working capital model.
In the quarter, Marley Spoon entered into another asset
financing facility with National Australia Bank Limited (NAB) for
€3.7M (AUD 6 million). The financing was used to fund the
development of the new Sydney fulfilment centre and bears 3.5%
interest. Additionally, in Q3, W23 Investments Pty Limited, an
affiliate of Woolworths Group Limited, exercised its right to
convert the last two outstanding convertible bonds issued by the
Company (for a combined amount of €17.2m) into shares, thereby
significantly improving the Company’s balance sheet.
This week, the Company drew the remaining balance of the USD
$45m Tranche 1 available to Marley Spoon from Runway Growth
Capital. Like the first USD $30m drawn, the current USD $15m
disbursement is earmarked for the Company’s capex plans, notably
its digital platforms and further fulfillment centre expansion.
Tranche 2 of USD $20m remains undrawn.
The Company expects to finish 2021 with adequate cash and
existing funding facilities to continue to fund its growth strategy
in 2022.
Finally, for the third quarter, cash payments for compensation
to related parties of the entity (members of the Supervisory and
Management Boards) were €215 thousand in aggregate.
2021 Full Year Guidance
- Marley Spoon is revising its 2021 net revenue guidance. The
Company now expects to grow net revenue between 26-28% YOY in CY
2021.
- The Company reaffirms its 2021 CM guidance for CY 2021 of ~29%,
in line with the PCP.
INVESTOR CONFERENCE CALL
An investor conference call will be held at 6.00 pm AEDT on 28
October 2021. Pre-registration links and dial-in details have been
released separately.
This announcement has been authorised for release to ASX by the
Board of Directors of Marley Spoon AG.
About Marley Spoon
Marley Spoon (MMM:ASX, GICS: Internet & Direct Marketing
Retail) is a global direct-to-consumer brand company that is
solving everyday recurring problems in delightful and sustainable
ways. Founded in 2014, Marley Spoon currently operates in three
primary regions: Australia, United States and Europe (Austria,
Belgium, Germany, Denmark, Sweden and the Netherlands).
With Marley Spoon’s meal-kits, you decide what to eat, when to
eat, and leave behind the hassle of grocery shopping. To help make
weeknights easier and dinners more delicious, our meal kits contain
step-by-step recipes and pre-portioned seasonal ingredients to cook
better, healthy meals for your loved ones.
As consumer behaviour moves towards valuing the convenience
aspect of online ordering, Marley Spoon’s global mission through
its various brands, such as Marley Spoon, Martha Stewart &
Marley Spoon, and Dinnerly, is to help millions of people to enjoy
easier, smarter and more sustainable lives.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211028005482/en/
COMPANY INFORMATION: Fabian Siegel, Marley Spoon CEO
fabian@marleyspoon.com
INVESTOR QUERIES: Michael Brown, Pegasus 0400 248
080 mbrown@pegasusadvisory.com.au
REGISTERED ADDRESS: Paul-Lincke-Ufer 39/40 10999
Berlin Germany
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