roadshow presentation q1 2018 - boozt...kpi highlights. customer satisfaction. 9,1 9,2. q1 2017. q1...
TRANSCRIPT
Roadshowpresentation
Q1 2018
May 2018
Key highlights Q1
• Solid momentum with positive development in key performance indicators
• Growth supported by currency (~4%-points) and driven by Boozt.com (+33%) and Booztlet.com (+105%)
• Gross margin hit by cold weather extending the winter season, relatively lower amount of campaign stock and termination of consignment sales
• Upgrading growth outlook to +33% (previous +30%) based on solid momentum and positive impact from weakened SEK
Net revenue growth31% (62%)
Adjusted EBIT margin-0.7% (-0.6%)
KPI highlightsOrder development
No. of orders(000)
Boozt.com
510
638
Q1 2017 Q1 2018
+25%
Average order value
788824
Q1 2017 Q1 2018
SEK
+5%
862
1.104
Q1 2017 Q1 2018
5,9
7,2
Q1 2017 Q1 2018
KPI highlightsCohort development
Active customers
Customers who made at least one order during LTM (000)
Boozt.com
+28%
No. of orders per active customerAOV SEK
2,22,4
Q1 2017 Q1 2018
True frequency
Order frequency from customers buying in Q1 2017 (Q1 2016) and the following 12 months
KPI highlightsCustomer satisfaction
9,1
9,2
Q1 2017 Q1 2018
6668
Q1 2017 Q1 2018
Customer satisfaction
Trustpilot and NPS score
Boozt.com
Trustpilot NPS
A segment with attractive features complementing Boozt.com
Strong momentum on Booztlet.com
105% growth in Q1
Clearing of Boozt.com products
End of lifecycle management
Off-price segment with great potential
Reaching new customers
Provide a credible clearing channel for mid to premium brands
Develop brand relations
Offering the Boozt.com experience to the off-price segment
Quality outlet
• Initial findings suggest positive synergies with apparel as customers buys more frequently and includes apparel in their baskets
• New key brands signed including MAC, Kiehls and Urban Decay
• Increased focus on haircare due to significant potential
• Opening of flagship store in Copenhagen in June on track
Beauty progressing as expected
FINANCIAL UPDATE
FIRST QUARTER 2018
Results update
Gross profit
SEK million
Net revenue
SEK million
421,1
551,9
Q1 2017 Q1 2018
Adjusted EBIT
SEK million
187,1215,9
Q1 2017 Q1 2018
Margin 39.1%
Margin 44.4%
-2,5 -4,1
Q1 2017 Q1 2018
Margin -0.7%
Margin -0.6%
+31%
Group
10,9
22,3
Q1 2017 Q1 2018
12,9
2,6
Q1 2017 Q1 2018
Net revenue by segment
397,4
527,0
Q1 2017 Q1 2018
Net revenue Q1 (SEK million) Net revenue Q1 (SEK million)
Boozt.com Booztlet.com Other
+33%
+105%
-80%
Net revenue Q1 (SEK million)
1,3
3,9
Q1 2017 Q1 2018
2,2
-1,7Q1 2017 Q1 2018
Adjusted EBIT by segment
-6,0 -6,3Q1 2017 Q1 2018
Adjusted EBIT Q1 (SEK million) Adjusted EBIT Q1(SEK million)
Boozt.com Booztlet.com Other
-1.5% -1.2%
11.6%
17.6%
17.0%
-66.3%
Adjusted EBIT Q1(SEK million)
Cost ratio development
Gross margin
Marketing cost ratio
Depreciation cost ratio
Adjusted fulfilment cost ratio
Adjusted admin & other cost ratio*
Adjusted EBIT margin
Share of net revenue, %
44.4
(13.2)
(0.7)
(0.6)
(16.0)
(15.1)
Q1 2017 Change
(5.3 pp)
2.5 pp
1.4 pp
2.5 pp
(1.2 pp)
(0.1 pp)
39.1
(0.7)
(13.5)
(13.7)
(10.7)
(2.0)
Q1 2018
*whereof cost of personnel (7.5) 1.0 pp(6.5)
2,9
1,3
2,2
5,9
Q1 2017 Q1 2018
Fixed assets
Intangibles
-98,3
-7,7
Q1 2017 Q1 2018
Key financials
171,4
213,7
Q1 2017 Q1 2018
SEK million (in % of LTM revenue) SEK million
Net working capital CAPEX Operational cash flow
11.0% 10.0%
SEK million
Outlook
25-30%medium term
>6%medium term
For 2018 the Group now expects a net revenue growth above 33% (previous above 30%).
The adjusted EBIT margin is expected to improve slightly compared to 2017.
• Boozt targets annual net revenue growth in the range of 25-30% in the medium term
• Boozt targets an adjusted EBIT margin exceeding 6% in the medium term
• Boozt expects to increase the adjusted EBIT margin annually as the cost base is further leveraged by net revenue growth
Net revenue growth
Adjusted EBIT margin
Medium term (3-5 years post IPO) targets remain unchanged
Disclaimer
The Company’s financial targets set forth above constitute forward-looking information that is subject to considerableuncertainty. The financial targets are based upon a number of assumptions relating to, among others, the development ofthe Company’s industry, business, results of operations and financial condition. Company’s business, results of operationsand financial condition, and the development of the industry and the macroeconomic environment in which theCompany operates, may differ materially from, and be more negative than, those assumed by the Company’s whenpreparing the financial targets set out above. As a result, the Company’s ability to reach these financial targets is subjectto uncertainties and contingencies, some of which are beyond its control, and no assurance can be given that theCompany will be able to reach these targets or that the Company’s financial condition or results of operations will not bematerially different from these financial targets.
16
Q&A
APPENDIX
Income statement
SEK million Q1 2018 Q1 2017
Operating incomeNet revenue 551.9 421.1Other operating income 2.0
Operating costsGoods for resale -336.0 -234.1Other external costs -177.4 -176.2Cost of personnel -35.9 -31.4Depreciation and impairment losses -11.0 -3.0Other operating costs -2.6Total operating costs -560.3 -447.3Operating profit/loss (EBIT) -6.4 -26.1
Financial income and expensesFinancial income 0.0 3.2Financial expenses -7.3 -0.4Net financial items -7.3 2.8Profit/loss before tax -13.7 -23.3
Income tax 2.5 5.4Profit/loss for the period -11.2 -17.9
APPENDIX
Financial positionSEK million Mar 31, 2018 Mar 31, 2017
ASSETSNon current assetsIntangible assetsWeb platform 23.8 16.0
Tangible assetsMachinery and equipment 147.0 18.8
Deposits 12.3 10.0Deferred tax assets 94.9 42.2Total non-current assets 277.9 87.1
Current assetsInventories 737.9 525.4Accounts receivables 10.8 10.1Other receivables 46.5 17.9Current tax assets 0.3 0.5Prepaid expenses and accrued income 33.7 46.7Derivatives 0.5 3.2 Cash and cash equivalent 400.2 118.1Total current assets 1,229.9 721.9
TOTAL ASSETS 1,507.9 808.9
APPENDIX
Financial positionSEK million Mar 31, 2018 Mar 31, 2017
EQUITY AND LIABILITIES
EquityShare capital 4.7 3.9 Other capital contributions 1,124.9 689.2 Reserves 0.2 -0.0 Retained earnings including profit for the year -349.5 -343.7 Total equity 780.3 349.4
Non-current liabilitiesInterest bearing liabilities 66.9 6.9Other provisions 22.7 18.4Total non-current liabilities 91.7 25.2
Current liabilitiesInterest bearing liabilities 19.4 5.1Accounts payables 415.3 251.8Other liabilities 60.8 45.2Derivatives financial instruments 3.1 -Accrued expenses and prepaid income 139.3 132.2Total current liabilities 638.0 434.3
TOTAL EQUITY AND LIABILITIES 1,507.9 808.9
APPENDIX
Cash flow
SEK million Q1 2018 Q1 2017
Operating profit -6.4 -26.1Adjustments for non-cash items 12.5 5.0Net interest -0.6 -0.4Paid income tax 0.1 -0.1Cash flow from operating activities before working capital 5.6 -21.6
Change in inventory -111.2 -136.6Change in current assets 8.1 -16.3Change in current liabilities 89.7 186.3Cash flow from changes in working capital -13.4 -76.7
Cash flow from operating activites -7.7 -98.3
Investments in fixed assets -1.3 -2.9Change in financial assets -0.4 -0.3Investments in intangible assets -5.9 -2.2Cash flow from investing activities -7.6 -5.4
Repayment of loans -14.9 -Cash flow from financing activities -14.9 -
Cash flow for the period -30.3 -103.7
Currency exchange gains/losses in cash and cash equivalents 0.8 0.0Cash and cash equivalents beginning of period 429.7 221.8Cash and cash equivalents end of period 400.2 118.1
APPENDIX
COMPANY OVERVIEW
22
5 middle aged men selling fashion…
Jesper Brøndum
CTO
Allan Junge-Jensen
CFO
Hermann Haraldsson
CEO
Niels Hemmingsen
COO
Peter G. Jørgensen
CMO
BUILDING NORDIC SCALE
• Nordic roll-out
• Assortment expansion
• Increase share of wallet and number of returning customers
• Accelerate growth
2015 - 2016
ONLINE LEADERSHIP
• Strive towards Nordic online market leadership
• Leverage the technology platform
• Invest in infrastructure
• Maintain disciplined portfolio management
2017 -
Dec 2017
SEK 191m(transactional net revenue)
2011 - 2013
LAUNCH OF BOOZT.COM
• New strategy launched and multi-brand shop opened
• On-boarding of brands
• Creation of an integrated tech platform
• Marketing focus in Denmark
Aug 2011
SEK 0.7m (transactional net revenue)
EXPANSION
• On-boarding of brands
• Geographic expansion
• Marketing focus in Denmark, Sweden and Finland
• Securing funding
2014 - 2015
Embarking on an exciting journey
Apparel is a large market in the Nordics
Note: Apparel retail market is defined as the aggregation of the clothing and footwear market (including sports). The market data covers retail sales of apparel through both store-based retailers and non-store retailers. It excludes black market sales (i.e. untaxed, generated within informal retailing) and duty free sales (travel retail). Items must be new when sold to the consumer; second-hand/used items are excluded. Antique and/or vintage clothing and footwear is also excluded. All data from Euromonitor International used in this section is based on retail sales prices (including VAT), expressed in nominal terms and assumes fixed currency rates against SEK of 9.44 (EUR), 1.07 (NOK), 1.27 (DKK), 10.98 (GPB) and 8.88 (USD). Source: Euromonitor International Beauty and Personal Care 2016 edition, Consumer Electronics 2017 edition, Consumer Appliances 2017 edition, Consumer Health 2017 edition, Apparel and Footwear 2017 edition. Euromonitor doesn’t research Apparel, Consumer Electronics and Consumer Appliances in Finland, therefore to estimate the total Nordic market, management estimates for Finland used as follows: Apparel: SEK 35 billion; Consumer electronics: SEK 35 billion and; Consumer appliances: SEK 6 billion.
33 44
6 11 4
242
100
56 4434
Apparel ConsumerElectronics
Beauty andPersonal Care
ConsumerAppliances
ConsumerHealth
Nordic market size (SEKbn)
9.700 9.2008.600
5.300
US Nordics UK Europe
Total apparel spending per capita (2016 in SEK, rounded to the nearest hundred)
Apparel is one of the largest consumer categories… … driven by high spend per capita
Online
Total
Strong growth potential in online fashion in the Nordics
Total market
SEK 242bn
SEK ~109bn
SEK ~50bn
Source: Company data and Euromonitor.
Nordic apparel market (2016)
Penetration AND consolidation
Online penetration levels at various stages hint to the market potential
SEK ~30bn TODAY
@ 13% online penetration
@ 20% online penetration
2027?@ 45% online penetration
Key success factors in Nordic online fashion
• Relevant and curated selection
• Personalised yet”power to the people”
• Nudging and not forcing
• Pay THE (right) price
• Seamless user experience across platforms
• Convenient delivery and return options
• Easy access customer care
• Fast free deliveries• Fast free returns
EASE
SPEED
PRICERELEVANCE
A prerequisite for success is a wellinvested, data driven operating platform
Purpose-built infrastructure enables full control over the customer journey
Ads
TV
Emails
Marketing
AffiliateSoc. media
Filter + search
Salesadvice
Fraudcheck
Paymentvalidation
Discounts
Sales
Return +refund
Openpackage
Review
RatingPickup +delivery
Fulfilment
Customer service
Chat Exchange
Phone
Emails Soc. mediaThe solar system
The halo
Relevance through sophisticateduse of BIG data, AI and ML
Social data Distribution data Boozt solar system Payment data Market data
Data lake
Data quantification
Data analysis Data model
• Customer segmentation
• Brand classification
• Return patterns
• Prediction of next purchase
• Personalized product recommendation
• Customer service categorisation
Anecdotes are fine, but data rules
Competitive offering to modern Nordic fashion followers
One destination for fashion
Curated, contemporary and relevant selection
Carefully selected brands with Nordic appealAttractive customer characteristics
Focus on target groups where convenience is key
Diversified customer base with attractive features
~70% ~85% ~55%Women Live together Have kids
Customers aged 25-54 represent >75% of net revenue
Well positioned to capture larger share of the Nordic online apparel market
21Entry brandsPremium brandsCommercial
Attractive position in a market where scale matters
Prod
uct s
egm
ent f
ocus
Prem
ium
Com
mer
cia
lEn
try p
rice
Catch-all Curated
Brand strategy
Distinct position based on a curated Nordic selection…
Favorable unit economics
Illustrative Nordic market landscape
Boozt’s positioning delivers a high AOV
AOV incl. VAT in SEK (Accumulated Q1- Q4 2017)
Selectively active in the Nordic region
787,0 632,0
VAT
3) 4)
+54.4%
Adjusted fulfilment cost ratios, in % of net revenue (Accumulated Q1- Q4 2017)
14,5%25,9%
Depreciations related to fulfilment
1.5%
-9.9 ppt
5)
1) As defined by Euromonitor International. Boozt CAGR based on net revenue excluding VAT (based on Company data). 2) Zalando, H&M, Nelly, Ellos and Stylepit. 3) Boozt.com’s reported AOV excludes VAT. 4) Based on average basket size for accumulated period Q1-Q4 2017 of EUR 64.5 and converted based on EUR/SEK 9.81. Source: Zalando Q4, quarterly statement 5)Based on reported figures in Zalando Q4.
Why AOV matters…in same size business
The relative high AOV leaves room for high marketing…
Cost split per order
If low AOV…gross margin would have to be higher
Challenging to drive growth & profit without better GM….787
451
114
102
89
1219
531
304
114
69
608
-24
57.3%
14.5%
13.0%
11.3%
1.5%2.4%
Goods for resale
Fulfilment & dist.
Marketing
Admin & staff opex
Depreciation
EBIT
Goods for resale
Fulfilment & dist.
Marketing
Admin & staff opex
Depreciation
EBIT
57.3%
21.5%
13.0%
11.3%1.5%-4.6%
6.0%
2.4%
50.3%?
Why scale matters…
The relative high AOV leaves room for high marketing…
Cost split per order
Scale will drive profit…even at lower gross margin
Regional focus will drive marketing down….
787
451
114
102
89
1219
787
57.3%
14.5%
13.0%
11.3%
1.5%2.4%
Goods for resale
Fulfilment & dist.
Marketing
Admin & staff opexDepreciation
EBIT
Goods for resale
Fulfilment & dist.
Marketing
Admin & staff opexDepreciation
EBIT Above 6%
Cohort behaviour suggests ”annuity-like-CLV”
NEW
Cohorts are strong and loyalty is built fast – loyal customers expand their transactions with us
Expected “as is” 2018 revenue from 2017 cohort = 100%
0
500
1000
1500
2000
2014 2015 2016 2017Loyal customer Converting to loyal
Total Net. Sales (excl. VAT)
Growing as fast as uniteconomics make sense
Contribution margin development
First year Year + 1 Year + 2 Year + 3 Year + 4 Year + 5
Initial negative contribution from new customers…
Accumulated CLV for Boozt.com
First year Year + 1 Year + 2 Year + 3 Year + 4 Year + 5
Customer lifetime value (CLV)
…followed by steep accumulation in live time value
CLV is defined as gross profit less fulfillment & distribution and marketing costs attributable to a particular customer cohort.
Central and automatedwarehouse in southern Sweden
1) Estimated capacity based on 43,500 m2 in total area is ~500,000 bins and ~500 picking robots. 2) Assuming a constant AOV. Source: Company data.
450,000+ SKU locations
Capacity of
3,000,000+items
Based on AutoStore solution
4 days from product arrival to in webstore
Returns being refunded
within
24 hours
>2,500orders per
hour in handling capacity
The new warehouse in operational since the end of March 2017Next day delivery to several Nordic areas
Custom-built to deliver convenience and designed for >4x net revenue2)
• 180,000 bins1)
• 151 picking robots1)
• ~90% of products to be handled in the “grid”
Automation Phase 1
2017
Modular expansion driving scalability
Building of new warehouse next to current starts in 2020
2billion
We are here!
Automation Phase 2
2017/2018Negotiations regarding phase 3&4 commence
Automation Phase 3
2019/2020
1 2
3 4Automation Phase 4
2020/20214-6
billion6-8
billion
3-4billion
Revenue capacity
A step change in delivery proposition
1-2 days
Next day
Same day
Next day
Same day
1-2 days
Serving 90% of the Nordic region with 100% of the assortment within same or next day
Q1 2018Deliveryreach
Current share oforders
99%
Population(million)
18.8
25.0
0%
80%
95%
30%
90%
3.5 100%
100%
100%
Range
of assortment
of assortment
of assortment