While Q1 sales decreased by 7.4% yoy to € 74.7m as a result of the notably reduced marketing vouchers (-19.8%) and cut marketing expenses (-8.3%), which impacted the number of active subscribers (-17% yoy to 160k), margins across the board benefited as the quality of subscribers further increased (i.e. 5.2% higher average oder value and 6.2% increased order frequency). As a result, the group's contribution margin improved by 60bps to 35%.
From a regional perspective, the US remains the star of the show. With € 40m sales, the contribution margin stood at 39.1% (+142 bps yoy) and the operating EBITDA margin at 9.7% (+40 bps yoy). As Europe operates sub scale (€ 7m sales) margins are clearly below the group's averages; CM 25.9% (-120 bps yoy), op. EBITDA -3.2% (+350 bps yoy thanks to significant fix cost reductions).
As per its focus on margins over growth, G&A expenses shrunk 20% yoy. Despite the weak top-line, MSG's operating EBITDA increased to € 0.6m. The reported EBIT loss halved to € 3.8m.
Even more importantly, the operating cash flow further improved to € 4.6m (+ € 1.7m), which led to a net cash inflow of € 1.7m; total cash at the end of Q1 stood at € 7.7m. This, coupled with the expected cash inflow from the Chefgood divestment in Q2 (eNuW: € 6.3m) forms a comfortable liquidity buffer to bridge the gap to sustainable positive operating cashflows expected from this year onwards.
FY25 guidance remains intact. Management expects a single-digit % yoy sales decline while at the same time the contribution margin is expected to improve by >100bps and operating EBITDA to increase by 70-80% yoy (i.e. € 15.6-16.6m).
Ongoing Marley Spoon transformation. With the discontinuation of its Dinnerly brand in Europe and the expected launch of its ready-to-eat (RTE) offering in Europe, Marley Spoon is further progressing on its single brand strategy, which offers simpler processes and synergies in regards to marketing. Mind you, during the mid-term, management highlighted plans to offer additional food and nutrition solutions (e.g. juice packs, healthy snacks, special diet meals) under the Marley Spoon brand, ultimately increasing the value proposition for customers on the platform.
BUY with an unchanged € 2.70 PT based on DCF.
ISIN: LU2380748603
