Home24 presentation Building the online destination for Home & Living February 2021

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Home24 presentation Building the online destination for Home & Living February 2021
home24 presentation
Building the online destination for Home & Living
February 2021                                       0
Home24 presentation Building the online destination for Home & Living February 2021
Our mission: to be the online destination for Home & Living

                                                              1
Home24 presentation Building the online destination for Home & Living February 2021
Thinking of customers in Home & Living offline retail today –
does this look familiar to you?

                                                                2
                                                                3
Home24 presentation Building the online destination for Home & Living February 2021
Our challenge is to change the Home & Living shopping
experience for mass market consumers

                          We want to empower people to create happy homes...

            ...by offering great value                      ...in a convenient and inspirational
             products people love...                                 shopping experience

     Broad but relevant, curated assortment               Fast, reliable and flexible delivery times, paired
     empowering customers to choose from a wide           with convenient payment methods and services
     range of styles, materials and prices
                                                          Effective & friendly customer service support and
                                                          transparent communication whenever needed
     Exclusive assortment only available at home24,
     combined with a broad selection of relevant
     third party products                                 Opportunities to get a touch and feel for the
                                                          product offering online, but also in showrooms

     With a great value for money and product             Personalized relevant content that inspires and
 $                                                        consults, helping to make a complex purchase
     quality aspiration, creating happy homes, and a
     clear commitment to sustainability                   decisions easier (ref. no strong consumer brands)

                                                                                                               3
Home24 presentation Building the online destination for Home & Living February 2021
Management board combines deep experience and
entrepreneurial mindset

  Marc Appelhoff         Brigitte Wittekind    Philipp Steinhäuser    Johannes Schaback
           CEO                   COO                    CFO            CTO until Mar 2021
  11 years with home24   6 years with home24    7 years with home24    2 years with home24

                                                                                             4
Home24 presentation Building the online destination for Home & Living February 2021
We are already a leading pure-play Home & Living e-commerce
platform in continental Europe and Brazil

                                                                    #1
                                                     In continental
                                                            Europe

                                                     #1
                                       In Brazil

                                                                                                        Positive
€492m                              >44%                   c.€350            46%           First order Adj. EBITDA
Home24 presentation Building the online destination for Home & Living February 2021
Management summary, FY 2020 preliminary unaudited figures
                       Order intake growth accelerated to 58% in Q4 2020, raising FY 2020 growth to 46% YoY.
                       January trading with continued strong momentum in order intake of +70% YoY (all in CC).

                                    Q4 revenue growth of 50% brings FY 2020 to 42% and thus upper end of guidance range
                                    (in CC, last upgraded Nov 11th). Q4 adj. EBITDA at 4% or EUR 6m, leading to FY adj. EBITDA
                                    of 3% or EUR 17m (significant improvement of 10pp or EUR 45m YoY).

                                        Financial year 2020 cash flow positive, also excluding capital increase of EUR 46m. Cash
                                        and cash equivalents at the end of 2020 at EUR 103m (pre Mobly IPO).

                                        Public listing of our Brazilian business Mobly on February 5, to make growth financing
                                        more independent from home24. Gross proceeds of c. EUR 121m to Mobly, and up to
                                        EUR 24m to home24. Pricing of BRL 21 per share at c. 4x LTM Q3 2020 Sales (in BRL).

                                    Post capital measures, both EU and Latam segments of home24 have more than EUR 100m
                                    funds available to invest in accelerated growth, having reached core profitability in 2020.

                       FY 2021 guidance for revenue and adj. EBITDA will be communicated with the publication of
                       audited financials on March 31st, to best reflect remaining pandemic related uncertainty and
                       strategic growth initiatives initiated post capital measures in both, EU and Brazil.
All figures preliminary and unaudited                                                                                              6
Home24 presentation Building the online destination for Home & Living February 2021
1
       Huge and uniquely
attractive Home & Living
market opportunity with
    high barriers to entry

                             7
Home24 presentation Building the online destination for Home & Living February 2021
Huge addressable market with low online penetration

Global
Home & Living market1                                                                 >€560bn

home24 footprint2
Home & Living market                                                                     >€120bn

home24 footprint2
Online Home & Living market                                                                   >€10bn

                                                                                              €0.45bn3
Source: Euromonitor International.
                                                                                         (~4-5% mkt. share)
1. Home & Living market defined as Euromonitor Passport: Home and Garden categories “homewares” and “home furnishings” (EUR using 2019 fixed exchange rates).   8
2. home24 markets consist of Germany, France, Italy, the Netherlands, Belgium, Austria, Switzerland and Brazil.
3. home24 revenue Oct 2019 - Sep 2020
Home24 presentation Building the online destination for Home & Living February 2021
Demographics, changes in consumer habits and technology
 boost online penetration with potential proven in the US and UK
      Online penetration by industry in home24 markets1                                                                      Home & Living online penetration by geography

                                                                                               Traditional toys
30%                                                                                            and games              30%
                                                                                            Consumer
                                                                                            electronics

                        4x                                                                                                             2x
          Penetration Upside                                                                                                   Penetration Upside
20%                                                                            Consumer                               20%
                                                                               appliance
                                                                           Fashion

10%                                                                                                                   10%
                                                            Home & Living                                                                               Home & Living

0%              Early days                   Acceleration                         Growth                               0%        Early days     Acceleration            Growth

 Source: Euromonitor International; Management Estimates                                                                                                                         9
 1. Consists of home24’s target markets Germany, France, Italy, the Netherlands, Austria, Belgium, Switzerland and Brazil.
Home & Living has some category specific challenges which we
have mastered, creating significant barriers to entry

      Products with high basket size / AOV and without established
I     consumer brands in mass market

      Identify and source relevant assortment in a market with no
II    brands and abundant product variety

      Inventory management: make bulky and high value items available
III   at short delivery times and still remain working capital neutral
                                                                         has cracked
                                                                          the code

IV    Scalable online demand largely in short tail generic search
      without brands

V     Extremely complex logistics and delivery for multi-component and
      heavy/bulky products

                                                                                       10
2
A leading pure-play
 online platform in
continental Europe
          and Brazil

                       11
Home & Living challenge I:
• Products with high basket size / AOV and without established consumer brands in mass market

                   Low value                               High value
                High brand trust                         low brand trust

                                                                                            12
There are no strong consumer brands in Home & Living

           SOFA

           ?

                                                       13
Market ripe for disruption due to highly fragmented supplier
landscape and retail landscape
                      Fragmented supplier landscape1                                                                                    Fragmented retail landscape2

                                              c. 97%                                                                                           72%
                                            of all suppliers have                                                                            of the market
                                               limited market                                                                              highly fragmented
                                               power with no
                                                strong brands
                                                                                                                                  28%
                                               3%                              c.1%
    Companies with                   Companies with                       Companies with                                           Top 5                                Rest of the market
    revenue < €10m              revenue of €10m – €100m                  revenue > €100m

                             Huge private label opportunity                                                                   International market leader IKEA only has 15% share3

                            Negotiation power lies with the                                                                             Market beyond top 5 is extremely
                               strongest retail platform                                                                          fragmented with mostly local / regional players

                                                                                                                                 No strong online presence even by offline market
                   Opportunity to build a leading platform brand
                                                                                                                                                      leaders

Source: PwC – “PwC Marktstudie Möbelbranche 2019”; Euromonitor International.
1. Germany only.
2. 2019 revenues in home24 markets converted to EUR using 2019 exchange rates; refers to Euromonitor “homewares and home furnishings stores” segment by brand shares.                        14
3. Blended share across home24 markets.
We have built a leading pure-play online Home & Living
brand in Germany
                                                                                          Brand awareness1

Source: Survey by DCMN Insights. National representative sample (n=1003) for DE, ages 18-69, 50% women, 50% men in Q4 2020.
1. Proportion of interviewed people aware of those brands, aided.
2. Price comparison website.                                                                                                  15
home24’s leading online approach is supported by offline
activities providing a unique shopping experience to customers
                     Online                                                             Offline

 Go-to-destination            AR feature to various          Increase brand awareness         Europe: 10 showrooms and 5
                              products                       and engagement                   outlets
 Mobile first approach with
 best in class app            Search by image                Improve conversion of            LatAm: 11 retail stores
                                                             online sales                     (megastores, Mobly ZIP and
 Broad, curated product       AI-based product                                                outlets)
 offering                     recommendation engine          Focus on consultation in
                                                             showrooms                        Conceptually profit centers
 Distinguished product        Interactive VR mood pictures                                    within first quarters
 information                                                 Touch and feel for larger
                                                             baskets, esp. private label
                                                             offering

                                                                                                                        16
3
     Unique home24
     business model
     driving superior
      economics and
customer proposition

                        17
Home & Living challenges II and III:
• Identify and source relevant assortment in a market with no brands and abundant product variety
• Inventory management: make bulky and high value items available at short delivery times and
  still remain working capital neutral

                                                                                             18
home24 solves these challenges by combining non-inventory
3rd party model with vertically integrated private label model

                                                            Model

                           3rd party products                                        Private label

      Assortment           Broad assortment                                     Attractive bestsellers
      focus        (high conversion, mostly long tail)                              (high margin)

      Sourcing &       Mostly non-inventory and                                 Vertically integrated,
      fulfilment             drop-shipped                  Big data to          mostly held on stock
                                                            identify
                   •   Broad but curated assortment        bestsellers   •   Superior gross margin & pricing
                   •   No inventory risk                                 •   Minimal inventory risk
      Benefits
                   •   Negative working capital                          •   Direct sourcing focus
                   •   Rich data on customer preferences                 •   Very short delivery times

                   • c.50% of sales                                      • c.50% of sales
      Economics
                   • c.75% of SKUs                                       • c.25% of SKUs

                                                                                                               19
4
 Scalable first order
profitable customer
         acquisition

                        20
Home & Living challenge IV: scalable online demand largely in
short tail generic search without brands

                                \                               Strong brands –
                                                                multiple specific
                                                                 search terms

                                                                  No brands –
                                                                   few generic
                                                                  search terms

                                                                                 21
First order profitability driven by unique home24 model

           • Large relevant assortment     More impressions & higher
           • Short delivery times                 conversion
           • Attractive consumer prices

           • c.50% private label share
                                                       +
           • High AOV                     Superior contribution margin
           • Low returns
                                                       +
           • Automated proprietary
                                          Efficient customer acquisition
             marketing engine

                                                       =
                                             First order profitability

                                                                           22
5
Scalable end-to-end
     automated and
           vertically
   integrated value
               chain

                        23
Home & Living challenge V:
• Extremely complex supply chain management for multi-component and heavy/bulky products
      ○ Supplier challenges: fragmented supplier network, mostly SME
      ○ Warehousing: lack of format patterns, labor intense 2MH
      ○ Transportation challenges: less advanced networks in large and oversized products

                                                                                            24
We invest heavily to create an end-to-end process optimized
and automated fulfilment platform
                                 Integrated end-to-end automated
                                             platform

                                                                                                    Automated

                                                                                                    End-to-end
        Sourcing                        Warehousing                          Delivery
• 1000+ supplier network,          •   7 own operated              •   Self-managed inbound /
  500+ in EU and LatAm each            warehouses for own              mid-mile logistics
• Flexible crossdock, dropship         inventory and crossdock     •   Network of 3rd party last
  and own inventory model          •   >200,000 sqm of gross           mile providers managed
• Curated supplier selection           WH capacity with                by home24                    Scalable
                                       expansion headroom          •   Asset light own last mile
• ERP integration to drive
  transparency and tracking        •   Customized for parcel           delivery in Brazil (40% of
                                       and bulky items                 volume) for faster
• On the ground quality                                                delivery with higher
  control                          •   Automated data driven                                                     25
                                       reordering                      reliability
6
        Best-in-class
technology platform
        empowering
data-driven decision
         making and
         automation

                        26
We collect vast volumes of data on a daily basis to drive
superior decisions across the value chain

   Input        Customer data                     Assortment data                     Fulfilment data                 3rd party data

            Order history       Browsing                                                           Available      Crawling of competitor price &
                                               Supplier            Availability   Stock levels                            delivery times
                                                                                                   carriers
                                                                                                                  Google 360           Marketing
            Demographics        Session
                                                                                                                  analytics            costs
                                data                               Product                         Delivery
                                               Pricing                            Item location
            Decision time       Reviews                            features                        mode           Industry               X-Device
            lag                                                                                                   fairs/events           session
                                                                                                                  Design trends     !   Risk scoring

                                                                                   Accurate         Audience                            Optimise
            Identify & fill    Optimise                                                                           Automated
                                               Sorting        Curation             marketing        optimised                           warehouse
            white spaces       availability                                                                       re-stocking
                                                                                   contribution     acquisition                         utilization
            Predict &          Develop                                            Personalised     Optimise
                                                                                                   marketing      Live delivery         Minimise
            stock              superior        Search         Personalisation     suggestions/
                                                                                                   channel on     information           delivery time
            bestsellers        private label                                      offers
                                                                                                   daily basis

  Output          Assortment                             Webshop                    Marketing & CRM                      Fulfilment
                                                                                                                                                       27
Long story short - home24 understands and solves the key
points for consumers

           Consumer Pain Points                                    home24 Delivers
                                                Broad and relevant assortment covering all price points,
 Discovering the right product                  styles, tastes in the mass market through a diversified
                                                suppliers base

                                                State of the art online user experience paired with unique
 Poor shopping experience                       go-to-market approach incl. showrooms, fabric samples,
                                                spare parts, print catalogue etc.

                                                Better value for money through more than 50% private
 Finding good quality products at fair prices
                                                label share. 3rd party products with low price guarantee

                                                Free delivery and free returns in EU, decentralized logistics
 Prohibitive shipping costs                     footprint fulfilled by own specialized last mile delivery (esp.
                                                LatAm)

                                                Hybrid model combining various delivery modes with
 Long and unreliable delivery times             majority of sales from warehouse. Inventory with full
                                                control of the value chain

                                                                                                             28
7
Financials &
    Outlook

               29
We have built the best-in-class platform to drive profitable
growth

               Q2‘2018 – Q1‘2019                                        Q2‘2019 – Q4‘2019                    2020 -
            POST-IPO INVESTMENTS &                                          PATH TO                        PROFITABLE
             CHALLENGING MARKET                                          PROFITABILITY                      GROWTH

                  FY 2018:
                 85%+  p.a.                                                FY
                                                                           4%+2019:
                                                                                yoy                       FY 2020:
                                                                                                         13%+  yoy
                 2011-2016
              +18% YoY revenue                                        +20%2015-2016
                                                                            YoY revenue                  2016-2017
                                                                                                      +42% YoY revenue
                          growth1                                          growth1                        growth1
               -13% adj. EBITDA                                        Q4 adj. EBITDA                 +3% adj. EBITDA
                   Margin                                               break even                        margin
                          2015                                                                         2016      2017

                  Long term key investments into                                                       Continuously balancing
                                                                       Investments pay off in terms
                  logistics, brand, return                                                             growth and profitability
                                                                       of profitability and growth
                  clearance, ERP system etc.
                                                                                                       Demand accelerated by
                  Gain of market shares in                             All milestones achieved to      consumer behaviour during
                  challenging market conditions                        reach goal of break-even        the COVID pandemic

1. Based on constant currency using previous year BRL/EUR FX rates.                                                                30
2020 financials preliminary and unaudited.
Strong revenue growth and positive adj. EBITDA
 demonstrate structural profitability of home24
Revenue Group in EURm, Revenue Growth in CC YoY in %, Adj. EBITDA in EURm, Adj. EBITDA margin in %

                                                                                                     31
Outlook

          ■ Home24 has laid the foundation of further growth with the capital increase and
             the Mobly IPO. With EUR >100m funds dedicated to both EU and Latam, we will
             step up deliberate investments into Working Capital, customer acquisition and
             Capex.
          ■ While we see our terminal margin profile of low double digit adj. EBITDA
             margins confirmed by recent profitability improvements (>10pp YoY FY 2020),
             we believe the market opportunity is attractive to accelerate growth and take
             market share.
          ■ January trading with continued strong momentum in order intake (>70% YoY).
             Yet, uncertainty around COVID-19 pandemic prevails both on demand and
             supply side.
          ■ Backed by the active customer base of > 2.2 million and the ability to step up
             marketing expenses having reached core break-even, we are in a good position
             to deliver significant IFRS growth in 2021 despite strong YoY comparables.
          ■ FY guidance ranges for 2021 Revenue and adj. EBITDA are to be set with the
             publication of audited financials on March 31st, to best reflect the strategic
             initiatives post capital measures and the COVID-related uncertainty.

                                                                                              32
home24 has multi-dimensional drivers for sustainable
long-term growth
  Structural           Market                                        Platform                                        Market
   growth       +    penetration      +                            development                                +     expansion

                                                                                                                    Expand into
                       Accelerate          Enhance      Introduce new         Enhance         Adopt new
 Benefit from                                                                                                          new
                    through further        product      categories e.g.       shopping      technologies to
  increasing                                                                                                        geographies
                       roll-out of        offering in       to drive         journey to          foster
    online                                                                                                         and capitalize
                    “go-to-market”         existing        purchase        increase brand     competitive
 penetration                                                                                                      on high market
                       approach           categories      frequency            loyalty         advantage
                                                                                                                  fragmentation

                                                                                                                                33
home24 remains uniquely positioned to exploit the vast Home
& Living opportunity, even more than before the COVID pandemic

         Market                                     Customer value
   Huge market opportunity
                                                      proposition
  characterized by low online                     Best value offering and most
 penetration with huge catch-                     relevant selection brought to
 up potential, accelerated by                   life in a customer centric go-to-
  consumer behaviour during
                                                         market approach
     the COVID pandemic

      Value chain                                 Data & Technology
Scalable and automated value                        Pioneering technologies
      chain that delivers                         improve shopping experience
   sustainable scale effects                             and empower
                                                     data-driven decisions

                                                                                    34
8
           Latest
Financial Update

                    35
Q4 2020 order intake growth accelerated to 58%,
bringing FY 2020 growth to 46% (all CC)
  GOV in EURm, Active customers and Total gross orders in k, Average order value in EUR

                                                                                          ▪ home24 further accelerates
                                                                                            growth at 58% YoY GOV in
                                                                                            Q4 2020.
                                                                                          ▪ Milestone of +2m active
                                                                                            customers surpassed with
                                                                                            now 2.2m active customers.
                                                                                          ▪ Further FX impact due to
                                                                                            decrease in BRL/EUR
                                                                                            weighing on real currency
                                                                                            basket size and growth rate.

All figures preliminary and unaudited                                                                                      36
Q4 revenue growth of 50% (in CC) taking FY to 42%, adj.
EBITDA at 4%, taking FY to EUR 17m, a YoY improvement of EUR 45m
  Revenue in EURm and Growth YoY in %, preliminary unaudited financials

                                                                                               ▪ Both segments broadly
                                                                                                 contributed in a similar way to FY
                                                                                                 growth of 42% in CC.
                                                                                               ▪ Certain spillover of Q4 order
                                                                                                 intake into Q1 revenue due to
                                                                                                 significantly longer delivery times.

  Adj. EBITDA in EURm and in % of Revenue, preliminary unaudited financials
                                                                                               ▪ Another strong quarter with adj.
                                                                                                 EBITDA margin of 4%.
                                                                                               ▪ Strong >40% FY revenue growth
                                                                                                 paired with >10pp adj. EBITDA
                                                                                                 margin improvement lead to EUR
                                                                                                 45m profitability increase.
                                                                                               ▪ Improvements across all P&L line
                                                                                                 items to a similar extend (2-4pp
Segment reporting of EU and LatA to follow with publication of annual report 2020 report due     each in COGS, Fulfillment
                  to regulatory requirements (silent period) post Mobly IPO                      Expenses, Marketing Expenses and
                                                                                                 SG&A).
All figures preliminary and unaudited                                                                                                   37
Cash and cash equivalents ended 2020 at above EUR 100m.
FY 2020 cash flow positive also excl. capital increase of EUR 46m
  Cash flow FY 2020 in EURm

                                                                                                                   ▪ Positive operating cash flow in
                                                                                                                     all quarters 2020, with total
                                                                                                                     +EUR 32m in 2020, solid basis
                                                                                                                     for continuously improved cash
                                                                                                                     position.
                                                                                                                   ▪ Due to the 10% capital
                                                                                                                     increase executed in Dec cash
                                                                                                                     level of more than EUR 100m.
                                                                                                                   ▪ Cash inflows from Working
                                                                                                                     Capital esp. in Europe
                                                                                                                     significantly increased due to
                                                                                                                     low stock levels. This is
                                                                                                                     expected
                                                                                                                      1         to partly reverse in
                                                                                                                     2021, once delivery times
                                                                                                                     decrease again and growth
                                                                                                                     trajectory stabilizes.

1 Including
                                                                                                                                                       38
            e.g. changes in provisions, changes in other assets/liabilities, finance costs, taxes and FX effects
All figures preliminary and unaudited
Our mission: to be the online destination for Home & Living

▪   Huge and uniquely attractive Home & Living market opportunity of >EUR 120 billion

▪   Markets characterized by low online penetration of
Investor Contact              Media Contact

Philipp Steinhäuser          Anne Gaida
CFO                          Senior Communications Manager
home24 SE                    home24 SE
Greifswalder Str. 212/213    Greifswalder Str. 212/213
10405 Berlin                 10405 Berlin

E-Mail: ir@home24.de         E-Mail: anne.gaida@home24.de
Phone: +49 30 201 634 728    Phone: +49 30 201 632 9416

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KPI definitions

KPI                   Definition

                      Defined as the aggregated gross order value of the orders placed in the respective period,
Gross order value
                      including VAT and without factoring in cancellations and returns as well as subsequent
[in EUR]
                      discounts and vouchers

Number of active      Defined as the number of customers that have placed at least one non-canceled order in the
customers [#]         12 months prior to the respective date, without factoring in returns

                      Defined as the number of orders placed in the relevant period, regardless of cancellations
Total gross orders
                      or returns

                      Defined as the aggregated gross order value of the orders placed in the respective period,
Average order value
                      including VAT, divided by the number of orders, without factoring in cancellations and
[in EUR]
                      returns as well as subsequent discounts and vouchers

Growth at constant
                      Defined as growth using constant BRL/EUR exchange rates from the previous year
currency (CC)

                      EBITDA defined as the sum of operating result (EBIT) and depreciation and amortization.
Adjusted EBITDA       Adjusted for share-based compensation expenses and costs incurred in connection with the
[in EUR]              listing of existing shares and other one-off expenses, mainly service fees for legal and other
                      consulting services associated with the IPO
                                                                                                                       41
Disclaimer
This presentation has been prepared by home24 SE (the “Company“). All material contained in this document and the information presented is for
information purposes only and does not purport to be a full or complete description of the Company and its affiliated entities. This presentation must
not be relied on for any purpose.

This presentation contains forward-looking statements. These statements are based on the current views, expectations, assumptions and
information of the management of the Company. Forward-looking statements should not be construed as a promise of future results and
developments and involve known and unknown risks and uncertainties. Various factors could cause actual future results, performance or events to
differ materially from those described in these statements, and neither the Company nor any other person accepts any responsibility for the accuracy
of the opinions expressed in this presentation or the underlying assumptions. The Company does not assume any obligations to update any forward-
looking statements.

This presentation contains certain financial measures that are not calculated in accordance with IFRS and are therefore considered “non-IFRS
financial measures”. The management of the Company believes that these non-IFRS financial measures used by the Company, when considered in
conjunction with, but not in lieu of, other measures that are computed in accordance with IFRS, enhance an understanding of the Company’s results
of operations, financial position and cash flows. A number of these non-IFRS financial measures are also commonly used by securities analysts, credit
rating agencies and investors to evaluate and compare the periodic and future operating performance and value of other companies with which the
Company competes. These non-IFRS financial measures should not be considered in isolation as a measure of the Company’s profitability or liquidity,
and should be considered in addition to, rather than as a substitute for, income data or cash flow data prepared in accordance with IFRS. In
particular, there are material limitations associated with the use of non-IFRS financial measures, including the limitations inherent in determination
of each of the relevant adjustments. The non-IFRS financial measures used by the Company may differ from, and not be comparable to, similarly-
titled measures used by other companies.

Certain numerical data, financial information and market data, including percentages, in this presentation have been rounded according to
established commercial standards. Furthermore, in tables and charts, these rounded figures may not add up exactly to the totals contained in the
respective tables and charts.

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