Q1 2023 MYT Netherlands Parent BV Earnings Call
Ladies and gentlemen, greetings and welcome to the Mitek visa first quarter of fiscal 2023 earnings conference call.
At this time all participants are in a listen only mode.
Today's call is being recorded.
And we have allocated one hour for prepared remarks and Q&A.
It is now my pleasure to introduce your host Martin Bill My Teresa Chief Financial Officer.
Thank you I know what to yourself.
Thank you operator, and welcome everyone to my treats US Investor Conference call for the first quarter of fiscal year 'twenty two 'twenty three.
With me today is our CEO Mike <unk>.
Before we begin I would like to remind you that our discussions today will include forward looking statements any comments, we make about expectations are forward looking statements and are subject to risks and uncertainties, including the risks and uncertainties described in our annual report.
Many factors could cause actual results to differ materially we are under no duty to update forward looking statements.
In addition, we will refer to certain financial measures not reported in accordance with prior fast on this call.
You can find reconciliations of these non iff's financial measures in our earnings press release, which is available on our Investor Relations website at.
Investors dropped my Teresa Dot com.
I will now turn the call over to Michael.
Thank you Martin.
Also from my side, a very warm welcome to all of you and thank you for joining our call today.
We hold today comment on the results and performance of our core.
Fiscal year 2023.
We are extremely pleased with our results.
Business has shown excellent strength and resilience.
Ongoing challenging economic and geopolitical types by Teresa has accelerated its top line growth in the first quarter of fiscal year 2023.
Which is a continuation of what the.
So in previous quarters.
Furthermore, we deliver in the first quarter once more very good profitability.
Given what we see in the broader consumer sector and with other digital businesses. We believe that mitral rizo is a truly differentiated business with a unique customer focus.
Adaptive business model.
And outstanding operational excellence.
These qualities make us confident to deliver against our communicated targets for full year fiscal year 'twenty 'twenty three despite clear challenges in the macro environment.
I will today provide you with details on these three key qualities as evidenced in the first quarter of fiscal year 'twenty to 'twenty. Three so that you can fully appreciate the strength and health of the mitral read the business.
First.
Our sole focus on the high end luxury sector, both in terms of customers as well as brands make us foremost luxury business and not just the digital.
Our events, Brian Exclusives and customer Kpis.
First quarter will speak to this.
Being luxury explains why we are in many ways protected from the challenges and uncertainties in the macro.
And by that.
This is evidenced by very strong and sustainable growth in the first quarter, Unlike more middle market oriented digital businesses.
Second we have created a very diversified.
Ed job business.
We are global we are focused on food price selling and we have a high share of cost variability there.
Therefore, we can expand our business alone many growth vectors, while at the same time delivering outstanding profitability positive cash flow and high return on invested capital.
But the key success factor for microarray as has always been to be operational excellence and the business.
This can be seen in our once again outstanding operational kpis for the first quarter.
The high customer satisfaction.
And the many trust based relationships we enjoy with.
Luxury brand partners.
Let me now comment in more detail on these three key qualities of the mitre ease of business.
First let's look at the very strong and sustainable growth in the first quarter.
We grew our gross merchandise value GMP by plus 28% compared to Q1 fiscal year 2022.
A clear acceleration versus the Q3 growth rate of 13, 2% and the Q4 growth rate of 18.2% fiscal year 2022.
This accelerated growth in the first quarter are clearly sets us apart from other digital businesses.
In the same period.
It is driven by the sole focus on true high end luxury customers.
Not on the peripheral occasional luxury shoppers.
The latter are and will be impacted significantly by economic downturn, while the true luxury customer is more resilient.
First quarter of fiscal year 2023, our top customer base grew by plus 22, 7% compared to Q1 of fiscal year 'twenty to 'twenty two.
The average spend for all customers grew by plus six 5%.
First quarter of fiscal year 2023, compared to Q1 of fiscal year 2022.
In that sense, the lower growth of plus 12, 5% for the full customer base during the quarter did not matter as much as it was driven by slower growth in occasional luxury shoppers.
To engage and stuff.
Our high end customer base or as we call them <unk>.
Luxury wardrobe buildups.
The part that again was mainly leading luxury brands for exclusive collaborations.
We produced impactful digital content and campaigns that created visibility for the brands to reach our unique high value multi brand customer base, which cannot be easily reached by pure mono brand offerings.
Our clear focus on high end customer engagement is ultimately the key reason for luxury brands to continually parcel with us.
Examples for exclusive Brian collaborations from the first quarter include the launch of the exclusive islands bags from Gucci <unk>.
Exclusive fall winter styles from the waiver and more clear.
As well as the prelaunch of the highly anticipated new collection of creative director matured Blahsy.
Veneta, leaving micro arrays that customers exclusively first axis.
We will also the exclusive launch partner for the left water back for actual which was featured on the very first runway show of the new design, a barcode even shouldn't salt and.
And exclusively available on my Theresa on the day of the show.
Please see our investor presentation for more details on brand collaborations in the first quarter of fiscal year 'twenty two 'twenty three.
Our unique ability to excite and engage through such unique brand collaborations with true high end luxury customers and then build long lasting relationships provide us with a very sustainable and growing revenue base.
This comes on top of course of the continued shift of luxury consumers to online shopping.
And our tech I'm up predicts that by 2025 still only 30% of the personal luxury goods spend will be online.
Second, let's look on the very diversified and agile by Teresa business.
The first quarter of fiscal year 2023, we grew across all categories, such as womens wear menswear and kids wear as well as our recently launched life category featuring home and lifestyle products.
Also in terms of geographic presence, we continue to see growth in all regions in the United States, which is one of our key growth markets. We achieved again, an above average G. M b growth with plus 28, 5% compared to Q1 of fiscal year 'twenty to 'twenty two.
We drove this growth with a strong lineup of customer and brand events across the United States. Please.
Please see our investor presentation for more details on all of our events in the first quarter of fiscal year 'twenty two 'twenty three.
We also partnered with women's wear daily during New York fashion week for physical and digital marketing activities.
And hosted a high impact lunch for the designer Gabriela Hearst at 11 Madison Park restaurant.
Additionally in July we announced in June as our new President for China, and Asia Pacific as a clear commitment to invest into this region.
We grew our team of personal shoppers and marketing staff with China in the first quarter.
Despite the ongoing COVID-19 related challenges for customers, our mainland China GMB grew by plus 22, 5% in the first quarter or.
'twenty two 'twenty three compared to the first quarter of fiscal year 2022.
In two days, we will actually launch the Chinese design, a program to support and create visibility for Chinese luxury designers as well as raise our public profile in China.
Please see our investor presentation for more details on this significant and highly publicized program.
In terms of business model diversity, we not only grew our life category on the basis of a drop ship model, but also continue to expand our curated platform models C. P. M to now seven brands in the first quarter of fiscal year 2023.
Just as a reminder, the C. P M allows us to do right and serve our customers as we do.
Under the wholesale model, while the inventory ownership remains with the brand, which allows for better inventory management and control for them.
As in the previous quarters, we achieved our G V grow with a continued focus on full price selling.
Our average LTM order value increased by plus five 4% in the first quarter of fiscal year 2023, compared to fiscal year 'twenty to 'twenty two.
The repurchase rates of new customer cohorts are quiet in Q4 fiscal year 'twenty to show positive trend versus Q4 of fiscal year 'twenty, one cohort in their respective first quarter.
Please see our investor presentation for more details on the cohort repurchase rates.
Our customer acquisition costs only increased moderately by 6% in the first quarter and finally, we achieved our growth with a very healthy gross profit margin, which was 90 basis points higher than the first quarter of fiscal year 'twenty to 'twenty three compared to fiscal year 'twenty to 'twenty two.
All of these kpis demonstrate the agility of our business model.
We'll talk in a few minutes about how all of this translated into excellent bottom line results for the fourth.
First quarter of fiscal year 2023.
But let's look at the key strengths of my Teresa the operational excellence in the business.
A key indicator for this is customer satisfaction, which reached an outstanding level as measured internally with a net promoter score of 81.0% in the first quarter of fiscal year 2023.
This is only achievable with a very high consistency and quality across all functions and in particular warehouse operations customer care and technology services.
Furthermore, high customer satisfaction for our top customers is achieved by the flawless execution of true money can buy experiences for them.
Examples for the east for the first quarter include the celebration of Victoria Beckham first show in Paris.
Star studded guest list, including Eva Longoria, Gigi Hadid and many more.
One string of the discharge exhibition in one Oh cool accompanied by did not for our top customers, whereas the iconic she truly is an IMAX was down a little bit to himself.
And we can experience with top customers and fill the meal at home when they look at Chile, including being part of his personal birthday Party.
Finally operational excellence today also means.
Progress against sustainability requirements.
To read our recently published its first positive change report.
Some of the highlights and achievements in this report for fiscal year 2022 include a 34% decrease of C O two emissions.
The older ships at.
Achievement of carbon neutrality for the company.
90% usage of renewable electricity in the company.
57% women in leadership positions.
And more than 2 million you will work off products resold our customers buy our partnership is with <unk> collective.
Please see our investor presentation for more details on the Mitre as a positive change.
Yeah.
With all the above it should come as no surprise that we strongly believe our communicated targets for fiscal year 2023.
We are extremely satisfied with our performance in the first quarter.
We believe that our results demonstrate the fundamental strength and consistency of our business model.
Livery profitable growth.
We see ourselves as one of the few windows and the clearly consolidating luxury.
E Commerce space.
And now I hand over to Martin to discuss the financial results in detail.
Thank you Michael.
I will now review the financial results over the first quarter of fiscal year 2023, and at September 32022, and we will provide additional details on some of the previously mentioned factors influencing our performance.
Unless otherwise stated all numbers for export to Europe .
As Michael highlighted we are extremely satisfied with our results.
G M b in the first quarter running from July to September .
Well, it's at $197 9 million, a 20.8% increase from $163 9 million in the prior year quarter.
We have been able to accelerate growth throughout calendar year 2022 despite a negative consumer sentiment, resulting from the outbreak of the war in Ukraine and much.
This is quite a remarkable and resilient performance.
Highlighting the unique my Teresa positioning and online battery.
<unk> is one of our key value drivers as it shows the depth and growth of our customer relationships.
In the first quarter, we delivered strong G M D.
Due to excellent existing customer cohort performance and robust new customer growth.
Customer engagement and retention continued to grow as our active customers, who shopped with us in the last 12 months grew by 13, 4% to 800000.
During the first quarter net sales increased by $18 1 million or 11, 4% year over year.
$175 9 billion.
As in previous quarters that sales reports it is impacted by brands transitioning to our curated platform model.
During the first quarter of fiscal 'twenty three we now have seven brands operating under the curated platform model.
Catch one brand in Q1 of fiscal year 'twenty two.
In Q2 of fiscal year 'twenty, two we operated with six breaths under the CPA.
We therefore expect the growth rates on net sales.
Are we much closer to G M b in the second half of fiscal year 'twenty three.
And to be more similar in <unk>.
Fiscal year, 'twenty four and beyond.
There's only a few further brands will join the C. P M overtime.
As stated before due to the onetime effects of selected brands transitioning from the wholesale model to our curated platform model. The increase in net sales is lower than our GM vehicles in the quarter.
The difference in growth rates between G N V and net sales.
It's purely a one time financial accounting effects.
As for the C. P M breaths, we book the platform fee is in that sense.
Months.
After the full transition of those France.
This one time effects will be over and.
Our net sales will grow in line with G. M B again.
The curated platform model offer special financial characteristics to my Teresa.
Enables a stronger topline growth.
Due to in season replenishment and overall yields similar profit profile for mitral zone.
In addition inventory risks stays with the brand.
As they maintain ownership of the inventory and my Teresa has a much better cash cycle as we only pay the brand once the customer has paid us.
And the first quarter of this fiscal year.
We once again saw significant growth in many regions of the world.
We grew strongly in the U S and other parts of the world as we fortified our global leadership position in.
And curated online luxury expenses.
Our net sales share outside your increased from 40% in Q1 fiscal year 'twenty two.
245% in Q1 of fiscal year 'twenty three.
Our total orders shipped in the last 12 months increased by 16, 4% to 1.84 million.
Our a O b L T M increased by five 4%.
Now 631 euros.
One of the highest in the industry.
In absolute figures this growth in AOE equals an increase of 32 euros per order shipped.
The gross profit margin of 49, 9% improved by 90 basis points compared with the prior year period a 49.0%.
Driven by an increasing CPM shneur.
The high level of our cross profit March reflect our successful full price positioning fully consistent with the high end brand perception of my Teresa itself.
Shipping and payment costs increased by $4 1 million to $24 million in the quarter driven by an increase in total orders shipped.
As a percentage of G M B <unk>.
Shipping and payment costs in this quarter remained stable with 12, 1% compared to 12, 2% in the prior year quarter.
During the first quarter marketing expenses increased to $25 4 million.
Compared to $22 4 million in the prior year quarter due to the number of new customers acquired and an increasing share of P. R customer events executed.
As a percentage of G M D.
Marketing expenses decreased to 12, 8% from 13, 7% in the previous year quarter.
We again saw excellent customer cohort performance.
And kept the marketing ratio in line with our expectations.
Adjusted selling general and administrative expenses grew by $7 1 million to $27 7 million in Q1.
Adjusted SG&A expenses as percent of G M B.
<unk> increased by 140 basis points to 14% from 12, 6% compared to the prior year quarter.
The increase is.
It is due to higher personal cost, especially in logistics.
And energy costs.
We've seen a 14% SG&A cost ratio already in Q4 of.
Our fiscal year 'twenty two.
The increase in the SG&A cost ratio is fully in line with our budget.
And we expect to manage those cost pressures throughout fiscal year 'twenty three.
Despite current macroeconomic uncertainties, we will continue to invest in the quality of our personnel and will make no compromise you know our service excellence.
This will be key to sustain our medium and long term growth strategy.
Capturing market share and.
Thus fortifying our market leadership position.
Adjusted EBITDA in Q1 of fiscal 2023.
It was $11 6 million.
Compared to 14 million in the prior year quarter.
The adjusted EBITDA margin was at six 6% compared to eight 9% in the previous quarter.
The decrease of 230 basis points is mainly due to the aforementioned increased cost effects.
In personal and energy.
Nonetheless, the adjusted EBITA margin shows the strength and resilience of our profitable business model and we continue to deliver an industry leading performance on top and bottom line.
Despite increased cost.
And within an uncertain market environment.
We have proven that our business model is agile.
To cope with macro challenges.
And to state insights targeted levels for the full fiscal year.
Within our growth trajectory, we are able to absorb SG&A cost increases.
Through our operating leverage.
Depreciation and amortization expenses in Q1 were consistent with the prior year period.
It's $2 5 million or one 3% of G M B.
Compared to the prior year periods at $2 2 million or one 3%.
The resilient profitability.
Our business model.
It's also visible on operating income and net income level.
Despite the current macro challenges my trees are reported and adjusted operating income of $9 million at a 5.1% margin.
And then adjusted net income of $6 1 million or three 5% margin in the.
First quarter of fiscal 'twenty three.
We focus on continuously delivering profitable growth.
Which is clearly visible in a very simple and transparent P&L.
EBITDA adjusted EBITDA, adjusted operating income and adjusted net income and their related margin percentages.
Non <unk> measures.
Moving to the cash flow statement.
During the three months ended September 32022, operating activities generated a seasonal 18 million negative operating cash flow.
On the same level as in the previous year quarter.
With delivering a positive cash flow for the full fiscal year 'twenty two.
Net decrease in cash and cash equivalents was at $25 6 million, including $5 million of Capex for the construction of our new warehouse Leipzig, which.
Which will enable us to better serve our consumers.
We can't shipping times.
Including last year's portion.
17 million.
Or 40% to 50% of the assumed total cost of the new warehouse.
Between 35 and $40 million.
Been paid already.
The majority of the remainder will be paid during the current fiscal year and the rest next year upon.
Elevation.
As outlined in our last Investor presentation, where you run a highly efficient capital light model.
In fiscal year 'twenty to 'twenty two.
We had a positive operating and free cash flow and were able to increase our adjusted return on capital employed.
28%.
We ended the quarter.
And our strong financial position.
With cash and cash equivalents of $87 9 million.
No bank debt.
And $60 million unused availability under the revolving credit facilities as of September 32022.
Turning now to our expectations for the current fiscal year ending June 32023.
Most of the unprecedented overall market challenges of the past quarters are still intact.
Fear of an upcoming recession, a war in the middle of Europe increased energy prices ongoing COVID-19 restrictions in Asia and predominantly inflationary pressures may also affect online luxury sales of high net worth individuals.
But to a much lesser degree.
Even in these times.
My Teresa has shown a strong topline and a highly resilient bottom line performance as we cater to the dedicated luxury shopper.
We expect to manage these cost pressures.
Fiscal year 'twenty three.
I said before despite the current macroeconomic uncertainties.
We will continue to invest in the quality of our personal and we will make no compromise in our service excellence.
This will be key to sustain our medium and long term growth strategy.
<unk> market share and thus fortifying our market leadership position.
With prudence.
We confirm our guidance.
As the situation is less predictable.
Therefore, our guidance for fiscal year 'twenty three remains.
G M V and the range of $865 million to $910 million.
Representing 16% to 22% growth.
Net sales of 755 million to 800 million, representing 10% to 16% growth.
Gross profit at 410 to 135 million growing in line with G. M. B also representing 16% to 22% growth.
And adjusted EBITDA in the range of $68 million to $76 million.
And then adjusted EBITDA margin between 995%.
We are extremely satisfied with our excellent performance and the acceleration during the first quarter of fiscal year 'twenty to 'twenty three.
The upcoming months, we'll give more transparency on how the world is affected by the ongoing macroeconomic situation and related cost pressures.
I will now turn the call back over to Michael for his concluding remarks.
Thank you Martin we're extremely satisfied with the first quarter of fiscal year 2020 Street earnings result.
We see ourselves very well positioned to achieve our short term targets. Despite the challenging environment and based on this take advantage of the ongoing shifts to online and luxury Smith.
Consolidation and digital platforms, and the global market share expansion opportunities.
We are confident that my Teresa office high value consumers, the best multi brand digital shopping experience that is.
And with that I'd like to ask the operator to open us for your questions.
Yeah.
Thank you.
Ladies and gentlemen at this time, we will be conducting a question and answer session.
If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
You May press star two if you'd like to remove your question from the queue.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Ladies and gentlemen, we request you to restrict yourself to one question and one follow up.
We will wait for a moment, while we poll for questions.
Our first question comes from the line of Oliver Chen from Cowen. Please go ahead.
Thanks, a lot good morning, Michael Martin regarding your guidance on G. M. B looking forward it would be great. If we could get some color on regional trends Europe , North America Asia, you have really good momentum, but there are plenty of cautions in the marketplace that you called out and second follow up question as we.
Model inventory growth relative to sales how's the freshness of your inventory in any shifts we should be aware of and also what are your thoughts on the promotional environment, we're starting to see some intensification and in some.
More accessible luxury in the U S. Thank you.
Thank you all of them.
Let me take the.
Geography question, and then Martin can speak to the inventory.
We have experienced.
Ongoing challenges in Asia, particularly in China, we believe that.
We will continue for sure until the beginning of next year, there may be a potential upsides.
Covid situation becomes more control if not we will face the same situation back we have faced since January so.
Maybe and upsides, but if everything is is as it is now that we will continue to see good growth that we have been able to achieve in Europe .
Yeah.
We believe our customer segment the potential recession that will happen beginning of next year is not a large significance. We believe that what is out there in in terms of child.
Challenges inflation.
Energy prices is already evidenced in their behavior right now so we expect Europe to be very strong.
Place for us to be in the U S has shown continued outperformance, but not as high as it was maybe last fall, but do we believe that the stronger performance that we have seen in the U S. So far will continue well into next year and we actually believe.
That kamarck, particularly as you look into our numbers, you'll able remember Q3 of last fiscal year was really heavily it. So there is an opportunity in Q3 to achieve on the not so great last Q3.
But otherwise based on what we see at the moment, we don't believe that significant changes in trends will will happen by geography.
Masterful in the inventory.
Yeah happy to speak to the inventory also there we are quite happy.
Satisfied with their inventory levels. They are exactly on budget, if we look at a different season deliveries.
And we expect Jimmy over inventory to be exactly around.
Last our last fiscal year's level. So on that front, we are fully delivered as expected and have the freshness mm two to satisfy the customer needs.
Nice quarter and best regards.
Thank you.
Our next question comes from the line of Matthew Boss from J P. Morgan. Please go ahead.
Great. Thanks, So Michael maybe as we think about customer growth our top customer growth up 23% in the first quarter, that's on top of more than 40% growth a year ago, maybe could you just expand on the customer acquisition strategy the marketing that you're doing around these.
Top customer cohorts and then how you're balancing the gross margin at the same time with the new customer acquisition.
Sure happy to do so Matt so.
I always say if you see good top customer growth now.
The origin as a year ago, because you need to acquire the right from then to do develop them and we have seen now for almost over a year always the very strong trend of drop customer growth.
We believe that it will continue as they are.
Definitely economically challenging times, the more peripheral customer the more occasional customer may postpone purchases.
The core of luxury customer is continuing to spend and as these cohorts age and mature is a better word.
We continue to see that develop and so the original acquisition is really done by immensely refined targeting.
Really bidding them the right traffic really bidding on the right AD words really putting the digital marketing in and in the place where it belongs the nurturing of declines is of course very much centered on.
One on one personal relationships with the personal shoppers the money can buy experiences that we have highlighted a couple of times in these calls which are really unique because they allow our best shoppers to meet the designers to be part of that.
The environment they they they like so much.
And.
Good news is of course that as long as we deliver on the operational excellence.
They have high loyalty in these top customers. So they are not requiring endless marketing.
And endless discounts they are requiring outstanding service they require outstanding.
Duration.
Exclusive capsules, but.
The more you focus on this customer that's one at one key strategy to protect your margin.
Great and then maybe Martin just to follow up so relative to gross profit dollar growth of almost 14% in the first quarter, what's the confidence in 16% to 22% growth for the full year and just how best to think about maybe the gross margin cadence for the rest of the year.
Yeah happy to do so and that I mean.
Gross profit grew to 14% exactly as you said this is a faster growth than net sales of 11, 4%.
But if it's slower than GMB growth also driven by them by the share of C. P M at the prior year quarter.
We just had.
One CPM brand and now have seven and half compensating effect swelled to P&L as shown in the last quarters, but I mean, the overall logic is that we always have significant shifts off gross profit between cultures and in comparison to the quarters of the preceding year due to.
The seasonality of the business.
And we don't give quarterly guidance, but we confirm our guidance for the full fiscal year with gross profit growing in line with G. M. We between 16% to 22%.
And this high level of crop gross profit margin.
And its resilience.
Flex our successful full tow price positioning.
Great Best of luck.
Thank you.
Our next question comes from the line of Michael Binetti from Credit Suisse. Please go ahead.
Hey, guys. Thanks for all the detail here today, congrats on a nice quarter.
Could you maybe unpack the gross margin a little bit more maybe how much I know you don't want to give us get us to close the CPM impact, but how much of the gross margin change in the in the quarter was from mix of products, especially as you guys move into some of these new categories, how much discounting impact that year over year, maybe foreign currency as well would be curious.
On shipping.
How much excess shipping is there versus 2019 and when do you think that can start moving to move back below that 12% level that we saw before and then I did find that your comment on marketing interesting you said CAC was up 6%, but marketing leverage. So your number of first time buyers was about 15000 lower than the prior quarter, So maybe more of that.
It looks like more of the growth came from existing customers and you didn't have to advertise as much can you just speak to whether that continues or if you have to push harder into customer acquisition through the year to help us with the marketing line.
Maybe he made me Michael I start with the last one.
Martin will focus on the gross margin absolutely absolutely correct observation.
What we believe is happening at the moment is as I spoke again as I mentioned before is the peripheral customer.
One time customer is is not out there in the market as much as it was as they were 12 months ago. So.
Seeing lower numbers of first time customers.
Does not mean that we acquire less good customers as you know we have quite a significant share of customers from year, one to year, two which is the natural churn of customers that actually only by luxury items once or twice a year and then don't come back in.
So we continue to focus as much as possible in our marketing efforts to really get the good customers that over 12 months mature and become top customers. So if the total number of first time buyers is shrinking.
But really what is happening is less peripheral that's good.
Oh occasional shoppers then all is fine all is fine.
The average pack ban goes up.
But you're actually in the mix have been even better quality. All of that is constantly monitor are we always provide you. The 90 days 30 days repurchase rates as long as those numbers are fine, but the strategy works actually and as I mentioned before.
And the earnings statement are having less total growth in customers is totally fine for the moment as long as we get our share of top customers and the top customer development is playing out as it does and we get more from existing at the moment, but it was 21% growth.
In this environment would be more than happy to have that slightly different mix for the moment at least.
Martin on G M.
Yeah on the gross profit margin as as you rightfully state there the gross profit margin for the full fiscal year.
We'll go up as expected and I think as we as we talked and guided to before it will be for the full fiscal year round, 54% driven by an increasing share of CPM and that is also the main reason why the prior year quarter had a different cros.
Margin in relation to G. M B and then the the the core in the quarter and that's why the gross profit growth the absolute across both with goal is 14% and that is that is stronger than net sales growth.
But less than the GMB growth of 21%.
And we but but the quarterly you should not so much focus on the quarterly gross profit margin as it is also driven by seasonality.
So Q1 and Q2 are in this fiscal year and Q1 and Q2 in Alaska skier Theres always a shift and you know.
And days in sales per days and so that the quarterly look it's a it's not so much and focus them. The overall logic is that we.
Confirmed our guidance and are very confident for the full fiscal year with a gross profit growing at 16% to 22% in line.
In line with with G M D.
Thank you.
Thank you.
Ladies and gentlemen, if you wish to ask a question. Please press star one.
Our next question comes from the line of Kunal Motherfucker from U B S. Please go ahead.
Hi, Thanks, a few if I could one to start to pick up.
With the last question.
In terms of gross profit growth of 14% versus a target of four <unk> to north of 20% for the full year.
Martin.
Given you report numbers on a quarterly basis, we we definitely have to look at the trends.
In the quarter versus what the geysers and.
And then the gross margin growth are the leverage that for this quarter was significantly smaller than the leverage in the last few quarters.
So can you help or help us understand you know is.
Actually what's happening with the window, but the gross margin then I have a couple of follow ups.
I mean, the gross margin and that's why we deliberately are not giving quarterly guidance on the gross margin because it is influenced by so many factors and and one factor is the preceding C. P. M sure, which was much lower with one brand now we have some bets and that's.
As stated before the gross profits are off a C. P M. Brent in relation to G. M V is a bit lower than the gross profit of our wholesale hum product of wholesale brand.
In relation to G M B and that's why.
It is compensated by other cost efficiencies in marketing SG&A.
Topline, we talked about those they're also outlined in our investor presentations and therefore, we have the stability in the overall EBITDA margin.
As shown in the last last quarters and so if you take one factor is the steep damn sure preceding quarter now second one is an increasing C. P M sure which drives the.
Gross profit margin in relation to net sales and then you have shifts between quarters.
And so we yes, we have a 14% gross profit growth in this quarter.
But as we guide towards the 16% to 22%.
We are we were targeting and we maintain our target to achieve a 16% to 22% gross profit growth for the full fiscal year.
Got it and then.
Couple of quick follow ups, one is on the modeling side Benno you reported 28, 5% GMB growth in the U S. How much was that was FX and then overall on the G. M. B how much was the FX impact and then would be would be actually the FX impact how much of the GMB growth was essentially coming from.
This increases.
The luxury brands have kind of implemented over the past year or so.
Yeah, maybe I'll take the FX topic of the microeconomics or talk to and I V or price increases.
The FX effect overall in our business model is it is very small as we have an ethics exposure after our natural hedge of about 22% and that's why in this quarter.
We talked about this in the last quarter as well this quarter. The the ethics effect is about 3%.
3% is.
Constant currency growth would've been 3% lower.
Speaking to the growth in the U S. Obviously.
It would be a much higher number hum as as the strengthening of the U S dollar Oh occurred already and and in Q1.
Yeah.
Okay.
When the price factor.
It's true luxury brands have increased prices predict your bags, but.
Price increase is is a bit difficult to assess because 80% of what we sell each either had.
No equivalent the season before so.
Only on bags and shoes. There is the most St model that has existed for multiple seasons, but when you look at the total number a 28% Jim Regrows.
At the same time.
<unk>.
Increased by 5%. So the there is some price impact here, but to achieve 28% we sold more useful more items whiskey, we serve more customers and <unk> growth of Hypersound.
Some price increasing there is some customers buying more expensive pieces.
Even though you can't compare but they may buy it now.
Now.
<unk> was yields which are more expensive than flat. So I wouldn't really say this is inflation. What you see there was $20 eight or inflation, what you see with the Hypersound AWS customers already.
I'm willing to spend money.
Thanks, Michael just a quick follow up then.
Terms of the number of orders, our LTM orders per average but per buyer.
That improved modestly over 2019 levels now would be when we think of your buyer base one of the questions we keep getting.
A number of times is a bit.
How much of this buyer base is really the high net worth individuals that are below that.
Debt buyers and builds wardrobe.
Oh wardrobes.
What proportion of your customers are like you know this this high net worth individuals.
And then in terms of the average in terms of the frequency.
What percentage of your customer of your customer base over the past 12 months.
People that bought once and then they did not come back again for for the order.
On the on the last question we don't.
Close that.
That detail, but we disclosed in our S. One a patent that has been quite stable that from year one to two.
In the schools.
About 75% of customers.
We retained 50% of revenue and then azo year two onwards then.
We actually retain.
19, 95% of the customers and the 95% to 100% of the revenue.
It is a significant amount of one time customers, which are sort of now.
Naturally not coming back because they don't come back in general.
In terms of how much of our customer has a high net worth individuals. So I think the large large parts I mean, we not always capture every wallet of what they spend.
But for sure the 3% customers that now account for over one third of our revenues are all high net worth individuals.
The best evidence for that is this is a business and digital that.
<unk> delivered 21% of G. M. Equals. This is the effect of a business that is focusing on the high net worth individuals continue to spend even though for sure where many customer segments economic times, a very tough and at least very uncertain and so our customer base.
Is really skewed towards those that are more.
Don't feel any reason to reduce spending.
Well. Thank you Michael Thank you Martin.
Yeah.
Thank you.
Our next question comes from the line of Flavia theory, though from Jefferies. Please go ahead.
Thank you.
Hi, Michael I'm, often so two possibly three quick questions from me.
In terms of geographical mix as being an interesting shift in that and I know, it's just one quarter, but would say comparing Germany to.
Rest of the World I was wondering if you could give us a little bit more color on that on on what happened there one one's down and the other ones up quite a bit second thing can you give us or remind us what the projected IPO share compensation expenses liked it to be for the year.
And lastly, I was wondering and in recent weeks have you seen any particular momentum when it comes to the return rate.
As other airline to two two to pass metrics or have you seen any significant shift in any particular geography. Thank you.
Thank you Flavio, let me take questions, one and three of them.
Martin can talk about share based compensation on numbers right.
The recent weeks, we have seen a slight increase in in and return right now.
Nothing out of the proportional in terms of fluctuation. So we still believe for the full fiscal year, we will have a stable.
We will have a stable return rate, but as presented in our in our documents.
The return rate has picked up buffet.
Household three percentage points.
So to your question on that hard on on geography.
We continue to see.
Very good performance outside of Europe .
Inside of Europe .
Yes.
Clearly in the Gulf region, maybe a sentiment.
That is a bit more conservative, but also remember that in the Gulf region, we probably have an even higher share of.
Or do you see that not only a high net worth individuals because that's our.
Deepest penetration into the into the customer segments. So we do believe outside of Europe outside of Germany that that's for sure for the next couple of quarters, given the economic environment the growth will be stronger out there and that's where we invest both with HR.
Personnel as well as Ms Liz marketing Activations.
And on share based Martin.
Yeah on share based <unk>. This year, we expect about 30 million U S dollar a share based compensation.
Next year, a 15 and the Oh, you're up about five 5 million. So this comes to an end and its.
All I'm originating from the IPO with a share.
Share price of 31 U S. Dollar. This is the iff's accounting for that so it is it as stable as we account for that based on our 31 U S. Dollar ship is leading to 30 million U S. Dollar this year next.
Next year 15 at about five.
Thank you.
Yes.
Thank you.
Our next question comes from the line of Lauren Chung from Morgan Stanley . Please go ahead.
Great. Thanks for taking my question and maybe if I can ask the gross margin question and a little bit of a different way. So I guess the the last two quarters, you've decided about a 290 basis point benefit to gross margin from that the C. P M.
Model, if if we assume that is roughly consistent and next quarter that would imply some of the underlying gross margin was down nearly 200 basis points is that the right conclusion and if so what is what is driving that decline. Thank you.
Thanks, Loren I can't I can take that question I mean, the the difference in the effect of the CPM sure.
In Q4, obviously cannot be compared to the Q1.
Doubled up into the gross margin because in Q4 of the last year of.
The preceding year, we didn't have any CPM. So it's a pure CPM share effect, a 290 basis points in Q1, we already had.
Our major brands are key brands on the CPM model. Therefore, the CPM share increase effect is it's much lower it is more around half of that and and the M. B a.
A decrease in the gross profit.
On the overall wholesale products Ah is compensated by effect that you see for example in marketing and SG&A overall and this is the key asset of the overall curated platform model, which keeps a very stable.
Overall profit pool.
So we have an increasing gross profit margin in relation to net sales driven by Vicki made the platform model and and giving us the ability to have a very high gross profit margin debut one of the highest in the industry.
And leading to a bottom line with an EBITDA margin, which we guide for the full fiscal year and 90 to 90 599 to nine five to nine 7%, which is also one of the highest in the industry and one of the highest compared to our competitors. So we are very happy with our full price.
Selling success and our positioning of the overall business model and are able to have this curated platform model yielding.
Very similar overall profit pool, and enabling two to offer end to operate both models.
To to the brands. So the overall development I mean always there's fluctuations between quarters as stated.
We are very happy Hum on the gross profit development.
Lauren do you have any more questions.
Yeah, that's it thank you.
Thank you.
Our next question comes from the line of Pheno from Society General. Please go ahead.
Yeah, Hi.
I was just wondering could you give some comment on the current trading that you're seeing giving back.
Already like half quarters.
And.
Second thing is in terms of Oh, good if if I just I just wanted to confirm in terms of the FX impact. So basically what you're saying is excluding the FX impact. The GMB growth have been would have been 18% is that is that the correct way to look at it. Thanks.
Yeah, Hi, yes, exactly I mean, so the ethics effect, if you would calculate that is constant currency.
Constant currency growth would have been a 3% lower exactly this is the biggest impact.
And on current trading and that is also a reason why we are confident on our guidance for the full fiscal year.
Because as October as or looking at though too. We're also looking at today.
We see a continuation of those trends that we spoke to in Q1.
Yeah, I mean, almost all of the current trading let me just summarize I mean, we guided for this fiscal year, 2016% to 22%.
I remember when we put out this guidance last time it was a bit of skepticism is that achievable current environment I mean, we <unk>.
<unk> pointed out that we see continued acceleration there was a debate whether the last quarter it actually accelerated.
We clearly said, yes, it had to 18 and so it should come as no surprise with having to live up to the first quarter already with a 'twenty, one or 'twenty 0.8 D&B.
<unk> growth that we feel very comfortable with the 16 grew 22% guidance, which I have to accept is of course way about from many many other digital platforms in terms of what they guide to in terms of growth, which comes back to the customer focus, but we feel with the first.
Quarter end was what we see at the moment very confident regarding our guidance.
Alright.
Just one follow up so late last year. This year and also you expect to be free cash flow positive right.
Yeah.
Yes. This is our expectation.
Okay.
Thanks.
Yeah.
Thank you.
Ladies and gentlemen, we have reached the end of the question answer session.
Thank you for your participation for today's call.
You may now disconnect your lines.
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Yeah.
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Yeah.