HelloFresh SE — Earnings Release 2022

Mar 7, 2023

Q4 & FY 2022 Results

March 7th, 2023

Disclaimer

This document has been prepared by HelloFresh SE (the "Company" and, together with its subsidiaries, the "Group"). All material contained in this document and information presented is for information purposes only and must not be relied upon for any purpose, and does not purport to be a full or complete description of the Company or the Group. This document does not, and is not intended to, constitute or form part of, and should not be construed as, an offer to sell, or a solicitation of an offer to purchase, subscribe for or otherwise acquire, any securities of the Company, nor shall it or any part of it form the basis of or be relied upon in connection with or act as any inducement or recommendation to enter into any contract or commitment or investment decision or other transaction whatsoever. This document is not directed at, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction. Persons into whose possession this document comes should inform themselves about, and observe, any such restrictions.

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This document includes certain financial measures not presented in accordance with IFRS, including, but not limited to, AEBITDA. These financial measures are not measures of financial performance in accordance with IFRS and may exclude items that are significant in understanding and assessing the Company's financial results. Therefore, these measures should not be considered in isolation or as an alternative to result for the period or other measures of profitability, liquidity or performance under IFRS. You should be aware that the Company's presentation of these measures may not be comparable to similarly titled measures used by other companies, which may be defined and calculated differently. See the appendix for a reconciliation of certain of these non-IFRS measures to the most directly comparable IFRS measure.

Our Mission

We change the way people eat forever

Our Vision

The world's leading, fully integrated foods solution group

Extraordinary 3-year growth period behind us

1

We generated strong cash flow from operations… and re-invested the bulk of it back into the business

Q4 and FY Results 2022 | 5 ^{2020 2021 2022} Strong balance sheet and capital discipline preserved

Our customers are happier than ever...

1

2

Source: Company Data (Group excl. Youfoodz and GoodChop)

We have built a unique D2C operator in the largest consumer category with impenetrable competitive moats

2022 Highlights

We delivered 1bn meals in 2022

• Increase in number of meals driven by higher AOR YoY and resilient customer ordering behavior
• Order rates stabilized ahead of pre-Covid levels at 4.12 in Q4
• Q4 customers at 7.1m, a 1.5% decrease YoY versus Covid impacted period
  • Intl +1.1% (incl. YouFoodz)
  • US -4.3%, driven by spillover effects from previous quarter and optimization of marketing spend

Existing customer behavior remained relatively isolated from macro environment

Lifetime in # Orders of 10-wk Cohorts¹

(by acquisition week)

Group Cancellation Rate

(% of weekly active customers)

Source: Company Data (Group excl. Youfoodz and GoodChop)

1 Average of total orders per new customer over a 10 week period since acquisition Q4 and FY Results 2022 | 10 ^{2019 2021 2022}

We continued to successfully expand AOV throughout the year

• constant currency
• Positive contribution from all AOV drivers:
  • more meals per order
  • higher take-up of HF Market and surcharge offerings
  • higher price points
• Especially strong contribution by US segment, further supported by Factor strength

We delivered strong constant revenue growth of 18% for the full year to €7.6bn

• Continued healthy revenue growth across both segments in Q4
• Q4 US CC growth of +15.1%, including Factor contribution
• Q4 Intl CC growth of +6.1%

We managed to keep procurement expenses as % of revenue broadly stable for the year, despite record ingredient inflation

• Successfully mitigated meaningful ingredient price inflation without impacting product quality
• In addition, absorbed rapid rollout of Factor, HF Market and more surcharge offerings, which typically have higher COGS (and lower relative fulfilment expenses)

We improved fulfilment expenses as % of revenue, despite inflation in labor costs and last-mile

• Against meaningful inflationary headwind and continued capacity ramp-up, efficiency savings realized, especially in production
• Increasing momentum throughout the year
• US segment strongly contributing to performance

(41.7)% (39.1)% Q4 Fulfilment Costs (% of net revenue) 2.6pp (40.9)% (40.4)% 0.5pp FY Fulfilment Costs (% of net revenue) Q4 2021 Q4 2022 2021 2022

We expanded contribution margin for the year to 25.5%¹and more forcefully in Q4

• Improvement in Q4 contribution margin primarily driven by fulfilment efficiencies
• Further efficiencies targeted for 2023, primarily driven by additional production productivity gains

Marketing spend remains above prior year at 16.8%¹ of revenue

• Marketing spend grew in Q4 on a relative basis, particularly in the US
• Given successful expansion in AOV and contribution margin, we continue to deliver a strong ROI on our growth marketing spend

We delivered Q4 AEBITDA of €160.1m for a full year AEBITDA of €477.4m

• Meaningful YoY increase of both absolute AEBITDA and AEBITDA margin in Q4 as contribution margin expansion more than offsets relative increase in marketing expenses
• Strong US segment margin of 11.7% in Q4, as RTE turns profitable and we deliver fulfilment efficiencies
• Intl 8.6% margin in Q4, with younger businesses growing their contribution to the mix

Even in our peak capex year, we maintained a strong liquidity position while additionally returning €125m to shareholders

• Strong cash flow from operations of €313.4m
• Capex in 2022 represents peak, as it includes:
  • substantial investments in RTE capacity build out in the US, Australia and Canada
  • necessary investments within existing meal kit markets to catch-up with prior years' strong growth and to increase efficiency and automation
  • build out of capacity in newer markets (E.g. France, Nordics)
• FCF (cash flow from operations minus capex) at €(104.0)m. Expected to be positive from H2 2023 again, as cash flow from operations increases and capex reduces YoY
• €125m returned to shareholders
• Cash maintained above €500m at year end without tapping into external financing sources
• In addition access to €400m RCF, which remains substantially unutilized

For the FY 2023 we are targeting continued revenue and AEBITDA growth

expenses

For H2, we are targeting a step-up in revenue growth, a year-on-year expansion in AEBITDA margin and a return to positive FCF

Capex has peaked in 2022 and is expected to gradually decrease towards c.2.5% of revenue by 2025

Capex (incl. Intangibles)

• 2022 peak capex year
  • However, below initial guidance, as we reviewed certain projects in light of current macro environment
• 2023 below 2022 level, primarily finalization of key ongoing projects
  • Will allow further ramp of RTE in H2
  • Will allow further network optimization in meal kits by retiring less efficient sites
  • Cash outflow weighted towards H1
• 2024 onwards
  • Selected optimization projects, automation, RTE Europe

Group: Operational and Financial KPIs

1.Revenue post promotional discounts, customer credits, refunds and excluding VAT; YoY stands for year on year and compares the respective quarter with the same quarter of the previous year 2.Contribution margin is defined as revenue less cost of goods sold and fulfilment expenses, excluding share-based compensation expenses 3.AEBITDA is calculated by adjusting EBITDA for special items and share-based compensation expenses; AEBITDA margin is defined as % of revenue 4.Based on constant currency

USA: Operational and Financial KPIs

1.Revenue post promotional discounts, customer credits, refunds and excluding VAT; YoY stands for year on year and compares the respective quarter with the same quarter of the previous year 2.Contribution margin is defined as revenue less cost of goods sold and fulfilment expenses, excluding share-based compensation expenses 3.AEBITDA is calculated by adjusting EBITDA for special items and share-based compensation expenses; AEBITDA margin is defined as % of revenue 4.Based on constant currency

International: Operational and Financial KPIs

1.Revenue post promotional discounts, customer credits, refunds and excluding VAT; YoY stands for year on year and compares the respective quarter with the same quarter of the previous year 2.Contribution margin is defined as revenue less cost of goods sold and fulfilment expenses, excluding share-based compensation expenses 3.AEBITDA is calculated by adjusting EBITDA for special items and share-based compensation expenses; AEBITDA margin is defined as % of revenue 4.Based on constant currency

Profit and Loss Statement

		3 months ended	Change %	12 months ended		Change %
	31-Dec-22	31-Dec-21	YoY	31-Dec-22	31-Dec-21	YoY
Revenue	1,874.5	1,580.1	18.6%	7,607.2	5,993.4	26.9%
Procurement Expense	(642.1)	(536.7)	19.6%	(2,620.3)	(2,046.4)	28.0%
Fulfilment Expense	(733.2)	(658.3)	11.4%	(3,070.7)	(2,448.7)	25.4%
Contribution Margin	499.2	385.2	29.6%	1,916.2	1,498.3	27.9%
% of Revenue	26.9%	24.7%	2.2pp	25.5%	25.3%	0.2pp
Marketing Expense	(303.6)	(220.7)	37.6%	(1,284.2)	(861.6)	49.0%
G&A	(93.6)	(71.5)	30.9%	(366.5)	(233.6)	56.9%
Other Operating Income (Expenses)	(16.4)	(7.4)	121.3%	(48.1)	(24.6)	95.3%
EBIT	85.6	85.5	0.1%	217.4	378.5	(42.6)%
% of Revenue	4.6%	5.4%	(0.8)pp	2.9%	6.3%	(3.4)pp
Financial Result	(47.1)	0.8	(5990.7)%	(17.3)	(7.8)	122.3%
EBT	38.5	86.3	(55.4)%	200.0	370.7	(46.0)%
Income Tax (Expense) / Benefit	(5.0)	(38.5)	(87.1)%	(74.9)	(127.7)	(41.4)%
Net Income / (Loss)	33.5	47.8	(29.9)%	125.1	243.0	(48.5)%
Reconciliation starting at EBIT
EBIT	85.6	85.5	0.2%	217.4	378.5	(42.6)%
D&A	52.7	30.9	70.6%	165.8	96.8	71.3%
EBITDA	138.3	116.3	18.9%	383.2	475.3	(19.4)%
% of Revenue	7.4%	7.4%	0.0pp	5.0%	7.9%	(2.9)pp
SBC	(1.2)	8.9	(113.5)%	55.5	38.9	42.7%
Special Items	23.0	5.6	310.7%	38.7	13.4	188.8%
AEBITDA	160.1	130.8	22.4%	477.4	527.6	(9.5)%
% of Revenue	8.5%	8.3%	0.2pp	6.3%	8.8%	(2.5)pp

Balance Sheet & Cash Flow Statement

In MEUR	As at 31-Dec-22	As at 31-Dec-21
Assets
Non-current assets	1,623.0	1,054.4
Cash and cash equivalents	504.0	827.1
Other current assets	408.2	326.0
Total assets	2,535.2	2,207.5
Equity and liabilities
Equity	959.6	899.7
Non-current liabilities	605.1	482.5
Current liabilities	970.5	825.3
Total equity and liabilites	2,535.2	2,207.5

In MEUR	2022	2021
Cash and cash equivalents at the beginning of the period	827.1	729.0
Net Cash flows from operating activities	313.4	458.6
Net Cash flows from investing activities	(443.8)	(321.6)
of which M&A	(25.6)	(73.6)
Net Cash flows from financing activities	(204.3)	(62.7)
Effects of exchange rate changes and other changes on cash and cash equivalents	11.5	23.8
Cash and cash equivalents at the end of the period	504.0	827.1

Share Count

As of December 31, 2022

Types of share	Ordinary shares
Stock exchange	Frankfurt Stock Exchange
Market Segment	Regulated Market (Prime Standard)
Number of shares issued	171,928,379
Number of shares outstanding	171,694,425

Employee incentive plan	Options	RSU	Total
Vested (in mn)	7.95	0.09	8.04
Unvested (in mn)	2.64	1.30	3.94
Total (in mn)	10.59	1.39	11.98
WAEP1 (in EUR) Vested	15.12	0.00	14.94
WAEP1 (in EUR) Unvested	46.51	0.00	31.19
WAEP1 (in EUR)	22.94	0.00	20.28