HelloFresh SE — Interim / Quarterly Report 2024

Oct 29, 2024

HELLOFRESH

GROUP

Q3 2024 Results
October 29th, 2024

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.

We have started a fundamental shift of adapting our marketing strategy to the different maturity stage of the market

From

Maximizing growth at low ROI thresholds

Prioritizing market share considerations

Focusing on first-term buyers

Primarily monetary incentives to drive trial

Maximizing marketing ROI and long-term cash generation

Prioritizing high value customers

Improving brand considerations and strength of the whole new \& existing customer base

Product incentives to drive usage and customer tenure

We bring the strategy through a disciplined full-funnel approach to life...

... and nurture long-term relationships with our existing customer base to increase long-term marketing ROI

Q3 2024 Highlights

Robust quarter, both from a revenue growth and bottom line perspective
Revenue of $€ 1.8$ bn, a constant currency growth of $2 \%$
Further increase in average order value in both segments to Group AOV of $€ 66.2$ (+3.8\% yoy on CC)
Good marketing efficiency with marketing expenses down yoy both in relative and absolute terms
As a result, relatively strong AEBITDA of $€ 72.1 \mathrm{~m}$ for Q3 2024, a margin of $8.5 \%$ for meal kits and $1.3 \%$ for RTE

FCF excluding repayment of lease liabilities stands at $€ 29.9$ m for 9M 2024
Target to maintain strong marketing efficiency in Q4

27m+ orders delivered in Q3 2024, supported by robust behavior from existing customers

• Continued modest yoy decrease in overall order volume for the Group
• Subdued new customer acquisitions in meal kits, partly driven by focus on higher value meal kit customers and marketing budget shift towards rapidly growing RTE
• Continued robust behavior of existing customers, expressed by yoy increasing order rates and retention
  

Average order value up by $3.8 \%$ on a constant currency basis

• Further AOV growth into Q3, increasing 3.8\% yoy on a constant currency basis
• Both segments showed steady increase
• NA: $4.3 \%$ (cc)
• Intl: $3.0 \%$ (cc)
• AOV increase primarily driven by:
• Increased RTE contribution
• Increase in add-ons
  

$2 \%$ cc revenue growth for the Group

• Positive revenue growth across both segments
• NA cc growth of $+2.0 \%$
• Intl cc growth of $+1.7 \%$
• Continued strong cc revenue growth in RTE of $40 \%$
• Meal kits negative cc revenue growth of (9\%), with continued overall marketing discipline
  

Q3 2024 contribution margin at $24.3 \%{ }^{1}$

• Q3 is a seasonally lower quarter for contribution margin given lower utilization rates and warm temperatures (more packaging required)
• Contribution margin still down yoy, but delta sequentially reducing, due to:
• gradual improvement of productivity in RTE
• continuous productivity improvements in meal kits, especially in NA
• Intl still impacted by ramp-up expenses of new fulfilment centers in Germany and UK
• By segment ${ }^{1}$ :
• NA: (1.2pp)
• Intl: (2.4pp)

Q3 Contribution Margin ${ }^{1}$ (in € millions \& as \% of revenue)

Marketing spend at $18.9 \%{ }^{1}$ down yoy both in relative and absolute terms

• Q3 marketing expenses reflect normal seasonality, with September impacted by the 'back-to-school' period
  Q3 Marketing ${ }^{1}$
  (\% of revenue)
• Disciplined focus on marketing ROI results in yoy reduction
• For Q4 we target to maintain our marketing efficiency and, unlike last year, will not spend against seasonally weaker trends in the 2nd half of the quarter
  $+0.7 \mathrm{pp}$
  

AEBITDA of $€ 72 \mathrm{~m}$ delivered in Q3 2024

	Q3		9M
	By segment
In MEUR	Q3 2024	Q3 2023	9M 2024	9M 2023
North America	74.0	83.3	232.4	326.6
International	34.7	23.7	118.1	111.4
Holding	(36.6)	(37.8)	(115.4)	(110.6)
Group	72.1	69.2	235.1	327.2
	By product category
In MEUR	Q3 2024	Q3 2023	9M 2024	9M 2023
Meal kits	108.6	81.7	360.3	373.7
AEBITDA margin meal kits	$8.5 \%$	$5.8 \%$	8.5\%	$8.0 \%$
RTE	6.7	30.1	5.9	75.7
AEBITDA margin RTE	$1.3 \%$	$8.0 \%$	0.4\%	$7.2 \%$
Others	(6.6)	(4.8)	(15.6)	(11.7)
Holding	(36.6)	(37.8)	(115.4)	(110.6)
Group	72.1	69.2	235.1	327.2

Q3 AEBITDA of $€ 109$ m for meal kits, a significant improvement yoy

• Meal kit AEBITDA up yoy in absolute and relative terms
• Key driver is focus on marketing ROI, leading to lower yoy marketing spend (absolute and relative)
• Contribution margin lower than last year, due to lower fixed cost leverage and new fulfilment center ramp-up (DE, UK); however, upside for next year
  

Slightly positive Q3 RTE AEBITDA of $€ 6.7 \mathrm{~m}$, as investments in growth continue

• Seasonality for RTE is similar to meal kit business
• In Q3, lower trading volume during the summer; then an increase in marketing intensity during "back to school'
• Envisaged breakeven for Q3 2024 over-achieved
• Well positioned to exceed prior year AEBITDA benchmark in Q4 onwards

Q3 AEBITDA Margin
(in € millions \& as \% of revenue)

HELLOFRESH

AEBIT (excl. impairments) of $€ 6.7 \mathrm{~m}^{1}$ in Q3

• Difference to prior year primarily driven by higher D\&A
• Increasing focus on AEBIT as a key performance metric going forward to steer the business to higher capital efficiency
  

Year-to-date Free Cash Flow of €29.9m

• Cash Flow from Operating Activities lower yoy, primarily driven by lower AEBITDA
• Somewhat offset by lower CapEx
• 9m 2023 CapEx of EUR 235.8m
• 9m 2024 CapEx of EUR 131.6m

9M FCF
(in € millions)

HELLOFRESH

Revised 2024 outlook: 1\%-1.7\%\% cc revenue growth and €360m €400m AEBITDA

FY Guidance
9M 2024

Constant Currency Revenue Growth

$2 \%-8 \%$
$2 \%$
$1 \%-1.7 \%$
$€ 350 \mathrm{~m}-€ 400 \mathrm{~m}$
€235m
€360m - €400m

Indicative mid-term outlook: We are planning to meaningfully expand our AEBIT(DA) and FCF

		Meal kits	RTE
Contribution margin	$\square$	- Direct labor productivity increase (DE, US, UK) - Site rationalization	- Direct labor productivity increase
Marketing	$\square$	- Lower new customer acquisitions - Higher ROI thresholds	- Increased share of existing customer base
G\&A	$\square$	- Streamlining of fixed costs and operating model across the organization
Capex	$\square$	- Mostly maintenance and selected modernizations	- Other than moderate NA expansion and Intl site buildout, capacity largely sufficient beyond 2026

Group: Operational and Financial KPIs

North America: Operational and Financial KPIs

International: Operational and Financial KPIs

Profit and Loss Statement

	3 months ended		Change \%
	30-Sep 24	30-Sep 23	YoY
Revenue	1,828.4	1,804.0	$1.4 \%$
Procurement Expense	(697.3)	(634.4)	$9.9 \%$
Fulfilment Expense	(697.9)	(715.6)	$(2.5) \%$
Contribution Margin	433.2	454.1	$(4.6) \%$
\% of Revenue	23.7\%	25.2\%	(1.5)pp
Marketing Expense	(345.1)	(352.4)	$(2.1) \%$
G\&A, other income and expenses	(111.9)	(114.5)	$(2.3) \%$
EBIT	(23.7)	(12.9)	84.0\%
\% of Revenue	(1.3) $\%$	(0.7) $\%$	$(0.6) p p$
Financial Result	(26.1)	0.7	nm
EBT	(49.8)	(12.2)	308.2\%
Income Tax	16.1	0.7	nm
Net Income / (Loss)	(33.6)	(11.5)	192.2\%

Recanciliation starting at EBIT

EBIT
D\&A and impairment
EBITDA
\% of Revenue
Special Items
SBC
AEBITDA
\% of Revenue

(23.7)	(12.9)	84.0\%
68.6	55.1
44.9	42.2	6.4\%
2.5\%	2.3\%	0.2pp
6.2	3.2	93.8\%
21.0	23.8	(11.8)\%
72.1	69.2	4.2\%
3.9\%	3.8\%	0.1pp

EBIT
D\&A and impairment
EBITDA
\% of Revenue
$\begin{array}{ll}\text { (23.7) } & \text { (12.9) } \ 68.6 & 55.1\end{array}$
44.9
2.5\%
6.2
21.0
72.1
3.9\%

9 months ended		Change \%
30-Sep 24	30-Sep 23	YoY
5,852.8	5,737.6	2.0\%
(2,203.1)	(2,005.5)	9.9\%
(2,240.3)	(2,218.7)	1.0\%
1,409.4	1,513.4	(6.9)\%
24.1\%	26.4\%	(2.3)pp
(1,163.0)	(1,083.8)	7.3\%
(352.2)	(350.8)	0.4\%
(105.9)	78.8	(234.5)
(1.8) $\%$	1.4\%	(3.2)pp
(16.1)	(19.1)	15.7\%
(122.0)	59.7	(304.4)
13.3	(30.2)	144.0\%
(108.7)	29.5	(468.5)

(105.9)	$\mathbf{7 8 . 8}$	(234.5)
242.4	156.9
$\mathbf{1 3 6 . 5}$	$\mathbf{2 3 5 . 6}$	$(42.1) \%$
2.3\%	$4.1 \%$	$(1.8) p p$
22.5	22.8	$(1.3) \%$
76.1	68.8	10.6\%
$\mathbf{2 3 5 . 1}$	$\mathbf{3 2 7 . 2}$	$(28.1) \%$
4.0\%	$5.7 \%$	$(1.7) p p$

Q3 2024 Results | 23

Balance Sheet \& Cash Flow Statement

In MEUR	As at 30-Sep 24	As at 31-Dec 23
Assets
Non-current assets	$1,717.8$	$1,756.4$
Cash and cash equivalents	355.6	433.1
Other current assets	365.8	391.8
Total assets	2,439.2	2,581.3
Equity and liabilities
Equity	900.8	$1,019.0$
Non-current liabilities	535.7	649.3
Current liabilities	$1,002.7$	913.0
Total equity and liabilites	2,439.2	2,581.3

In MEUR	For the 3 months ended at 30-Sep 24	For the 3 months ended at 30-Sep 23
Cash and cash equivalents at the beginning of the period	381.9	464.5
Net Cash flows from / (used in) operating activities	14.5	73.0
Net Cash flows from / (used in) investing activities	(33.6)	(66.1)
Net Cash flows from / (used in) financing activities	(1.9)	(9.2)
Effects of exchange rate changes on cash and cash equivalents	(5.3)	4.4
Cash and cash equivalents at the end of the period	355.6	466.6

Share Count

As of September 30, 2024
Types of share
Stock exchange
Market Segment
Number of shares issued
Number of shares outstanding

Ordinary shares
Frankfurt Stock Exchange
Regulated Market (Prime Standard)
173,190,562
$163,465,079$

Employee Incentive Plan
Vested (in mn)
WAEP (in EUR) - vested instruments
Unvested (in mn)
WAEP (in EUR) - unvested instruments
Total outstanding (in mn)
WAEP (in EUR)

Options
RSU
11.0
1.3
1.3
1.3
21.85
7.8
13.49
18.8
18.40

Total
12.3
19.62
16.7
6.26
29.0
11.91

1. Weighted average exercise price

HELLOFRESH

GROUP