Westwing Group SE — Investor Presentation 2024

Aug 8, 2024

Disclaimer | Forward-looking statements

Certain statements in this communication may constitute forward-looking statements. These statements are based on assumptions that are believed to be reasonable at the time they are made, and are subject to significant risks and uncertainties. You should not rely on these forward-looking statements as predictions of future events and we undertake no obligation to update or revise these statements. Our actual results may differ materially and adversely from any forward-looking statements discussed in these statements due to a number of factors. These include, without limitation, risks from macroeconomic developments, external fraud, inefficient processes at fulfilment centres, inaccurate personnel and capacity forecasts for fulfilment centres, hazardous materials/production conditions with regard to private labels, insufficient innovation capabilities, inadequate data security, insufficient market knowledge, strike risks and changes in competition levels.

Agenda 01 Business update

02 Financial update
03 Investment highlights
04 Q\&A
05 Appendix

1. Business up

State of Westwing

We continued to grow in a challenging market.

• GMV growth of 5\% and revenue growth of 4\% year-over-year (yoy) despite market headwinds.
• Adjusted EBITDA of EUR 4 million at 4\% margin (-1pp yoy) with improved contribution margin and brand awareness investments.
• Free cash flow of EUR -7 million due to timing of payments \& seasonal inventory effects. Net cash of EUR 72 million (end of Q2).

We made good progress on our 3-step plan to unlock Westwing's full value potential.

• We completed reorganisations in Italy and Spain and are implementing further centralisation measures.
• Our new, mostly Software-as-a-Service (SaaS) based technology platform went live in the first 2 countries, in line with plan.
• Westwing Collection share increased to 53\% of Group GMV in Q2 2024, reaching a new all-time high.
• We continued to strengthen our premium brand positioning and are preparing to launch more new countries next year.

We are progressing towards our ambitious sustainability targets.

• We continued to increase the sustainable products and packaging share of our Westwing Collection.

We are confirming our FY 2024 guidance.

• Revenue of EUR 415 million to EUR 445 million (-3\% to +4\% yoy growth).
• Adjusted EBITDA of EUR 14 million to EUR 24 million (+3\% to +5\% adjusted EBITDA margin).

Recap: We are in the middle of a 3-step plan to unlock Westwing's full value potential

Recap: We are building a lean tech platform and are centralising our organisation \& product assortment

Measures

Mostly Software-as-a-Service (SaaS) tech platform

Consolidation of local PL/IT/ES logistics centre footprint

Mostly global product assortment for IT/ES

Restructuring of IT/ES corporate functions

Impact in 2024
As communicated

Topline loss	Low to mid single-digit \% of FY 2024 Group revenue
One-off cash costs for implementation	EUR -10 to -15 million
Higher D\&A	EUR -3 to -4 million

Return on investment

SaaS tech platform: Short payback period of one year after full implementation.

Other measures: Complexity reduction with longer payback period.

Positive impact on premium brand positioning.

Restructuring of Italy and Spain is completed, including consolidation of logistics centres

Measures

Mostly Software-as-a-Service (SaaS) tech platform

Consolidation of local PL/IT/ES logistics centre footprint

Mostly global product assortment for IT/ES

Restructuring of IT/ES corporate functions

Completed
Ongoing

We will use the momentum for the next step of complexity reduction and premiumisation

Measures

Mostly Software-as-a-Service (SaaS) tech platform

Completed

Ongoing
Started

Mostly global product assortment for IT/ES

Restructuring of IT/ES corporate functions

Mostly global product assortment for CEE ${ }^{(1)}$

Restructuring of CEE ${ }^{(1)}$ related business functions

Premiumisation of global product assortment

Consolidation of HQ related business functions

1.33 We will use the momentum for the next step of complexity reduction and premiumisation while lowering the expected one-off implementation costs

Measures

Mostly Software-as-a-Service (SaaS) tech platform

Consolidation of local PL/IT/ES logistics centre footprint

Completes
Ongoing
Started

Impact in 2024
Updated

Topline loss
One-off cash costs for implementation

Higher D\&A

Return on investment

SaaS tech platform: Short payback period of one year after full implementation.

Other measures: Complexity reduction with longer payback period.

Positive impact on premium brand positioning.

We are building a strong, highly profitable design brand, though this

transformation will temporarily impact topline

Westwing Collection share continued to increase

(45) We expanded to the Portuguese market - The first expansion for Westwing in 10 years and the proof-of-concept for our new tech platform

Ontdek onze categorieën

• We collaborated with İlkay Gündoğan, the captain of the men's German national football team
  

We are progressing towards our ambitious sustainability targets

Q4 2023: 48\%
$60 \%$
Q2 2024
of online Westwing Collection products feature the WE CARE label ${ }^{(1)}$

Q4 2023: 43\%
$76 \%$
Q2 2024
of plastic packaging have $>60 \%$ recycled content

Q4 2023: 67\%
$82 \%$
Q2 2024
of EU Westwing Collection suppliers have been evaluated on social aspects

2. Financial update

Revenue growth of $4 \%$ year-over-year in the second quarter of 2024

Group revenue [in EUR million]

• Despite a weak market and negative topline impact of Italy and Spain, Westwing achieved topline growth in the second quarter of the year and gained market share.
• GMV growth was 5\% year-over-year in Q2 2024.

Strong topline development in the DACH segment

Segment revenue [in EUR million]
DACH segment

International segment

• Westwing's DACH segment grew by $8 \%$ year-over-year, outperforming the market.
• International segment remained relatively stable compared to last year, negatively impacted by developments in Italy and Spain.

Improvements across most of the P\&L lines

DACH and International segment both with positive adjusted EBITDA margin in Q2 2024

Segment adjusted EBITDA [as \% of revenue]
DACH segment

H1'23
H1'24
Q2'23
Q2'24

International segment

• Both DACH and International segment with clearly positive adjusted EBITDA margin in Q2 2024 and H1 2024.
• DACH segment impacted by investment into brand awareness.
• International segment driven by strong increase in Westwing Collection share.

Net working capital remains negative with improvement of EUR 6 million year-over-year

Net working capital [in EUR million, as \% of revenue]

30 Jun. 23
$-11$
30 Jun. 24

• Net working capital mainly impacted by increased trade payables and decreased prepayments on inventories year-over-year at the end of Q2.
• Net working capital Q2 2023 included usage of trade financing; without this the net working capital would have been at EUR 2 million.

CAPEX in H1 2024 in line with previous year's level

CAPEX [in EUR million, as \% of revenue]

Free cash flow below previous year's level

Free cash flow [in EUR million]

H1'23
H1'24

Q2'23
- Net working capital effect in Q2 2024 of EUR -8 million.
- Reduction of payables (EUR -7 million) quarter-over-quarter driven by timing effect from Q1 as well as seasonal development.
- Typical seasonal inventory increase of EUR 2 million quarter-over-quarter after 2 years of excess inventory reduction.
- EUR -3 million cash payments in Q2 2024 for restructuring expenses as part of the complexity reduction measures.
- EUR +3 million cash income in Q2 2024 from completed sale-and-leaseback of warehouse assets.

Strong net cash position of EUR 72 million at the end of June 2024

FY 2024 guidance confirmed

FY 2023
Guidance FY 2024

Revenue

EUR 429m
EUR 415m to 445m
(-3\% to +4\% year-over-year growth)

Adjusted EBITDA

EUR 18m

Comments

• Good first half of 2024 but outlook for the rest of the year remains cautious.
• Complexity reduction measures will likely have detrimental effect on topline in H 2 .
• Increasing Westwing Collection share.
• Continued investment into brand awareness.
• Cost discipline and P\&L benefits from efficiency gains.
• Investment for complexity reduction of EUR 10-12 million will be adjusted, but with full impact on cash.
• Free cash flow expected to be breakeven.

3. Investment highlights

Investment highlights

• Unique assortment of gorgeous, own design Westwing Collection and the best 3rd party design brands.
• Best in class inspirational storytelling with distinct visuals and tone of voice.
• Premium services such as interior design service and branded delivery fleet.
• The one-stop destination for premium Home \& Living.
  
• Addressing sizeable premium segment of EUR c. 130b total Home \& Living market ${ }^{(1)}$ in existing 12 Westwing geographies. Future country expansion with additional potential.
• Massive online penetration potential in a mostly offline market.
  
• Desirable brand among design lovers, with $>13 \mathrm{~m}$ followers on social media.
• Clear premium positioning, only getting stronger.
• Huge upside potential from brand marketing invest and offline presence.
• Westwing Collection product brand with attributes of superior design, quality and sustainability.
  
• High margins as a result of pricing power based on a strong brand, as well as the unique Westwing Collection with further GMV share potential.
• Platform \& commercial model allowing for scaling with operating leverage in existing countries and beyond.
  
• Strong net cash position and no debt.
• Strong net working capital.
• Low CAPEX.

4. Q\&A

Continuously expanding share of wallet with customers

Active customers and average GMV per active customer [in k, in EUR]

KPI overview

| Group KPIs | Unit | $\begin{gathered} \text { G1 } \ 2020 \end{gathered}$ | $\begin{gathered} \text { G2 } \ 2020 \end{gathered}$ | $\begin{gathered} \text { G3 } \ 2020 \end{gathered}$ | $\begin{gathered} \text { G4 } \ 2020 \end{gathered}$ | $\begin{gathered} \text { G1 } \ 2021 \end{gathered}$ | $\begin{gathered} \text { G2 } \ 2021 \end{gathered}$ | $\begin{gathered} \text { G3 } \ 2021 \end{gathered}$ | $\begin{gathered} \text { G4 } \ 2021 \end{gathered}$ | $\begin{gathered} \text { G1 } \ 2022 \end{gathered}$ | $\begin{gathered} \text { G2 } \ 2022 \end{gathered}$ | $\begin{gathered} \text { G3 } \ 2022 \end{gathered}$ | $\begin{gathered} \text { G4 } \ 2022 \end{gathered}$ | $\begin{gathered} \text { G1 } \ 2023 \end{gathered}$ | $\begin{gathered} \text { G2 } \ 2023 \end{gathered}$ | $\begin{gathered} \text { G3 } \ 2023 \end{gathered}$ | $\begin{gathered} \text { G4 } \ 2023 \end{gathered}$ | $\begin{gathered} \text { G1 } \ 2024 \end{gathered}$ | $\begin{gathered} \text { G2 } \ 2024 \end{gathered}$ |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Westwing Collection share | in \% of GMV | 25\% | 22\% | 26\% | 28\% | 31\% | 32\% | 38\% | 37\% | 37\% | 38\% | 44\% | 44\% | 46\% | 46\% | 48\% | 47\% | 51\% | 53\% |
| Active customers | in k | 986 | 1,178 | 1,284 | 1,529 | 1,720 | 1,730 | 1,750 | 1,705 | 1,593 | 1,486 | 1,422 | 1,320 | 1,262 | 1,252 | 1,262 | 1,275 | 1,282 | 1,282 |
| Number of orders | in k | 675 | 1,051 | 874 | 1,474 | 1,268 | 1,022 | 819 | 1,262 | 872 | 685 | 620 | 951 | 694 | 614 | 605 | 939 | 676 | 578 |
| Average basket size | in EUR | 127 | 122 | 129 | 119 | 129 | 135 | 144 | 131 | 147 | 159 | 164 | 149 | 169 | 178 | 177 | 157 | 185 | 198 |
| Average orders LTM per active customer | in # | 2.5 | 2.6 | 2.7 | 2.7 | 2.7 | 2.7 | 2.6 | 2.6 | 2.5 | 2.4 | 2.4 | 2.4 | 2.3 | 2.3 | 2.3 | 2.2 | 2.2 | 2.2 |
| Average GMV LTM per active customer | in EUR | 324 | 325 | 330 | 328 | 337 | 341 | 340 | 343 | 345 | 349 | 355 | 364 | 373 | 376 | 377 | 377 | 381 | 385 |
| GMV | in EUR m | 85 | 128 | 113 | 175 | 164 | 139 | 118 | 166 | 128 | 109 | 102 | 142 | 118 | 109 | 107 | 147 | 125 | 114 |
| Mobile visit share | in \% | 76\% | 79\% | 80\% | 79\% | 79\% | 80\% | 80\% | 80\% | 80\% | 80\% | 80\% | 80\% | 79\% | 78\% | 79\% | 82\% | 81\% | 81\% |

KPI definitions

Westwing Collection share
Active customers
Number of orders
Average basket size
Average orders LTM per active customer

GMV share of Westwing Collection (formerly "Own \& Private Label"): GMV of Westwing Collection business as \% of Group GMV in the same reporting period.
A customer who has made a valid order within the last 12 months at the end of the reporting period.
Total number of valid orders (excluding failed and cancelled orders) of a reporting period.
Weighted average value of an order: GMV divided by total number of orders of the same reporting period.
Total number of orders of the last 12 months divided by active customers at the end of the reporting period.
Average GMV LTM per active customer GMV of the last 12 months divided by active customers.

GMV
Mobile visit share

Gross Merchandise Volume: Value of all valid customer orders placed of a reporting period (i.e. excluding cancellation and VAT, but including returns).
Share of daily unique sessions per platform via mobile devices (tablets and smartphones) as \% of all daily unique sessions per platform of a reporting period.

Consolidated income statement

EUR million, in \% of revenue	H1 2023	H1 2024
Revenue	204.7	214.7
Cost of sales	$-102.6$	$-105.3$
Gross profit	102.1	109.4
Fulfilment expenses	$-44.1$	$-43.3$
Marketing expenses	$-18.8$	$-27.4$
General and administrative expenses	$-40.0$	$-42.5$
Other operating expenses	$-3.2$	$-3.2$
Other operating income	3.6	2.6
Operating result	$-0.5$	$-4.3$
Financial result	$-0.6$	0.1
Result before income tax	$-1.1$	$-4.2$
Income tax expense	$-0.7$	$-0.7$
Result for the period	$-1.8$	$-4.8$
Reconciliation to adjusted EBITDA
Operating result (EBIT)	$-0.5$	$-4.3$
Share-based compensation expenses	0.6	$-0.0$
Complexity reduction	-	3.2
Depreciation and amortisation	9.5	11.2
Adjusted EBITDA	9.5	10.2
Adjusted EBITDA margin (\%)	$4.6 \%$	$4.7 \%$

Q2 2023	Q2 2024
101.8	106.0
$-50.7$	$-52.4$
51.1	53.6
$-21.8$	$-21.3$
$-9.6$	$-13.4$
$-21.4$	$-21.3$
$-2.3$	$-1.5$
2.1	1.1
$-1.9$	$-2.8$
$-0.0$	0.3
$-2.0$	$-2.5$
$-0.7$	$-0.5$
$-2.7$	$-3.0$
$-1.9$	$-2.8$
1.6	0.7
-	0.5
4.7	5.5
4.4	3.9
4.4\%	3.7\%

Adjusted income statement

EUR million, in \% of revenue	H1 2023	H1 2024
Revenue	204.7	214.7
Revenue growth year-over-year	$-4.4 \%$	$4.9 \%$
Cost of sales	$-102.6$	$-105.3$
Gross profit	102.1	109.4
Gross margin	$49.9 \%$	$51.0 \%$
Fulfillment expenses	$-44.1$	$-42.5$
Contribution profit	58.0	66.9
Contribution margin	$28.3 \%$	$31.2 \%$
Marketing expenses	$-18.8$	$-27.2$
General and administrative expenses	$-39.5$	$-40.2$
Other operating expenses	$-3.2$	$-3.2$
Other operating income	3.6	2.6
Depreciation and amortisation	9.5	11.1
Adjusted EBITDA	9.5	10.2
Adjusted EBITDA margin (in \%)	$4.6 \%$	$4.7 \%$

O2 2023	O2 2024
101.8	106.0
$-1.2 \%$	$4.1 \%$
$-50.7$	$-52.4$
51.1	53.6
$50.2 \%$	$50.6 \%$
$-21.8$	$-21.2$
29.3	32.4
$28.8 \%$	$30.6 \%$
$-9.5$	$-13.3$
$-19.8$	$-20.4$
$-2.3$	$-1.5$
2.1	1.1
4.7	5.5
4.4	3.9
$4.4 \%$	$3.7 \%$

Segment reporting

DACH in EUR million	H1 2023	H1 2024
Revenue	111.1	119.9
Year-over-year growth (in \%)	$-6.7 \%$	$7.9 \%$
Adjusted EBITDA	9.4	6.2
Adjusted EBITDA margin (in \%)	$8.4 \%$	$5.1 \%$

D2 2023	Q2 2024
55.3	59.8
$-5.5 \%$	$8.2 \%$
4.3	2.7
$7.8 \%$	$4.5 \%$

International in EUR million
Revenue
Year-over-year growth (in \%)
Adjusted EBITDA
Adjusted EBITDA margin (in \%)
H1 2023 H1 2024
93.6
94.7
$-1.5 \%$
$1.3 \%$
0.3
4.1
$0.4 \%$
$4.3 \%$
Q2 2023 Q2 2024
46.5
46.2
$4.4 \%$
$-0.7 \%$
0.2
1.1
$0.4 \%$

Excluding adjustments, Q2 2024 EBITDA of EUR 2.7 million and EBIT of EUR - 2.8 million

EUR million	G1 2023	G2 2023	G3 2023	G4 2023	G1 2024	G2 2024
Adjusted EBITDA	5.1	4.4	2.4	5.9	6.3	3.9
Adjusted D\&A	$-4.7$	$-4.7$	$-4.8$	$-5.5$	$-5.6$	$-5.5$
Adjusted EBIT	0.4	$-0.3$	$-2.5$	0.4	0.7	$-1.6$
Share-based compensation expenses	1.0	$-1.6$	$-1.0$	$-0.7$	0.7	$-0.7$
Complexity reduction	-	-	-	$-4.1$	$-2.7$	$-0.5$
EBT	0.9	$-2.0$	$-3.6$	$-4.4$	$-1.7$	$-2.5$
EBIT	1.4	$-1.9$	$-3.5$	$-4.4$	$-1.5$	$-2.8$
EBITDA	6.1	2.8	1.3	1.1	4.3	2.7

Issued share capital

Share information as at 30 June 2024
Type of shares
Stock exchange
Market segment
Number of shares issued
Issued share capital
Treasury shares

Ordinary bearer shares with no-par value (Stückaktien)
Frankfurt Stock Exchange
Regulated market (prime standard)
20,903,968
EUR 20,903,968
888,495

Stock option programs as at 30 June 2024

Program	# of options outstanding	Weighted average exercise price (in EUR)
LTIP 2023(1)	478,330	11.07
ECP 2022(2)	361,595	1.00
VSQPs(3)	645,625	$3.00^{(3)}$
LTIP 2019	$1,828,800$	19.30
LTIP 2016	96,450	0.01
Other	749,375	11.31
Total	$4,160,175$	12.35

Investor Relations Contact

Teresa Fischer Perez-Lozao
Director Corporate Finance
ir@westwing.de

Events

23 September 2024
Berenberg and Goldman Sachs German Corporate Conference

25 September 2024
Baader Investment Conference

7 November 2024
Publication of third quarter results