Zalando SE — Earnings Release 2016

May 12, 2016

Q 1 2016 E A R N I N G S C A L L

E U R O P E ' S L E A D I N G O N L I N E F A S H I O N D E S T I N A T I O N

1 2 - 0 5 - 2 0 1 6

R E S U L T S H I G H L I G H T S AND B U S I N E S S U P D A T E

Q1/15

(1) Excluding equity-settled stock based compensation costs ("SBC") of €3.8m in Q1/2016.

Z A L A N D O W I T H G O O D S T A R T I N T O 2 0 1 6 : S T R O N G G R O W T H C O U P L E D W I T H S T R A T E G I C I N V E S T M E N T S

796 644 2.5% 4.5% REVENUE GROWTH AT UPPER END OF GROWTH CORRIDOR In €m PROFITABILITY DRIVEN BY PLANNED INVESTMENTS EBIT margin excl. SBC¹ in percent

FREE CASH FLOW ALSO DRIVEN BY OPERATING INVESTMENTS

Cash flows in €m

• New-to-market, active wear line for women with high buzz
• JV between Beyoncé + Topshop
• Zalando is premier partner for Europe
• Joint campaign between Ivy Park and Zalando launched on 14-April-2016

Key new other brands: Missguided, Marc'O Polo Denim, Etam, Vivienne Westwood, AllSaints

P U S H T O W A R D S B E I N G D I G I T A L S T R A T E G Y FOR BRAND P A R T N E R S

I V Y P A R K

N E W I N S T O R E

O U R F U L F I L L M E N T F O O T P R I N T K E E P S G R O W I N G AND I M P R O V I N G

Stradella fulfills up to 50% of Italian orders with reduced lead time of up to 1.5 days

On track with construction at Lahr – manual operations to commence in fall

Finalizing planning of next hub

Instant return pilot for Berlin

Tech as the enabler: ~1,150 tech employees (+68% YoY)

150 brand partners connected with our partner program with ~22K SKUs shown

First offline pilot store "Bodycheck" in Berlin successfully connected to platform

Acquisition of marketplace software company Tradebyte

S T O C K I N T E G R A T I O N A S K E Y F E A T U R E O F U N I Q U E P L A T F O R M S T R A T E G Y

F I N A N C I A L U P D A T E Q 1 2 0 1 6

S T R O N G R E V E N U E G R O W T H A T U P P E R E N D O F G R O W T H C O R R I D O R

GROUP REVENUE

In €m

DACH REVENUE

In €m

(1) Segment "Others" mainly includes revenues from "Zalando Lounge", as well as two outlet stores in Berlin and Frankfurt and oth ers.

S T R O N G C U S T O M E R K P I S D R I V E R E V E N U E G R O W T H

(1) Defined as the transactional revenue (incl. VAT and transactional volume of Partner Program) after cancellations or returns d ivided by the number of orders. (2) GMV (gross merchandise volume) per active customer = average orders per active customer (LTM in #) x average basket size afte r returns (in €).

ACTIVE CUSTOMERS

In #m

S O L I D P R O F I T A B I L I T Y I N Q 1 D E S P I T E P L A N N E D I N V E S T M E N T S

GROUP EBIT PROFITABILITY

EBIT margin (excl. SBC¹ ) DACH EBIT

EBIT margin (excl. SBC¹ )

		Q1
	2015	2016	D e l t a
C O S T O F S A L E S	(54.8%)	(58.0%)	3.2pp
G R O S S P R O F I T	45.2%	42.0%	(3.2pp)
F U L F I L L M E N T C O S T S	(24.7%)	(24.1%)	(0.6pp)
M A R K E T I N G C O S T S	(11.8%)	(10.5%)	(1.3pp)
A D M I N I S T R A T I V E EXPENSES & OTHER	(4.2%)	(4.9%)	0.7pp
E B I T	4.5%	2.5%	(2.0pp)

E B I T M A R G I N D R I V E R S A S P L A N N E D

COSTS AND MARGINS (Q1)

excl. SBC1 in percent of revenue

F O C U S O N O P E R A T I O N A L C A P I T A L E F F I C I E N C Y

NET WORKING CAPITAL (END OF Q1)

in percent of annualized Q1 revenue

CAPITAL EXPENDITURE¹

in €m

L I Q U I D I T Y R E M A I N S S T R O N G A T € 1 . 1 B I L L I O N

CASH FLOW DEVELOPMENT (Q1)

In €m

• (1) Both Q4/15 and Q1/16 liquidity include investments into short-term deposits with maturity of more than 3 and less than 12 months of €155m.
• (2) Includes investments in fixed, intangible assets and payments for acquisitions.
• (3) Includes financing cash flow (€-0.8m) and effect of exchange rate on cash and cash equivalents (-€0.4m).

O U T L O O K

O U T L O O K F O R F Y 2 0 1 6 U N C H A N G E D – F O C U S O N P R O F I T A B L E G R O W T H

(1) Adjusted EBIT margin excludes stock-based compensation of 0.4%.

(2) Excludes investments into M&A.

Type of Shares Ordinary bearer shares with no-par value (Stückaktien)

Stock Exchange Frankfurt Stock Exchange

Market Segment Regulated Market (Prime Standard)

Index Listings MDAX (2.4% share1)

Total Number of Shares Outstanding 247,063,258

Issued Share Capital €247,063,258

SHARE INFORMATION

SHARE STOCK OPTION PROGRAMS

Program	# Options outstanding	Strike price
Various	95,370	1.00
Stock Option Program 2011	2,730,200	5.65
Stock Option Program 2013	9,817,500	15.63
Stock Option Program 2014 – Tranche pre IPO	5,200,209	17.72
Stock Option Program 2014 – Tranche Mar 2015	644,145	22.79
Stock Option Program 2014 – Tranche May 2015	371,800	25.03
Stock Option Program 2014 – Tranche Aug 2015	193,500	29.92
Stock Option Program 2014 – Tranche Nov 2015	58,900	30.48
Stock Option Program 2014 – Tranche Mar 2016	342.450	31.60
Total	19,454,074

I S S U E D S H A R E C A P I T A L

As of 31-Mar-2016

As of 31-Mar-2016

I N C O M E S T A T E M E N T

€
Cost of Sales	(1,047.0)
Selling and Distribution Costs Administrative Expenses	(733.5) (105.1)
Share Based Compensation (SBC

€ m	FY/13	FY/14	FY/15	Q1/15	Q1/16
Revenue	1,762.0	2,214.0	2,958.2	643.6	796.1
% growth	52.1%	25.7%	33.6%	28.5%	23.7%
Cost of Sales	(1,047.0)	(1,255.3)	(1,624.0)	(353.5)	(462.7)
Gross Profit	715.1	958.7	1,334.1	290.1	333.4
% margin	40.6%	43.3%	45.1%	45.1%	41.9%
Selling and Distribution Costs	(733.5)	(793.8)	(1,118.9)	(236.8)	(277.2)
Administrative Expenses	(105.1)	(109.1)	(129.0)	(29.1)	(40.6)
Other Operating Income	12.5	12.2	10.2	3.0	1.5
Other Operating Expenses	(2.9)	(5.8)	(7.0)	(2.0)	(0.7)
EBIT	(113.9)	62.1	89.6	25.1	16.4
% margin	(6.5%)	2.8%	3.0%	3.9%	2.1%
Net Financial Result	(3.3)	(4.5)	(3.0)	5.4	(6.2)
EBT	(117.3)	57.7	86.6	30.6	10.3
% margin	(6.7%)	2.6%	2.9%	4.7%	1.3%
Income and Other Tax	0.7	(10.5)	34.9	(6.3)	(5.7)
Net Income	(116.6)	47.2	121.5	24.3	4.6
% margin	(6.6%)	2.1%	4.1%	3.8%	0.6%
Depreciation & Amortization	14.9	25.8	34.2	7.5	9.1
EBITDA	(99.0)	88.0	123.8	32.6	25.5
% margin	(5.6%)	4.0%	4.2%	5.1%	3.2%
Share Based Compensation (SBC )	5.3	19.8	17.9	4.0	3.8
Adj. EBIT (adj. for SBC)	(108.6)	82.0	107.5	29.1	20.2
% margin	(6.2%)	3.7%	3.6%	4.5%	2.5%
Adj. EBITDA (adj. for SBC)	(93.7)	107.8	141.7	36.6	29.3
% margin	(5.3%)	4.9%	4.8%	5.7%	3.7%

S H A R E B A S E D C O M P E N S A T I O N

Per Income Statement Line Item

€m	FY/13	FY/14	FY/15	Q1/15	Q1/16
Per Income Statement Line Item
Cost of Sales	0.5	4.4	4.5	1.0	0.9
Selling and Distribution Costs	2.1	9.6	9.0	2.0	1.9
Administrative Expenses	2.7	5.8	4.5	1.0	0.9
Share Based Compensation	5.3	19.8	17.9	4.0	3.8
As % of revenue	FY/13	FY/14	FY/15	Q1/15	Q1/16
Per Income Statement Line Item
Cost of Sales	0.0%	0.2%	0.2%	0.2%	0.1%
Selling and Distribution Costs	0.1%	0.4%	0.3%	0.3%	0.2%
Administrative Expenses	0.2%	0.3%	0.2%	0.2%	0.1%
Share Based Compensation	0.3%	0.9%	0.6%	0.6%	0.5%

Per Income Statement Line Item

S E G M E N T S

€ m	FY/13	FY/14	FY/15	Q1/15	Q1/16
Revenue	1,762.0	2,214.0	2,958.2	643.6	796.1
DACH	1,056.1	1,234.0	1,580.1	347.1	405.8
Rest of Europe	630.2	862.6	1,211.6	265.0	334.5
Other	75.7	117.4	166.5	31.5	55.8
As % of total	100.0%	100.0%	100.0%	100.0%	100.0%
DACH	59.9%	55.7%	53.4%	53.9%	51.0%
Rest of Europe	35.8%	39.0%	41.0%	41.2%	42.0%
Other	4.3%	5.3%	5.6%	4.9%	7.0%
EBIT	(113.9)	62.1	89.6	25.1	16.4
DACH	5.3	72.3	92.2	30.2	37.4
Rest of Europe	(100.8)	(18.6)	(10.2)	(6.3)	(18.5)
Other	(18.4)	8.4	7.5	1.2	(2.4)
% margin	(6.5%)	2.8%	3.0%	3.9%	2.1%
DACH	0.5%	5.9%	5.8%	8.7%	9.2%
Rest of Europe	(16.0%)	(2.2%)	(0.8%)	(2.4%)	(5.5%)
Other	(24.3%)	7.2%	4.5%	3.9%	(4.4%)
Adjusted EBIT	(108.6)	82.0	107.5	29.1	20.2
DACH	8.2	83.0	101.9	32.4	39.3
Rest of Europe	(99.1)	(11.6)	(3.3)	(4.7)	(17.0)
Other	(17.8)	10.5	8.9	1.4	(2.1)
% adjusted margin	(6.2%)	3.7%	3.6%	4.5%	2.5%
DACH	0.8%	6.7%	6.4%	9.3%	9.7%
Rest of Europe	(15.7%)	(1.3%)	(0.3%)	(1.8%)	(5.1%)
Other	(23.5%)	9.0%	5.3%	4.5%	(3.7%)

B A L A N C E S H E E T

€m Q1/15

		Q1/15 (% of total		Q1/16 (% of total
€m	Q1/15	assets)	Q1/16	assets)
Total Non-Current Assets	179.1	9.2%	264.8	12.1%
Thereof: Property, Plant and Equipment	108.8	5.6%	136.6	6.2%
Other Financial Assets	32.3	1.7%	24.1	1.1%
Non-Financial Assets	3.0	0.2%	3.3	0.2%
Other Non-Current Assets	35.0	1.8%	100.8	4.6%
Total Current Assets	1,758.8	90.8%	1,931.6	87.9%
Thereof: Inventories	474.6	24.5%	590.4	26.9%
Trade and Other Receivables	169.8	8.8%	162.8	7.4%
Other Assets1	153.6	7.9%	237.2	10.8%
Cash and Cash Equivalents1	960.9	49.6%	941.2	42.9%
Total Assets	1,937.9	100.0%	2,196.4	100.0%
Total Equity	1,148.1	59.2%	1,278.3	58.2%
Thereof: Issued Capital	245.6	12.7%	247.0	11.2%
Capital Reserves	1,123.0	57.9%	1,144.7	52.1%
Retained earnings	(5.3)	(0.3%)	(0.1)	(0.0%)
Accumulated Loss	(215.2)	(11.1%)	(113.4)	(5.2%)
Total Non-Current Liabilities	33.9	1.8%	29.6	1.3%
Thereof: Financial Liabilities	16.8	0.9%	13.6	0.6%
Other Non-Current Liabilities	17.1	0.9%	16.0	0.7%
Total Current Liabilities	755.9	39.0%	888.4	40.4%
Thereof: Trade Payables and Similar Obligations	609.8	31.5%	737.7	33.6%
Other Current Liabilities	146.1	7.5%	150.8	6.9%
Total Equity & Liabilities	1,937.9	100.0%	2,196.4	100.0%
Net Working Capital	34.5	1.8%	15.5	0.7%

C A S H F L O W S T A T E M E N T

€m	FY2013	FY2014	FY2015	Q1/15	Q1/16
Net Income	(116.6)	47.2	121.5	24.3	4.6
Non-Cash Expenses from Share-Based Payments	2.0	19.8	17.9	4.0	3.8
Cash Settlement of Claims from Share-Based Payments	0.0	0.0	(2.3)	(2.0)	0.0
Depreciation	14.9	25.8	34.2	7.5	9.1
Income Taxes	(0.7)	10.5	(34.9)	6.3	5.7
Income Taxes Paid, Less Refunds	0.0	0.0	(0.0)	0.0	(20.1)
Change in Provisions	0.0	1.0	(0.5)	(0.4)	3.6
Other Non-Cash Income	0.0	(0.2)	(1.0)	(0.9)	(0.0)
Change in Inventories and Receivables	(122.7)	(68.7)	(154.2)	(155.4)	(108.3)
Change in Trade Liabilities	101.5	94.9	154.9	117.5	89.6
Change in Other Assets/Other Liabilities	41.4	44.6	(16.2)	(12.6)	2.8
Cash Flow from Operating Activities	(80.2)	174.9	119.4	(11.8)	(9.2)
Payments for Investments in Fixed and Intangible Assets	(73.8)	(51.1)	(60.0)	(7.5)	(23.7)
Payments for Acquisitions	0.0	0.0	(16.8)	(0.8)	(0.9)
Cash Paid for Investments in Term Deposits	0.0	0.0	(155.0)	(90.0)	0.0
Change in Restricted Cash	(16.4)	(0.8)	35.3	15.8	(0.0)
Cash Flow from Investing Activities	(90.2)	(51.9)	(196.5)	(82.6)	(24.6)
Payments Received from Capital Increases	199.3	510.1	6.4	1.5	0.0
Cash Received from Loans	9.1	3.9	0.0	0.0	0.0
Repurchase of treasury shares	0.0	0.0	(1.7)	0.0	0.0
Cash Repayments of Loans	(3.2)	(3.2)	(3.2)	(0.8)	(0.8)
Cash Flow from Financing Activities	205.2	510.8	1.5	0.7	(0.8)
Change in Cash & Cash Equivalents	34.9	633.8	(75.7)	(93.7)	(34.7)
Effects of Exchange Rate on Cash & Cash Equivalents	0.0	0.0	0.9	3.6	(0.4)

K P I D E V E L O P M E N T

	2014	Q1/15	Q2/15	Q3/15	Q4/15	2015	Q1/16
Site Visits (m)1	1,363.8	392.8	411.8	393.9	457.9	1,656.4	479.5
Mobile Visit Share (in % of Site Visits)2	42.3%	52.6%	56.6%	58.8%	59.9%	57.1%	62.3%
Active Customers (m) 3	14.7	15.4	16.4	17.2	17.9	17.9	18.4
Number of Orders (m) 4	41.4	12.0	14.0	13.8	15.4	55.3	15.6
Average Order per Active Customer	2.82x	2.84x	2.89x	3.00x	3.08x	3.08x	3.20x
Average Basket Size (in €) 5	66.6	68.0	67.4	63.3	72.1	67.8	66.5
Fulfillment Cost Ratio (in % of revenue) 6	22%	25%	28%	27%	23%	26%	24%
Marketing Cost Ratio (in % of revenue) 7	13%	12%	12%	12%	11%	12%	10%

• (1) Site Visits defined as the number of series of page requests from the same uniquely identified client at Zalando, including w ebsite, m.site and apps in the measurement period. A visit is considered ended when no requests have been recorded in more than 30 minutes.

• (2) Mobile is defined as tablets, mobile site and apps.

• (3) Active Customers defined as the number of customers placing at least one order in the last twelve months in the measurement p eriod irrespective of cancellations or returns.

• (4) Number of Orders defined as the number of customer orders placed in the measurement period irrespective of cancellations or r eturns. An order is counted on the day the customer places the order. Orders placed and orders delivered may differ due to orders that are in transit at the end of the measurement peri od or have been cancelled.
• (5) Average Basket Size defined as the transactional revenue (incl. VAT and transactional volume of Partner Program) after cancel lations or returns divided by the number of orders.
• expenses, as well as allocated overhead. costs. Fulfillment costs therefore comprises all selling and distribution costs, exc ept for marketing costs. All numbers shown excluding equity settled SBC costs.
• (7) Marketing Cost Ratio defined as marketing cost as a proportion of revenue in the measurement period. Marketing cost mainly co nsists of advertising expenses including search engine marketing, television, online display and other marketing channels as well as allocated overhead cost. All numbers shown excl uding equity-settled SBC costs.

(6) Fulfillment Cost Ratio defined as fulfillment cost as a proportion of revenue in the measurement period. Fulfillment costs ma inly include logistics, content creation, service and payment

F I N A N C I A L C A L E N D A R 2 0 1 6

		May 2016
M	T	W	T	F
2	3	4	5	6
9	10	11	12	13
16	17	18	19	20
23	24	25	26	27
30	31
Date
Tuesday,	17-May
Tuesday, 31-May
Wednesday, 8-June
July-20161
Thursday, 11-Aug
Tuesday,	6-Sep
Thursday, 10-Nov

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This presentation contains summary information only and does not purport to be comprehensive and is not intended to be (and s hould not be used as) the basis of any analysis or other evaluation. In addition, the information in this presentation is subject to change. No representation o r warranty (express or implied) is made as to, and no reliance should be placed on, any information, including projections, estimates, targets and opinions, contained h erein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein.

D I S C L A I M E R