Hellofresh Se Ord

Ladies and gentlemen, and welcome to the HelloFresh H1 2026 result call. The conference will be recorded. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to your host, Dominik Richter.

Good morning, ladies and gentlemen. Thank you for joining our Q2 2026 earnings call. I'm joined today by our CFO Fabien Simon and I'm going to spend my time on the strategic picture, why we're making the choices we're making and why we remain convinced they're right for this business over the long run. Our CFO will then walk you through the numbers in detail and will open the floor for questions after that. We've also published our H1 2026 shareholder letter this morning alongside this presentation. It covers a lot of what I'm about to say in more depth and I encourage you to read it alongside today's remarks. I want to start where we always start because it's the frame for everything else that we're talking about today. Our mission is to change the way people eat forever. Our vision is to become the world's leading digital native CPG company. Every decision I'll describe today, including the ones that show up as pressure in this quarter's numbers, is in service of that longer-term vision, not in spite of it. What you're looking at right now is a phased rebuild, not a single quarter story. Phase 1 was all about fixing our cost base. Phase 2, the one we're in right now, is reinvesting those savings into a genuinely better product. Phase three, we'll be turning that better product back into growth on our terms once the numbers tells us it's the right thing to lean in. We're firmly in phase two, better products, better customer metrics, and a top line that's still catching up to both. I want to cover three things today. First, why our structural position in this category gives us the room to be patient rather than reactive. What our efficiency program has actually funded on the product side in H1. And third, what the resulting customer data tells us about whether any of this is working. Let me start with our structural modes because it's easy to lose sight of them during the quarter to quarter reporting cadence. HelloFresh has built real advantages against both CPG manufacturers and food retailers in the overall food ecosystem. We run a constant feedback loop with our customers, millions of ratings, swaps, reorders and cancellations every week, which lets us get ahead of what people will want before they can articulate it themselves. At Feedback Loop sits inside a deeply rooted culture of data and experimentation, which de-risks every product bet before we scale it company-wide. Our customer base skews towards the top 40% of the income distribution, which gives us pricing power and margin resilience. We occupy the right corner of the food market. Convenience, health, Personalization and sustainability are the mega trends that everyone is seeing and traditional food companies struggle to meet. We've built a well-oiled D2C marketing flywheel that plans around where the shopping experience is heading, not where it's been. And our purpose-built, vertically integrated operations, from our own fulfillment centers, our own last-mile logistics, to our own procurement, allows us to push innovation and iterate at a rate that is impossible for CPG or food retailers. Individually, none of these show up in a month or half-year P&L. Collectively, they're the reason we can make deliberate, patient decisions instead of reactive ones, and they're why we have strong conviction in the strategy we pursue. The patience is exactly what our efficiency program has bought us. We're now roughly 85% through our initially communicated 300 million program as of the end of H1, with the remaining approximately 15% planned for completion in H2. These are permanent structural changes to our cost base. Not one-off savings we'll need to refine next year, and they are the direct funding source for the entire product agenda I'm about to walk you through. While H1 has seen a number of adverse external factors such as heavy winter storms, spiking fuel prices, we have nonetheless seen good underlying progress in the factors we control. Meerkat has already seen a convergence to our target low to mid team adjusted EBITDA margins over the course of the last 18 months. Ready to eat is where we are focusing a lot this year on the bottom line to also bring it to full year adjusted EBITDA profitability. We remain on track for that and margins are already up a full point year over year in H1. Even after absorbing material ramp up costs of our new Factor Europe facility, and the disruption of the aforementioned winter storms, increasingly driven by a larger share of revenues coming from a more tenured customer base. Getting the rest of the way there in H2 comes down to three things for RTE. Improving our contribution margins again after the initial ramp-up phase. Second, continuing to calibrate our marketing spend to where returns are strongest. and thirdly, scaling our emerging RTE geographies into profitable volume growth. We're doing all of that in that sequence for a reason. Margin discipline first, upgrading the customer experience second, and only then leaning back into growth. We are now about 12 months into what we call the refresh, our stage-gated product investment program. We test in a handful of markets, measure rigorously against preset metrics, and only roll out globally once we see the evidence. Early results out of the Nordics and the US gave us the confidence to keep widening it this half. The logic behind it is simple. With a limited number of meals and a narrow choice of cuisines, there are only so many long-term customers a business like ours can reach. So every dollar we put into broadening that selection is a dollar spent growing our addressable market, not just serving the customers we already have. Let me give you some very concrete examples. In Factor, we've broadened our collection of GLP-1 friendly recipes for customers managing their nutrition around that medication. An area where demand has been real, and where almost nobody else in the market has a credible answer yet. In LearKit, we've introduced low-lift dinners for the nights when a customer wants HelloFresh quality without the full cook time, with pre-cut vegetables or pre-marinated proteins allowing for a significant reduction of cooking time. We've also expanded protein variety, introducing new SKUs such as barramundi, Chilean sea bass or deer to our menus regularly. All three add more SKUs, more sourcing relationships and more variability in our kitchens. All three cost a bit more before we scale the volume behind them. We have accepted that ramp up cost deliberately because it's temporary and the retention benefit behind it isn't. Each of these is a small change on its own. Together, they're what more value per plate looks like in practice. And they're exactly the kind of investments that widens the pool of customers this business can serve over time. We are pairing the investment in food with digital features that make the product smarter around the edges, which is also how we think about becoming a genuinely digital native CPG company rather than just a meal kit company with an app attached to it. Our upgraded personalization engine uses onboarding quizzes and each customer's ordering history to build a food profile that recommends the best-fitting meals from a now much larger menu. We've broadly introduced other product personalization features as well, such as a wide range of swaps in the weekly menu, which now lets customers change an ingredient, for example, tofu for chicken with one tap, chef-tested, so the swap never costs them on taste. and we've built out personalized menu merchandising capabilities. For example, options to include the fussy eaters of the family, kids into the weekly dinner routine with an exciting collection of meals built around that use case. We've also launched our HelloFresh cookbook this year. which lets customers save any recipe they spot on social media or anywhere else online into a HelloFresh style recipe card with full step-by-step instructions, free, no subscription required. Customers have already saved more than 3 million recipes since launch, which tells us there's a real appetite for us to be useful to customers well beyond the meals we ship them. It also gives us a live read on trends and preferences. With these features, we increasingly embed ourselves into customers' lives and make our app useful for active, lapsed and prospective customers. So where does all of this actually show up? In Meerkat specifically, Constant currency average order value is up 5.7% year over year in H1. And order rate is up 4.1%. Customers who are with us today are ordering more often and spending more per order than they were a year ago. What you won't see yet is that translating into top line growth. And I want to be direct about why, because I know it's going to be a question on the score. We point back marketing spend significantly again in H1 on top of an already large step down a year earlier. As a deeply data-driven business, we hold every dollar of marketing to a strict return threshold. And that threshold only works when we can forecast our cash space with great confidence. In H1, we had less of that confidence than usual. Given the heaviest winter storms in 75 years, Europe had its own run of severe weather and the war in Iran pushed fuel surcharges and fertilizer prices up across our supply chain. Spending aggressively into that kind of cost uncertainty means buying customers at a price we can't properly underwrite. And unlike in past times, we've chosen not to do that even though it costs us in this house top line. That's a deliberate trade-off to build sustainably for the long term. Where we don't yet have the long run data to justify, we're staying patient rather than assuming it'll work out. We're going to reassess our investment levels as we now move into back to school season, when we typically get a much clearer read on demand elasticity and our cost base for the second half of the year. That discipline is the whole point of a phased approach where right now we're focusing predominantly on making the product significantly better for consumers. That brings me to how we're thinking about the rest of the year. Our focus for H2 remains on efficiency with select opportunities for investment where the data actually supports it. Specifically, we'll focus on four things. We're recalibrating product investment levels based on what H1 actually told us works, rather than scaling every initiative uniformly and globally. We're keeping marketing spend disciplined and we'll let early results from back to school, one of the most important demand signals in the year, set the pace of any incremental investments from there. and after a period of initial inefficiency while driving a lot of innovation in H1, we're now targeting contribution margin expansion for the group again because that margin is what keeps funding everything else on the list. And finally, we're scaling Factor outside the US with our EU Center Ready for Growth and into new channels. For example, after a successful trial in H1, We're broadening our access to retail shelves for our RTE product, which gives us a second channel and diversifies our revenue line. I want to close the strategic part of this call with one of the charts I find most convincing, because it speaks to revenue quality rather than revenue quantity. And quality is what this whole strategy and phase three build has been optimizing for. Look at Neal Kitts first on the top of the page. Revenue from customers who've been with us more than four years now make up 34% of H1 net revenue, up from just 7% in H1 2023. That 10-year revenue has kept growing, which tells you this growth is coming from customers staying longer and spending more once they're in, not from throwing more money at acquisition. Ready to Eat on the bottom chart is earlier in that curve. Tenured revenue there is growing significantly too. Revenue from customers that have been with us for over two years stand at 20% today, having grown considerably over the past three years. But the category is younger, so revenue is still a lot more sensitive to the volume of new customers we acquire in any given period. That's simply where RTE sits in its maturity relative to Meerkat and tells you about the story of revenue decline in RTE in H1. To recap before I hand over, H1 has seen us continue to execute the multi-year strategy we've been deliberately pursuing. Strong innovation, tight ROI thresholds in an uncertain environment, and good progress towards a return to positive full year RTE bottom line. These trends are compounding in the right direction. It's a multi-year trend, not a quarter blip, and we're not managing this business quarter to quarter. The product is improving strongly and the customer reception proves that every single week. Growth, when we lean back into it, will be a choice we make with conviction, backed by data we trust, Not a target we chase into a cost environment we can't see clearly yet. With that, let me hand it over to our CFO, who will take you through the quarter's financials.

Thank you, Dominik. Good morning, everyone. Thank you for joining us for our Q2 earnings presentation. Before I walk through the quarter, I want to flag a change in how we are presenting our results. At the full year result, and through the various interactions with investors, I made a commitment to enhance the transparency of our disclosure and to update our reporting framework. Beginning this quarter, we are staying true to our words, and we are disclosing full P&L in reported and constant currency by product category as a deliberate step towards more comprehensive reporting. because each category has distinct economics and a distinct trajectory. We believe investors are better served by seeing them clearly and separately rather than through a consolidated view. So all the details can be found in our H1 report including 2025 comparison. Additionally, what you would have seen in Dominik's sections and will continue to see in the coming pages is also further transparency on cohort revenues. Again, this is something that we said we would do as we believe this will give the market a better view of a more solid foundation and dynamic that we have in our business than sometimes understood. And this comes on top of a greater focus on cash flow and the updated metrics of free cash flow post-needs repayment that I communicated already during the year-end results. With that, let me now start by walking you through the key themes of the quarter before we look at each line item in detail. In Q2 2026, we delivered what we said we would deliver as we continue to execute against our strategic priorities. Revenue of 1.5 billion euro reflects a decline of 7.8% in constant currency for the group. Both the meal kit and ready-to-eat segment came broadly in line with our internal expectation, which I had communicated to the market last quarter. The other segment, that is a new venture in specialty meat and in pet food, is up 36% in constant currency for the quarter. I want to draw your attention to two dynamics that I believe tell you more about the underlying quality of the business. The first is our tenured customer cohort. Those customers who have built HelloFresh in their weekly routine continue to show stable and in fact improving behaviors in Q2 with order rates increasing year on year. This is true for the group and individually for each of the product categories. The second dynamic is average order value which increased 6.5% in constant currency to 71 euros driven by higher add-on contribution, a greater share of premium recipes, and some price increases. On the operational side, 85% of our planned 300 million euro efficiency measures were implemented before the end of June. Progress on the cost side was, however, largely offset by the deliberate front-loaded product investment that was communicated 12 to 18 months ago. This is reflected in the group contribution margin of 25.2% down 2.1 percentage points year on year. And I will address that in detail on the contribution margin slide. But note that Dominik already mentioned that efficiency remains our priority for the rest of the year and we will be disciplined with marketing and product investment. Q2 group adjusted EBITDA was €100.6 million with milk it at a 15.1% adjusted EBITDA margin, broadly the same as last year in percentage terms. Ready-to-eat margin was 3% in Q2 and better in percentage terms in H1 versus H1 last year. We continue to work on our goal of turning ready-to-eat adjusted EBITDA margin positive this year. And in fact, for H1, the US market, ready to eat there was almost reaching breakeven at the adjusted EBITDA level and we expect positive margin for HV. Finally, it is worth sharing that in July, we successfully completed the pricing and issuance of our inaugural 350 million euro bond with a coupon of 5.5% maturing in 2031 which strengthens our capital structure and extends our maturity profile. The adjusted EBITDA outlook is reconfirmed for the full year. For our constant currency revenue growth, we see it trending towards the bottom end of the full year range and we will gain further visibility following the back to school campaign. Moving to the slide on revenue. So group revenue of 1.5 billion Euro in Q2 declined 7.8% in constant currency, and as I mentioned, this was in line with our expectation. Multis declined 8.9% in constant currency. Sequentially, this compares to a decline of 8.5% in Q1, including the effect of Spain and Italy, which has now ceased to operate, so practically flat sequentially. The performance is increasingly supported by two structural pillars. the resilience of our tenured subscriber base whose order rates are growing year on year and a continued improvement in net average order value which reached 64.5 euros in Q2 up 7.1% in constant currency for Miltit. What we need to see in order to witness an inflection in Miltit revenue growth is a step up in conversions at our tighter ROI levels and in our ability to keep those conversions. We did not see that in Q1, an important acquisition quarter which is having an effect on the rest of the year. The next natural point in time to assess our conversion momentum will be the back to school campaign which starts very shortly. On ready to eat, the category declined 8.4% in constant currency in Q2 which represents a sequential deceleration compared to Q1. Ready2eat has a greater structural reliance on new customer conversions than MealKit. It is a younger category with a less deep 10-year subscriber base. Our disciplined application of marketing-wise threshold, therefore, has a proportionately larger near-term impact on Ready2eat top-line than on MealKit. The structural positive within the segment is that tenured ready-to-eat customers continue to expand their net revenue double digits year-on-year in Q2, which speaks to the quality momentum of the return base. Q2 AOV was up 1.1%. Given how important conversions are for ready-to-eat and the fact that we communicated already that we entered the year with a low level of active customer base, We should not expect Ready2Eat to recover in Q3 and are instead looking at the level of exit rate for the year. I would also highlight our other segment, which includes our newer ventures, growing at 36.1% in constant currency year-on-year. It's a continuation of the strong momentum that we have described in prior quarters. 13. I want to put the meal kit revenue trajectory in the context of H1 as a whole. So while Q2 showed a modest sequential deceleration, negligible on the like-for-like basis when you account for the discontinuation of Italy and Spain, the H1 pictures continued to support the direction of travel. The rate of decline has been narrowing consistently, and importantly, that improvement is happening as we tighten our marketing ROI standards. Turning to slide 14, this is another very clear example of us providing the transparency around cohorts that you have been asking for. In this slide, I present in more detail the behavior of our customers across the different tenure pools by comparing the revenue growth evolution in constant currency from H1 2025 with H1 2026. So let me walk you through the chart from left to right. On the very left, you see the growth rate of the revenue in H1 generated by customers that were acquired within the preceding 12 months. The growth rate for this cohort remains negative in H1 2026 year-on-year, which is expected. Performance marketing, the primary driver of new customer acquisition, also declined. But what matters is the rate of improvement. The year-on-year decline in new customer revenue growth in H1 2026 is about one-third of what we recorded in H1 2025. The trajectory is therefore improving. A similar dynamic, and in fact a more pronounced one, is visible for reactivation. The revenue growth rate from reactivated customers has improved meaningfully with approximately half of the decline recorded in H1 2025 having been erased by H1 2026. And this is consistent with the early signals we are seeing from lapsed customers responding to the improved product proposition. Finally, failure customers Their revenue growth rate in H1 2026 is similar to H1 2025 which is, I want to note, a meaningful result in itself. Every month we are bringing in fewer new customers who have the potential to become tenured over time and yet this cohort continues to grow at a stable rate. These customers are showing increasing order rate across the market and lower churn in the market where our product investment cycle is most advanced. This is the customer base we are building for. And it is the customer base that give us structural confidence in the trajectory of the business. Even as the overall top line continues to reflect the managed transitions toward the more loyal, higher quality subscriber competition. Q2 2026 contribution margin came in at 25.2%. A decrease of 2.1 percentage points year on year when you exclude the impact of share-based compensation and impairment. And I want to address this directly because it has a lot of moving parts. The decline in contribution margin is not a reversal of our underlying efficiency progress. It is a deliberate consequence of the front-loaded product investment strategy we communicated at the start of the year. We said we would invest in H1, the product quality, in the menu, in the experience, ahead of the back-to-school period, and that is precisely what the margin reflects. Let me give you now the segmental breakdown. Milked contribution margin was 28.2%, a decrease of only 0.2% H0 year-on-year, which I think is a meaningful signal in itself. The efficiency reset is largely holding the meal kit margin in place even as we absorb product investment on that line, as well as volume-led operational deliberation. Ready-to-eat contribution margin was 21.6%, a decrease of 5.2.0% year-on-year. The larger impact in ready-to-eat reflects both the product investment, which we are also being rolled out in the ready-to-eat category, and the mixed effect from expansions into new international markets, which are not operating yet at the efficiency level of our core geographies. On the cost line breakdown, procurement and cooking costs increased by 2.4 percentage points year on year. In meal kit, the figure is 1.8 points, which will moderate in H2 as our procurement and fulfillment teams get better at navigating initial phase of inefficiency that you typically see when launching a meaningful product innovation cycle, for example, around operational waste. We are on track to hit our previously mentioned target of 150 basis points. In Ready-to-Eat, the cost increased by 3.6 percentage points, half of which is product investment, which we also moderate towards 150 basis point target in H2, and half of which is a ramp-up of our European kitchen which shows up in this line. Fulfillment cost decreased by 0.3 percentage points with efficiency program savings partially offsetting the impact of the volume-laid operational deleverage and through-cost inflations. So the direction of travel on the underlying cost structure is intact. The back to school campaign will give us the first evidence on whether the consumer response to the improved product justifies the level of investment. Turning to the marketing spending. Due to 2026 group marketing declined 16.3% year on year in absolute terms, now representing 14.9% of group revenue. a reduction of 1.4 percentage points compared to Q2 2025. Marketing declined faster than revenue in both segments which is the intended dynamic. The continued reduction in marketing is the ongoing execution of the structural differences approach to customer acquisition which is anchored on stringent return on investment threshold rather than volume. In Miltit, marketing spend reached 11.6% of revenue in Q2 2026, down 23.4 million euros in absolute terms year on year. But in H1 2026, marketing to revenue for meal kit was broadly stable at 14.8% compared to H1 2025, which reflects consistent and disciplined application of our ROI criteria and some incremental marketing spend in countries where we see product cycle is more advanced such as in the Nordics. In ready-to-eat, marketing spend reached 19.2% of revenue in Q2 2026 down 23% year-on-year. The higher relative level of ready-to-eat marketing compared to milk-eat reflects the fact that it is a younger category with a greater reliance on new customer conversion. At the same time, The year-on-year decline in reliquary marketing in percentage terms was actually steeper than in meal kit, which is a direct consequence of the disciplined focus on higher ROI customers and channels that we have applied with equal rigor to both segments, as well as a reduction in the very high brand marketing spend incurred in H1 2025. I would flag that marketing efficiency during the back-to-school period will be an important input. both to our assessment of the conversion trajectory and to the marketing stand profile we will carry into the remainder of the year. Turning to slide 17 on the adjusted EBITDA summary for Q2 and for H1. Q2 2026 group adjusted EBITDA was 120.6 million euros representing a margin of 7.8%. So let me walk through the segments. Miltit delivered €167 million in Q2 at an adjusted EBITDA margin of 15.1%, this compared to €184.8 million and 15.2% in Q2 2025, a margin that is broadly stable year-on-year, despite the product investment being made in the category. The resilience of the margin is a direct function of the structural improvement in the Miltit cost base, even as there is some volume-led operational deliverance. For H1 2026, meal kit was 271 million euros adjusted EBITDA at 11.7% margin compared to 334.6 million euros and 12.8% in H1 2025. That H1 comparison reflects the front-loaded investment profile which is weighted to the first half of the year and the winter storm impact we witnessed in Q1 of this year. Ready to Eat delivered 13.1 million euros in adjusted EBITDA in Q2 at a 3% margin compared to 17 million euros and 3.5% in Q2 2025. For H1, Ready to Eat adjusted EBITDA improved to negative 13.6 million euros from negative 26.4 million euros in H1 2025. As mentioned earlier, The US ready-to-eat business was not too far off from breaking even in H1 2026. The year-on-year H1 improvement is meaningful, and it is directionally consistent with our goal of modest full-year profitability in this segment. Holding costs at €53.8 million in Q2 were higher than Q2 of last year, reflecting primarily some IT service cost inflations including those related to AI and some salary adjustments that had to be made as a share based compensation program is reduced but not of course on a one for one basis. On cash flow, H1 2026 free cash flow was positive at 49.4 million euros. This represents a decrease of 107 million euros compared to H1 of last year. But each one of last year included a one-off tax refund, which I communicated at the beginning of the year. Excluding that non-recurring item, the year-on-year free cash flow decline narrows to about €69 million. The remaining decline is principally driven by the adjusted EBITDA development, which, as I have described, reflects the front-loaded product investment and winter storm impact in this house. CAPEX in H1 2026 was 76.7 million euros, up from 66 million euros in H1 2025. This step up has a specific composition, so investment in factor EU infrastructures as we scale the European ready-to-eat business, and CAPEX directly related to automation in support of our menu expansion and product investment program. but it is important to know that at the midpoint of our adjusted EBITDA guidance range for 2026 we expect free cash flow to remain positive for the full year with H2 expected to be materially more favorable than H2 2025. That expected improvement is supported by a stronger H2 2026 adjusted EBITDA profile by normalizing lease liabilities relative to the one-off termination payment made in 2025 and by a working capital profile that is expected to be more favorable than last year. So before we go into the last slide on our capital structures and then open up the call to your questions, let me bring together our outlook. As mentioned at the beginning, the adjusted EBITDA outlook is reconfirmed in full. This means that at present and with the visibility we have, the range remains within reach. On constant currency revenue, our view is trending towards the bottom end of the full range and we will gain further visibility following the back to school campaign. So I want to be clear about why these two statements can coexist. The strength of the efficiency program and the improving unit economics of our customer base give us the confidence to reaffirm adjusted EBITDA even as the revenue pictures trend to the lower end of the wedge. And again, the back to school campaign is the next meaningful read on conversion and marketing efficiency and we will share those findings with you as soon as we have time. On slide 19, I want to address the bond transactions we completed in July and specifically the rationale behind it. So in July, HelloFresh SE priced its inaugural 350 million euro bond with a coupon of 5.5% and a maturity in 2031. The notes carry a BBB rating from S&P which is consistent with our issuer rating and stable outlook. This transaction is primarily about extending our debt maturity profile and diversifying our sources of funding. The proceeds are being applied to general corporate purposes, including the refinancing of existing term loan debts, which reduces near-term maturity concentrations and gives the business a more durable and balanced financial foundation. And I want to be equally clear that this transaction does not change our capital allocation policy. which prioritize investment in organic growth opportunities and maintaining our adequate level of leverage as communicated before. With that, I open it up for questions.

Thank you. Ladies and gentlemen, if you would like to ask a question, please press star, nine and the pound key on your telephone keypad. If you would like to cancel your question, press star, three and the pound key. You can also use the dial-in function in the webcast if you would like to ask a question by phone. We kindly ask you to limit your questions to one per person. In case there is more time, we'll take on further questions. So let's start with the first question. This one is from Andrew Rose from Barclays. You can go ahead, your line is open.

Great morning all and thanks for taking my one question.

I guess inevitably it's to come back on meal kit declines in Q2 and then you're thinking into H2 and the first thing I want to understand is exactly why the meal kit declines didn't improve in Q2 versus Q1 you obviously spoke about that on the Q1 call it played out but back at Q1 it sounded as though that you had a specific market where maybe customer acquisition had been softer in April now to me it sounds like the tone is that it's a broader base factor across market with kind of low ROI you're getting on your marketing spend so I'd love to understand kind of you know what you've seen in terms of the cohort behavior in more detail in Q2 and meal kits and I guess that feeds into a follow-up when we kind of think about the implied improvement in H2 for meal kits to get to the low end of your four-year guidance range What gives you confidence that you can do that? Do you have kind of any visibility into that back to school period that the ROI versus CAC mass could have improved? Anything you can give to give us some comfort that growth is going to get better would be helpful. Thanks.

Thanks for your question. In general, I think it's important just to kind of like think back to the phased rebuilds that we're going through, right? So really our focus for H1 was making sure that we genuinely improve the product and broaden the TAM that we're going after before we then kind of like try to lean back into growth. In Q2, I think overall, like very much according to our expectations, very much according to the expectations that We communicated in Q1. So I think this was actually nothing super special that happened between what we communicated on the Q1 call and now in Q2, very much in line with our expectations. And I think on the product side, we've also really done a lot of what we wanted to bring to customers and generally have seen strong reception, which is reflected in the customer metrics. I think the more interesting question is the second one, the implied improvements. Obviously, on the cost side, it's very much that we're gonna drive contribution margin expansion again. We talked about some of the known inefficiencies that we took on board during the first half of the year, which is generally normal when you try to do a lot of new things. I think with the lessons learned and applying those, we'll see some contribution margin expansion into the second half of the year. Efficiency program, more things will come through in the second half of the year. and then on top line it's really a function of number one the improving order rates that we've seen among and AOVs among our customer base which obviously also play out for all the customers that we've acquired in H1 which compared to one year earlier will deliver more revenue per customer in the second half of the year and secondly then it's a function of how much we're leaning into growth and marketing in the second half of the year which is on the one hand side something that obviously we control but where we also are very much looking at the overall cost environment it's definitely been Okay, thanks.

Thank you for taking my question. I'm just going to build off the sort of second part of Andrew's question and your response, Dominik. I mean, at the midpoint of your adjusted EBITDA guide, you need to do, I think, plus 24% year-on-year for adjusted EBITDA in H2, having just done minus 33% in 1H. Now I think you sort of alluded to some of this. You said you efficiency savings and more efficiency savings in H2 and also you said expanding contribution margin. Can you quantify either of them to help us because it just seems like an absolutely enormous goal that you're expecting to deliver in H2 year on year versus what you did in H1. So if you can quantify that or flesh it out a bit more that would be really helpful.

Fabien, I will try to help you on that one. So indeed there is a meaningful improvement that we are expecting in H2. But first I want to remind that the decline we are seeing in H1 is, I mean, close to half of it is coming from a one-off event we have had with Winter Storm. So if you exclude that, the step up looks less dramatic overall. And indeed, for us to deliver on our adjusted EBITDA ranges, we need to have a minimum 24 million euros adjusted EBITDA improvement year on year in H2. which is like 10 to 12 million minimum per quarter and why we are confident about it. If we look at what we expect for Q3, you know, I always like to give how we see the coming quarter coming. On top line, we can't because it's gonna rely a lot on the back to school season and the conversion but on bottom line, we have a pretty good visibility. We see this, I would say, 10 to 20 million euro improvement coming already in Q3. and we believe that in Q4 there is really the possibility with a good campaign coming to achieve the same level. So we feel confident that both quality of conversions, continued discipline on marketing ROI, which will continue, but as well a lower impact of product investment which you know we started that in H2 of last year and we continued in H1 of this year is going to have a lower year-on-year effect than what we have seen for the first part of the year.

Thank you.

And the next question is from from . You can go ahead. Your line is open.

Thank you. If you get into the back to school window and see a similar cost environment that you saw in Q2 and you decide to keep the marketing ROI thresholds at the same level as Q2, where do you think you'll land on the full year overall group revenue decline? Is it the bottom end of the range or is the bottom end of the range requiring a change in the marketing threshold? So you would actually land below the bottom end of the range. Thank you.

I see it's a bit of a difficult question because I think ROI on marketing is not something which is linear throughout the year. It's a very different month and month and by season. And of course the mix always change. what we would say is maybe to bring some perspective on what we have done in the past if we look at the progress we have been making last year between our H2 and our H1 and assuming we would deliver the similar improvement between H2 and H1 of this year we would be at the bottom end of the range. But what we are keen to commit is as soon as we have visibility of the back to school, which may be well before our Q3 earnings, we will communicate to the market what we have been seeing and if there is a need for readjustment or not. But so far we are planning for success for the back to school campaign.

So you're planning for success, but if the back to school campaign goes worse than you're anticipating, does that require a move down in the Bizarre Guidance too?

Don't think so at this stage.

I think we expect the biggest differences to be mostly on the top line. and we would need to assess why do we think it would have been the case. Is it because consumers have a higher propensity in a more stressed environment to look at value so we may have to adjust our product or is it because we have not been powerful enough in awareness for new consumer and we may have to change back then in that case with our marketing approach. But we believe it's going to be much more a top line potential change than the bottom line one.

Thank you very much.

The next question is from Sven Sauer from Kepler Schiphol. You can go ahead. Your line is open now.

Yes, thank you for taking my question. The average order rate and the average order volume improved and increased, but on the one slide you showed that the revenue coming from milked customers that have been customers for more than one year decelerated in the first half. It was still positive, but it decelerated. I'm just wondering how that can be with average order value and average order rate improving.

Because as you know, it's really a new level of transparency, which I really trust, market appreciate. What makes net revenue of a tenured cohort is two things. So is one, your existing customer, how long do they stay with you? I mean, how is the chain evolving? Then how much do they order? How much can you charge? But as well, from the new conversions you have been having over the years, how much are becoming long-term tenure? And what we have seen in H1 first is not a decline. I think we talk about 0.1, 0.2% difference on revenue growth. I think maybe it's the scale on the chart which is not helping us here. But let's say we see stability of our revenue, but of course also on our profitability, which is very important because the bulk of our profitability is made there. So your question is why AOR-AOV can go up and this pool of revenue be stable is simply because over, let's say, the accumulated level over the last three years, we have seen a lower conversion. That's why the overall multi-business has been declining as you have seen on the introductory slides from Dominik. And that it's only the consequence of less new customers becoming tenured. that explain why it is not growing at the pace of our average order rate and average order value, which we expect something which is gonna transition. I think the worst in my view would have been something different, would have been that you see the same decline in your conversions, you've seen a further decline on churn or same decline as before on churn and then that number will be negative. But which is not what we see, which proves that our products are becoming, are touching well existing customers and notice the difference and they are churning less and they are ordering more. Which I think is a very encouraging sign.

Just to clarify this, I'm not sure I understood it. So the number of Customers converting to these long-term one-year customers is decreasing and offsetting the higher average order value and the higher average order rate.

Yes, correct. And this is, I would say, expected and natural. When you have lower conversions, you always have a bulk of your new conversions that become longer tenured customers. And if you have less of that, of course, there is a consequence. That's why it's, for us, important. to ensure we always have good campaigns to fuel back the conversion momentum to grow the tenure base.

Okay.

Thank you.

Question is from from Deutsche Bank. You can go ahead. Your line is open.

Great. Thank you. So my question is on the type of customer that ends up in that long-tenured customer base. You said that you target the top 40% of the income in each of your markets. How are they behaving during an uncertain macro environment? Is there change in any behavior that you're seeing over the last year? And also, who are these customers? Could you maybe give us some color on are there more women now, age, are there young families, any color that you can give us to maybe get a better understanding as to who values the product in that category? Thank you.

Great to take that question. So you can definitely see that those customers who stay with us longer, who become tenured customers, tend to have a number of certain features. You referenced already two or three of those. So they tend to be part of the top 40% of the income brackets. They are very often sort of like living in a multi-person household, very often with kids. There's a somewhat over representation of suburban areas versus urban or rural areas. So those are some of the dominant features of that customer group. In general, I think they are certainly also to a point effective, especially in the US and other markets where you have like very flexible rates on your credit, whether that's for housing, mortgage, your car, credit cards, et cetera, et cetera, but probably to a lesser degree than the bottom quarter or the bottom half of the income distribution. we feel and we also get that from customer research that customers that have experienced the product that use it or have used it on an ongoing basis and formed a habit tends to think that it provides like really good value cuts waste you know and helps them discover new recipes eating healthy a lot of the features we've discussed in prior shareholder letters and and prior presentations I think those very much apply In a more uncertain consumer environment, I think what you tend to see is that those customers who haven't formed a habit kind of like tend to think twice about whether to start something new. And given that we've also walked back a lot of the initial incentives, Thank you very much. and the addressable TAM of the product that we have by introducing a lot of new cuisines, new features, more meals for different people rather than chasing new customers at all growth before the product is in the place that we really intend this to have. That was maybe a little bit of a longer answer than to your initial question, but I think it's very good to think about it that way.

Thanks. As we don't have any more time, we're going to be wrapping up. Thank you very much everybody for participating.

Have a great day ahead.