Tonies Se Reg A

Hello and welcome everyone to the Tony's Q3 2024 webcast. My name is Manuel Bösing and I represent the Investor Relations team. Today we will walk you through our presentation and afterwards we invite you to submit any questions you have via the Zoom Q&A function. On the call we have our CEO Tobias Wann and our CFO Dr. Jan Middel. And now over to you, Tobias.

Thank you, Manuel, for the intro. I want to welcome everyone joining us for our Q3 update today, where I have another exciting chapter of our growth story to share with you. I'm particularly pleased with how our global expansion is progressing, as well as the continued strength of our core markets. Before Jan walks you through the numbers in detail, let me share the highlights of what we've achieved this quarter and why I'm confident about our weeks to come. Looking at our global footprint today, the numbers tell a remarkable story about our market leadership. We've built the world's largest interactive audio platform for children, now actively enriching children's lives in more than 100 countries. Since our launch in 2016, we've placed 7.8 million Tony boxes in over 90 million Tonys in children's hands. But what really demonstrates the strength of our platform is how deeply children engage with Tonys. They spent more than 270 minutes with us each week. And in the US, parents and caretakers are so enthusiastic about the experience, they are continuously giving us a Net Promoter Score above 70. Looking at our third quarter performance, I'm pleased to report continued strong momentum across all key metrics. Our revenue grew 21% to 95 million euro, with North America showing exceptional growth of 40%, a clear validation of our international strategy. This puts our year-to-date growth at 26%, underlining the strength and scalability of our business model. What makes our platform particularly powerful is that over 70% of all Tony boxes stay active, leading to highly predictable figurine purchases, typically 20 Tonys per box after four and a half years. This quarter alone, we welcomed more than 500,000 new Tony box families and distributed 8.3 million new Tonys, setting us up well for our important fourth quarter. When I spoke to you at our annual presentation earlier this year, I introduced five key value levers that would drive our future growth. Internationalization, margin expansion, own content, product mix, and operating leverage. Today, I want to show you how we are turning this strategy into tangible results through six concrete initiatives that demonstrate our execution capability. We've rapidly expanded our U.S. presence, both in retail and online, consistently strengthened Tony's as a brand that families trust and love, strategically broadened our reach to older children with innovative products, launched our exciting new La La Dinos franchise, strengthened our leadership team with Ginny McCormick as Chief Experience Officer, and prepared extensively for what is traditionally our strongest squad. So let's walk through them. Let me share what's driving our international momentum, particularly our strengthening position in the US market. I want to highlight two strategic partnerships that showcase different aspects of our approach. Looking at target first, we are seeing remarkable results from our wholesale strategy. We've steadily expanded our shelf presence over time, recently doubling from four to eight feet in their stores. The impact on performance has been immediate. Sales have tripled since this expansion, clearly demonstrating our scaling potential in physical retail. Our direct-to-consumer business shows equally compelling progress, particularly through our partnership with Amazon. During their key shopping events, we've seen exceptional growth. Both July's prime days and October's prime big deal days delivered at least doubled year-over-year sales across both boxes and figurines. To ensure we can sustain this growth trajectory, we are also strengthening our supply chain fundamentals. I'm pleased to report that new suppliers in Vietnam will begin production, reducing our regional dependencies and making our supply chain more resilient. This positions us well for continued international expansion across both wholesale and direct-to-consumer channels. Let me share how we are strengthening Tony's market position. building on our foundation as a trusted brand for families. We are executing this through three strategic initiatives, each targeting a different aspect of our growth potential. First, we are expanding our educational content portfolio. partnering with TV star Checker Toby and launching his Clever Tonys, allowing us to address the growing demand for engaging educational content while strategically expanding into the oldest children segment. Our second initiative involves innovative partnership with leading museums, including Museum Kunstpalast and Natural History Museum, where children receive a Tony box as their personal guide fundamentally changing how they experience art and culture. The third pillar involves strategic partnerships with established brands from NBA teams to Bundesliga clubs, culminating in our first nationwide US campaign, Discover Imagination, where partnerships with Disney, National Geographic, Marvel, Paramount and Hasbro demonstrate the true breadth and appeal of our platforms. A particularly exciting development this quarter has been our book Tony's launch, a strategic initiative that expands our addressable market while leveraging our platform's core strength. We're bringing carefully selected bestsellers to the Tony's format, working with renowned authors like Tom Fletcher, David Walliams, Adam Kay, along with classics from Enid Blyton, Dev Pilkey, and Andrea Beatty. This initiative succeeds on two key fronts. It extends our reach to children aged five and older, while our simplified design approach enables faster launches and improved margins. I'm particularly excited to announce our latest content initiatives, our second major content franchise, the LaLaLinos. This launch is based on clear market insights. We know that music and songs for children age three and up are among our most popular formats globally. The La La Linos combine music, rhythm and dance in a way that supports child development, following the proven blueprint of our sleepy friends, which have become some of our most successful figurines to date. Own content like this is central to our strategy for two reasons. It drives exceptional brand loyalty among our customers while delivering significantly higher margins. We've also taken an important step in strengthening our management team, welcoming Ginny McCormick as our Chief Experience Officer. Ginny brings over 20 years of marketing expertise and a proven track record in scaling global brands. This appointment reflects our strategic decision to bring brand, product, and content under one unified leadership, which is exactly what Tony's needs at this stage of growth. Ginny has already made significant impact, and you'll have the opportunity to meet her yourselves at our upcoming Capital Markets Day. Our sixth initiative, Q4 readiness, I will address after the finance update. And with this, over to you, Jens.

Yes, good morning everyone also from my side. I'm very happy to report on our revenues for the third quarter of this year. We're only sharing revenue updates on a quarterly basis, full P&L only full year and half year. And if you look at the Tony's group development, we go with 26% year over year and that's exactly where we wanted Tony's to be. I'm very happy with that development, particularly as we see all markets and all resegments growing in line with our plan. I'm very pleased with the DACH development, which shows the additional potential still growing in the mid-single-digit range. The North American business growing ahead of 50%, likewise the rest of the world, and this is what tobias said in the beginning tony's is showing once again that our international expansion path works um we have increased on a year-over-year basis the share of our international business to 53 and that is testament to the quality of execution of the business um looking a bit at the product mix It's also very important to consider that this year, and I think we have said it quite a few times, the commercial moment of Black Friday and the Cyber Week is later. It's two weeks later. And you can also see that slightly in our product mix here on a year-over-year basis, in particular in Q3. You can see that Tony's is growing on the Tony's mix, so the figurine mix, exactly with the planned annual growth rate of 33%. We're a little lower on the Tony box sales, but while that is maybe at a first sight surprising, please consider this. The growth comes majority from the international expansion, where particularly the fourth quarter and the commercial moments between Black Friday and Christmas do matter. That is when Tony boxes are being set up. That is when we grow our platform. And that's also when we would see this year's growth coming on the installed base. So with these results, we're actually fairly happy. And looking at the overall product mix, I think there's some interesting takeaways to draw. You can see on the right hand side that the Tony box share was higher in 2023 on the first nine months. But again, Black Friday was just earlier. So loadings take place a little earlier. And that's what you see here. Overall, I think it's a very good result to also see that we're doing very well with selling Tony figurines. So have very consistent cohort behavior. And that is also a key ingredient of our profitability that we sell Tony's figurines. And you can see that on a revenue mixed basis here, the share has increased in the first nine months. of this year. And maybe looking particularly into the third quarter now, what is always important with Tony's and we keep repeating that is always consider baselining effects here. We've seen in 2023 an extreme acceleration of the business by growth 46%, 22% to 23%. So the business has really picked up. And therefore, the baseline comparison here is to be considered. We're very happy, as I said, with the third quarter. I believe it puts us in a good position for the fourth quarter. And you can see it, the dark market is The North American market grows, the rest of the world grows. And what you can see here in particular is that you have growth on the Tony side of the business. This also has something to do with loadings. So, for example, if we enter a retail partner on a larger extent earlier or later, that can, of course, influence the overall product mix. of a quarter and that's how i suggest to read the tony box figures that you do see here on a year-over-year comparison remember we entered some significant wholesale partners in some markets in q3 of last year So overall, very happy with this. And also, if I look at the total amount of Tony boxes being sold in H1 versus in Q3, it's actually a very, very healthy relationship. And therefore, I'm very confident for what is yet to come in Q4. And of course, we also have some visibility on how the business is going. Tobias, back to you.