Westwing Group Se

Good morning everyone and thank you for joining us for our earnings call on the first quarter of 2026. My name is Andreas Hörning, I'm the CEO of West Wing. I'm hosting the call together with my colleague Sebastian Westrich, our CFO. Looking at today's agenda, I will begin by providing key updates on our business for Q1, after which Sebastian will share the details of West Wing's financial performance, and how the current macroeconomic environment is impacting our business. After our investment highlights, we will be happy to take your questions. Let's take a look at the current state of West Wing. Overall in Q1, we saw strong top-line growth. Our revenue increased by 11% year-over-year, €220 million. This was driven by two main factors. First, we benefited from a highly successful mega sales event in January, which we already mentioned in the last call. Second, we saw continued top line contributions from our expansion initiatives. In Q1 of last year, we operated in only four new markets and ran four offline stores. Since then, we expanded to eight additional markets and added three more stores. It is great to see that these expansion efforts are really delivering a strong top line impact even against rather weak consumer sentiment. On bottom line, we increased adjusted EBITDA to 9.6 million euros and an adjusted EBITDA margin of 8.0%. This represents an improvement of half a million euros compared to the same period last year. While we saw strong top line growth, the increase in adjusted EBITDA remained limited due to the investments into expansion. Free cash flow was negative at minus 2.0 million euros, which represented an increase of nearly 6.9 million euros year over year. Our net working capital remained negative at minus 5.6 million euros at the end of Q1, which also showed an improvement from the minus 2.1 million euros at the end of Q1 last year. We ended the quarter with 84 million euros in net cash which includes 3 million euros spent on share buybacks during Q1. Overall, that's 27 million euros higher than at the end of Q1 last year, reflecting the continued improvement in profitability. This once again underscores the success of our business transformation as outlined in our previous earnings call. The overall development is in line with our guidance that we published in March and which we confirmed today. Beyond financials, we again made good progress on our three-step plan. Most recently, in February, we successfully launched in the United Kingdom, where we're already seeing early customer traction and demand. As always, let's have a look at our three-step value creation plan, which we initiated in 2022. We're happy to report that we are well on track with the execution of the third phase, scaling with operating leverage. As we continue to grow both in our existing markets through our store portfolio and in our new markets through recent country launches, we remain focused on maintaining cost discipline. This way we can continue to invest throughout the cycle while sustaining a high level of profitability. Overall, we continue to make strong progress towards unlocking West Wing's full potential as we advance through this phase. I now hand over to Sebastian for details on our financial performance.

Thank you, Andreas, and good morning, everyone. I'm Sebastian Westreich, the CFO of West Wing. Let me start with details on our top line. Our GMV increased by 17%, 135 million euros, and revenue increased by 11% year-over-year to 120 million euros. In addition, we see a positive development in the West Wing collection. Its share of total GMV increased by another percentage point to 63%. As Andreas highlighted in the business update, Q1 top-line performance was supported by a successful January sales event, which we mentioned already in our last earnings call. Both the DAG and international segment benefited from this. While the dust segment achieved a 3% year-over-year growth for the quarter, the international segment recorded a remarkable revenue increase of 22% year-over-year due to the contributions from the newly launched countries. While we were pleased with the Q1 performance, the macro environment remains uncertain, and we continue to focus on developing our business through disciplined execution of our growth initiatives Continued investments and attractive expansion opportunities and a clear focus on long-term value creation. Let me continue with an overview of our P&L development in the first quarter of 2026. I'm pleased to share that we delivered an adjusted EBITDA margin only slightly below previous year and an adjusted EBIT margin same as last year. Now let's go through the P&L line by line. In Q1 2026, gross margin increased by 1.3 percentage points year-over-year to 52.9%. This was supported by lower inventory depreciation effects compared to Q1 2025, which we don't expect to see in the upcoming quarters. In addition, our gross margin benefited from better purchasing prices and a slight increase in the share of West Wing's collection. The fulfillment ratio improved by 0.5 percentage points year-over-year to minus 18.8%. This was mainly driven by increased warehouse efficiencies from scale effects. However, this improvement was partially offset by higher freight costs as rising fuel prices increased line haul and last mile carrier rates in March. Overall, contribution margin increased by 1.9 percentage points to 34.1%. Moving further down the P&L, our marketing ratio increased by 1.4 percentage points year-over-year to minus 13.2%. This reflects planned marketing investments in expansion countries to support growth and market penetration. Our G&A ratio, excluding other results, improved by 0.4 percentage points year-over-year to minus 15.7%, driven by scale effects and continued disciplined cost management, more than offsetting the higher cost base associated with our expanded store portfolio. Other result ratio decreased by 0.9 percentage points year-over-year to minus 0.3%, mainly due to timing and one-off effects related to lower holiday and IFRS 9 provisions in the previous year. Adjusted EBIT margin came in at 4.9% unchanged year-over-year. DNA ratio improved by 3.4 percentage points year-over-year to 3.1%, mainly due to reduced DNA of internally developed technology assets that we already discussed in the previous course. Overall, adjusted EBITDA margin was at 8% in Q1 2026, with 8.5% in the previous year, as the improvement in contribution margin was reinvested into planned expansion and shifts, and as we had less tailwind from other results. The adjustments made in Q1 were minor, except for the higher fair value of stock option programs, which amounted to about 5 million euros. An overview of these adjustments, as well as the unadjusted consolidated income statements, can be found in the appendix to this presentation and in our Q1 financial report. Let's move on to profitability on segment levels. As expected, adjusted EBITDA margins developed differently across the two segments in Q1. In the DAS segment, adjusted EBITDA margin decreased by 1.1 percentage points year-over-year to 8.3%. This was mainly driven by the ramp up of new stores. In the international segment, adjusted EBITDA margin improved by 0.2 percentage points year-over-year, 7.6%, mainly driven by the successful ramp-up of our expansion countries. Let us now take a look at our net working capital. At the end of G1 2026, net working capital remained negative at minus 6 million euros, improving by roughly 3 million euros compared to the previous year. The improvements reflects disciplined network and capital management and was supported by higher customer prepayments in line with GMV growth, as well as better inventory management. On the next slide, you see CapEx and CapEx ratio for Q1 2026 compared to Q1 2025. CapEx remained at a health level of around 2 million euros, corresponding to a CapEx ratio of 2% of revenue. Investments in intangible assets increased by 2.8 million euros year over year, This was mainly driven by implementation costs related to the transition from legacy systems to SaaS-based order and warehouse management systems. We plan to complete the implementation by Q3 this year. At the same time, investments into property, plant and equipment decreased by 0.5 million euros due to higher previous year spend for store openings. Overall, CapEx remained probably stable year over year and reflects our continued CapEx light business model. Let us now take a look at our net cash position. We are pleased to report a strong net cash balance sheet position of 84 million euros at the end of March 2026. Free cash flow was at minus 2 million euros in Q1 2026 in line with normal seasonal patterns and significantly better than last year's Q1. Lease payments amounted to 3 million euros, leading to free cash flow after lease payments of minus 5 million euros. Other financing cash flow amounted to minus 3 million euros, mainly driven by the purchase of treasury shares. Overall, our balance sheet remains strong with no debt other than IFRS 16 lease obligations and IFRS 2 liabilities from cash settled stock option programs. With 84 million euros of net cash at the end of March, a Quebec slide business model and a completed turnaround, disciplined capital allocation remains a key priority. Our capital allocation continues to be guided by five principles. First, we maintain a strong balance sheet to navigate a volatile macro environment and preserve strategic flexibility. Second, we invest selectively in high return opportunities. Third, we actively reduce dilution from outstanding stock option programs. In the latest exercise window outstanding stock options were further reduced by more than 500,000 shares with very low strike prices corresponding to a reduction of about 15%. These exercises will lead to a cash out in Q2 of around 9 million euros. Fourth, we retain an appropriate level of treasury shares to hedge dilution and cash risk from remaining stock option programs. We return excess capital to shareholders through share buybacks and earnings per share accretive share cancellations. Since the start of the 2026 share buyback program, we have brought back 262,000 shares representing 1.3% of share capital with an investment of 4 million euros as of and including April 30th. Overall, this demonstrates our continued progress in actively managing dilution and returning capital to shareholders while maintaining financial flexibility for attractive growth opportunities. The next slide provides an update on how the conflict in the Middle East impacts our business, as well as further risks connected to it. While the initial impact on our business in Q1 remained limited, we continue to monitor the situation closely across several dimensions and expect to see more negative impacts, especially on our contribution margin in the upcoming months. From a top-line perspective, we are seeing a noticeable deterioration in consumer sentiment across Europe, this weighing on average order value and creating negative effects on unit economics. If consumer confidence remains weak, we expect these trends to persist or potentially intensify. On the cost side, some logistics carriers have already introduced surcharges due to higher fuel prices, and we expect further adjustments across the industry. In addition, several product suppliers have indicated rising raw material and production costs. If oil prices remain elevated, we expect broader inflationary pressure on shipping and sourcing costs, which would negatively affect our contribution margin. We are also monitoring potential second-order effects, including energy-related production constraints in Asia and possible disruptions to global freight flows. At this stage, we only see limited constraints at a small number of suppliers and no significant disruptions to trade, but the situation could deteriorate if restrictions become more widespread. Overall, these risks remain broadly in line with the assumptions we outlined during our full-year 2025 earnings call. While the scope for short-term mitigation measures is limited, our business model provides a degree of resilience. This includes a diversified supplier base and a significant share of fixed container rates, which help to partially mitigate cost volatility. In addition, our strong margin profile and healthy balance sheet position us well to navigate the current uncertainties. Turning now to our out log with some comments on current trading. We confirm our full year 2026 guidance, which was shared in our last earnings call, for revenue of €470 million to €495 million and adjusted EBITDA of €36 million to €48 million. The guidance reflects, to a certain extent, top-line and margin risk related to the Middle East conflict, as well as upside potential from a stronger-than-expected country expansion and a fast recovery in consumer sentiment reflected in the upper end of our guidance. Let me also share some comments on current trading. Q2 is showing top line trends similar to Q1 so far, but at a slightly lower magnitude, with a successful sales event early in the quarter, followed by an expected normalization. At the same time, our expansion initiatives continue to contribute positively to top line development. As highlighted in previous polls, comparables will become more demanding in the second half of 2026. In the first half of 2025, Top line performance was still impacted by the transition to a more global, premium and curated assortment, while contributions from expansion initiatives remained limited. From Q3 onwards, these headwinds started to ease and country expansion began contributing more meaningfully to growth. In addition, Q4 2025 benefited from a particularly strong Black Week performance. As a result, we expect tougher year-over-year comparisons in the second half of 2026. Overall, we are well on track to deliver on our guidance for both revenue and profitability. We remain focused on executing our three-step value creation plan with a clear objective of further improving profitability and cash flow while unlocking West Wing's full value potential. And with that, I hand over to Andreas to conclude the presentation with our investment highlights.

Thank you, Sebastian. Let me briefly recap our investment highlights first. We have a unique, relevant customer value proposition through the specific assortment and the way we serve our customers. Second, the market potential is huge in our existing geographies as well as beyond. Third, we are developing the super brand in design with high loyalty and true potential to grow further. Fourth, we have high and increasing margins as well as operating leverage while we scale. Fifth, we have a great balance sheet with a strong cash position and no debt. strong networking capital and low capex. All of this will lead us in the midterm to 10% plus adjusted EBITDA with a continued strong cash conversion. This also allows us to continue investing through the cycle, even in the presence of temporary headwinds from the ongoing conflict in the Middle East. Sebastian and I are now happy to take your questions.