Boozt AB (publ)

Welcome to the BOOST Q4 2025 report presentation. For the first part of the presentation, participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to CEO Herman Haraldsen and CFO Michael Bjergby. Please go ahead.

Thank you and welcome all to our Q4 2025. We will have the usual agenda for the presentation. I will present the highlights of the quarter and the business update before handing over to Michael for the financials. So next slide, please. Well, 2025 has been a defining and transformative year for Boost. It's no secret that it was a challenging period where we faced a continued tough market environment. However, we have not been idle. We used the year to trim the organization, to clear out excess inventory, and make a deliberate shift in strategy between our two platforms, Boost.com and Boostlet, focusing more on our premium side. And finally, we are also moving to a new headquarters in Copenhagen, and this is a major step that gives us better access to talent and position us in one of the capitals of the Nordics. Looking at the fourth quarter, net revenue grew 4% in constant currency. This is a slight acceleration compared with Q3. Growth was driven entirely by Boost.com, which is already benefiting from a strategic shift towards a more premium in-season sales. On the profitability side, our focus on efficiency continues to pay off, and despite a competitive market and a high promotional intensity, we managed to improve our underlying EBIT margin. This was supported by efficiency gains across the entire value chain, proving that our leaner technology-driven structure is working and driving tangible results. The highlight of the quarter and also the full year is our cash generation. We delivered a record high free cash flow of over one billion SEK in the quarter, supported by our disciplined effort to right-size our inventory. Basically, we have essentially de-risked the balance sheet, leaving us in a very strong position as we enter the new year. Because of this strong cash position, we intend to continue returning capital to the shareholders through a new share buyback program later this spring. We are currently completing the 800 million SAC capital return we promised at our last capital markets day, and we plan to continue distributing excess cash to the shareholders. Looking into 2026, our focus shifts from defense to offense. We are ready to start expanding our market share again as we target a gradual return towards double digit growth levels. We have several growth drivers in place that I will cover in the following slides. So please turn to slide number five. I would like to start my presentation by looking at the journey we've been on so far. Since our launch in 2011, the industry and boost as well has moved through distinct phases. From early expansion and price leadership to the surge in online penetration we saw during the COVID years. The last two years have been a period of deceleration for the industry, marked by a decline in consumer confidence and the stalling of the post-pandemic online growth. On top of this, we in Boost have also had currency headwinds due to the strengthening of the SEC. However, as we enter 2026, we are moving into a new phase that I would like to call rejuvenation. The next wave of growth will be driven by our leadership in service and convenience, and AI is the engine that will drive this, making the customer journey more seamless, faster and more personal than ever before. This push should then be supported by a healthier, not a consumer, as market conditions are likely to improve gradually throughout the year. Next slide, please. To fuel our return to growth in 2026, we have several engines running in parallel. We see small signs of market conditions beginning to turn with fiscal support for the northern consumer and likely some pent-up demand coming through. We are meeting this with a stronger assortment. This means bringing in new premium brands and ramping up our inventory to make sure that we have the right products for the market. We're also pushing forward with personalized shopping using targeted curation and personal prices to make sure that every customer feels that the experience or shopping journey, if you will, is built just for them. Another big milestone is the relaunch of the Club Boost in April It's based on a new concept designed to be much more commercial focused and drive direct sales. Finally, supporting all of this is our AI integration, which is driving both the consumer journey and our overall operational effectiveness. So next slide, please. Technology has always been the engine at boost and we are now moving fast to embed AI into the core of our operations. The projects I'll highlight here are just examples as AI is already a part of our daily operations across the board. Broadly speaking, AI is a primary lever for our efficiency from optimizing the warehouse and forecasting demand to automate routine tasks like inverse handling and product categorization. By letting technology handle the heavy lifting, we are able to operate a much leaner and much more efficient organization. This is also changing our customer shop. We've just gone live with AI power search on Boost.com, delivering much more intuitive and relevant results. Along with visual search and AI generated inspiration, we are making product discovery faster and more personal. This at the same time as our service bots already handle 35% of inquiries, letting us scale without compromising quality. And finally, we have just recently launched a virtual shopping assistant to act as a personal shopper through natural conversation. Looking ahead, we intend to stay at the forefront of this development. We are already in talks with Google and OpenAI about agent e-commerce and how AI agents will shop in the future. Our approach is quite simple. We want AI to help customers find the right products, but we stay disciplined about how the actual buying happens. This ensures that we neither lose the curated field nor the high average order value that makes BOOST unique. So you might say that we are just following these new standards. We are positioning BOOST to lead through them. So now let's move on to the next slide. where we continue to see the department store model prove its worth, especially in a year where fashion demand remains soft. By offering a true department store experience, we create a natural hedge. When one category is muted, others step in to support the overall business. In 2025, 44% of our revenue on Boost.com was generated from categories outside of fashion, and this is up from 42% last year. Our goal remains to move this towards 50% in the near term. The diversification, of course, is not just about risk management. It's also about the bottom line. As we have stated on earlier occasions, multi-category shoppers stay with us longer, return fewer items and spend more per order. Today, 54% of our customers on booth.com shop from more than one category. This is a clear step up from 52% last year, showing that our efforts to encourage cross-category discovery are paying off. Next slide, please. And if we look closer at how our customer shop, the trend is actually quite encouraging. We are seeing robust growth across the board for customers buying into multiple categories. As you can see on the slide, we saw an increase of between 6% and 9% in every group of customers, jumping from two to six different categories. And this is exactly what we want to see. It shows that once we get customers into the Boost ecosystem, they find value across our different departments. Overall, our active customer base on Boost.com stands at 2.8 million, which is a 2% increase over the last 12 months. While we always want to grow faster, the stability in a tough market really shows the strength of the Department Store model in building deep customer loyalty. So with that, I would like to hand over now to Michael and the financial review.

Yes, thank you, Herman, and good morning from my side as well. I will start out by presenting our finances for the quarter, which we characterized by solid profitability and also record free cash flow. Afterwards, I'll go through the details of our outlook for 2026. Please go to slide number 11. So we grew 4% in constant currency which was just slightly above our growth in Q3, but it is important for us that we continue to improve our growth momentum and across the value chain we are laser focused on accelerating growth even further as we move ahead. The incremental growth improvement was to a large extent driven by an increase in activity in the women's fashion which is our largest product category. As previously announced, we have created a sharper distinction between boost and boostless, and we saw the results in September, but it really came to full effect here in Q4. As planned, we have generated solid growth at our more premium side and negative growth on bootstrap. The change of strategy between the two sides was a tough decision because we knew it would impact our growth short-term, but it is the right long-term strategy and will support both growth and margins going forward, but it's also accretive to our relationship with our brands. From a country perspective, the growth was relatively stable across our key markets, But I want to highlight double-digit growth both in boost and boost-left in Norway, which is a market where we see continued great potential and where we are heavily underrepresented. Now please go to the next slide and some comments on our profitability. The profits were strong in Q4 with the improvement of 0.9 percentage points from the EBIT margin if you exclude the effect from last year where there was a positive one-off of customs from Norway. Q1 to Q3 benefit was included in Q4, so in that sense Q4 was distorted, but the year is comparable. The gross margin was under pressure from two external headwinds. One, the continued SEC appreciation, and two, a promotional environment driven by price-sensitive consumption, and especially in the Black Friday period. This is not specific for Boost, but something that has been communicated consistently also by peers on the stock exchange, and particularly related to the Swedish market. The FX impact contributed by a bit more than half of the decline in the gross margin. Even with the negative development on the gross margin, we delivered almost 10% EBIT margin driven by operational efficiencies really across the value chain, and this is even without any material leverage from higher revenue, because net revenue only increased by 1%, but rather it's really true cost decreases across fulfillment, marketing, and administrative costs. It illustrates the strength of our business model and how scalable it is, and overall we delivered a small EBIT improvement for the year, even with some FX hit rate. Now, please move to slide 13, and our cash development for the year. We delivered record-free cash flow in 2025, and the cash conversion was far above 100%, and needless to say, this is not sustainable in the long term. But the year and the cash really reflects that in an inventory business model like ours, where when capital swings far outweigh cash generation from profit, then there will be fluctuations. And fundamentally, it boosts us a very strong cash flow generation, easily above 70% of EBIT over the cycle. 2025 was a year of consolidation and improving the health of our inventory and working capital really was a driver of the fee cash flow. So in rough terms, 50% of the cash flow was driven by normal profit cash, which is sustainable long term, and 50% was driven by working capital improvements. Please go to the next slide. We ended the year with a net cash position above 1 billion SEK, and it should be noted that the year end is the time of the year where working capital requirements are the absolute lowest, so this is not reflective of the excess cash available. But we want to be disciplined in returning excess cash back to shareholders, which is why we are today announcing a new Sharebuy Back program. And with that, we commit to distributing 300 million SEK back to shareholders in 2026, which comprises more than 5% of our market cap based on yesterday's closing. We will continue to generate and optimize cash and return it to shareholders and combined in 2025 and 2026 share buybacks are now expected to amount to around 750 million SEK or 14% of the market cap based on this closing as well. So with this I have finished my financial review for 2025 and we will now look forward and turn to the outlook for 2026. Because as Herman described, we believe that we are going into 2026 in a position of strength. And we have the right quality and quantity of our inventory, the organization is strengthened, and we have lined up an offer of commercial initiatives that can drive growth, not least within AI. As such, we have created an expansive plan, I think a broad plan to deliver this growth acceleration during the year, and we are putting capital behind it, which is why we invest both in inventory, people and commercial initiatives to drive that growth. Our outlook reflects the plan, and while we do not want to focus on what is out of our control, I will, before we jump into the details, consider the implications of the FX development on slide number 16. Firstly, related to the FX, I think it's important to understand why we are sensitive to FX movement. Boost is a highly centralized business and that makes a difference. We don't have subsidiaries across the globe where revenue and cost exposures offset each other. We do everything from Sweden and as such we have our inventory recorded in Swedish Krona, fulfillment cost, administrative cost, all in Swedish Krona and we get revenue in many other currencies. As an example, when we lose revenue from knock depreciations against SEC, then there's around 90% drop through to EBIT, because we have very limited cost in Norway, only a bit of distribution and marketing cost. So in 2025, we lost more than 160 million SEC in revenue from changes in currency, and with a relatively high drop through to EBIT. And with the recent development in December and January, currencies will remain a headwind in 2026, even though our Danish krona exposure will be much lower for March after our headquarter move. As such, you can see the rates here on the slide to the right-hand side, and it's based on yesterday's fixing from the Swedish Riksbanken, and implies more than 2% negative impact on revenue. This can be calculated from the table to the right because Euro and DKK represents, as you can see, almost 50% of revenue and has declined by 4% if you compare the spot to the average of 2025, which means that 4% times 50% implies 2% points on group revenue alone from these two currencies. On top of this comes depreciation of smaller currencies against the SEC. So with the estimated drop-through, then this has an effect of 0.6 percentage points on EBIT margin at the current FX rates in 2026. Now please go to slide number 17. So we plan to accelerate growth and increase margins and thereby growing profit by double-digit amounts, even despite of this currency headwind. We are guiding constant currency growth of 3 to 8% and an adjusted margin of 5.3 to 6.5%, which includes the negative impact from currency. It is important to highlight that we expect growth momentum to accelerate through the year, and we will continue to look at the acceleration, thereby gradually building towards very strong growth in the second half. This is driven by an offensive inventory buying plan, and that's particularly the AB26 buy, but also our commercial initiatives, which gradually will have effect. One of these initiatives is the launch of our Club Boost in April, and the new concept is more commercially incentivizing and designed to drive growth. From a technical perspective, please note that this will temporarily impact reported figures, because there will be deferred revenue recognition related to the program's unused discounts. This may impact timing of revenue, but for the full year the impact of both revenue and margins is expected to be very limited. This brings me to the margin where we implicitly are underlying delivering minimum 20 basis points improvement for the low end of our revenue range and for higher revenue there is significant potential for further operational leverage. It should be noted that the drivers of the margin are different from 2025 because we expect to drive profitability through gross margin while we continue to be more effective also on marketing and fulfillment cost ratios. The admin cost ratio is expected to increase. As we move to Copenhagen, the conversion of salaries from SEC to TKK will increase cost by approximately 10 to 15 million SEK, but this will be fully offset by lower costs related to social charges on the LTIP program. But from an adjusted EBIT perspective, it will have a negative impact because the social charges for LTIP are today booked as an adjustment. So for reported EBIT and from a cash perspective, it will be neutral. We also see a double-digit SEC amount related to our people and organization. This is new commercial initiatives, but it's also increased running costs of our headquarters in Copenhagen compared to our headquarters in København. We consider these important investments for both talent acquisition and our organizational development. CAPEX is expected to amount to 165 to 185 million SEK, which is a bit higher than in 2025. The CAPEX includes 40 million SEK one-off investment that we have already started at the warehouse, which relates to insurance compliance and does not really give any other benefit than improved compliance and the fact that we can have insurance at reasonable prices. On top of this, we have real, I would say, capex investments at the warehouse of 40 to 50 million SEK that support efficiencies and will create savings on the fulfillment line. And this year our capex projects are focused on the return handling, but also the handling of what is classified as dangerous goods, such as some beauty products. And these combined is very, very attractive investments. So with our continued underlying market improvement, we are firmly committed to reach our 10% EBIT margin target in the mid-term. Since we announced our target of 10%, we've had significant FX headwind and we've also seen muted consumer spend. But regardless of the label, our focus is on delivering continued market expanding every single year towards the 10% mark. Please move to my final slide of the day. So looking at cash flow in 2026, then as we also saw in 2025, we can easily deliver cash conversion of around 70%, and this includes even inventory increasing in line with revenue. But 2026 will be impacted by timing factors, which will be a benefit in the following years. Particularly the exit tax and the inventory buildup with the cash outflows in 2026 will be beneficial to the cash flow in 2027 and beyond. Now, with the inventory build-up, we are also able to overperform compared to what we have guided today if there is demand in the market. The one-off moving cost has been recognized on the income statement in 2025, but will have cash effect during 2026, and this relates to double rent, cost of restoration of the old headquarter, and practical handling of the move, etc. Consequently, our free cash flow in 2026 is expected to be relatively moderate. As we continue to drive our margin, we will drive cash generation further, and this will create capital both for investments and for distribution back to shareholders in future years. That concludes my prepared presentation for the day, and I will now turn to Herman for the closing remarks.