Cheffelo AB (publ)

Good morning from a sunny Stockholm. Thank you for your interest in Sheffalo and welcome to this presentation of our first quarter result. My name is Walker Kinman. I'm the CEO of Sheffalo here today together with Erik Bergman, our CFO. I will take a few minutes to give you a short intro on the company and then take you through our prepared remarks on the Q1 development before Erik gives you a run through on the financials. We'll then take your questions, which you can fill in on the form located to the right of the broadcast. All right, so let's start with a little about Shuffalo. Every evening, families across the Nordics face the same question, and that's what's for dinner. Sheffalo solves that daily moment for tens of thousands of households every week, and our ambition is to do it better than anyone else. We've been pioneers in the meal kit category for more than two decades. We run a proven, profitable, dividend-paying business, and we operate trusted local brands in each market. Those are Gotthebert in Norway, Lines Motkasse in Sweden, and Ratnent in Denmark. At the heart of our service is a simple promise, meals that unite families. By removing the stress of planning, shopping, and deciding what to cook, we make it easier to put nutritious, well-balanced, and great-tasting food on the table. With the widest variety of recipes in the meal kit category tailored to different preferences and dietary needs, we keep customers engaged over time. And because this whole experience is powered by our own tech platform and data, we can keep improving it also over time. turning everyday dinners into recurring revenue, strong loyalty, and attractive unit economics for our investors. Our business is built on a demand-driven subscription model for meal kits. Customers choose their recipes in advance, which lets us plan purchasing tightly, keep inventories low, and significantly reduce food waste. One of our key competitive advantages is personalization at scale. We offer the widest recipe selection in our markets with flexible portion sizes from two to six persons and recipes tailored to different needs and preferences. Our goal is to give customers the right selection, not endless scrolling, so they find what works for their household without being overwhelmed by choice. This is enabled by our in-house technology platform and deep data analytics capabilities. We use custom-built advanced algorithms and machine learning models to pre-select and recommend recipes, forecast demand, and plan production. This allows us to run a highly personalized service with efficiency and discipline. Every order is produced individually in our own fulfillment centers using tech-enabled processes and supported by a strong, scalable Nordic supply chain. Together, this creates a business model that's difficult to copy, it's structurally efficient, and it's well-positioned to continue delivering profitable growth. So turning to slide six, let's talk about some of the key figures for the quarter. The year is off to a good start. The net sales in local currency up 13.5%. This growth comes despite Easter school holidays in Norway and Denmark, and also to a lesser extent in Sweden, shifting into the first quarter and affecting year-on-year comparisons. We continue to see strong growth in Norway, and our plan to merge the two brands we operate in that market seems to have delivered an even better result than we had expected. I'll return to this in more detail shortly. In Sweden, we saw our top line return to double-digit growth. We are also very encouraged by the development in Denmark, where we returned to growth in local currency, even though the calendar was not in our favor. The top-line development continues to give us significant leverage in our cost base, further assisted by cost productivity in sales and marketing. Our efforts, which are less visible in our reported figures, such as a deliberate move to attract customers with fewer discounts, have also helped to improve cost efficiency. As a result, we reached a new record EBIT in the first quarter of 35.7 million kroner, an increase of almost 74% compared with the same period last year. Our work with continuous improvement goes well beyond cost efficiency. For a personalized meal kit, a key measure is enough variety in the weekly menu to meet the very broad range of customer taste preferences and dietary needs. In Norway, we have now been operating for a couple of months with an extended menu. This will be rolled out to our other markets during the year. We have also introduced more flexible portion sizes for each recipe, making it easy to adjust a meal for dinner guests or to create extra leftovers for a favorite dish. The preparations for our pilot launch in Finland in the second half of the year are going well, and the entire organization is enthusiastically looking forward to introducing Sheffalo's personalized meal kit concept to Finnish families. Momentum in the second quarter has remained strong. As expected, the calendar timing issues have reversed, and the underlying trend remains positive. Looking at the first half of 2026, we estimate that net sales will grow in the range of 14% to 18%. So let's take a closer look at what we set out to achieve with the brand consolidation in Norway and what we have accomplished on slide seven. We started the year with an ambitious project already underway, consolidating our two Norwegian brands, Gotlevæk and Adams Mokkasse, into a single brand with Gotlevæk remaining in the market. Gotlevæk is the brand in Norway that best reflects our value proposition of meals that bring families together. And it is also where we can best leverage our strengths in personalization and service reliability. After moving our Atoms customers over to the Goat Libret brand, we're now offering an even more personalized experience to both customer groups while removing sales, marketing, and other costs linked to running two brands in the same market. The consolidation has allowed us to strengthen menu variety for all our Norwegian customers, with a menu now expanded to 150 recipes per week and hundreds of unique recipes each month to meet a wide range of taste preferences and dietary needs. As I mentioned, the migration project went better than we had expected. The teams involved were very hard to ensure customers would be receptive to the change and could move over without friction. Thanks to this effort, a large share of our Adams customers in Norway chose to migrate themselves before the final cutoff in March. This led to a very smooth transition and allowed us to reach our business case targets faster than planned with higher than expected customer retention. At a product level, what we're doing in Norway with the broader recipe offering is a blueprint that we will roll out in Sweden and Denmark during the year. Continuing to develop our product and service in existing markets remains key to strengthening our competitiveness and driving profitable growth. Now let's turn to slide eight to look at how things are developing in each market. When looking at the development by market, Again, it's important to remember that the Easter timing effect on the calendar in Q1 this year was larger in both Norway and Denmark and somewhat smaller in Sweden compared with last year. In turn, growth last year was higher in all markets versus the previous year because the same calendar effect went in the opposite direction. Market conditions in Norway have remained favorable. We stopped promoting the Adams brand in late 2025. and shifted fully to Goethe-Werk with a broad set of activities focused on migration and reactivation to that brand. Because the migration could be a disruptive factor, we expected a lower growth rate in Norway, but we still saw almost 17% growth in the quarter in local currency. Norway represents roughly 52% of our consolidated net sales, and momentum remains good going into the second quarter. Net sales growth in Sweden returned to double digits in the first quarter at just over 12%, or roughly in line with last year. Once again, our Swedish business grew faster than the Swedish online grocery index, which was 9.3% for the quarter. Sweden accounts for 37% of our consolidated net sales, and we're seeing a steady positive momentum so far in the second quarter. Our business in Denmark grew by 4.4% in local currency during the quarter, roughly in line with last year's Q1 growth rate. Because the calendar effect weighed more heavily on Denmark than on Sweden, achieving the same growth rate as last year signals a meaningful improvement in underlying growth and a solid early result towards our efforts to return to a clear growth trajectory. Statistics Denmark has changed how it reports data we have historically referenced, and unfortunately, the Danish online grocery index is no longer publicly available. Denmark accounts for roughly 11% of our consolidated net sales, and the trend towards higher volume continues as we approach the midpoint of the second quarter. So far, we have not seen any clear signs that consumer demand is weakening beyond normal seasonal patterns. However, we are closely monitoring consumer sentiments in all our markets. And let's take a look at that briefly on slide nine. We're humbly aware that the current geopolitical situation can create local effects in our markets and influence customer sentiment. As I highlighted in the report, the direct and indirect cost impact is limited from a risk perspective compared with the broader risk if customers become more cautious about their spending. We have good tools to adjust pricing, marketing, and operations so that we can protect our unit economics and stay profitable, even if sentiment weakens. There's a general view that the Scandinavian economies are robust and healthy, with low inflation and labor markets that are neither weak nor overheated. However, consumer sentiment does not always reflect the broader economy, and as a direct-to-consumer e-commerce company, we are very aware that if consumers tighten their wallets, for whatever reason, it can feed directly into our business through changes in purchasing behavior. Right now, consumers are facing a constant flow of disrupting headlines, seeing fuel prices steadily rise at the pump, so it's really no surprise that sentiment surveys are showing a decline. Over the last 18 months, Denmark has laid both Sweden and Norway in consumer sentiment, mainly due to turbulence in the pharmaceutical sector, amplified by shifting relations with the US and tariff uncertainty. The uptick measured at the end of last year disappeared in April against the backdrop of renewed geopolitical instability. Sweden has had roughly two years of generally solid consumer sentiment, but hit a pothole around this time last year when tariff concerns emerged. While the sentiment has mostly been stable since then, the most recent survey showed a clear downturn. Norwegian consumers remain skeptical for much longer than in our other two markets, but have shown steadily increase in optimism over the last three years. Levels in the second half of last year could almost be considered positive. However, the most recent quarterly survey in February also showed the first poll lack in three years. There's generally a clear link between growth in our business and the strength of consumer sentiment. So we're attentive to the shifts we see in the current environment. As mentioned, we have not seen any direct changes in demand for meal kits, and we feel confident we can navigate different market scenarios while maintaining profitability by staying close to our customers and continually improving the value we offer. With that, I'm going to now hand it over to Eric to take us through the financials and summarize the outlook for the coming year.

Okay, thank you, Walker, and good morning, everyone. I'm pleased to report a good start to the year. Net sales in the first quarter reached 375 million SEK, up from 336 million SEK last year. This is a reported net sales growth of 11.4%. The growth, however, was dampened from negative currency effects, as the Swedish krona was relatively stronger to both Norwegian and Danish krona than it was one year ago. So without the impact of the currency effect, the growth was 13.5%. As mentioned, it's also worth noting that the timing of Easter impacts comparability of metrics year over year. This year, part of the Easter fell in the first quarter, while last year it was fully in the second quarter. As part of our customers tend to pause their deliveries during vacation period, this leads to lower volumes during those periods. We don't see easy impact in the underlying growth. Rather, it is a comparability timing between quarters and we expect to see the opposite comparability effect when we move into the second quarter. We don't provide an easy adjusted number, but as we want to give you a fair view of how the underlying business is performing, they have expressed that they expect to see a growth rate of approximately 14 to 18% in the first half. If you continue to look at the first quarter, our key top line measures pointed in the right direction. Active customer increased by 7%. Immigration of all the multi-customer customers was completed towards the end of the quarter, and immigration was successful, with customers moving over smoothly, which meant that the impact on the report number of active customers was limited in the first quarter, despite moving from four to three brands. Average order value increased by 5.9%, which was explained by price adjustments and increasing add-ons in grocery sales and the mix of meal kits, which in average resulted in slightly larger overall baskets. And despite order frequency was flat versus last year, I do consider the development to be positive. This as the year over year comparison is affected by Easter with a large share of customers posting their deliveries during that Easter week. All in all, the year is off to a good start with double digit growth and our top line metrics pointing in the right direction. So let's go on to profitability, starting with our contribution margin. The relative contribution margin for the first quarter at 32.4% was in line with last year. The contribution margin typically varies with the seasonal volumes with higher contribution margin expected in the first, second and fourth quarters. With focus on driving top line and as such improving overall profitability, we have deliberately invested more in food quality and customer experience. This has affected our input good, which increased to 47% of net sales. This was offset by lower fulfillment cost measured as a share of net sales, which benefited from both economists of scale and the continued operational efficiencies. So overall, we managed the contribution margin at the stable level, while we also invested in the product and the customer experience to drive top-line growth. So let's move to next slide, looking at the EBIT. And with the double-digit increase in net sales and the stable contribution margin, we were able to increase the EBIT by almost 74%, resulting in a new Q1 EBIT record. The positive scale effects from higher volumes is why we allow ourselves to invest in the customer experience, which was reflected in a relatively high input goods compared to last year. EPIT was also positively affected by the 2.9 milliseconds lower sales and marketing expense for the quarter compared to last year. The main driver for that reduction is the consolidation of our Norwegian brands by focusing on one brand in Norway, we can run more efficient brand building and a more focused customer acquisition. Sales and marketing expenses amounted to almost 45 million SEK in total, where we in the first quarter focused relatively more on customer acquisition, which gives the first quarter to have a relatively higher marketing spending. All in all, the increase in EBIT reflects the higher volumes, the controlled contribution margin, the more efficient marketing spend, and the continued overall cost discipline. So let's move on to the next slide to have a look at the cash flow. Free cash flow amounts to almost 54 million SEK, which was an increase of 33 million SEK versus last year. High profitability with a bit up 15 million SEK is the main driver of the underlying increase in free cash flow. In addition, Q1 cash flow was, compared to last year, boosted by a higher contribution from networking capital, which was largely explained by timing. And to understand the cash flow in Sheffaloo, it is important to understand the dynamics of networking capital, To simplify, we have two major factors that influence cash flow, accounts receivable and accounts payable. This quarter, it was mainly accounts receivable, so temporary affected cash flow comparison versus last year. The lower deliveries in the last week of March, which was related to Easter, reduced accounts receivable at quarter end, which contributed to the more positive working capital effects this year compared to last year. But let's move on to the next slide, where I want to talk about how our capital flexibility supports our focus on profit growth while returning excess cash to our shareholders. Last week, we held our annual general meeting, and therefore I would like to take a minute to talk about how we think about capital allocation and our approach to capital flexibility. Our approach is quite straightforward. We return excess cash to shareholders while we're keeping up enough flexibility to fund attractive growth opportunities. Last week, Daniel General Meeting approved a total dividend of almost 92 million SEK in total. That equal to all the free cash flow generated during 2025 plus 8 million SEK corresponding to the cash proceeds from the new share issue related to the long-term incentive program also in 2025. And therefore, to be able to return cash to shareholders and remain flexible, we now have two additional tools to support flexibility. First, shareholders approach a 10% equity mandate, which allows the board to move quickly if they identify a growth opportunity. And second, we will implement a 30 million reserve credit facility. And although we don't intend to use that today, it provides a liquidity buffer to support the seasonal swings that we see in our cash flow. We have no immediate plan to use any of these tools today, but they are intended if needed. So this will not impede us looking at growth opportunities. And these tools in combination with our current balance sheet with 60% equity ratio and a negative net debt makes us well positioned for both returning cash to shareholders while maintaining a flexible capital structure. So let's move on to looking forward. The first quarter marked a good start to the year. Looking ahead, we see good momentum going to the second quarter and the first half of 2026. In Norway, we expect growth to remain strong. We expect Norway to continue to lead the group's net sales growth, supported by the successful brand consolidation. In Sweden, we expect continued double-digit growth, and in Denmark, we expect growth to accelerate compared to the recent quarter as our initiatives in the market start to have effect. For the first half of 2026, we expect net sales growth in the range of 14% to 18%, where we expect to see a positive comparison effect in the second quarter from Easter timing. For the full year, we expect contribution margin to land between 30% to 31%. And sales and market expenses are expected to continue to benefit from the consolidation in Norway. With that, I would like to hand back to Walker for a quick summary.

All right. Thanks, Erik. And let's turn to the final slide to summarize, and then we'll open it up for questions. So in summary, we're pleased with how the year has started. Let me leave you with these takeaways from this presentation. We again delivered double digit growth for the quarter, despite Easter calendar effects, supported by more customers, higher loyalty, and increased average order value. Higher revenue led to continued scale benefits with a record Q1 EBIT, which increased by 74% versus last year. We successfully consolidated our brands in Norway under the Gultenberg brand, hitting our business case targets faster than expected and with a higher than expected retention success. We have returned to volume growth in Denmark and we are on track to launch our pilot project in Finland during the second half of the year. We have taken steps to increase capital flexibility while maintaining a practice of distributing the majority of cash generated by the business to shareholders. We have good momentum in the second quarter, which does not appear to be impacted by weaker consumer sentiment, and we expect to deliver between 14% and 18% growth over the first half as Q1 Easter calendar effects unwind. Given the way the year started, we remain very optimistic about Sheffalo's competitiveness and ability to continue to acquire market share in a profitable manner. The team continues to move from win to win, and I want to thank our loyal customers and congratulate our entire team, suppliers, and partners on a successful quarter. This concludes our prepared remarks, and we're ready to answer your questions. Remember, you can use the form located to the right of the broadcast if you haven't done so already. So let's go to the first question, and that comes from Jakob Menon. Congratulations on a stellar quarter. Thank you, Jakob. You state that you expect H1 revenue to grow by 14% to 18%. Can you confirm that this is reported growth and not local currency growth?

Hi, Jacob. Yes, we can confirm that this is intended to be reported growth. However, I cannot foresee the current fluctuation, but if it remains stable, yes, this is intended to be the reported growth.

Great. Next question also from Jakob. Sweden grew strongly in Q1. Have you seen any noteworthy changes in customer activity or behavior due to the lowering of the VAT in the Swedish market from April 1st?

And we haven't seen any large short-term effect. We did adjust the customer price and did it in a transparent and fair way towards the customers. And our net VAT price remained the same. And this is also an effect of reported figures. And when it comes to customer acquisitions, I cannot really see that I've seen any large changes when it comes to VAT. a lot of changes when it comes to the VAT reduction.

Thanks, Eric. And then we have our next question from Jakob as well. And this one is, have you noticed any changes in the competitive landscape during Q1 or the beginning of Q2? As it seems like one of your competitors is pushing more on marketing. I can't really comment too much on how the competitors are acting. I think we operate in a very competitive market, regardless of any single competitor. And I think the most important thing from our side is simply the fact that we're continuously improving and we're building capabilities around our customer acquisition that are actually delivering on demand. So what we're seeing is good productivity in terms of cost efficiency. And as I mentioned also in the remarks, we're very encouraged by proof points that continue to show that it's possible to sell meal kits without large discounts. So improvements in the discounting profile and discounting efficiency is also something that's strengthening and enabling business, which is also contributing to better cohorts. Let's move over to Carl. He has a question here. Europe is running out of jet fuel. Do you think that could have a positive impact for you during the summer as people will travel less? The truth of the matter is that when people don't travel during the summer, they need to eat and they buy more meal kits. And I think one of the effects last year that we saw in Norway was, in fact, a weaker Norwegian crown. My hypothesis, and I don't have any direct proof of it other than our sales figures, is that when consumers chose to not travel as much out of the country, they bought more meal kits. So It could have a positive impact. It's speculative from my side, but we'll definitely take any customer orders that get placed during the summer. We've got a great menu with grill items and other things in the works. Let's move over to Christian. The question is on the 14 to 8% H1 growth guidance, we assume this refers to organic growth. Given the stronger NOC SEC since the start of the year reported SEC growth should come in above that range. Is that the right way to think about it? And can you give any directional view on reported growth for H1?

So the 14% to 18% guidance, it's intended to be for the reported growth. And then when it comes to currency, yes, we do see a stronger NOC versus SEC today. But that's something to speculate around. The intention here was that it's reported.

All right. Thank you. And the next question from Andreas von Hedenberg. Good morning, Andreas. What is the ambition and the target setting with regards to the business in Denmark under the coming year and for the next three years? Is the business in Denmark profitable? So I think one thing, first of all, to bear in mind, because of the way we're structured and because of the scale that we have in the business, Denmark is also carrying costs related to the full group, related to everything from infrastructure, technology, HR. admin, et cetera. So when we look at Denmark as a standalone case, I think the ambition is quite clear. We wish to be bigger. We want to have more market share and have a bigger position in the market. And that's the target and that's the ambition we're setting there. I think the potential in Denmark is significant simply because the market itself is the largest market we operate in. It is also a very competitive market with a lot of competitors. So We're working methodically and very definitively towards changing the position in the Danish market. Let's move back to Jakob. The question is, the possibility to adjust portion sizes per recipe is, of course, driving a better product experience, but do you also see it as a positive driver of average order value, or can it have a negative effect on average order value if portion sizes are reduced? What does your data indicate? So I think if you look at what we're trying to do, this is about personalization. So to the extent that even we have acknowledged a long time ago and we very consciously moved the business to a higher degree of personalization, we're doing it with the thought in mind that if customers get what they want, they'll stay longer. One of those pain points that customers have is that not every meal during a week looks exactly the same. How easy is it to adjust the sizes? Or if you buy a meal kit, do you have to run out and complement it with other things? So what we're giving customers the possibility to do is to portion up. Whether this will increase average order value or not isn't the point of this type of product feature. What we're trying to do is make sure that customers get what they need. And because of that and solving their dinner, then they'll be with us a lot longer. Let's move back to Christian and his question now is, you mentioned that the brand consolidation in Norway has already led to marketing efficiency gains. Can you expand a bit on what has been done so far and what we should expect going forward in terms of scale benefits from the consolidation? So, yeah, there's some things here that are pretty straightforward, which is that if you have a brand and you're operating a brand in the market, you've got a baseline of costs that you simply need to maintain because there's two brands. So this is the marketing efficiency side of things. putting two brands and pushing two brands in the market, each brand needs its own messaging, each brand needs its own media, each brand, et cetera. I think you get the point. I think one of the challenges that we've always had is that if we're pushing two brands in the market, we don't want those brands to be pushing at the same time and competing directly against each other, both with the value propositions, but also with timing and messaging. So we're able to do quite a bit more when we're very much focused on one brand. This is translating into reduced production costs. It's translating into volume purchasing scale advantages. It translates across the board in terms of of being able to rest at times and not have any activity in the market. So good marketing efficiency coming from operating only one brand in the market. And of course, it's not just marketing efficiency. It also translates into the operating environment as well and what we can do at a product level in the Norwegian market. Let's move back to Christian's question on Denmark returned to 4.4% local currency growth in Q1 despite the Easter drag. So what changed compared with weakness seen throughout most of 2025? Is it better customer acquisition, lower churn, mix, or something else? And what does the active customer trend look like in Denmark specifically? So I think I've mentioned before on these presentations that one of the very clear leading indicators that I have and I've been looking at on a daily basis is where does our sort of active subscriber numbers look? And when I see... what i see in denmark and right now for us is that we're we're moving back to sort of this active subscriber growth that's always an early indicator for me that the you know the volume is going to follow one way or another over time we definitely have seen higher acquisition rates in denmark we've changed how we're we're doing the marketing there's been a lot of work um with uh marketing and mixed modeling and other types of efficiencies where we have spent more on media this year leading to a direct effect in terms of customer acquisition. So I think as we mentioned in the remarks, just the fact that it's the same growth as last year, once we start to factor in Easter drag this year and Easter boost last year, we're seeing a meaningful change in the trend. Very good. And let's keep going with Christian. One more question here with input goods as a share of net sales increased by 70 basis points year-over-year to 47%, which you describe as a deliberate investment in food quality. What does that mean in practice? Is it better ingredients, sourcing, larger portions, or is it something else? And should we see 47% as the new baseline, or could this continue to move higher through 2026?

So we are always working with improving the ingredient sourcing and look at the Nordic synergies. When it comes to the increased input goods, net sales, part of that is due to our Of course, when it comes to having convenient products with more of the pre-made ingredients, which then is a bit more expensive, it's also about being able to include a higher cost of protein without having plus prices. To mention two examples of what's behind that. We don't guide all the input goods as a share of net sales alone. What we have said is that we expect to see the full year contribution margin to be between 30 to 31%.

Thanks, Erik. And the last question that we have received, and feel free to post any more questions if you have them, is again from Andreas. And the question is what turnover is needed in Finland to reach a operating result, which is break even. I think if you take the reference to where we're at in our Danish business right now, which is operating, at breakeven, maybe slightly under breakeven. I think you get an indication here of probably around 150 million SEC turnover. We're talking, what would that be? Roughly 14, 13, 14 million euros to hit breakeven in the Finnish market. I think... And obviously, when we talk about Finland, we're talking about what we see also as an investment curve here. So I think the potential to open up the Finnish market, introduce Finns to a great product, and also grow the meal kit category, there's significant opportunity there. The category is quite small to begin with. So I think there's a long game here when it comes to Finland, but certainly we see in our business model, the level of 150 million probably works. Good. This concludes all the questions we have. And as we don't have any more, I would like to thank you once again for joining us for this first quarter earnings call for Shefflo. We look forward to seeing you again in August when we share our second quarter results. Have a great day.