Rugvista Group AB (publ)

welcome to the rug vista q3 2025 conference call for the first part of the conference call the 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 the speakers ceo ebba lungerid and cfo joachim tovner please go ahead hi good morning everyone uh welcome to the q3

earnings call. I am Ebba Ljungerud and I'm CEO of the company and I also have Joakim Tuvner who is CFO with me here today. I'd like to start by talking a little bit about the photos or the images in this presentation you will see. These images come from one of our four collections. We have four collections, classic, modern, rustic and Scandinavian. And as I'm sure you can already see in this photo, this is the classic collection. This is our heritage, it's where we come from, with the unique rugs. So we have a lot of unique rugs that you will see here, but also new designs and some big centers that we've had for many, many years. So I hope you like them. The structure is as it always is. I will start with a business update, then Joakim will go through the numbers in a little bit more detail, and then we will finish with a Q&A at the end. If we jump straight into the business update, We are very proud, I have to say, of this quarter. Once again, we had good growth. We landed the top line on almost 167 million, so that's up 15% from last year. And organic growth, that's just north of 18% growth. And by some margin, it's actually our best Q3 ever, so very happy about that. If we look at the order count, we grew in orders. We did see a little bit lower order growth at the end of the quarter. I'll come back to that. But if we look here quarter by quarter, you see that it's more than 19% growth in orders. And at the bottom there, you see the rolling 12, which also continues to grow over time. When we talk about new customers, almost, well, 57,000 new customers compared to 49,000 new customers last year. So that's a 16% growth. And I think here it's worth mentioning that over time we tend to be on around 70% new customers. Q4, where we're at right now, is normally a little bit higher, but over time it's around 30% returning customers and 70% new customers. Looking at the average order value, that was flat year on year, 2,952 SEK. And looking at the development over time, if you take FX into account, it actually grew 3.1%. But you can see here that it's stable quarter over quarter, which I'm very happy about. And September was the strongest month. And coming back to the orders, we see that When AOV grows, the order growth is a little bit lower. So that is a very important balance. And you've heard me talk about it many times before. But we, of course, continue to work on this and it will always be a very important balance for us. Moving over to the profit, improved profitability, and that's even including our moving costs. So gross margin ended up on 63.4%. one percent higher than last year. We think this is a good level and the growth there comes from a lot of different things. We had lower discount rates in the quarter. We have continuous work on the freight costs. And we've also earlier in the year had some price adjustments through the nice price change that we did, which basically means that all currencies end in even numbers rather than just the exchange rate numbers. And looking at the gross margin for the period, January to September, that also ended up on 63.4%. And compared to last year, it's 1.2% higher than last year. Marketing spend, it's almost flat 29.9% versus 30.1%. It's higher than we've seen earlier in the year. And as we pointed out before, it tends to be higher in the fall. And of course, now we're moving into Q4 where the competition is much more than in other quarters. So it does fluctuate quarter to quarter. We see this year that there is a lot of competition already when it comes to the Black Friday. It used to be a day, then a week, then a month, and now it's almost a quarter. So that period is definitely growing over time. Sessions on site increased by 39%. This is partly due to the fact that we are marketing much higher in the funnel, which means that the traffic comes in and the conversion is a little bit lower, but more people come in and get to know our brand and our products. So this is, of course, still a big jump. We are now moving into more like for like comparables because we started with this more visual advertising about a year ago, but we're still growing. So we're very happy about that. And then last but not least for this slide, EBIT ended up on 12 million compared to 9 million last year. So that's a margin of 7.2. And that is including almost 2 million in moving costs for the quarter. So we're happy with this solid result here as well. Looking a bit more on the market climate, we see that customer sentiment continues to fluctuate. If we look here, we have three markets that we follow a bit more closely. You see that Sweden is moving up a little bit while Germany is backing quite a bit and France is stable even down a tiny bit. So for us being in 30 markets, this is of course something that we need to look at, but also balance. And we can't really rely on just the big markets driving our growth. And you saw that in the report and you've seen it before. For us, it really means that we need to optimize the spend and move quickly from one market to another. And it also means that the small markets are also important to us to balance. And just a couple of examples. Q2, Germany grew by 10% and now in Q3 it grew by 17%. And Sweden grew by 16% in Q2 and it grew by 6% in Q3. So it does vary a lot from market to market. And then I also think it's worth mentioning that our organic search continues to grow. We see both strong growth in branded search, which we think is very connected to that we are higher up in the funnel when we market and have much more visual ads. But we actually also see very good growth in non-branded search. And to us, it's a sign that our big efforts in SEO are paying off. And then now we are going into peak or we're actually already in peak. So just a couple of things from last quarter that have been important for this. First of all, the move has been finalized. Total capex of that will land around 45 million. Very, very happy with how that move has progressed. We've done it in a very structured way and we've had very little disturbances and I also think it actually would have been difficult for us to handle peak in our old setup so that's really great. We have a lot of new processes and automations and we will continue to work on that. This will now be continuous improvement. The assortment, the base of what we do, all our beautiful rugs. We have launched around 45 new designs this season. And we've also adapted both on sizes and colors on our most popular big sellers. And this rug that you see here is called Precious. And this is a hand-tufted rug from India that I really like. And we know a lot of customers like it as well. We have finally really kicked off personalization and getting personalized customer journeys. This is a big step for us and we're doing a lot of tests at the moment. This is of course also continuous improvement. For us who more or less always done one size fits all when it comes to marketing, no matter what the country or who the customer is, it is a big shift and it's really a way for us to utilize a new technology to communicate differently with different customers. And then last but of course not least in this slide is that we have stable and high Trustpilot scores, even though the move has happened. And you can see here on this slide that we are continuously on 4.7, rolling 12, which we're very happy about. And this is something we track very diligently as we know that the customer is liking us. It's really the base for everything we do. And with that, I hand over to you Joakim.

Thanks a lot, Ebba. So I'll start with the top line. And as you already mentioned there, the top line grew, net revenue grew by 15.1%. And in local currency, we grew by 18.4%. Looking at the region, we had good growth in all regions, DACH being the best, plus 26%, whereas Germany grew 17%, the Nordics growing 12% almost, and of which Sweden grew 6%. And then in the rest of the world, which is the rest of Europe, basically, we grew by 13%. And as you may recall from quarter two, the two biggest markets there, France and UK, were flat. Now in this quarter, France is plus 23% and UK is flat. But bear in mind then that over the past few years, not the last year, but over the past few years, UK has been a good source of growth for us. So all in all, a good growth in all regions. So moving on to cost ratios in the EBIT margin, the product expenses came down 1%. Eva already mentioned a few reasons, the biggest one being that we had a lower discount rate average over this year compared to prior year, but we also had this nice price increase that we did earlier in the year. Shipping and other selling expenses almost flat. So that sums up then to a gross margin increase of 1% due to the lower product expenses. Other external expenses, the biggest one there is marketing going down from 30.1 to 29.9. So that's a 0.2% decrease versus last year. And the biggest negative variance versus prior year is then the moving cost of 1.8 million, which is 1.1 percentage points of net revenue. Personnel expenses are going down 3.3 percentage points, and that's mainly due to that we had non-recurring cost in last year, but also a bit on the positive side from the economies of scale we get. In other operating expenses, we record the revaluation of assets and liabilities that we carry in foreign currency. And that's the only thing we have in this line. As you can see in prior year, this was an income of 0.5 and this year it's 0.7 cost. So it's a 1.1 difference. You can see at the bottom of the page, we note that there are some rounding differences that may occur. And here is one example of that. Depreciation and amortization. Here we have three major things. We have our lease agreements, we have the depreciation of the tangible assets and we have the amortization of our intangible asset that is our webshop. If we start with the tangible assets, then like Ebba said, we have invested 43 million. We have started depreciating those at the beginning of the quarter. So we almost have a full quarterly charge that we will carry going forward. That is 1.2 million increase, which is equivalent to 0.7%. Also, we have the new lease that we have for Lodgatan, our new office premises that has been added. And at the same time, we have the Limham costs still in here. That's about 1.2 million. We haven't included that in the moving cost. We were operating from that site. But as of 1st of October this year, we don't have that cost. We will not have that cost anymore. So all in all it sums up to an EBIT margin of 7.2 and increase of 1 percentage points. Moving on to inventory. So we have increased inventory by 14 million, which is normal during this period of the year. We build up for the quarter four. If we look to the right, we see the share of the last 12 months of net revenue, where we are at 19.4. It's in the middle of the target span that we have defined. It seems like we have decreased a lot versus prior year. We have, but we feel that we are well stocked up for the quarter four season that we are in. Then on to cash flow. Cash flow from operating activities increased and mainly due to the increased earnings due to the increased EBITDA. You can also see that the working capital decreases less than it did in last year. So in last year, we had more of an inventory build up than we have had this year. At the bottom left, cash flow from investing activities. This is a bit unusual for us as a company. This is the biggest investments that we have done. We have invested 33 in cash going out for the tangible assets and the intangible assets we stopped putting on the balance sheet on the 1st of July last year. So now we expense all those costs in the P&L. So all in all, to the right in the picture, despite having then invested 33 million intangible assets, we end the period with 29 million higher cash balance than the year before. So if I then try to summarize a little bit about good growth in all regions, you spoke about the positive average order value in local currency, it's plus 3%, it's flat in But in local currency, AUV is up 3%. And then on the balance sheet side, despite these investments in tangible assets, so we have an even higher cash balance than Q3 of last year. So we stand with a strong balance sheet. So I hand it back over to you.