Thank you for standing by. Welcome to the Adore Beauty Group Limited first half FY23 results conference call. All participants are in listen only mode. There will be a presentation followed by a question and answer session. If you'd like to ask a question via the phones, you'll need to press the star key followed by 1 on your telephone keypad. If you would like to ask a question via webcast, please enter it into the ask a question box and click Submit. I would now like to hand the conference over to Tamalin Morton, CEO. Please go ahead. Thank you. Good morning, everyone. I'm Tamalin Morton, CEO of Adore Beauty Group. Having joined last month, I'm excited to be part of a company that plays a key role in the daily lives and routines of our customers. While I haven't met most of you in person yet, thank you for joining us this morning to discuss Adore Beauty's results for the first half of FY23. Here with me today is our CFO, Stephanie Carroll. Today's call will reference slides from the investor presentation uploaded to the ASX earlier. I'll begin by providing a brief business update before handing over to Stephanie to go through the half year numbers and balance sheets. I'll then take you through how we're progressing with our strategic priorities before finishing with some comments on Adore's outlook. We will welcome questions at the end of the presentation. Adore Beauty's half one FY23 results reflected the volatility in the market as we cycled two consecutive periods of significant lockdown growth. Revenue of AUD 93.6 million was down 17% over the prior corresponding period when many of our customers were experiencing lockdown. It's important to note that our revenue has grown at a CAGR of 22% over the past 3 years. Active customers of 801,000 declined 9% from the same period last year, reflecting the cycling of large volumes of new customers. Our returning customer numbers are up 10% over the prior period to 481,000, with this number up 40% on a 3-year CAGR. Gross profit margin was down 0.5 percentage points to 32.6%. Stephanie will provide more detail on this shortly. Reported EBITDA of AUD 406,000 reflects lower operating leverage, cost inflation and investment in strategic priorities. Adore Beauty is generating free cash flow with a strong balance sheet of AUD 30.1 million in cash. Moving to slide two. Before we dive into the detail, it's useful to provide some context to our half year performance. As I mentioned earlier, we were cycling two lockdown impacted periods of significant growth, making comparisons difficult. Our revenue has increased 80% on half one FY2020, highlighting the growth in our business. In this post-lockdown environment, we're seeing some consumers returning to bricks and mortar stores. This is impacting many e-commerce businesses. Given the significant growth over the past few years, this current shift to in-store aligns with Frost & Sullivan's 2022 market data forecasting subdued online market growth for calendar years 2022 and 2023. Importantly, online market growth is expected to ramp back up in the longer term. Our operations are also being impacted by inflationary cost pressures across freight, marketing, employee and other costs. We are implementing cost optimization and margin improvement measures to address this. That said, we were pleased with some of the achievements in the half. This included a record four-day cyber sales event in November, which was achieved despite some of the headwinds we experienced. Also, brand awareness in our target market grew four percentage points to 63%. Finally, our capital efficient business model generated free cash flow of AUD 0.3 million. Turning now to active customers on slide 3. We now have a record 481,000 returning customers. These loyal customers spend more on the platform than new customers. A higher proportion of returning customers is driving improvements in key customer metrics, with annual revenue per active customer up AUD 1 over the prior period to AUD 225. The next slide shows our revenue breakdown by new and returning customers. Revenue in half 1 FY23 was underpinned by our valuable returning customers, who contributed 78% to all revenue. This is up from 71% in the prior period and 64% in half 1 FY21. The graph on the right shows revenue contribution from our returning customers has grown at an impressive annual growth rate of 30% since half 1 FY20. I'll now hand over to our CFO, Stephanie Carroll, who will take you through our financial performance. Thanks, Tamalin. Good morning, everyone. As Tamalin has outlined, Adore Beauty's half year results reflects the volatility in year-on-year comparisons as both half one FY22 and half one FY21 were impacted by COVID lockdowns. These three graphs show the performance of the company prior to lockdowns, during lockdowns, and now in the post-lockdown environment. As you can see, Adore Beauty's post-lockdown performance is significantly higher than pre-COVID levels and we are now growing off an elevated base. Revenue of AUD 93.6 million declined 17% compared to the prior period. Over the last three years, Adore Beauty has grown revenue at a compound annual growth rate of 22%. Gross profit margin of 32.6% was down 0.5 percentage points on the prior year due to cost inflation increase and increased promotional discounting. Margin impacts were offset by some rebates falling earlier this year. Reported EBITDA of AUD 406,000 and EBITDA margin of 0.4% includes a significant one-off benefit related to the forfeiture of CEO options. Adjusted EBITDA of a loss of AUD 493K and EBITDA margin of -0.5% reflects lower operating leverage and reinvestment in strategic initiatives. Slide 7 shows our profit and loss statement for half one FY23 compared to the three corresponding periods. Revenue of AUD 93.6 million was supported by a record four-day Cyber trading period and a record number of returning customers. These high-value customers spend more on the platform and do so more frequently, which is underpinning growth in average order values and annual revenue per active customer. Average order value increased 2% from the PCP to AUD 109.02, while average order frequency remained stable at 2.1 orders per customer annually. Moving down the P&L, gross profit margin declined to 32.6% for the reasons mentioned earlier. Marketing as a percentage of sales increased 1 percentage point over the prior year to 15%, impacted by higher customer acquisition costs. Moving now to our balance sheet on slide 8. Adore Beauty is capital efficient, generating free cash flow of AUD 322,000 during the half. We have a strong closing cash balance of AUD 30.1 million and remain debt-free. Disciplined stock management saw inventory levels decline 15% on the prior year. This was achieved despite half one typically being a higher inventory period to account for supplier closures. Our strong balance sheet provides flexibility to pursue growth opportunities such as scaling our own brand portfolio. I'll be happy to take questions at the end of the presentation. For now, I'll hand back to you, Tamalin. Thanks, Stephanie. Now turning to slide 10. Adore Beauty is focused on beauty done better. We provide our customers with an authentic and relatable beauty shopping experience that focuses on high quality products, a wide range, value, and convenience. Our community-minded approach to beauty and personal care improves accessibility to the category. We are delivering on this mission by progressing our key initiatives. These are designed to drive improvements in customer metrics and support sustainable long-term growth. They enable us to attract and retain loyal, high-value customers to drive top-line growth while expanding margins. Our loyalty program and mobile app, which support customer retention and lifetime value, are gaining momentum, now contributing 63% and 18% of total revenue respectively. Adore Beauty's content-led owned marketing channels and community are boosting brand awareness, up 4 percentage points to 63% in our core 25-45 demographic. Our content supports new customer acquisition, brand awareness, and cost-effective retargeting of existing customers. We onboarded 13 new brands during the period and continue to see strong growth in adjacent product categories. Adore Beauty's extensive product offering drives customer acquisition and increases share of wallet. We also expanded our own brand portfolio, launching new sunscreens under a second owned brand, AB LAB. We're receiving positive customer feedback on the skincare lead SPF products. Owned brands diversify our revenue profile and will be instrumental in expanding our margins over time. Moving now to our loyalty program on slide 11. As I mentioned, our Adore Society members contributed 63% of all revenue in H1 FY23. This community of engaged customers have a higher or average order value and lifetime value than our non-loyalty members. The loyalty program plays an important role in supporting retention and lifetime value with these engaged customers. Aggregate calendar year 2022 customer retention of 54.9% was down 1.3 percentage points on the PCP, reflecting the significant volume of new customers acquired during lockdown. We typically see our lowest retention rates in the first year of acquiring a customer at around 35%. From year 2 onwards, our customer retention rates are higher. The graph on the right shows our lifetime value to customer acquisition cost ratio, which measures the effectiveness of our marketing. For the calendar year 2018-2022 cohorts, the average customer acquisition cost is recovered in just over a year, while the lifetime value continues to grow over time. By year 5, customer lifetime value is 6.6x the acquisition cost. Turning to slide 12. Our mobile app is continuing to gain traction, with revenue contribution doubling from the prior corresponding period to 18% for the first half of FY23. The graph at the bottom left shows mobile app revenue growth on a quarterly basis. Encouragingly, the app continues to deliver higher levels of conversion and order value even as our user base has grown to more than 250,000 downloads. Average order value on the app is 16% higher than our mobile web, while average order frequency is up 24%, and our customers are loving it. Currently rated 4.8 over 5 from almost 10,000 reviews. Our app is another content-led owned channel designed to engage, retain, and grow the lifetime value of our customers. It enables us to build an ongoing relationship with our existing customers so that we can add value to their daily lives, not just when they're shopping. Adore Beauty's content is an authentic and entertaining voice on beauty and personal care with a loyal and highly engaged community. During the half year, our content-driven impressions increased 15%, which cost effectively drives traffic to our owned marketing channels. These include multiple podcasts, blogs, and follower communities across Instagram, YouTube, TikTok, and Facebook. Engagement with our content is compelling, with our eight podcasts now downloaded a combined 5.1 million times. Our digital marketing capability and content ecosystem is also increasingly important to our brand partners. The next slide highlights our extensive brand and product offering. We continue to refine our range to meet evolving customer needs. During the half, we onboarded 13 new brands, which you can see on the screen. These include the internationally renowned Dior and Huda Beauty, which support our conversations with other luxury brands. Pleasingly, since October, these 13 brands have already grown to account for 1.8% of revenue. We're also seeing growth in our adjacent product categories, with fragrance now accounting for 5.3% of total revenue, while K-beauty represents 3.2%. Moving to our own brands on slide 15. Adore Beauty continues to grow its own brand portfolio, launching two skincare led sunscreens under our new brand, AB LAB, in October. AB LAB leverages the Adore Beauty brand with its first product developed in response to feedback from our loyalty members. Our first own brand, Viviology, continues to receive positive customer feedback. We are expanding our wholesale distribution for this brand through salons and professional clinics. We've also expanded our Adore Beauty branded range of accessories, which include makeup brushes and the makeup cases that you can see in the top right-hand corner. These are continuing to perform very well. Now to the market opportunity and outlook. While many of you will have seen slide 17 before, it highlights our significant long-term growth opportunity. We operate in Australia's AUD 11.8 billion beauty and personal care market, which according to Frost & Sullivan is expected to grow at a CAGR of 4.3% to 2026. We estimate that in this market, Adore Beauty is the market leader of the AUD 1.5 billion online segment, which is forecast to grow faster than the broader category to 2026. As I mentioned earlier, this market growth is not expected to be linear, with subdued online market growth forecast for the 2023 calendar year as the market ingests the accelerated growth of the past two years. Despite more subdued online market growth in the short term, Adore Beauty has a long runway, and we remain optimistic about Adore Beauty's growth opportunity. The graph on the right shows online sales in Australia are still years behind more mature markets such as the U.K. and the USA, which were forecast to reach 40.5% and 32.8% respectively by the end of 2022. This will be supported by new digitally native millennials and Gen Z consumers entering the market. As the Australian market matures, as the incumbent, we are well placed to grow customers, revenue and margin. Lastly, historically, beauty has been a resilient and attractive category even in times of economic hardship. The graph in the middle shows this resilience, with the category demonstrating a strong track record of long-term growth through the macroeconomic cycle. Beauty products, particularly skin and hair care, where we index highly, are often used as part of a daily routine, which many consider essential and are frequently repurchased. Turning to slide 18. Adore Beauty's long-term strategy remains focused on driving top-line revenue growth from returning customers, cost effectively acquiring new customers, growing our range, and building our own brand portfolio to expand margins. Our investment in strategic initiatives will prioritize those that accelerate revenue and margin growth. As part of my hundred-day review of the business, we are also exploring additional strategic opportunities. We are scaling our mobile app and loyalty program to grow retention and lifetime value. Improved user experience, site speed, and data-driven personalization will also continue to be a focus as we enhance our online transactional experience. Our content and expanding owned media channels enable us to increase brand awareness, acquire new customers, and cost effectively retain our returning customers. They also play an important role in building our brand co-funding opportunities. Adore Beauty's exceptional product offering will continue to grow, increasing share in the core categories of skincare, hair care, and makeup. We're also scaling adjacent product categories such as fragrance, sex, men, and wellness. Our broad product offering supports new customer growth and increases share of wallet. Finally, we're growing our product offering under our own brand portfolio. Our own brands will expand margins over time. We're also increasing our footprint in New Zealand, which remains under-penetrated. Turning to slide 19. We remain focused on increasing long-term profitability. The key pillars of margin expansion are revenue growth, improved gross profit margin, and reduced costs. Increased scale, new products, initiatives to improve average order values and frequency, and retention of returning customers will support top line revenue growth and deliver operating leverage. Longer term, we will continue to evaluate opportunities to drive further revenue growth through M&A. Gross margin improvements will come from our margin-accretive own brands, partner support, and adjacency expansion. Finally, a new cost optimization program will reduce our expenses while our growing owned media channels, loyalty program, and brand funding will enhance our marketing efficiency, one of our key input lines. Turning to outlook now on slide 20. Trading conditions remain challenging with high levels of inflation, subdued consumer sentiment, and a current shift to bricks and mortar retail. While Adore Beauty has now finished cycling COVID lockdown periods, January 2022 did produce some lockdown-like conditions given Omicron infection and mandated isolation across the community. It also featured additional promotional activity. This has made growth comparisons volatile for the first seven weeks of Half 2, with revenue down this year 7.8% on PCP. However, sales have improved through February and are up 3.7% on the PCP. Given the tougher than expected trading conditions, we no longer expect to see double-digit revenue growth this half, with Half 2 FY23 likely to be flat for the PCP as the company focuses on margin and remaining profitable. Adore Beauty reaffirms it expects to remain EBITDA profitable on a full year basis before returning to a 2%-4% EBITDA margin in FY24. We have several cost optimization and margin improvement initiatives being developed across the business to support these targets. Longer term strategic initiatives, including own brands and marketing channels and scale benefits, are expected to increase operating leverage and deliver EBITDA margin expansion. Thank you for your time today. Before I hand you back to the operator for questions, I'd like to acknowledge the hard work and the dedication of the entire Adore Beauty team. The company's incredible culture, passion, and innovation mindset were key attractions for me in joining Adore Beauty. Stephanie and I will now take questions. Thank you. If you'd like to ask a question via the phone, you'll need to press the star key followed by the number one on your telephone keypad. If you'd like to ask a question via the webcast, please type your question into the ask a question box. Your first question comes from Apoorv Sehgal from UBS. Please go ahead. Good morning, Pamela and Steph. A few questions from me, please. Just firstly, the difference between January and February trading, is it fair to say that February sales in dollar terms were well ahead of January sales? Yes. In terms... Do you want to cover that one, Steph, please? I think, I think if we talk about January, I don't, you know, in terms of the comparative period, you know, we had last year, we had Omicron, you know, high levels of Omicron, and mandatory isolation. The promotional calendar isn't like for like in January. You know, there was more travel this year versus last year. That's just the context in terms of January. Pleasingly, we are seeing February, you know, seeing that growth in February of 3.7%. Okay. Just a question on the guidance for positive full year EBITDA, is that using reported EBITDA, which I think was AUD 0.4 million in the first half? Is that using the underlying operating number, which excludes the SBP expense benefit? I think that was minus AUD 0.5 in the first half. Just which one of those two are we using? It's on the reported EBITDA. Reported EBITDA. Okay, perfect. By extension, I guess if I'm thinking about second half 2023 EBITDA, obviously if it's positive for the full year, that most likely is positive for the second half. I'd expect flat revenues, right? That's about AUD 87 million. If I just assume gross margins hold steady, getting about AUD 28 million of GP. That would imply that operating costs in the second half would be kind of a few million dollars below the first half of 2023, which was about AUD 30 million or so. Yeah. Can you just talk through where that cost subtraction happens half and half? I guess like marketing and other costs a likely variable, but I'm just thinking, are there any, like, staff reductions being factored into that employee cost line? Or are you expecting gross margins to go higher in the second half? I'm happy to talk to costs. We are conducting a cost optimization program. Obviously, I'm new to the business, but we're working through that, and it will be a broad look at costs across the business. We're working through that. We do anticipate that there will be partial impact in FY23 of that program and fuller impact in FY24. To your question, Apoorv, just to add to that, I mean, we're doing that review across all lines of the P&L. You know, we have been working through that. One initiative that, you know, we've implemented already, but the impact was not in half one, is that we have removed the Sunday shifts at the customer fulfillment center with no, you know, impact to customer service. We will continue to do that removal. So that is an employee expense line specifically. We're working through a marketing optimization, so we're looking at marketing efficiency, and, you know, so marketing line. We're not giving guidance in terms of what's gonna come down where, but we're working through every, you know, every line. Got it. One last one from me, please. Just in the past, you've had long-term targets, EBITDA margins, 8%-10% by FY27, 10%+ long-term. You've had private label targets as well. I think that was 10% of sales by FY27, 15%+ long-term. What do you think about those targets now? Again, I'm still relatively new to the role. Those are the stated targets. They're the plans for the business, and I'm immersing myself in the business now and understanding those in greater depth, but they're absolutely the current plan. Okay. Thanks for that. Thank you. Once again, if you'd like to ask a question, please press star one on your telephone and wait for your name to be announced. Your next question comes from Elijah Mayr from CLSA. Please go ahead. Good morning, Tamalin and Stephanie. Just a couple from me. Maybe just quickly following on from the previous question on the EBITDA and I guess maybe the impacts of that cost optimization program. You're saying there's gonna be partial impacts in 23 and 24. Are you able to give a dollar amount? Then just confirm if that's included in the EBITDA targets of being positive for FY23. No, we haven't given any. What we've confirmed is that we will remain profitable for FY23, and we've confirmed 2%-4% EBITDA guidance for FY24. There will be costs involved with the cost optimization program impacting 23. We just don't have the numbers for that, but that will be included in the EBITDA positive number, that you're targeting in FY23? That's correct. Yeah. Yeah. Cool. Just previously you've presented new customers by quarter. I was just wondering if you could maybe sort of break out the number of customers, the number of new customers, sorry, in second quarter 2023? No, I don't think we have provided by quarter. We normally do customers on an LTM basis. The last time we did customers was in our quarterly quarter one update. We did active customers in our quarter one update, and that active customer number has increased since that quarter one update. Previously, I think they've just been presented in chart format rather than actually being called out. You can sort of see the trend. I was just wondering if we could get some more clarity on what those sort of new customer numbers were doing in the second quarter. We'll have a look and, I'll come back to you, individually. Yep, no problem. Maybe just lastly on labor challenges, can you maybe make a comment on sort of employee retention and attrition that you're sort of seeing at the moment? Yeah, we, you know, as was the case for much of the market last year, there were high levels of, you know, movement, and Adore Beauty was no exception to that. We've seen a stabilization in those numbers as we've worked through an employee value proposition. You know, well, we had one, but we've, you know, been working through it in more detail, and those numbers have stabilized. I think just to add to what Stephanie said there, you know, joining the business, it has been pleasing to see that stabilization. I think also our team engagement, we had our team engagement survey results come out relatively recently. They were also very pleasing. Good to see that that is stabilized and that we have an engaged team. No problem. Thanks for the question. Thank you. Once again, if you'd like to ask a question, please press star one on your telephone and wait for your name to be announced. As there are no more phone questions, I'll now take questions from the webcast. The first question from the webcast today comes from Christopher Tynan. Christopher asks, "Could you please outline the mix between the volume..." Oh, it appears that's been deleted. If there's no further questions, I'll now hand back to Ms. Tamalin Morton for any closing remarks. Sorry, we just asked that question. Question? Pardon me. We're just experiencing technical difficulties. Please stand by one moment. Pardon me. We have retrieved the question. The question from the webcast comes from Christopher Tynan. Christopher asks, "Can you please outline the mix between the price and volume in trading? Have prices been put up during this period? Are volumes negative? you know, revenue for the period was down 17%. We have, you know, we are, a third party, you know, distributor of brands. We have 270 of those. We have had increases come through on those brands, but typically they are market-wide increases, and increases are reflected in RRPs that are being passed through. I think what we've talked to is that there was increased promotional discounting in the period to remain competitive. Thank you. As there are no further questions from the webcast, I'll now hand back to Tamalin Morton for any closing remarks. Thank you. Thank you. Thanks again for joining us today. I look forward to meeting many of you over the coming days and want to say a big thank you for your support. We'll now close the call. Thank you.