Hello, ladies and gentlemen, and welcome to the HelloFresh Q1 2025 results call. At this time, all participants Hello, ladies and gentlemen, and welcome to the HelloFresh Q1 2025 results call. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to your host, Dominik Richter. Good morning, ladies and gentlemen. I'm here today with Christian, our CFO, to present the Q1 earnings and provide some context on our recent financials. After deep diving on our strategy for 2025 and 2026 on our recent Capital Markets Day in late March, we'll try to keep the strategic updates brief today and focus on the financial performance in Q1, as well as our outlook for the remainder of the year. What is worth re-emphasizing, though, are the two objectives that we're laser-focused on right now as a company. Firstly, deliver on our efficiency program, and secondly, create a step change in our customer offerings so we can expand the total addressable market that we go after and eventually return to a multi-year growth trajectory. This includes both Meal Kits and RTEs. Even though they are at very different stages of growth, we strongly believe that a much-improved customer offering will pave the road to predictable and sustainable midterm growth and a continuously larger TAM to go after for our two strong consumer brands. Executing on our efficiency program is critical for both short-term and long-term success. It's our deliberate strategy to emphasize profits and cash flow generation over volume growth this year. We had seen the painful decline of our EBITDA, but also of our free cash flow for three years in a row, and it's important to turn this around in 2025 by right-sizing our fixed costs, improving our unit economics, and returning to a best-in-class financial profile. This will free up the funds and investments required to self-finance the massive improvements we plan for our customer offerings and to diverse into additional product groups more forcefully. The success of our efficiency program is crucial to eventually return to growth at the right unit economics and with superior margins and a strong cash flow profile. It will provide us with the right foundation to build toward our long-term vision to create a leading global digital-first CPG group with diversified revenue streams and strong underlying profit pools. Let's turn to the highlights for Q1 now. Q1 has been the extension of us delivering strongly on our efficiency program, like we also did in Q3 and Q4 last year, to fundamentally change our cost profile for the better. We've made great progress on many dimensions. Net revenue amounted to EUR 1.9 billion in Q1, a decline of 8.3% year-over-year, primarily driven by a decline of Meal Kit marketing expenses and materially lower new customer additions, in line with our strategy to optimize for higher ROI thresholds and a focus on profit over revenue growth. The flip side of this has been a strong increase in adjusted EBITDA and adjusted EBIT generation. EBITDA is up 245% to EUR 58.1 million, while EBIT increased by EUR 46 million year-over-year in Q1 alone. Free cash flow increased even more forcefully by about EUR 100 million year-over-year, from minus EUR 6 million in Q1 2024 to over EUR 94 million in Q1 2025. A major contributor to the improvements in our bottom-line profitability metrics has been the expansion of our contribution margin by 1.3 percentage points to 27%. In addition, we managed to decrease marketing spend by about one percentage point year-over-year. This has been achieved as a result of higher marketing ROI thresholds, much-reduced marketing investments in the Meal Kits product group, and in spite of our biggest brand campaign to date for RTE in Q1. Based on the better-than-expected Q1 results, we feel on track with regard to our previously issued full-year guidance, despite the heightened macro uncertainty. This includes the potential impact of tariffs, major FX headwinds in our EUR reporting currency, and an unclear consumer confidence outlook, particularly around the U.S. consumer, which are all hard to fully control for. We therefore think it's prudent to stick with our previously communicated full-year guidance for now. Finally, we have seen encouraging results from product investments in Q1 and have a full pipeline to roll out successful pilots in many of our mature markets, mostly in the second half of the year. In line with our strategy, we saw orders for the group decline by about 12% year-over-year in Q1, mostly driven by the meaningful reduction in U.S. Meal Kit marketing spend. As a result, Q1 North America Meal Kit orders declined by about 18%. International Meal Kit orders, on the other hand, also saw a reduction, which also saw a reduction of Meal Kit marketing spend, but not to the same degree. We saw orders consequently decline by about 3.6%. Important to note that our existing customer base shows overall a stable to improving order behavior, i.e., the decline in orders is fully due to fewer new customer additions. Group AOV once again increased in Q1 year-over-year to over EUR 68 per order, a 3.8% increase in constant currency. North America increased by 5.9%, international by 4.5%. Both regional segments benefited from lower monetary incentives, pushing up AOVs. In addition, in North America specifically, we saw a mixed shift toward a higher share of RTE orders, which come at a somewhat higher AOV compared to Meal Kit orders. Put together, the deliberate strategy to emphasize profits over growth has led to a substantial temporary order decline, fully attributable to lower new customer additions. This has been somewhat offset by higher AOVs, most notably by lowering monetary incentives. All in all, this has led to a net revenue decline of 8.3% in constant currency. Q1 net revenue reached EUR 1.9 billion, in line with previously issued revenue guidance. From a regional perspective, North America net revenue declined about 13% in Q1, whereas international net revenue increased by about 1% year-over-year. From a product group perspective, Meal Kits declined by about 14% year-over-year, whereas RTE net revenue grew about 8%, both in line with previously issued revenue guidance. I'll hand over to Christian now to walk us through our cost line items and the outlook for the remainder of 2025. Thank you, Dominik. As you will clearly see on the following pages, we have built significant momentum in our efficiency program across all cost and cash flow items. Starting with our contribution margin, we see a significant leap forward. In Q1 2025, we have increased our contribution margin year-on-year by a substantial 130 basis points to 27%. This expansion is a direct result of the efficiency levers I outlined at our Capital Markets Day. Firstly, a meaningful year-on-year increase in our direct labor productivity for both Meal Kits and Ready- to- Eat. Secondly, the decisive steps we are taking to decrease our production footprint in Meal Kits. Lastly, efficiencies gained from reducing our overhead personnel and ancillary costs. Looking at our geographic segments, North America has delivered a remarkable increase in contribution margin, up by 290 basis points. In international, we see a temporarily-r educed contribution margin by 80 basis points, driven by the continued ramp-up of our automated sites in Germany and the U.K., as I've flagged earlier. Importantly, we expect this to reverse by the end of the year, setting the stage for year-on-year contribution margin expansion in Q4 in international as well. In summary, we are well on track to expand our contribution margin for the full year 2025 by circa 100 basis points, as declared earlier, even while reinvesting in our product to fuel future growth. Separately, in Q1 2025, we've taken an additional EUR 90 million non-cash exceptional impairment charge, driven by executed and planned reductions in our production footprint. Whilst there may still be some smaller impairments throughout the year, we currently do not plan significant further impairments of similar size going forward. Let me now turn to our marketing expenses. You'll recall our detailed discussion at the Capital Markets Day regarding our disciplined ROI-focused approach. Now, this strategy is clearly reflected in our results. It is particularly evident in our Meal Kit business, where our focus on ROI has led to a significant decrease in spending, with the year-on-year reduction in Q1 being even more pronounced than in the second half of 2024. This is primarily impacting new customer acquisition, while crucially, orders from our tenured existing customer base have remained robust. The result is a meaningful reduction of total group marketing expenses, down by 90 basis points on a relative basis and a substantial EUR 51 million in absolute terms. This achievement comes despite our strategic investments in brand marketing for Ready- to- Eat in Q1, as we had outlined at the Capital Markets Day. In fact, we increased our Ready- to- Eat brand spend by over EUR 30 million, representing approximately 6 percentage points of EBIT margin in Q1. This demonstrates our commitment to building long-term brand equity for Factor. The disciplined execution of our efficiency program has allowed us to increase EBITDA year-on-year by more than EUR 40 million, which, given that Q1 typically is a low profitability quarter, means that we have more than tripled adjusted EBITDA year-on-year. Both of our geographic segments have contributed to the positive trend. North America increased its EBITDA from EUR 26 million to EUR 61 million. International increased its EBITDA from EUR 29 million to EUR 41 million. From a product group perspective, the EBITDA margin of Meal Kits stands out with 11.4%. This represents the highest Q1 adjusted EBITDA margin we have ever achieved in Meal Kits in Q1, i.e., even higher than during peak COVID in Q1 2021. Importantly, we are not stopping here. We have a comprehensive pipeline of efficiency measures still to fully materialize, giving us strong confidence in further EBITDA margin expansion in Meal Kits over the coming quarters and in 2026. This is a powerful engine for us to self-fund reinvestments into our product to reignite growth, as discussed at our Capital Markets Day, and to fund share buybacks while maintaining a strong balance sheet. In Ready-to-Eat, we meaningfully expanded the contribution margin by several percentage points year-on-year. At the same time, we stepped up investments into marketing and especially brands, where we spent in Q1 over EUR 30 million more than in Q1 2024, corresponding, as I have mentioned, to more than six margin points. This, in addition to building our customer base and further internationalization of the footprint of Ready-to-Eat, has resulted in a temporary decrease in our Ready-to-Eat EBITDA margin by approximately 4 percentage points year-over-year to - 8.4% in Q1. We expect, however, Ready-to-Eat EBITDA margin to be positive each quarter and higher than last year for the remainder of the year. Our strong EBITDA uplift in Q1 has also translated to a strong adjusted EBIT increase in the same quarter. We have increased our adjusted EBIT in Q1 year-on-year by EUR 46 million. This is driven by the adjusted EBITDA uplift, which we have just discussed, and a slight reduction in D&A, where our lower CapEx and overall more asset-light approach start to take effect. Both of our geographic segments have contributed to this adjusted EBIT improvement: North America, with a year-on-year increase of EUR 40 million, and international, with an increase of EUR 12 million. From a product group perspective, you see a similar trend as just discussed for adjusted EBITDA. Meal Kits very meaningfully up, Ready-to-Eat temporarily down due to a step-up primarily in brand investments in that quarter. Now, let's turn to our free cash flow. We have delivered a significant step change in free cash flow generation, reaching EUR 94 million in Q1 2025. To put this into perspective, this represents a year-on-year expansion of EUR 100 million and results in a free cash flow for Q1 higher than our entire free cash flow for the full year 2024. The number of drivers for this significant improvement, firstly and most importantly, the very meaningful adjusted EBIT and adjusted EBITDA expansion that we had just discussed. Secondly, seasonal cash inflow from working capital, which in this Q1 was slightly more pronounced than last year. Thirdly, EUR 7 million lower CapEx than the same period last year, which is mostly due to timing. For the full year, my previous guidance still holds. I was still targeting a similar amount of CapEx as last year before bringing it further down to below EUR 150 million in 2026. Our strong free cash flow generation has also funds our ongoing share buyback. In Q1, we have bought back 2.7 million shares for a total of approximately EUR 20 million. Based on our buyback program, we buy more shares at lower share prices, and at the current rate, would be done with our EUR 75 million program already around the time of publication of our H1 financials, i.e., somewhere mid-August. I would now like to conclude with our outlook for the full year. As you know, we remain entirely focused on executing well on our ongoing efficiency program, whilst investing meaningfully into our product. I've discussed the key components of our efficiency program at length at our Capital Markets Day. The program's implication is that we are accepting a temporary period of negative top-line growth to reset our margin and free cash flow profile, paving the way for return to top-line growth with a then significantly enhanced profitability and cash generation capability. Our strong Q1 performance on adjusted EBIT and adjusted EBITDA and free cash flow enables us to maintain our full-year guidance despite some of the emerging macro headwinds and uncertainties such as soft U.S. consumer confidence, a meaningfully weaker U.S. dollar, and ongoing tariff uncertainty. This means concretely for the full year 2025. We are targeting a decrease in constant currency revenue by -3% to 8% for the full year. In Q1, as you've seen, we were at the wide end of this range, and we expect a similar picture in Q2 before steadily re-accelerating year-on-year revenue growth in H2, driven by meaningful product reinvestments. From a product group perspective, based on the first three weeks of Q2, Meal Kits is trending mildly better on revenue growth compared to Q1, and RTE is somewhat softer. Driven by the implementation of our efficiency measures, we continue to target for the full year to expand contribution margin by circa 100 basis points and reduce relative marketing spend by indicatively 50- 100 basis points. Our contribution margin and marketing cost improvements, combined with the benefits of our overhead efficiency initiatives, allow us to target an adjusted EBIT of EUR 200-EUR 250 million for 2025, an increase of 65% versus 2024 at the midpoint. This also implies a meaningful increase of our adjusted EBITDA outlook to EUR 450 million to EUR 500 million in 2025 versus 2024. Based on the levers within our control, we remain on track with respect to our profitability targets despite heightened macro uncertainty, continued U.S. tariff risk, and FX headwinds. Now, on FX, please keep in mind that we had initially provided our 2025 adjusted EBIT and EBITDA outlook based on a EUR 1.04/U.S. dollar exchange rate. In the meantime, the U.S. dollar has softened materially, as you all know, to a level of currently approximately EUR 1.14. Maintaining our outlook in the current FX environment effectively means absorbing an FX headwind to adjusted EBIT for the remainder of the year of EUR 28 million through additional measures. Finally, on free cash flow, we continue to target more than doubling our free cash flow in 2025. Our strong Q1 performance represents a significant step in that direction. Coupled with our ongoing share buyback program, we anticipate that our free cash flow per diluted share growth will be even slightly higher than our total free cash flow growth, further enhancing shareholder value. We are firmly convinced that delivering long-term EBIT growth and strong free cash flow per diluted share is the key to drive long-term value for our shareholders. These are the core targets that our entire HelloFresh organization is dedicated to achieving. Now, with that, we look forward to your questions. Ladies and gentlemen, if you would like to ask a question now, please press nine, followed by the star key on your telephone keypad. If you wish to cancel that question, please press three, followed by the star key. Please note that we kindly ask you to limit yourself to one question per person. Should time allow, there will be room for further questions. One moment for the first question, please. The first question comes from Luke Holbrook, Morgan Stanley. Please go ahead. Morning, everyone. Thank you for taking my question. You usually provide a more specific outlook into the outer quarter. Is there any reason for Q2 to be more specific on adjusted EBITDA, absolute figure that you're guiding to? Just within that context, could you just be a little bit more specific on how trends are faring into the second quarter regarding your kind of core loyal customer base that you outlined that your CMD is 2/3 of the overall orders of the group by function of them having placed 21 orders on your platform historically versus those that are less loyal, that remaining third of the customer base. Just want to get an understanding of some of those dynamics from your cohort. Thank you. Hey, Luke, it' s Christian. From a profitability outlook, e ffectively, what I told you not too long ago at the Capital Markets Day and also with the full-year results still holds. We're targeting every quarter to roughly be EUR 10 million-EUR 20 million better than the prior quarter from a profitability perspective, and that still holds. That's why I didn't repeat it again, but no change to that. With respect to the behavior of our loyal customer base, no change to what you've seen from us and what we discussed in detail at the Capital Markets Day five weeks ago. Understood. Thank you. The next question comes from Sven Sauer, Kepler Cheuvreux. Please go ahead. Yes. Hello. Thank you also for taking my question. It's on the RTE segment. Just looking at the sales growth and the profitability last year and now comparing it with this year, and you also mentioned that you invested EUR 30 million into the brand, but also said that Q2 might be a little bit softer for RTE. I'm just wondering, I mean, is the marketing efficiency going down for this segment, or am I seeing something wrong? For RTE specifically, it's really important to understand that we don't want to chase the last customer, but really aiming to build a multi-leg growth strategy, as we've outlined at the Capital Markets Day. The focus in H1 is to really build long-term demand and brand equity through some of the brand advertising and invest significantly into the product offering and our service levels before accelerating revenue growth again in the second half of the year on the back of this and versus somewhat easier comps. I think it's important to note that obviously U.S. consumer is sort of very uncertain where the U.S. consumer stands, and hence we really want to see both our brand investments and our product investment plans land before we kind of dig more forcefully into some of the demand harvesting phase again. Q2 is more of a trend continuation of what you've seen in Q1. We should be seeing re-acceleration in H2 on the back of those investments that we're taking in H1 now. Okay. Great. Thanks. The next question comes from Marcus Diebel, JPMorgan. Please go ahead. Your line is open. Yeah. Hi, everyone. Yes, I can follow up on the revenue momentum in relative to what you just said. In H2, you're telling us that the revenue growth is accelerating because of your investments in the customer proposition, or is that also a function of new markets opening up, which basically then come, which are then incremental? If you can just spend a bit more time explaining to us why you should see this revenue acceleration in the second half in RTE. Thank you. In the second half, it's mostly down to what we'll do in the U.S. In Europe, I think we've grown our Factor business to a good size. We've seen sort of strong customer metrics and strong customer demand, but a big focus in our international Factor business this year is moving into our own facility. It's not a huge source of overall RTE growth for the year, and it's also not what will accelerate H2 revenue acceleration in RTE. It's really building up the overall brand demand in the first half of the year and most notably the product investments, and then really focus on marketing those in our back-to-school season, which, as you know, is outside of the January period, the most important season for us, the biggest sort of marketing moment in the year. That is where we focus, and that is where we will focus a lot on bringing those product investments across and expect that to also come through in overall revenue growth numbers. Okay. Thank you. The next question comes from Jo Barnet-Lamb, UBS. Please go ahead. Thank you very much for taking my question. I guess just a follow-up with regards to the higher brand marketing in RTE. It's obviously very substantial. Is there anything that you can point us to with regards to lead indicators that you're looking at to give you confidence that you're going to get a good payback on that expenditure? It obviously feels like quite a big step change. A second one, if I can just sneak it in, it's a clarification from the CMD that I just wanted to ask. With regards to your cost savings that you guided to at the CMD, it's not clear to me from the buckets given, does it include savings from reduced discounts or not? Thank you very much. Let me tackle the first question on RTE and brand advertising. There are two data points that I can point to. Number one, we started brand advertising at very small scale. Last year for Factor, which we did over a 15-month period where we targeted certain geographies called DMAs in the U.S. and compared the long-term demand generation in those DMAs versus other representative DMAs where we did not engage in doing that. What we saw was that over the course of 12 months- 15 months, we could really build up a lot more search traffic. We could build up better NPS. We could build up overall, so a very good cross-effect on other channels that we engaged in. That has been, I think, a very robust long-term test. Based on that test, we felt comfortable deploying a much larger brand spend to a lot more DMAs over the United States in Q1 this year, and we would expect it to play out in a similar fashion. Now, what are some of the sort of more short-term metrics that we look at to see if we're on the right track? Those are metrics like brand awareness and consideration, organic traffic to our page. For example, unaided brand awareness for Factor jumped from about 8% to 12% over the course of Q1. Clearly, sort of some of the leading indicators that should tell you whether this is playing out in the long term, I think they look fine. They look like we would have expected that. If the results that we've done in our large-scale experiment last year hold true, then this should play out over the next quarters that will allow us to harvest demand more efficiently than in those DMAs where we haven't engaged in doing that. I think a long answer, but I think the bottom line is that the short-term metrics point in the right direction, and usually those types of investments play out over multiple quarters rather than the very first time that you launch it. Jo, it's Christian here on your second question whether reduced price incentives also included in our efficiency saving targets. The answer is yes. These pain to the marketing are improvements that we are materializing and continue to target throughout the rest of the year for 2026. They're also baked into that EUR 300 million gross savings number that we had discussed at the Capital Markets Day and the EUR 200 million net number. That's all included. Those answers are very, very helpful. Thank you, gentlemen. Thank you, everyone, for the questions. I'd now like to hand it back to Dominik Richter and Christian Gärtner for some closing remarks. Thank you all for attending our Q1 earnings call. I think we have a very, very clear strategy of what we want to do. We'll see over the coming quarters how that plays out, but we have big confidence that a lot of the things that we're doing right now will meaningfully increase the value to our customer base and open up to potential new audiences. In the same line as I started the call, we are really laser-focused on two major objectives: the cost efficiency program, which I think you've seen come through already in Q1, and we expect that trend to continue for the remainder of the year, and then also on a number of really material product investments, which I think will really help us to reinvigorate growth and eventually return to growth for the group in the long run. We look forward to reporting back on the results of that strategy in our next call when we'll discuss the H1 and Q2 results specifically. Thank you for attending the call today. The recording has been stopped.