Revenue Growth: 3.4% year-on-year increase. Adjusted EBITDA: EUR 28.1 million. Gross Margin: Increased by 170 basis points to 40.4%. Free Cash Flow: Positive EUR 55.5 million. Cash Balance: EUR 154.5 million at the end of FY24-'25. SCAYLE Revenue Growth: 11.5% increase. SCAYLE Adjusted EBITDA Margin: 47%. Group Revenue Q4: Increased by 8.7% to EUR 474 million. Active Customers: Increased by 4.8% to 12.9 million. Average Order Value: Increased by 3.6% to EUR 60.1. Net Working Capital: Negative EUR 109 million at the end of Q4 '24-'25. Operating Cash Flow: Positive EUR 100.2 million in FY24-'25.

Warning! GuruFocus has detected 2 Warning Sign with XTER:YOU.

Release Date: May 08, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

ABOUT YOU Holding SE achieved a top-down growth of 3.4% year on year and improved profitability with an adjusted EBITDA of EUR28.1 million. The company saw a record increase in LTM active customers by 4.8% to 12.9 million, driven by improved retention and new customer acquisition. SCAYLE delivered a successful year with revenue growth of 11.5% and a strong ARR growth of 23%, maintaining a healthy adjusted EBITDA margin of 47%. The group gross margin increased by 170 basis points to 40.4%, driven by high-margin tech revenues and improved inventory positions. ABOUT YOU generated a positive IFRS free cash flow of EUR55.5 million, resulting in a solid cash balance of EUR154.5 million at the end of FY24-'25.

Negative Points

The average order frequency per active customer declined by 3.4% to 3.0 transactions over the last 12 months. The group adjusted EBITDA margin was negative 1% in Q4 '24-'25, despite improvements in profitability. The gross margin declined by 170 basis points to 37.6% in Q4 due to revenue mix and comp effects. The company is facing uncertainties due to the upcoming Zalando transaction, impacting revenue growth guidance. Commerce operating profit remains in negative territory, with expectations for positive adjusted EBITDA in the near term.

Q & A Highlights

Q: You've previously pointed towards double-digit growth expectations for FY25-'26. Now you're suggesting moderate growth. What has changed since you last reported? A: We are not seeing major changes in consumer sentiment, which remains relatively stable. The guidance for moderate revenue growth in FY25-'26 considers two factors: the expected faster GMV growth due to the marketplace model rollout and uncertainties related to the Zalando transaction, which affects business steering.

Story Continues

Q: Have you observed any changes in cost per clicks, particularly with Chinese competitors spending more on advertising in Europe? A: We have not seen changes in cost per clicks compared to previous quarters. Despite discussions about increased aggressiveness from Asian players, online marketing behavior remains stable.

Q: Can you provide insights into the SCAYLE pipeline and whether US macro concerns are affecting potential partners' decision-making? A: The SCAYLE pipeline is developing healthily, in line with expectations. While geopolitical tensions are acknowledged, they currently do not negatively impact the SCAYLE pipeline or operating business.

Q: How is ABOUT YOU's market share growth compared to competitors, and which players are you taking share from? A: In core markets, ABOUT YOU is growing slightly above market average, taking share from multi-channel retailers and smaller players. The company expects to continue outgrowing the market through strategic initiatives.

Q: What is the status of your distribution network, and what are the potential benefits of moving inventory to Zalando warehouses? A: Most distribution center contracts have a term of around five years, with many capitalized in '22 and '23. Future decisions on inventory movement to Zalando warehouses will depend on synergy discussions with Zalando.

Q: When do you expect the commerce business to achieve positive operating profit? A: ABOUT YOU anticipates strong increases in adjusted EBITDA for commerce, expecting to reach a positive adjusted EBITDA in the near term. Future segment reporting will include adjacent B2B revenue streams, enhancing reported commerce adjusted EBITDA.

Q: Have Asian competitors increased activity in Europe following tariff announcements? A: There have been no significant changes in the behavior of Asian competitors in Europe. Online marketing aggressiveness and pricing remain stable.

Q: What is driving growth in the rest of Europe, and how do you expect these markets to perform in the coming year? A: Growth in the rest of Europe is driven by reduced commitment in certain markets and improvements in large markets like CEE. Stable consumer sentiment and a stabilizing competitive environment contribute to positive future expectations.

Q: Can you provide examples of non-fashion categories in the SCAYLE business, and is there still demand from fashion players? A: SCAYLE has acquired partners in food retailing, opticians, and car equipment, among others. Fashion remains a focus and sweet spot for SCAYLE, with continued demand expected, especially with the upcoming team-up with Zalando.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.