Earnings Call: Q2 2021

Aug 10, 2021

Dear ladies and gentlemen, welcome to the Half Year twenty twenty one Results of HelloFresh SE. At our customer's request, this conference will be recorded. As a reminder, all participants will be in a listen only mode. After the presentation, there will be an opportunity to ask questions. May I now hand you over to Dominik Ritter, who will lead you through this conference. Please go ahead. Welcome, everyone, to our Q2 2021 earnings call. The Q2 kept us really busy. It was a record quarter for us in many dimensions And the business has been coming out of the pandemic on a really strong footing, but fundamentally all underlying KPIs Better than anticipated at the beginning of the year. Before we go into the highlights of the quarter, Let me quickly refresh your memory on our vision and mission for HelloFresh. At HelloFresh, we often speak about our mission to change the way people eat forever. Cooking at home is such a massive category with 7 out of 10 dinners globally and 5 in 10 dinners in the U. S, Which are being cooked and consumed at home. It's one of the biggest consumer spend categories and the massive total addressable market. When we refer to our mission internally, it very often helps us to make decisions on the customers' behalf, So just making our product more affordable, investing in greater choice to allow everyone to eat better and also which food suppliers we want to work with Truly make a difference for our consumers. With the massive impact we have, we're on track for over 900,000,000 meals this year. We fundamentally changed a lot of consumers' cooking habits and their experience and allow them to eat better, cheaper and more delicious meals And with traditional alternatives. While we have come closer and closer to fulfilling our mission, we've also made huge progress on delivering on our vision In the Q2, as you'll be able to see with our forays into new geographies, we have broadened access to meal kits for consumers worldwide. With the acquisition of Factor late last year and with New Foods in Australia in early Q3, We are firmly committed to also becoming a leading player in the ready to eat market. With the launch of the HelloFresh market in Benelux in the U. S, We have further broadened our suite of products and increased our relevance to consumers, so that we're on a clear trajectory To actually becoming the world's leading food solutions group has outlined our mission. Christian will talk later about our cash flow and around our cash balance. But with the cash balance that we have on our balance sheet, I can promise you that we will continue to focus relentlessly on making our value proposition to consumers better and better With more meals on the menu, better service levels and more competitive pricing, these are some of the dimensions that we'll be using to go after the huge whole cooking tab. With that, let's focus on the near past and cover some of the recent Q2 highlights for HFrush. 1st of all, we continued with our impressive customer growth rates. We grew strongly both year on year and sequentially To 7,700,000 customers as the world has been coming out of the pandemic in all of our markets in the 2nd quarter. Secondly, order rates have stabilized sequentially at rates higher than pre pandemic, Also slightly lower than at peak COVID 1 year ago, very much in line with our projections. The Q2 also marked the highest ever net revenue quarter in the company's history, amounting to €1,600,000,000 in a single quarter, An increase of over 66% year on year. Moreover, we continued to deliver impressive profitability With €158,000,000 in adjusted EBITDA, that's a 10.1% EBITDA margin In the huge growth quarter, where we added a lot of new customers. The team focused strongly on a number of TAM expansion initiatives, Launching Norway as a new choco feed, Green Chef as a new brand in the UK. And after the close of the quarter, We also acquired Q Foods, the leading ready to eat player in Australia, giving us access to a lot more households globally that are actually now in our target group. Finally, based on the positive trading year to date and the strong growth we've been seeing, we've updated our outlook for the remainder of the year. We now expect revenue growth about 10 percentage points higher than before, a massive upgrade to our internal projections Now expected to amount to between 45% 65% in constant currency. As a result of the strong cash flow we have delivered, we will also aggressively go forward to rollout and scale up of our infrastructure, So we won't run into any capacity limitations in 2022 as we innovate for our consumers. Adjusted EBITDA is now expected to come in at 8.25% to 10.25% for the full year 2021. Let me quickly elaborate on 2 recent launches for Hetofresh that we conducted in the Q2. We've been focusing more on the Nordics after a very successful launch in both Sweden and Denmark and the past. And so we are now also launching in Norway. Norway adds about 2,500,000 households To our overall TAM, we have a strong e commerce penetration and very high household income levels. So we think it has all of the right ingredients to become a very successful geography for us as well. We We're going to be fulfilling orders out of the new sale of the RSBC near Oslo, providing Norwegian customers with its broad suites of products and meal kits. Secondly, we also launched GreenShap in the UK. It's the 1st international market for GreenShap. And this is on the back of strong market share gains during and after the pandemic in the UK with the cheapest prices on the market For our HelloFresh brand. With Wizzia, we now offer a great alternative for health conscious UK consumers, And it's the most sustainable meal kit brand in the UK, allowing us to attract a new segment of the market that we haven't been able to tap into before And that will allow us to expand our market share further. Now let's dive into our KPIs. For many metrics, we have actually added both sequential evolution as well as year on year year over 2 year metrics To foster a better understanding how we have improved across the board against pre pandemic KPIs. Customer numbers set a new record in Q2 with an increase of 83% year over year and 2 20% Year over 2 years, we even sequentially added about 400,000 new customers After already hitting a previous record in the Q1. That outperformance was broad based And the results of debottlenecking our capacity in a number of markets. If we look at segment trends, The U. S, including Factor, grew by 93% year over year and international grew by 75% year over year. Without factor, both growth rates for our core HelloFresh brands would have been very close to each other. If you look at year over 2 year numbers, you can see why we have been investing so strongly into capacity expansion and will continue to do so going forward. Within 2 years, it basically triples the volume through our supply chain, while continuing to add a lot more complexity, We have a lot more choice for consumers and with the rollout of HelloFresh market in some of our geographies in that period as well. Our order rates also remain high and stabilized at the same levels we actually already saw in Q4 and Q1, Our 2 most recent quarters, which were, by the way, much more strongly affected by the pandemic than the second quarter. It's been a great achievement and testament to the fact that our improvements to choice, service levels and competitive pricing versus Supermarkets have been paying off. With about 4 quarters for 4 orders per quarter, we have improved order rates By 8% compared to pre pandemic levels, albeit down from the peak COVID number of 4.3 orders That we saw next year in the Q2 when COVID hits most of our markets initial period of time. A similar story can be observed for our average order value. In Q2, Average order value came down compared to last year's peak COVID quarter by about 6%, in line with our projections. However, AOV grew both sequentially compared to the Q1 of 2021 and has now stabilized On higher levels than pre pandemic, about 3% higher than what we were 2 years ago. The root cause of that improvement can be traced back, Number 1, to our market offering that we have started to roll out Envadustin in the U. S. And also to a higher AOV that we're seeing from Factor, Putting everything together, we grew net revenues by 66% year over year in the second quarter. Both of our operating segments, the U. S. And international, contributed strongly to that impressive growth momentum. U. S. Grew a little stronger with 76% in constant currency year over year, a combination of easing capacity constraints And the addition of Factor, which has been performing really strongly for us. International grew by 55% year on year. Stand alone, I think a really great results on top of extremely tough comps from last year. That top line of performance Has been based on super strong fundamentals and sets us on a great trajectory for the remainder of the year. That's why we have upgraded our top line outlook Okay. It's Christian here. Let me continue with our profitability metrics. Let's start, as usual, with our contribution margin. Our contribution margin has remained broadly stable Year on year, it's around 26%. Now this is a combination of, on the one hand, further improvement Of our ingredient procurement expenses, by circa 0.9 percentage points. And on the other hand, an increase In fulfillment expenses by 1 about 1.4 percentage points, driven by the rapid ramp up of our production capacity. Now it's probably worthwhile to discuss both of these line items separately On a segment basis. Let's first talk about our procurement expenses. That's the light green line Here on both of these charts, what you see is we have improved our procurement expenses in both segments since Q2 2019. This by the way should hopefully provide some reassurance that we can cope well with a certain level of degree in price inflation, Which is something that a number of investors have cited at the ORE recently. Now let's talk about our fulfillment expenses. That's the dark green line on this page. And to understand the year on year comparison in Q2 2021, You have to keep in mind the impact of COVID on offshore expenses in 2020 by segments. First, let's have a look at the left side of this page at our U. S. Fulfillment expenses. Those were in Q2 last year heavily impacted by COVID related inefficiencies. You see those Fulfilled expenses increasing from 39% of revenues to 46% of revenues. Now what you see this quarter is a meaningful improvement versus these COVID inefficiencies last year, and those are somewhat offset By the impact of a fast production ramp up. Now in international, the picture is somewhat different. Dan, COVID related inefficiencies were less of a topic last year. You saw that we even improved our footprint expenses In Q2 last year versus Q2 twenty nineteen, primarily driven by higher capacity utilization across our network internationally. So this year, there is no different to the U. S. There's no meaningful benefit from any elimination of those So it's inefficiencies, but you still see the temporary negative impact from a fast production ramp up and therefore a quite meaningful increase temporary increase In our fulfillment expenses. There's also a certain mix effect within international. International, as you know, is a Composite of 14 individual markets, and there we realize somewhat faster growth in markets with a slightly Lower contribution margin. Okay. Let's now come to our marketing expenses. Our marketing expenses as a percentage of revenue was 13.7% in Q2. While this is obviously up on Q2 last year, when we curtailed marketing meaningfully during the peak lockdown quarter, This is still below the range of 15% to 17% we have guided for the full year. And this is despite us continuing to grow customers strongly, as you've seen on a couple of slides before, from 7,300,000 in Q1 to 7,700,000 Thank you, Zohr. When you put all of this together, so strong revenue growth, stable contribution margin and a normalization marketing expenses. This means for our EBITDA that we managed to slightly increase Absolute EBITDA in the Q2 is €158,000,000 Whilst our EBITDA margin is down from the exceptional level of Q2 twenty We still achieved a level of 10.1% in the Q2 this year. And we have achieved this despite our significant capacity ramp up And our continued investment into new markets and new verticals such as Ready to Eat and HelloFresh Markets. When you look at our segments, you will see that both have done well from an EBITDA perspective. So both of our segments that you see on Page 14 Increased absolute EBITDA in both segments have achieved EBITDA margin well in excess of 10%. Okay. Let's now have a look at our cash flows. We have further increased our cash position in Q2 to €933,000,000 Up from €876,000,000 at the end of the first quarter and up by €200,000,000 from the €730,000,000 We're stood at the end of 2020. We did this through strong organic free cash flow in Q2 alone. We generated cash flow from operations of €103,000,000 Over the same period, we invested €40,000,000 into CapEx, A meaningful step up versus Q2 2020, and this is an area where you should expect quite some additional CapEx to sum in H2, driven by the ongoing capacity expansion. We now plan with approximately 200,000,000 €250,000,000 CapEx for the full year of 2020. Let me now conclude with our updated outlook for the full year 2021. Based on the strong revenue growth to date, we have increased our revenue growth outlook significantly again, Dominik had alluded to that earlier, On a constant currency basis from previously 35% to 45% to now 45% to 55%. Given the strong ramp up in production capacity, we plan with somewhat higher fulfillment expenses now. We also plan to scale certain central functions, especially our tech and data tools faster. This means we change our margin outlook Downward for the year to 8.25 to 10.25 adjusted EBITDA margin, which still represents One of the best margin profiles you can get in e commerce and FX. With that, we very much look forward to your questions. Yes. Good morning, everyone. Three questions for me. The first one, if we look at the 200 basis point Increasing fulfillment cost based on your guidance, could you share with us how much is due to the ramp up of the new DCs, the faster ramp up? And how much is due to the preparation of new DCs? And as a follow-up to that, Christian, I think you said last time that in Q2 2022, you could have SEK 7,000,000,000 sales in terms of capacity. So how has this number changed? Would be my first question. And second question, could you quantify the wage inflation that you saw in your P and L in the U. S? And the last one would be, do you have a view regarding the sales shape or the sales growth you expected for Q3 and Q4 this year. Thank you. Hey, Fabienne. Okay. Those were actually 4 questions. But let me go through them 1 by 1. The first one on the 200 bps, how that breaks down. I think that the best to think about you is This is broadly a run rate of oil capacity expansion we've got in full flight, and that's to come now for the next couple of quarters Because we're obviously not launching all of these fulfillment centers at exactly the same point in time. So while some of those We will be then already reasonably further part on the track in terms of getting to the productivity levels where We're targeting other specialty come on stream. So this, let's say, 200 basis point impact is, I think, what you should assume as a baseline From existing ones and new ones to come now for the next couple of quarters into the second half of twenty twenty two. On the capacity impact, so with I would say 2 points to that. One is From all that we have in flight and planning on top of that, that gets us to a theoretical Production capacity of north of €8,000,000,000 On top of that, and that's quite important, but this also enables us to create enough Flexibility that if we decide further down the road to tweak the automation level in our fulfillment centers And increase that we have enough room, so to speak, to implement that while Running our operations at the same time not impacting our desired growth at those points in time. On wage inflation in the U. S. And across our other markets, so there's a certain Impact of that, both in car training as well as in the next couple of quarters. Having said that, The impact of that is definitely more modest than the impact of those capacity expansions That we try to highlight here. So if you think about impact so far, it's definitely inside of a point. And let me comment quickly on the outlook for Q3 and the remainder of the year. I think as you see on the outlook, on our bullish outlook and upgrades to guidance, we're quite confident that we can continue on a very successful path. Having said that, it's very clear that in Q3, much of the world has moved out of the pandemic And we are seeing sort of like normal seasonality return as well as sort of like holiday season, People are generally eating out more in summer. So that is something that we have factored into our guidance. And if you break that down, then certainly Sort of like we'll continue to see very strong revenue for the remaining two quarters and we'll also continue to see Sort of like strong underlying profitability, however, sort of like lower than initially expected, but which can really be factored back To the capacity expansion, as Christian outlined, we were starting the year expecting to grow 20% to 25%. We're now at 45% to 55% at our level. This is 1,000,000,000 more in sales. And obviously, for that, we need to ramp up capacity In a very quick fashion, and that will impact some of the numbers for the remainder of the year. But with the updated guidance, We're very confident and comfortable that we can stay within that. Okay. Thanks a lot. The next question is from Markus Divo, JPMorgan. Your line is now open. Please go ahead. Yes. Hi, everyone. Maybe two questions to Christian, thanks for giving the detail on the cost items. Maybe the first one on procurement. Clearly, a very strong performance. What is your view why you didn't have to do so much with cost pressure and inflation as So some of your smaller peers, that would be interesting and that you expect this to remain like this also going forward. And then the second question is again on Corfum and the related impact on guidance. Could you just explain a bit more what exactly these costs really are? I'm coming from The phase there, Sergey, the CapEx was very much known and you roll out the capacity. So I don't fully Understand why the corresponding OpEx that follows this CapEx, if that makes sense, wasn't the initial guidance. Only did I Stan, what really these additional costs really are? Thank you. All right, Markus. Maybe firstly on your point on procurement expenses, how we manage to Just to trade at those levels, despite some input in cost inflation, the reason is that we as you know, we have Some flexibility in our business model in terms of mainly selection, how we combine those recipes. We have a robust data tools behind that and that Certainly helps. On the front, on top of that, given our scale, we are also Even to, on a continuous basis, improve our procurement conditions and a combination of that, we still find that To mitigate any meaningful impact from cost inflation so far. On your second point, so On the fulfillment expenses, what's really new and why this to go through? What's really the impact All the drivers are for a step up here is there are a couple of things. When you think about when we Ramp up a new fulfillment center. There is a quite meaningful upfront cost involved. We first had to Hi, Andrew. Direct labor colleagues, live leads, site managers and so forth. All of these Costs are produced even before we start to produce the first box. And then once we start to produce the first box, it takes another So until we get towards the productivity levels that we want. Now Faster we then do those ramp ups, the more you see these type of inefficiencies upfront. And that's why you see In some of the fulfillment centers, we are about to ramp up or as recently it ramped up. And then on top of that, Given the strong growth outlook that we have now, then we had at the beginning of the year, the year but also still in April, we also pulled forward Some of the expansion projects initially at year mark for 2022 and added actually a couple More on top of that, that cuts across both of our segments across our U. S. Segment as well as across our international segment. The next question is from Andrew Gwynn, Exane BNP Paribas. Your line is now open. Please go ahead. Hi, good morning Christian, Dominik. Two questions, if I can. So firstly, just on the margin outlook. Obviously, very early to be giving thoughts on 2022. But Just to help us on our modeling, should we expect some of this to continue into the early parts of next year? The second Question, just going to advance the CapEx. Firstly, could you just repeat the figure for this year? Sorry, I missed it, when you said before. But secondly, again, just thinking about the outlook, to On the contribution margin point, you should expect that we We'll claw back off those smaller bits that we're discussing, yes. But we will claw back quite a bit of that in the second half of next year. So until then, you should assume broadly that as a Temporary drag on contribution margin, obviously, with some seasonality and it needs that structurally about the 200 Going back into mid next year, then second half of next year, you should expect us To be able to claw quite a bit of that back. On CapEx for this year, we are planning with €200,000,000 €250,000,000 that compares to the €120,000,000 to €150,000,000 we initially And at the beginning of the year, we should then talk up to 150 to 200 in April, May, so another Now, 2022 CapEx It's still a bit early, frankly, to guide. I would say on the capacity pure capacity expansion side, we We have made most progress by Q2 next year. And then The remainder of potential CapEx is really driven somewhat by what we decide on some of our automation Projects which is still a bit too premature to discuss at this point. Okay. That's clear. Thank you. And then just Sorry, one more. Just going back to the seasonality. Obviously, we didn't see much of that last year. This year, it's come back. I think if we look at 2019 as a guide, revenue in Q3 was pretty flat with Q2. Is that loosely what we should be thinking for this year? Or again, far too soon to really have a clear view? Thank you. Yes. So on a like for like basis, you will see in Q3 revenue somewhat down seasonally and down, which It's on a like for like basis if you need market launches and so forth. Aside from that is obviously In July, August, substantially all of our markets except for Australia, we call it this evening. So our customers take 2 to 3 weeks off during that period. On top of that, we also during July, August dialed in back on any marketing And then all of this comes back in September. Therefore, for the quarter, you typically see Capacity utilization in our procurement centers lower and basically revenues lower as well. That's what You should expect more for this year as well. So we see a return back to normal seasonality across most of our markets. So yes, that's what you should expect. Okay, great. Thank you very much. Hopefully, enjoy your holidays as well. Thank you. The next question is from Clement Jean Hallum, I've got 2 questions from my side, if I may. The first one is on Australia. Are you currently benefiting from a COVID-nineteen in Q3 since the implementation of lockdowns in some biggest crisis such as According to Alexa Traffic Rank, HelloFresh incoming traffic has been materially lagging behind Good Food since early July. So with regards to your first question on Australia, the Coming back of COVID is probably a small tailwind on revenues, but it's also a headwind on some of our operations And margin, so it's affected into the guidance already, but we have seen that we have to pay Higher wages to labor have to over hire, so we can make sure that certain people are not Showing up for work that we can still get a great product out to consumers. So overall, very small tailwind on revenues and some Small headwinds on our overall structural operating costs that we'll see. With regard to Canada, Canada is actually the one market where we had the Most market share gains over if you look at the last 12 months. So I think we've expanded our market Shared in Canada by over 10 points in that period. So if you see any of these trends reversing or traffic Data reversing, then that should only be temporary. I think it's been the one market where we have gained market share the most And where we've actually also been very aggressive in our approach and where we have been able to put a lot of customers from the brands. The next question is from Nizla Neisse, Deutsche Bank. Your line is now open. Please go ahead. Great. Thank you. I will limit myself to 3. The first is on the tech and data sort of investments you said you're making this year. Could you tell us in what specifically are you investing? Is this going to be part of your G and A cost? And out of the sort of revised margin guidance, How many basis points is applicable to the tech and data investments versus the fulfillment cost ramp up? And secondly, on marketing for the full year, given that the run rate seems to be quite nice already, Could the outlook for the full year be lower than the 15% to 17% that you typically guide for? Some color there would be great. And my last question is on HelloFresh Market. I mean, the U. S. Seems like a massive opportunity. How much of sort of incremental revenue are you anticipating, for example, in the 1st year of rollout? In the 1st year. And what's the potential there? In the market. And will you then roll it out to other European markets as well outside of Boudinilux? Those are my 3. Thank you. And Yves Leben, let me take the first one. So Check investments, what does that represent? And well, it's short. So you're right, it shows up In our G and A, effectively, what we are planning is to Almost double the size of our second data change between end of Q2 to end of 2022. Now in terms of impact on our margin profile, this will be A gradual buildup, obviously. So when you think just about 2021, the impact is Certainly inside of 1%, so below 50 bps actually. But in 2022, the impact It's somewhat higher. So when we are closer to the full headcount run rate that we're targeting there. Your second question on marketing and that versus our full year guidance of 15% to 17%, I think It's reasonably fair to say that at least we can right now, we're more on track towards the lower end of the marketing expenses And let me add just on your question around technology You stated teams in which areas are we investing? The boring answer is basically applies to almost all areas of the business. So for example, the fact that we've been able to offset sort of like any inflationary trends around our procurement costs It's really down to the fact that we've been able to much better see our suppliers find some mutual benefits in how we source products together with our suppliers, which is all driven by some of the software solutions. Same with the rollout of our home logistics, we're creating a lot of software To be able to track and trace sort of like all of the deliveries that we're doing ourselves, we're launching new geographies, we're launching and scaling up the HelloFresh market, Which is a completely new logic and how we actually think about products, store products and inventory, etcetera. So those are all things that Require a lot of software development, but all of those systems have very high incremental ROI. With regard to the question on HelloFresh Markets, I agree it's a big opportunity. At the moment, we're capturing with HelloFresh Only about 5% to 7% of our consumers' food budget on average. And so whatever we can do to Provide them with better solutions also for other new locations and increase our share of their food budget. That's obviously like a big opportunity for us. It's still in the early phases. And if you look at the assortments, we've been starting in the U. S. With about 100 products. 100 products is obviously a lot less than where we wanted to be at scale. And so it's going to be a gradual ramp up. It should show up in some way in our AOV. In terms of overall contribution to net revenues, I think we need to see sort of like how much and how fast we can scale it and that has some dependencies on Our fulfillment automation that has some dependencies on resourcing, that has some dependencies On our capacity and fulfillment centers, so there's a couple of unknown variables, which is why I don't want to give out too granular guidance. But overall, certainly like a big opportunity that over the next couple of years should add meaningfully to revenues, First in the U. S. And Benelux and then also in other markets where we plan to roll it out. Perfect. Thank you. The next question is from Miriam Beeson, Morgan Stanley. Your line is now open. Please go ahead. Great. Good morning, everyone. 3 for me. Just firstly, on the active customer growth, if you could just give us a bit more color on the mix between new customer growth And reactivations. And then secondly, on the procurement expenses, just to follow-up here. If you could just confirm that Whether or not you put through any price rises in the quarter or whether you plan to do any before the end of the year and sort of where do you think you are now in terms of sort of the gap Between yourself and competitors on prices? And then finally, just on new geographies, Does the fulfillment capacity ramp up bring forward any new launches in Europe? And can you just remind us on where you are in terms of sort of the pipeline for new launches before the end of the year. Thanks. Let me go for the first two questions. In terms of active customer growth, reactivations have Stabilized in terms of gross additions at about the same level that we've seen in the previous quarters. So as we come out of the pandemic, I think that's sort of like towards Q4 and also Q1 next year. We're probably expecting reactivations to increase. But for now, for the Q2, for the last quarter that we had, it was more in line with what we've seen before, about mid-20s in terms of percentage Compared to the overall customer gross additions that we saw. In terms of price increases And also price increases versus competition. You've actually seen almost all of our competitors increase prices, Which we like because that makes us more price competitive than the direct comparison. We haven't done any large scale price increases And we'll most likely not do them. I think we've always seen that if we can have very competitive pricing, Both versus competition, but also versus supermarkets that really helps us with the order rates of our existing customers, acquiring new customers. And so our goal is to opportunistically, we always look for opportunities to optimize pricing, But we don't plan any large scale price increases like some of our competitors have done. Quite the opposite. We think price competitiveness It's a key variable for consumers to buy meal kits and if we can keep prices stable and optimize around the margin That will make all products in relation to overall supermarket prices, which see inflation as well as our competition Just a better deal for consumers, which is something that should contribute to our growth rates going forward. And then, Miriam, on your last point, new market launches, Dominik has spoken a little bit about Norway, which we just launched. For the remainder of the year, we will have Italy upcoming towards the end of the year and Going into next year, the pre launch form for Japan, hopefully, by The end of October or thereabouts, we can also close on the on our announced acquisition Our few foods are ready to eat business in Australia. So we will also be able to Count that business into the HelloFresh, have your growth going into next year. Great. Thank you. The next question is from Victoria Petrella, Credit Suisse, your line is now open. Please go ahead. Thank you, Christian. Thank you, Dominique. I have some small outstanding ones. So first of all, obviously, June was a pretty lockdown 3 months. Where did those 400 1,000 incremental active customers came from in the Q2 versus Q1. Again, you talked about reactivations, but in general, probably it's an indication of sort of incremental demand into the next quarters. And also in this context, do I understand correctly that your guidance upgrade of revenues for 2021 is also an upgrade of the second half? It was sort of, I don't know, dollars 1,200,000,000, dollars 1,300,000,000 of sales per Q4. That would be my first question. In terms of capacity, could you please run us through the open facilities in 2021, the to be opened as well as the volume maybe in the number of orders type of capacity you are bringing on board. So we just understand what those extra costs I run against in terms of incremental impact. And of course, it's extremely helpful that you talked about €8,000,000,000 of overall sales capacity. Does it suggest that your €10,000,000,000 of revenues 2025, 2026 target is also moved forward now? Thank you very much. So let me start with the incremental customers. I think our outperformance on active customers was pretty broad based. So we've seen very good numbers in the U. S. We've seen very good numbers and contribution from Saxtra, higher than we initially anticipated. And I think with regards to international segments, Especially in the UK, we've managed to further expand market share. We've been really aggressive in the UK and as well as in Canada, The 2 markets where we have where we do face some competition. So in those markets, in particular, we've actually set up our new customer additions Truly make sure we can expand the market leadership position that we have. But overall, there were no countries which Growth was extremely slow. So it was more that in those countries I just mentioned, U. S, U. K, Canada, that was probably sort of like a leading the overall pack in terms of gross customer additions and also volume growth to net customer additions. And then in terms of our upgrade to the full year revenue Outlook, does that growth outlook, does that also imply an upgrade to issue? Yes, it does. So You look at the midpoint, for example, of our upward revised guidance and see how that compares, What that implies for H2 and how that compares also to consensus out there, which stood at the midpoint roughly or the upper half of where we've been before, You see that it also implies an upgrade to H2. On your Other question on capacity. Where exactly are we spending or planning to extend incrementally? So let's 1st, talk about what we've announced and done already in the U. S. We added Two big sites on the East Coast are dedicated sites on top of that for every place. In international, we And it's a big new full service set in the UK. We recently launched our mobile site in Australia And also expanded in the Netherlands and in Canada, so quite a lot of activity in international as well. In terms of Additional sites that come on top of that, that is in the U. S. There are 2 Additional big sites planned out of which we actually announced on already in Phoenix. And then also on top of that, Some expansion that we're planning for our long hair fresh U. S. Brands. In international, there Also further sites planned for competitive reasons, we would not like to say exactly which Geography or in which geographies that is incrementally planned what we had communicated Before, but one thing that we, for example, also brought forward somewhat is a big German side where we now this year already where We'll start and we'll incur costs for that time as well. To your last point, Victoria, on whether we are also bringing forward our €10,000,000,000 revenue targets from what was 20, 20 I have the answer is for now noted, yes. So it's great that you keep us on our toes, but I think this is This is still a journey, and right now, we're going to check on the journey. Thank you very much. If I may just ask one additional question. Your marketing expenses in absolute terms and as percent of sales are down quarter on quarter versus Q1 2021. Is it it's probably a mix of seasonality and customer acquisition costs. Can you maybe very briefly comment on that? To what extent your customer acquisition increased? They probably increased in the Q2. And what impact of seasonality It wasn't how you managed to keep it relatively low. Thank you very much. Yes. So it's exactly as you Same. That is back to a normal or more normal seasonal pattern, where as you know in Q1, we typically The most forward leaning in terms of our marketing activities, and then during Q2, we then will start to bring that somewhat So I would say, especially when we approach the summer season, so from, let's say, mid May onwards. In terms of So the second part of your question, our customer acquisition costs have developed, our city has been broadly stable Thank you very much. Thanks. And the next question is from William Wood, Bernstein. Your line is now open. Please go ahead. Hi, thanks very much for taking my questions. Just 2 from me. So I suppose just on the revenue seasonality and your updated guidance. I think when I look at it, it looks like a pretty strong drop in Revenue in the second half versus the first half. Can you just comment on how much of that is due to seasonality versus actually you've seen kind of some Demand normalization in the kind of 2020 cohort? And then secondly, just on discounting, I've seen kind of revenue per meal trending down year on year. I suppose how is discounting trended over Q2? How is it relative to FY 2019? And how are you seeing that going forward into Q3? Thank you. With regard to revenue seasonality, certainly, we've grown in the first half of the year by about 70%. Now guide for the full year is between 45% to 55%. That then implies that second half of the year we're not going to be growing less 70%, but obviously Lower than full year guidance. Nonetheless, I think it's both in relative as well as in absolute terms, Quite a big step up from what we had initially projected at the beginning of the year and then again in April. So something that's overall, I think is a very positive message. Now thinking about revenue seasonality, especially in Q3, What we continue to see is very strong order rates from people that we have acquired in the past 18 months. What we also see is that as people spend more time outside, less time in front of their laptops, computers, TV, Then we also dial back on advertising. It's usually not so great some time for us to advertise heavily in July August. And so, let's say, revenue seasonality that you will see in Q3 is number 1, that people have lower order rates Because they have spent more time on the beach or in the mountains wherever they make holidays. And secondly, because we take the foot off the gas in terms of advertising, Because July August just historically have never been good seasons for us, which again can't be explained with people being not existing customers, but potentially new customers Leave away from their computers and phones and laptops, which they obviously need to see our advertising and that will come on over. And then William, especially on your second question on Discountingprice incentives, as you know, price incentives are primarily targeted towards New customer acquisitions for the AC is similar trend to what Victoria just described on the paid marketing spend. So quarter on quarter, less overall price incentives that we've given in the Q2 versus Q1. Year on year, we work with higher patent additives given that Q2 last year was Obviously, impacted by being the peak lockdown on the quarter, so to speak, where we reduced price incentives Across the board also to household with the capacity we have available, which is more of The odd one out, I would say, but from a sequential perspective, in absolute terms, down The price incentives, overall price incentives versus Q1 this year, so in line with our paid marketing. And there are currently no further questions. So I hand back to the speakers for closing remarks. Thanks, everyone, for attending the 2nd quarter earnings call. We look forward Sure. Welcoming you and updating you on our Q3 performance in November. Thanks, everyone. Bye bye. Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.