Earnings Call: Q3 2020

Nov 3, 2020

Hi, and good morning, everyone. I'm really excited to share HelloFresh's 3rd quarter earnings results with you today. High level, it's been a quarter that's turned out very well for us despite continuing to see a challenging operating environment. Given our global footprint, we've been dealing with a variety of different circumstances in the different markets that we're active in. For example, during the quarter, we noted quite severe government imposed measures in the U. K. And in parts of Australia, whereas in Germany, Canada and most parts of the U. S, some kind of normalization took place over summer, albeit with fewer customers breaking up their routine and going on vacation. On a positive note, we've accumulated a lot of knowledge on consumer behavior and its sensitivity towards external factors, such as the varying degree of lockdowns that we've seen, the seasonality impacts in times of COVID as well as on the type of habit formation that's been going on among our customers. With regards to that habit formation, not only we, but the whole e commerce industry from fashion, beauty and furniture and food has really seen a tremendous acceleration of the shift from online from offline to online players. Due to our customers continuing to spend more time at home, working from home and consequently eating and cooking more times at home, we've observed strong data signals that point to sustainable habit formation. Among others, we've seen strong early order rates from new customers, strong customer satisfaction levels and collected a lot of feedback from consumers that they intend to continue to order at very high rates into the future, irrespective of external circumstances. For today's call, we wanted to keep it rather brief and focus predominantly on the 3rd quarter numbers, which Christian and I will lead you through in a moment. Before that, I'd like to make sure you all know about our Capital Markets Day on December 10. It's going to be all virtual, and the focus of that day will be squarely on our long term growth opportunity over the next 5 years and what we're really excited about to achieve over those next 5 years. For now though, let me start by quickly reviewing the highlights of the Q3 with you. Firstly, during the Q3, we conducted a refresh of our corporate identity. That's something that we really wanted to do every 4 to 5 years to stay relevant with consumers. You might have seen our new logo and some selected brand updates already. And by the end of the year, we wanted to have our new corporate identity fully rolled out so that you'll recognize it across every single customer touch point we have from advertising to packaging to rebranding all of our creative assets that we actually use. Secondly and very importantly, we reached 5,000,000 active customers for the first time in the Q3. That's up 91.5% versus the same period last year. We've also delivered a record number of orders, 19,500,000, an increase of 114% from last year and a record number of mills, more than 162,000,000 mills, up 135% from the same period last year. Taken together, that constitutes a Q3 revenue of over €970,000,000 which again constitutes a year on year revenue growth of over 120 percent actually 127% in constant currency. We've also achieved a continued strong free cash flow generation and generated in 1 quarter alone €118,500,000 And finally, our adjusted EBITDA margin has also been up by 8.3 points year over year to just short of 12% adjusted EBITDA margin. So all in all, I think very, very strong results, and we're going to take a deeper look at each of those numbers right now. First of all, group customer base has been up strongly and not only year on year, but also sequentially. We've achieved delivery to over to exactly 5,000,000 active customers in the 3rd quarter and added more than 800,000 additional customers sequentially. So 800,000 additional households that ordered in the Q3 over the Q2 sequentially, which I think has been a very, very strong achievement. And due to the fact that we could add a lot of capacity in our international segment, not so much in the U. S. Segment, but also being able to slowly scaling it up in that segment as well. We've also seen structurally higher order rates despite a varying degree of lockdown measures in Q3 across several markets and especially in Continental Europe and U. S, a return to some kind of normal over the summer months. So our order rates are still up 11% compared to pre COVID, compared to last year and but down a little bit from the 2nd quarter when we were really facing peak COVID in all our markets. If you look into the different segments, in the U. S, it's up about 19% compared to the same period last year, whereas international is also up over 4% year over year. That's something that really speaks to the fact that in the U. S. We were capacity constrained and focusing mostly on existing customers, whereas in international, we had added enough capacity to really take advantage of a very benign customer acquisition environment and could add a lot of customers during that quarter. If you look at customer orders in the 3rd quarter, they were also up very significantly, up 114% compared to last year and also up sequentially compared to the Q2. It's been driven by both an increase in the number of active customers as well as a continued high order rate as we just spoke about. Average order value has also been up compared to last year by 7% on a constant currency basis. That's been primarily driven by our larger assortment of add ons that we have and the higher take rate of those add ons and an increased number of meals per order. So as customers are spending more time at home, they have more opportunities to cook at home, and that's also where we come in and where we obviously offer a very strong alternative for their home cooking needs. It's been down sequentially from the peak of COVID in the second quarter. But like I said, still very, very strongly up compared to last year and now normalizing at a level that we think we can sustain for the next quarters as well. If you take all of that together, you get about 100 and 28 percent in constant currency revenue growth for the 3rd quarter. That's about the same that we had in Q2 in absolute amounts and just shy of that in euro reported currency, 120% in debt. And I think really positive that we've been able to stabilize at that same level that we've been in the Q2 when I think we were benefiting from very, very high order rates, very high AOB. And so by adding more customers in the Q3, we could more than counterbalance the effects of order rates and AOB slightly coming down sequentially. It's really been a consequence of the successful ongoing debottlenecking and creation of new production capacity across both segments. So if you look at the 2 different segments, then you can see that they both developed very strongly about to the same tune of growth. In the U. S, we've grown 100 and 25% in constant currency versus the same period last year. And in international, even slightly higher, 132% in constant currency. So really both segments contributing strongly to the exceptional performance that we've seen throughout the Q3. Okay. With that, let's talk about our contribution margin. Our contribution margin is still down year on year, driven by an increase in fulfillment expenses due to COVID. The good news is that compared to Q2, we are up sequentially. Also that the delta versus the same period last year is much smaller. It's run about 80 bps versus more than 3 percentage points in Q2. From a geographic perspective, our U. S. Segment is most exposed for this cost increase, especially in production and partly in logistics. Our international business, on the other hand, has actually expanded its contribution margin year on year to over 30%. Here, savings on the procurement side and fixed cost leverage have outweighed the effect of COVID. With that, let's have a look at our marketing expenses. Our marketing expenses as percentage of revenue are more than 7 percentage points below last year. 12.7% of revenues is still sit quite a bit below the 15% to 17% midterm guidance we've provided previously, but are somewhat up from Q2. So this quarter, we have achieved both very strong sequential growth in active customers, while still maintaining our marketing expenses at low levels. We've achieved that because we maintained our customer acquisition costs at very attractive levels for the full period across both of our segments. So very attractive customer acquisition costs And on top of that, continued leverage on our G and A side means we again achieved a very strong EBITDA this quarter. Of EUR 114,700,000 EBITDA, This is approximately 10 times of what we generated in Q3 last year and corresponds to a margin of 11.8%. So I'll also have a quick look at both of our segments. What's remarkable here is that both segments have again generated best in class e commerce margins with more than 10% in Q3. What's even more impressive is that each segment has operated at 10% plus margin for each quarter of this year, including Q1, which was still largely unaffected by any COVID impact. Our international business, which you see on the right hand side here, and which on balance has our more mature markets, actually is operating at a double digit EBITDA margin already for the last 6 quarters in a row. Let me now turn to the development of our liquidity position. We've generated again a very strong free cash flow in Q3 of 118,500,000 In each quarter this year, we have generated free cash flow of more than EUR 100,000,000 In Q3, we also had some adverse FX translation effects on our non euro cash holdings, which if you put that together with €118,000,000 free cash flow means we've increased in euro terms our cash position by EUR 111,000,000 to EUR 7 23,000,000 at the end of the quarter. I will now conclude actually repeating our guidance for the full year, which we have raised a couple of weeks ago. So on revenues, and on constant currency revenue growth from previously 75% to 95%, we've increased that range to now 95% at the bottom end to 105%. This is in constant currency. In euro reported, at current exchange rates, that would be around about 3 to 4 points lower than that range. Right now, I. E. After the first 4 weeks or so of the Q4, we're trending towards the upper half of that revenue guidance provided. In terms of EBITDA margin, we increased the range from previously 9% to 11% to now 11.25% to 12.75% in terms of a full year EBITDA margin. There, I would say, the midpoint of that range is probably a good base case. Also keep in mind that in Q4, December, the last 2 weeks, we will see some seasonal slowdown. Also, Thanksgiving week is in that quarter. And also, lastly, we, as you know, are ramping up quite a few fulfillment centers in that Q4. With that, we would conclude our presentation and look forward to your Q and A. We will take the first question from Shaquid Attia from Morgan Stanley. Good morning and thank you for taking my question. 3 for me. First of all, on the demand and just the general lockdowns that we're seeing, can you give us an update on the current demand specifically in these countries that have tightened restrictions or reentered lockdowns? And would you say that the current guidance takes into account these additional lockdowns across your market? 2nd, you showed impressive customer growth in the quarter. So of the new customers, can you maybe give us a rough split of many of these are reactivations versus customers who are completely new to the category? And then lastly, on the contribution margin side, so you called out temporary reductions in productivity in the U. S. Fulfillment centers as the driver for lower margins. So should we expect contribution margins to go back perhaps closer to 2019 levels once the new fulfillment center is online in the 4th quarter? Or is this more of a first half twenty twenty one story? Thank you. Hey, thanks for your questions. On the demand side, so as I tried to point out in my opening statement is that also in Q3, you've actually seen a varying degree of lockdowns, softmod lockdowns, governmental imposed measures throughout the different markets that we have. So especially in the beginning of Q3, a lot of the U. S. Was still kind of like spending a lot of time at home. The U. K. Still had some quite severe measures. Parts of Australia had some quite severe measures, whereas sort of like the summer season in Continental Europe was mostly free of those type of measures. Right now, we obviously see in Continental Europe that in the U. K, in Germany and France, etcetera, you have additional measures being discussed and being implemented in parts. We definitely have some sensitivity to those. So when we see that those are imposed, we do see that there is some additional orders coming in, existing customers ordering more meals, etcetera. So this is certainly something that we see. But on the other hand, right now in the U. S, right now in Australia, right now in Canada, which are some of our other very, very large markets, that is not the case. And so I think in parts of our business, we definitely do see some additional tailwind through that. But in Others, where we had seen that, for example, in Q3, we don't see it. So that I would say that the overall numbers should not massively be different to what we guided towards. And on the Sjaket, on your reactivations point, so if you recall, prior to COVID, reactivations trended at around about high 20s of our total conversions in a given quarter. We then during Q2 tied back quite a bit on reactivations to somewhat manage effectively demand and bring that in line with the capacity that we had available. But in Q3, I would say, the share of reactivation is somewhere in the middle of those 2 goalposts. On the contribution margin outlook, I think it's important to keep 2 things in mind. First one, structurally, our productivity has not changed, yes? So if you basically take out those temporary effects, If anything, our productivity continues to clock higher, and that's what you will see structurally in the midterm. More near term, I. E, in this quarter and most likely still the next one, social distancing is still a reality. And that then somewhat reflected in our production costs. On top of that, in Q4 as well as H1, we are ramping up quite a number of fulfillment centers, both in our U. S. Segment as well as in our international segment, which will basically have a certain impact on contribution margins as well. So you will see both of those more temporary effects still certainly in Q4, but also in H1 next year. But structurally, we're still targeting the same contribution margins as we have discussed in the past, and there's no we don't see any structural impediments to that. Great. Thank you. The next question comes from Robert Berg from Berenberg. Yes. Hi. A couple of questions, please. The first around new customer behavior. You've now had the March, April, what maybe we would call peak COVID customers for over 6 months now. And you mentioned you have the formation as a theme, but any comments on those initial customers in recent months and how their behavior has developed? And the second question is more conceptual. You've seen a decent amount of normalization in Q3 and basket sizes average order value heading back towards normal levels, particularly in the international region. While you mentioned just now there were obviously restrictions in certain markets, most of our restaurants, grocery stores all provide lots of options. And it's maybe an impossible question to answer, but if you can compare maybe different markets, how much of your current growth do you think is perhaps COVID related versus regular kind of structural growth that's here to stay? Maybe you can't answer, but it'd be interesting to hear your thoughts nevertheless. Thanks. Rob, on your first question, so in terms of customer behavior, so there we see a continuation of the positive trend that we have discussed last time. So when you look at customer engagement metrics, retention, order rate that you also see in this presentation here, we see a very positive trend and a trend above the baseline of what we've seen as baseline a year ago, for example. So there are continued strong behavior. Yes. And I think as you indicated, it's hard to answer that question. And maybe one data point that I can point you towards were obviously our Q1 results, which were also up very strongly. We're only in the last 10 days of March. We've actually been affected by COVID. So during that period, I think we were up over 40% year on year. So that was sort of like the going growth rate before we had any impact of COVID affecting the business. That is certainly something that we felt we could have probably driven forward throughout the year. I think as of today, as you actually look into Q3, as you look into Q4 and some normalization going on, it's very hard to put one number down. But I think conceptually, and I guess that was the sort of like question that you had, I would say that roughly half the growth is growth that we would also have had organically and another sort of like half is that now customers spending a lot more time at home and actually bringing forward certain behaviors. So some of the customer behavior that we've also seen is that some of the data points that we collected is that there were a lot of people that were considering buying from HelloFresh, but then for one reason or another, either lack of time or never sort of like got around to ordering, etcetera, have never tried it out. And those are actually customers that respond very positively and also have very strong order rates. So that's something that we can see in qualitative feedback, and that's also what makes us quite confident that this is behavior that will, to some degree, remains key over the next couple of years as well. Okay. Interesting. Thanks very much. The next question comes from Andrew Gwynn from Exane BNP Paribas. Good morning, team. Two questions. I mean, you've talked about it a little bit, but some of the data you mentioned on the habit formation, I'm just wondering if you could elaborate a little bit more. Maybe I'm preempting some of the CMD there, but a little bit of help would be good. And then secondly, just something I've noticed myself as a customer, but you've maybe seen a couple of points where there's been a few operational challenges, and I'm thinking particularly sort of ingredient shortages, that kind of stuff. I'm just wondering how widespread that is. You also mentioned already very strong customer satisfaction data. So maybe it's something I could not think, but just any sort of more detail on maybe some of the operational constraints that you're seeing? Thank you. So on habit formation, Andrew. I think what we've seen is, number 1, that we always look at the behavior of a group of customers in the early weeks very, very detailed. So what we've seen is that a lot of customers that joined us over the last 6 months have had very strong early order rates. So that's one signal that we track very closely because it usually gives a lot of indication how those customers actually behave in the mid- and in the long term. Another data point is we've been polling a lot of customers and asking them for feedback, especially customers that joined during that period about their plans, what is it that they're replacing, where would they have spent their food budget otherwise and how do they think about that spend going forward, what do they intend to buy more from, what they do intend to buy less from. And the results that we've gotten were actually very much in line with other external studies that we've seen. I think there were studies from hypersandler, from Morgan Stanley, from a couple of others, which also were very close to the results that we got when pulling our own customer base. So I think those are just 2 of a few data points that we have. And as you said, there's more of that, that we're also going to be talking about at our Capital Markets Day. On the second question of yours, operational challenges, I think especially in the U. K, we were basically also maxed out in terms of capacity, and we're bringing on new capacity now till end of the year. There have certainly been some weeks when our sort of like structural failure rates or error rates was higher than we would have liked. I think as of today, we've come down to the levels that we've been operating at pre COVID. But definitely, I mean, I don't want to sugarcoat anything. There have been weeks where we've also been suffering from some challenges in our operations, whether that's ingredient shortages or also sometimes carriers that have been maxed out. And so we had to basically deal with the carriers not being able to sometimes deliver some of our boxes. I think all in all, that's something that all e commerce companies have seen. And it's been quite widespread, but certainly not at a level that we're fully satisfied with. But I think the positive note is that a lot of that had normalized over the last couple of weeks again. Okay. Thank you. Just the other thing that sort of intrigues me at the moment is the carbon neutral decisions. I'm just wondering if you could elaborate a little bit more on that. It seems to be that you're keen to get involved in specific projects rather than maybe just buying credits on the market. So just maybe the reason for the change and how important is it to consumers and perhaps just a little bit more color on what you're doing? Thank you. Sure. Look, so the carbon offset that we've decided to do now is really the 3rd step that we of our CO2 policy. First one is to just by our business model be more sustainable compared to any other realistic food model that you've got out there. 2nd one is then to optimize within our business model. And then what's left here is really what we decided then this year to offset. You're right, we took them, let's say, slightly more expensive and work heavy routes by not just buying certificates, but really with 2 partners going out there and selecting projects, reforestation and the like that we think fits best to us and have a good impact. We'll take the next question from Markus Steeple from JPMorgan. Hi, everyone. Very One question is on churn. The disclosure you gave in the past was one number that you highlighted that you retain about 20% of cohort revenues after 8 quarters. I think that's the number you've given a while ago and obviously well pre COVID. Could you tell us roughly if you would give this today? Or where would that be roughly in terms of the percentage? Just trying to find out what really the change in consumer behavior so far has been. So if you can just update us on this, that would be helpful. And then if you could let us know maybe broadly where we are tracking on customer acquisition costs for in the Q3. Markus, it's Christian here. So on your two points, first one on net revenue retention after 8 quarters. So one thing that we can say and also confirmed a period in the past is that it certainly is not worse than what we had put out there 3 years ago at the time of our IPO. On your second question on customer acquisition costs, we don't give that out on a quarterly basis. But as I mentioned in my presentation, certainly, they're attractive now, also attractive versus some of the historic levers that we had discussed. But certainly, COVID has helped. But on top of that, this is something you've really seen from us over the last 5 quarters now. From the very strong customer acquisition cost levels we had sometimes beginning of 2019. We since Q2 2019 brought that down successively every quarter and Q3 was basically a continuation of that trend. Okay. But I won't get anything more, Christian, on the numbers, just not worse than the IPO. So I think the Yes, trying to work out basically, is there a meaningful change yet in from March onwards, I. E. Those customers that you acquired pre COVID, have they stayed also a lot more resilient or not? I'm just trying to work out how that works over the last 4, 5 months. I think whether you about contribution margin, whether you talk about revenue retention or customer acquisition costs, those all of those metrics obviously have seen some change during COVID. I think what we want to be focused on is the midterm and long term opportunity. And there, we actually don't think that anything has majorly changed structurally, but rather that the performance that we had seen in Q1 is indicative of what we will see as sort of like the world returns to normal. I don't want to boast about the lowest customer acquisition costs that we ever had or that revenue retention is now better than pre COVID because I think that is certainly something that has been sensitive to some of the exogenous factors. But what we really want to focus on is the more midterm and long term opportunity. And to be successful in the midterm and long term, we don't need to have that tailwind or that positive change from the exogenous factors as we've seen in the last two quarters. We will now take the next question from Alastair Berkey from Citi. Hi, good morning. Thanks for taking my questions. 3, if I may. Firstly, every plate looks to be performing really strongly in the U. S. Can you please share some comparisons between customer behavior across the U. S. Price tiers and outline the level of penetration of new every pay customers who have reactivated after using the core HelloFresh offer? 2nd question, please could you disaggregate the moving parts within gross margin from an operational discounting perspective? And also outline the relationship between top line promotions and direct marketing costs and how this has evolved through COVID? And finally, the international holding fee looks to be relatively high as a proportion of profit. Please could you explain what has driven the increase and how we should frame our expectations going forward? Thank you. Let me comment on EveryPlates U. S. So EveryPlates definitely been a good growth driver of the course of this year. It's obviously our value tier. So we have lower AOV. What we tend to see with the lower AOV is that when you look at food costs, they're probably, percentage wise, in line with what we also see in HelloFresh. Oilsailment costs are structurally slightly higher compared to our HelloFresh business, but we more than make up for that by also seeing lower customer acquisition costs. In simple terms, the cheaper a product, the easier it is to win people over for that. And so I think if you then look at customer profitability, every customer that we get into EveryPlates in the U. S. Gets us the same ROI on that investment that we actually get bringing in a customer into Green Chef or HelloFresh. So the band in which we operate in terms of customer profitability and in terms of ROI on our marketing spend is really quite comparable across those three brands. And in terms of customer sorry, go ahead. No, obviously, I'm sorry. Yes, in terms of customer recapture, just what's the kind of flow of customers between your price tiering? It would be good to get a sense there. So there is actually I mean, we it's one of many drivers that we have to have people that, for example, at HelloFresh have at some point canceled or paused and told us that they felt that the product was too expensive, that we then sort of like funded them towards our EveryPlate U. S. Brand. But that's only a sort of like a smaller minority. I wouldn't say that this is like a very large part of our customer acquisition for EveryPlate. It's certainly something that we think is a good side effect that we can leverage that pool of customers better and funnel them to a price point where they can order in a more sustainable fashion. But the vast majority of customers that we acquire into EveryPlates are customers that have not been with HelloFresh. Because if you just look at the price points at Everyplace, the $5 price point is really the median price point that we have for U. S. Consumers and how much they spend for home cooked dinners. That is a slightly different target group than our classic HelloFresh target group. And in the end, what we found out is that customers are quite good in opting in the type of meals and in the type of price points that they also usually have at home. Okay. Great. Alison, sorry, I didn't want to cut you off on your previous questions. On your other two questions that you had, relation of top line discounting versus direct marketing. It's a good point. It's effectively something that you have seen from us, say, pre the second quarter this year that during the 3, 4 quarters before that, we somewhat shifted our marketing budget from, let's say, paid marketing into more price incentives during Q2, given the very heavy capacity constraints that we had to manage against, we died back a lot on those price incentives. And now Q3 started to normalize more towards not fully, but towards the levels that are more normal for us that we've observed effectively pre Q2, I. E. There was more were more price incentives given in Q3 than what we certainly did in Q2. And that's absolutely why it has a certain impact on the AOV as well that we've put out. On your other question on the holding fee, yes, I would almost beg you not to lose too much headache about our holding fees. From your perspective, you should consider it almost as, let's say, intra group dividend that we get from our individual segments and geographies once they basically have used up all the tax loss carry forwards, which is now the case pretty much this year also for our U. S. Business. That's why we also putting a lot of focus on to give you the segmental data also on a pre holding fee. So we show it to you post holding fee, but also pre holding fee. Let's say the economic performance of our segments, you certainly look see better when you look at the EBIT, EBITDA, excluding holding fee as we give it to you in our segment disclosure. Okay, great. Thank you very much. We'll now take the next question from Victoria Petrova from Credit Suisse. Thank you very much and congratulations on strong results. I have 3 short questions. First, I'm looking at your Slide 13, where there is basically a different dynamics between EBITDA in the U. S. And international EBITDA differential. Is there any structural reason why U. S. EBITDA is sort of long lower, long term? And what would be the explanation between this first, second, third quarter dynamics of the trend? My second question, you mentioned that with entering Australian market with every plate, you increased your TAM by 25%. Is it fair to assume that other international markets are subject to also 20% to 25% total addressable market increase in case you are internationalizing your brands? And my third question, you were guiding mid to high teens revenue growth in 2021, but it was based on your previous guidance. Now the guidance is upgraded, obviously, the base is higher. Are you keeping your sort of 2021 expectations in terms of growth unchanged? Thank you very much. Hi, Victoria. On your questions around EBITDA margins, I think the simplest explanation here, it's really time on the markets and maturity of the markets that we have. So in the U. S, we only started really scaling the business in 2014. And most of our European markets, which make up the bulk of our international segment, we already so in 2011, 2012. So you can basically see all the way up to the Q1 that U. S. Was lagging the international markets by pretty much 12 to 18 months in their overall development. And that's really just a question of maturity. The longer we are on the market, the more opportunity we have to optimize margins, the more orders are coming from our established customer base versus new customers. And all of that taken together means that you had seen slightly different EBITDA margins in U. S. And international. Long term, structurally, they should all be trading sort of like at the same levels because the differences are not very large between the markets that we have. They're more sort of like business model inherent that we should be able to get them to very attractive double digits. On Every Plate Australia and the TAM increase, I think, as you rightly indicated, that usually, the price points that we want to choose for every plate is so that we can open up an additional TAM of about 20% to 30%. And so also in Australia, with the price point that we have chosen, that meant that according to all our estimates, that was a TAM increase of about 25% in Australia. And you can expect the same if we were to launch EveryPlates in any other international markets, that we choose the price points that allows us to make a good margin, but at the same point, allows us to push for at least 20% to 30% higher TAM. Question? Just remind me. The last one was on your 2021 growth, mid- to high teens, if you are still sort of guiding around the same levels despite guidance upgrade for 2020? So we want to provide sort of like a more detailed picture during our Capital Markets Day. We'll be mostly focused on the long term opportunity in the next 5 years, but definitely also on the guidance for 2021. I think here what we previously said, we still stick to. I think right now, we see very encouraging behaviors of customers in all different geographies. There's certainly been a huge acceleration throughout this year, but we'll carry forward a very large customer base into next year. And if you think about the U. S, where we haven't really been able to add a lot of new customers for any of the last 6 months and also now are only very slowly opening up new capacity, we should be able to capture a lot of that latent demand into next year. And here and then, we haven't even talked about internationalization of some of our brands as well as further geographic expansion. So all of those are additional growth levers and all of them taken together. We still feel very confident with what we've previously stated. But please bear with us until the Capital Markets Day, where we will provide more detail on that. Thank you very much. And looking forward to December 10. Thank you. We will take the last question from Fabienne Karan from Kepler. Please go ahead. Good morning, everyone. Two quick questions from my side. The first one, how shall I think about the cost of reactivating customers? Is it only discounts? Or do we have some marketing cost in this? And the second question is about your cash position. You've got a decent cash position. You're now a profitable business. You're not very capital intensive. So what's your view about cash potential? Do you have a potential dividend or buying back your bonds or doing some M and A or share buyback, please? Fabienne, on your first question, cost of reactivations, it is more geared towards price incentives. So there's a little bit of paid marketing attached to it as well, but substantially affecting the price incentives that we're giving. On your second question, the luxury topic that we will deal with, how to best deploy our EUR 723,000,000 of cash. I would say near term, we will first focus on CapEx spending at hand. So we are ramping up a number of fulfillment centers now for Q4 alone. And we still stick to the €70,000,000 CapEx guidance for this year. So you should expect for Q4 on about €30,000,000 CapEx in that quarter alone. And then H1, given the capacity and capability expansion that we're doing, there will be quite a bit in H1 next year as well. And anything beyond that is a little bit premature what we how we want to deploy that cash. Okay. Thank you. Thanks, everyone, for attending the Q3 earnings call. Definitely looking forward to engaging with you individually and then see you again to our 4th quarter results that we'll be publishing towards the Q1 next year. Thanks, everyone. Bye bye.