Earnings Call: Q4 2020

Mar 30, 2021

Dear ladies and gentlemen, welcome to the Full Year twenty twenty Earnings Call of Westwing Group AG. At our customers' 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 Stefan Smoller, who will lead you through this conference. Please go ahead. Good morning, everyone. Thank you for joining our 2020 earnings call. I'm glad to be speaking with all of you and hope that you are safe and well. Today, we will review our full year and Q4 twenty twenty results. With me in this call is Sebastian, our CFO. A reminder, Westwing is a company whose mission is to inspire and make every home a beautiful home. And during 2020, we progressed very strongly and successfully on this mission as well as building a strongly growing and very profitable company. I will now provide an update of our business and our results. Then Sebastian will provide the financial details, and after summary, we will go to Q and A. Just hold on. Presentation. Yes. Good. In summary, 2020 was an extraordinary year for us as we have experienced a strong acceleration of e commerce in the home and living market. Before we come to the strong results of 2020, let me frame the bigger picture of where Westwing currently stands. 2020 gave us a glimpse of the unique opportunity in front of Westwing as the market for home and living is going online and through e commerce. COVID accelerated this trend, but we are convinced that this trend will not reverse as the pandemic hopefully winds down over the course of this year. We are convinced that we have what we have seen is an accelerated structural change in consumer behavior. During these times of accelerated growth, we were able to demonstrate how well the unique business model of Westwing is working at scale. We have proved that we can build a very profitable and highly cash generating e commerce business from a relatively early stage onwards and that our inspiration based brand approach is highly appealing to our target group. Let me emphasize that Westwing is only at the beginning, and we will continue to manage this business with a long term horizon and strategy. Despite the strong growth of the last year, the home and living market is still at a very low online penetration, and Westwing is still tiny compared to the overall market of more than €100,000,000,000 within Westwing's footprint. We literally have less than 0.5% of market share. So the opportunity is much larger in front of us. I can assure you, we will not lose sight of this much larger long term opportunity ahead of us and focus on building the business we envision for Westwing, the European leader in inspiration based e commerce for home and living. With that, let me summarize the strong results of 2020. We realized revenues of EUR $433,000,000 had a very strong growth of 62% year over year in 2020, with Q4 growth even further accelerating to 76% year over year. The strong growth resulted based on attractive unit economics and scale effects in a very strong profitability of EUR 50,000,000 adjusted EBITDA at 11.5% adjusted EBITDA margin. This profitability was converted into EUR40 million of free cash flow at 9% free cash flow margin, showcasing our best in class cash conversion ability. Furthermore, it was very encouraging to see that growth continues to be driven by our loyal existing customers, who show higher repurchase rates as well as a strong new customer acquisition. As mentioned in the beginning, we remain very upbeat on the opportunity in Home and Living e commerce as our more than EUR 100,000,000,000 market is moving online. We are convinced that e commerce adoption will remain strong and dynamic in the years to come and that we are in a very strong position to leverage this shift. As we have already completed the first three months of 2021, let me also provide a short update on this quarter. Overall, we had a very strong start in 2021. GMV for Q1 twenty twenty one is expected to grow by circa 92% and continued high profitability in Q1 at around 14% to 15% adjusted EBITDA as expected. Let's dig into a few details of 2020 before I give you some more background on our priorities and outlook for 02/2021. 2020 was not only in terms of growth and profitability a very strong year, but our whole business has delivered outstanding results. Our operations delivered more than 4,000,000 orders to our customers across Europe as our warehouse network scaled perfectly, and our frontline workers have done a tremendous job managing the increased volumes during these difficult times. Our customer care service ensured a high customer satisfaction during sudden demand increase. For instance, we answered 95% of service tickets within twenty four hours in our DUS segment. Our organic marketing model continues to be a great success story and at the heart of our brand and inspiration based e commerce model. On Instagram, just to give you an example, we were able to almost double our organic audience to more than 6,200,000 followers. And most importantly, we were able to maintain a high customer loyalty with 79% of orders placed by repeat customers alongside a record number of new customers. As a result, we're serving now more than 1,500,000 loyal active customers across Europe. The COVID situation, to give you some context, remains serious in Europe. Our number one priority remains health and safety while proactively managing the associated risks. Customer safety is of utmost importance to us to live up to this priority. We operate with wide ranging hygiene measures in warehousing and together with our freight carriers in delivery. Our various warehouse and photo studios continue to operate with highest hygiene standards and effective distancing measures, so our frontline workers can deliver at the highest level in a safe work environment. At this point, I would also like to acknowledge once again the enormous performance that our frontline workers have been delivering to manage our elevated demand at heightened safety measures for over a year by now. We continue to thank you and we so much appreciate your tireless work and your dedication. Thank you so much. Most of our office teams continue to work from home at excellent productivity levels. At the same time, we are putting an increasing focus on team cohesion to maintain our great Western culture. While focusing on health and safety, we continue to manage COVID related risk carefully and take all possible prevention measures. The risks we currently face in relation to COVID are: a potential forced warehouse closure. We, of course, take comprehensive safety measures to minimize the risk of a temporary warehouse closure due to a COVID outbreak, yet a risk remains. Supply chain disruptions and selective out of stock issues for products and raw materials are still a risk we face. Yet at this point, our supply chains are generally intact. We're in close contact with our suppliers and partners on the freight side to identify issues early on. In addition, we face currently significantly increased freight rates for containers as many companies in the world. However, at this point, impact on overall profitability for West Wing is very small. Due to the general online shift, freight carriers, our last mile partners, might face capacity constraints. We are working with existing and newly onboarded last mile carrier partners to mitigate those effects. Overall, we continue to manage the special COVID situation well with a focus on health and safety and mitigate COVID related risk as good as possible, but we also need to acknowledge that some relevant risks remain, which we need to closely monitor and manage. Coming now to some details of 2020. Based on the acceleration of e commerce adoption in our market, we delivered very strong GMV growth of 62 year over year to over EUR0.5 billion of GMV, concretely EUR502 million of GMV in 2020. This went in line with incredible active customer growth of 580,000 new active customers to now overall 1,500,000 active customers. Keep in mind, we ended last year with less than 1,000,000 active customers and now we are already at 1,500,000 by the end of last year. These are all customers that we can work with in our loyalty driven predictable business model. This growth happened in all our countries. Especially development in our international segment was very encouraging, further strengthening the progress made across the whole country portfolio. On the following page, let me provide you with some more insights what drove this growth on the customer side and what we see in our cohorts. The very positive aspect of this strong growth continues to be that it's driven by both our existing loyal customers and strong new customer acquisition. On the left side, you see new customer acquisition has been super strong in 2020, as our organic marketing model paid off big time during this accelerated e commerce shift. Overall, we generated 91% more new customers in 2020 than we did in 2019. What you see in the middle of this slide is, moreover, the new customers we have won during the last nine months continue to indicate strong repeat purchasing behavior already in their early time with us, as shown by our Q2, Q3, Q4 cohorts, and the accumulated GMV generation in the weeks after the first purchase, which is even slightly higher than our 2018 and 2019 cohorts were. Thus, these customers, we believe, are likely to become also long term loyal Westlink customers who will contribute to future growth. On the right side, you see the other portion of our growth was driven by our loyal existing customers, who showed continued higher engagement and repurchase rates in 2020. Overall, the average orders per active customer of our 2012 to 2018 cohorts increased from 3.1 in 2019 to 3.6 in 2020, which is roughly 20%. We believe this is another strong indication that customer behavior has changed fundamentally towards e commerce. All in all, 2020 was a great proof of our loyalty driven business model, which is at the core of Westwing and provides the basis to our profitability and growth strategy. Therefore, we will continue to focus on the loyalty of our customers by investing even more into great customer experience and inspiration. With that, I would like to zoom out of our recent 2020 results to provide some more details on the opportunities ahead of Westwing and an outlook into 2021. The home and living market provides a massive growth opportunity. It's very clear, we have experienced a year of strong market growth and COVID related effects that did support that growth. Yet we are convinced that we will not go back to pre COVID levels, because we are convinced that COVID did not result in a one time boost of e commerce, but in a lasting and structural change of consumer behavior. We were able to serve a huge number of new customers and additionally convince existing customers of more use cases for home and living e commerce. Our customers experienced the clear advantages in terms of convenience and shopping experience, and many adopted online shopping for home and living as a new habit. And consumer habits typically don't reverse, when new ones provide a clear advantage on convenience and shopping behavior. When people started using mobile phones, it didn't go back to dial up and most people still drive cars and not ride horses. In addition to adaptive consumer behavior, there are more reasons why we are convinced that e commerce adoption will remain strong and dynamic. The cocooning trend that we have seen over the past twelve months will remain. People will continue to spend more time at home compared to pre COVID levels. The demographic trend is also very supportive of further online adoptions as online savvy millennials reach an age in which they start spending significant money on home and living. And lastly, technology trends such as augmented reality will further enhance and improve the use cases for home and living e commerce. There's still plenty of headroom for e commerce adoption. The home and living market is still super early in its online adoption compared to other verticals, and the upside potential remains massive. This opportunity from high online penetration will enable very strong market growth rate for many years to come and consequently also enable us as Westwing to grow strongly in the coming years. May I remind you again that we are now at 0.4% of market share in European home and living, we're a tiny, tiny, tiny company yet with so much growth potential. To capture this massive growth opportunity, we'll continue to invest heavily into our business and long term vision. We will invest significantly in 2021 to lay the foundation for sustainable long term growth. We are heavily investing into our business to lay the foundation for strong and sustainable growth in 2020 and the years thereafter. These growth investments are simply intensifying the existing strategic priorities, which we have funded for years by now and which have been the basis to our successful last year. So we're not doing anything new here. This is acceleration of existing strategy and doubling down on what we are doing well. Firstly, we will invest heavily into technology. We're a technology company through and through, and with state of the art technology stack, we're able to move the business forward proactively. Our technology team and platform are the backbone of our business and growth strategy. And with our technology investments, we aim specifically on state of the art customer experience features and operational processes, as well as ensuring our platform remains future proof and scalable. In terms of marketing investments, we will double down on our proven differentiating organic marketing model with social media focus and content marketing focus by opening up new channels, as well as bringing existing channels to the next level. Additionally, will invest significantly into brand awareness, which provides a great growth opportunity for us. Also, we will significantly expand our private label Westwing collection team. Our Westwing collection business is our strongest strategic initiative and a massive value driver for Westwing. Our investments in this area are mainly focused on two things. First, we want to expand the category coverage of private label and West Wing collection to ultimately further increase our share of West Wing collection. And secondly, we have a clear ambition to transform our West Wing collection into a product line of sustainable products, While the full transformation to a fully sustainable will be a journey, over many years, we will start this year with the first sustainable product lines going online. Sebastian will later provide you with some more details how these investments will impact our p and l later this year. Let me now move on to our priorities in 2021. Priorities for this year are run the business well in a volatile environment and build the Westwing customer experience two point zero. COVID pandemic will unfortunately continue to impact our lives and business significantly in 2021. And accordingly, we have set ourselves two overarching priorities. Health and safety remain the basis of everything we do, and we run the business with high flexibility in all areas and will react fast to changing market environments. Our first priority is to run our day to day business at the highest standards and execute business critical initiatives. That means especially ensuring a great team cohesion during a work from home environment, investing into HR to attract and retain talent, expanding our warehouse capacity, although these will only be incremental warehouse expansions to enable better stock levels and will not massively invest into new warehouses in 2021 and invest into product availability, especially private label Western Collection to improve customer experience, enable the full potential of that business. Our second priority for the year is our West Wing Customer Experience two point zero program, which is a multi year strategic program to improve our customer experience and ultimately our future growth drivers. Within this West Wing Customer Experience two point zero, there are four pillars centered around our strategy as an inspirational e commerce consumer brand. We will bring our inspirational and creative core to the next level and double down on the differentiation of a loved brand. This includes, for instance, brand development, further development of West Wing collection, organic marketing and many more. We will improve on our state of the art order and post order experience by providing strong availability of our products and a great delivery experience. We will ensure a scalable and reliable business model and platform, especially a scalable technology platform. And incorporated in everything we will do, we will make sustainability a priority and anchor it at the core of our business. We will soon provide you with more details on these initiatives on our Capital Markets Day in May. Now let me talk a little bit about what happened this year so far. We had a strong start into 2021 at circa 92% expected GMV growth for Q1. On the highlights side, we first of all saw this GMV growth in January to March, which is expected at 92% year over year. Furthermore, execution of our day to day business in the first three months has been very good. We were able to provide our customers an inspiring and fresh offering in line with the Zeitgeist, we were able to realize very healthy unit economics. And as a result, we expect a very strong profitability of around 14 to 15% adjusted EBITDA for the first quarter. Moreover, we continue to constantly progress on our path towards more than 50% private label Western collection share, as we expect to increase the share by six percentage points year over year to 31% in Q1 twenty twenty one. Lastly, we have decided to accelerate our warehouse expansion plans to ensure that our warehouse will not become a growth restriction at any point. Next to these highlights, we also faced some challenges in Q1. The product availability of our private label Western collection products did not improve to the extent we had planned for, especially because demand levels were very strong. Secondly, we currently experience, like most businesses, a shortage in container availability and significantly increased freight rates. Yet the impact on our business from that is manageable and we do not see it as an immediate threat to our business. Overall, the first quarter of this year was extremely strong in both growth and profitability. With that, I'd like to hand over to Sebastian for the financial details. Thank you, Stefan. Good morning, everyone. Let me start by giving you my overall assessment of 2020 before we jump into the details of our results. Overall, 2020 was a challenging yet very successful year with outstanding financial results for us. But more importantly than the results of 2020 itself is what we were able to demonstrate and prove in this extraordinary year and what we can take from that for our long term vision of Westwing. We have built a stellar business model, which is in the unique position to deliver strong profitability. We are proud that we have faced the opportunity in 2020 to prove how well our business model is working at scale as the online adoption accelerates in the home and living market. Yes, I want to emphasize that we will continue to take a long term strategic approach, which which requires continued growth investments into our business. With our long term view and knowing we are still in the very early days, we feel it's the absolute right strategy to capture the massive opportunity ahead of us. With that, let me provide you with the financial details of the full year 2020 as well as the fourth quarter twenty twenty before I will give you an outlook for 2021. In 2020, we realized group revenues of €433,000,000 driven by strong customer momentum Stefan has described in the first part of our presentation. This was a 62% year over year growth for the full year, while Q4 showed even higher growth rates of 76%. We are very happy to report that this growth is coming from both our segments. International was growing at very attractive 64% versus 2019, even slightly outperforming our DAF segment with 60% growth in 2020. Next to growth, also profitability has been very strong in 2020, with full year adjusted EBITDA margin at 11.5%. This strongly improved profitability was driven on the one hand by the increased size. The level shift in size enabled us to realize significant operating leverage in almost all our P and L lines. On the other hand, profitability was based on very strong unit economics reflected in our contribution margin. While we have achieved substantial and structural improvement in terms of our contribution margin, I want to highlight that we also benefited from some special effects here in 2020 that I will comment on in a bit. Let me now give you some more details as I move down the p and l lines. Starting with gross margin. Our gross margin improved by 4.8 percentage points year over year to now 49.4% in 02/2020. This increase was mainly based on a great retail margins driven by our pricing power in combination with a strong private label share. Yet, we also benefited from a smaller special effect as we have seen lower inventory related obsolescence costs. Our inventory levels were relatively low and we sold off inventory at a fast pace at high inventory turns and had hardly any aging write offs. We were also able to improve our fulfillment costs in 2020 by 3.3 percentage points year over year. As a reminder, our fulfillment costs include our logistics, customer care and payment costs. Improvement was two folded. On the one hand, the 2019 baseline was negatively impacted by our warehouse move in the 2019. On the other hand, the basis to this improvement is our very efficient warehouse setup that we've implemented across Europe in 02/2019. Our warehouse is also currently run at very favorable utilization rates as we manage the sudden increase in shipment volume reliably and at high customer satisfaction with the existing infrastructure. While this financially means we can realize significant operating leverage in our warehouses, this also means the headroom capacity in our warehouses is decreasing. Therefore, we plan to further add warehouse capacity to ensure we can manage future growth and an expanding private label business that requires more stock. However, these investments are currently only incremental invests with limited impact on our financial results in 2021. Lastly, noting in fulfillment costs, we benefited from lower return rates in 2020 as observed in other industries as well. As a result of higher gross margins and lower fulfillment costs, contribution margin improved significantly to 29.5% in 2020, an increase of 8.1 percentage points versus 02/2019. We assume the structural contribution margin excluding the 2020 special effects of low inventory obsolescence cost and the tailwind from lower return rates to be approximately two percentage points lower than reported. This would still imply a structural improvement of six percentage points compared to 02/2019. In terms of marketing, we have continued our investments into marketing. Yet as our organic marketing strategy is very much people driven, the ramp up was not able to follow the sudden increase in revenues. So that we slightly underinvested was our target ratio of eight to 10% with 2020 ending at only 7.1% of revenues. G and A costs, which primarily consist of salaries and wages for technology, creative buying and supply chain management, were another important driver of our improved profitability. G and A ratio decreased by 6.5 percentage points compared to twenty nineteen, demonstrating strong operating leverage. I think important to highlight how well our G and A basis did scale in 2020 as this realization of operating leverage is the key driver to achieving our target GNA ratio in the long run. At the same time, as Stefan described, we believe we still have very, very attractive growth investments to make. The combination of the top line growth, strongly improved contribution margins and operating leverage resulted in fantastic bottom line results in 2020. Adjusted EBITDA improved by 15.4 percentage points to 11.5%. In absolute terms, we realized an adjusted EBITDA of €50,000,000 in 2020 and €26,000,000 in Q4 twenty twenty alone. Just like the growth, the improvement in profitability was driven by both segments. The international segment, which had been negative in the past, now showed a positive 4.8 adjusted EBITDA margin in 2020 and even 8.6% in Q4, while the DAF segment realized a margin of 16.9 for the full year 2020. As with most of our business parts, are leading with DAF and the international segment follows with a few years afterwards. Now moving to cash flows. As we operate a highly capital efficient business with a negative net working capital, we did not need to fund any net working capital to enable a strong growth last year. By the end of 02/2020, our networking capital was at negative €4,000,000 despite significant investments into our inventory to improve product availability. Furthermore, we have had a very low CapEx ratio. Our CapEx is mostly capitalized internal software development. In 02/2020, our CapEx ratio decreased by 1.6 percentage points to 1.9 of revenue versus the previous year. This decrease does not reflect a significant change in our absolute technology spending nor repurposing, but as a result of the higher revenues in combination with lower capitalization ratio. As a result of the strong profitability supported by best in class cash conversion, free cash flow improved by €62,000,000 year over year to €40,000,000 of free cash flow in 2020. Subsequently, our free cash flow margin improved significantly to 9% in 2020 compared to minus 8% in 2019. Based on the free cash flow generation of €40,000,000 in 2020, our net cash balance increased to €105,000,000 which is €32,000,000 higher than the ending balance of 2019. This cash balance gives us great comfort and strategic optionality going forward. Now let me turn to our guidance for 02/2021. Before jumping into the numbers, I want to share with you the context in which we are giving this guidance. While we are extremely confident in the medium to long term development, we are still operating in uncertain times with question marks around the macroeconomic environment, consumer sentiment, and the further pandemic development for the remainder of the year. Having said that, we plan for a very strong 2021 and expect to continue to significantly grow our business and realize very attractive profitability while we are at the same time investing into future growth. To put figures on this, we guide for revenues in the range of $5.10 to €550,000,000 implying an 18 to 27% growth rate. For profitability, we guide on adjusted EBITDA between 42,000,000 Euro and 55,000,000 Euro, implying an eight to 10% margin. Given our best in class cash conversion, we will continue to translate this attractive profitability into strong cash flows. This guidance confirms the strong trajectory from the last quarters and the confidence we have in our business. Yet next to our guidance for 2021, I want to highlight again that we are committed to continue investing into our ambition to generate attractive long term profitable growth. So we will maintain our long term mindset when Serum West brings through these uncertain times, yet also react decisive if the general circumstances in our market change to better or worse than we have expected. Let me give you some color on the different P and L lines for 2021. Please note that these are not official guidance information, but rather an offer of transparency with some additional qualitative thoughts for your models. We expect to continue to realize strong gross margins in 2021 in the range of 48 to 50%, which might be slightly lower than our 2020 margins as we potentially will see somewhat higher inventory related costs. Fulfillment costs as a percentage of revenue are expected to be around 20 to 22% depending on our investments into customer experience. Further warehouse capacity expansions and the development of last mile freight rates. As a result, we expect ongoing strong contribution margins of 28 to 30%. In terms of marketing, we will continue to invest into our organic marketing model to drive future growth and expect a marketing ratio of eight to 9%. In terms of G and A, we will we will invest as Stefan mentioned into attractive growth levers, especially into technology and into an aggressive expansion of our strategically important private label business. We plan to increase the total G and A spend to a number slightly north of €70,000,000, which implies GNA ratio of 13 to 14%. All of the above resulted in a very strong profitability guidance of eight to 10% adjusted EBITDA margin for 2021. Let me also give you some indication on how this profitability would translate into cash. We will continue to work with a negative net working capital by offsetting inventory increases through improved supplier terms. Secondly, in terms of CapEx, we expect a slight increase in absolute spending to roughly 10 to €15,000,000, mainly driven by our technology investments and some smaller warehouse capacity increases. At this point, you might ask why we are guiding for much lower profitability than the 14 to 15% adjusted EBITDA we are expecting for Q1 as per yesterday's ad hoc publication. The answer to that is two folded. On the one hand, our business is very seasonal with q one and q four being our strongest quarters. And the summer quarters q two, q three being seasonally less strong. Therefore, the profitability of q one cannot be extrapolated for the full year. Secondly, we are currently still in the phase of ramping up our investments into marketing technology and private label. The full effect of these investments will be only visible in the coming quarters. As I wrap up, I would like to end with noting that we are super focused on the huge opportunity ahead of us as the market is moving online. While staying humble and executing our model well on a daily basis, ensuring attractive long term growth, profitability and cash conversion. With that, I would like to turn the call back to Stefan before we take your questions. Thank you, Sebastian. Before we go into Q and A, quick summary on Westwing. 2020 was a very successful year as we increased our scale and reach significantly. We processed 4,000,000 orders, have a best in class order share from repeat customers at 79% and are serving 1,500,000 loyal active customers in Europe. We have grown to EUR $433,000,000 in revenues at a strong growth of 62% year over year by realizing EUR 50,000,000 of adjusted EBITDA, which implies a very strong margin of 11.5% adjusted EBITDA. Also, we have shown how well the profitability of Westwing is being translated into strong cash flows as we generated €40,000,000 of free cash flow at a free cash flow margin of 9% in 2020. Moreover, we expect to keep growing strongly in 2021 to €510,000,000 to €550,000,000 in revenues, while maintaining a very strong profitability of between €42,000,000 and €55,000,000 we are convinced, the e commerce adoption will remain dynamic and strong. And despite the strong growth we have realized, we're size wise so tiny compared to the huge opportunity in front of us, as we intend to lead the shift to online in a €100,000,000,000 plus market. It's truly day one, as a famous e commerce founder always says. Our business model focused on loyalty remains unparalleled with 79% of orders from repeat customers. We're strongly growing our private label products of Westwing Collection, where we sell gorgeous bestsellers at good prices and for us fantastic margins. We have a very strong cash profile, not only with the growing net cash position of EUR 105,000,000 and a negative net working capital, but also with a low CapEx ratio. And most importantly for shareholders, we have an attractive target P and L, 10 plus percent adjusted EBITDA margin and strong cash conversion. We already achieved 9% free cash flow margin in 2020 as cash generation is something we're very focused on. We're building Westwing as a long term winner, and our results give us confidence we are on the right path to inspire and make every home a beautiful home. Before we get into Q and A, would like to highlight that we will host a virtual Capital Markets Day on May 12 after our Q1 results presentation. We would be very happy to welcome you to this event to provide you with more background and discuss our strategy and ambition for the coming years. With that, we're happy to take your questions. Once your name has been announced, you can ask a question. If you find your question is answered before it's your turn to speak, you can dial 02 to cancel your question. If you're using speaker equipment today, please lift the handset before making your selection. Our first question comes from Volker Bosse, Baader Yes. You very much. Volker Bosse, Baader Bank. Congratulations on the great results, phenomenal achievement. I would like to ask three questions. First is on your international business. Could you give us a bit of deeper look and provide us a split by countries or at least which are highlights or lowlights by countries in your international operations? And do you see also a kind of certain correlation between strictness of lockdown measures in the certain countries to your sales trend? Means as strict as a lockdown, the better your your sales development is or something like that what you can read out of your figures? Second question would be on your products sold. Could you give us a general remark? If your products sold more linked to homeschooling, home offers, or is it more general decoration, general refurbishment? Do you see any specifics in certain product tiers which you sold last year? And the third question is regarding the outlook on 2021. Your guidance is 18% to 27% full year growth. First quarter saw already 92% last year. Second quarter was plus 90%. So in the second quarter, you run against a higher base. So my question is, how do you see the quarterly sales volatility throughout the year? So what is your underlying assumption to get to the 18% to 27% to get a feeling about the volatility you expect over the quarters? Thank you very much. Thank you, Parker. So I'll answer questions one and two, and then Sebastian will cover three. So on the international, I think we're not going to give a split on the individual countries because development has been extremely similar in every one of those countries. And we see that despite all the discussion we've had in 2019 on the international segment that through 2020, all countries are operating very well. We have all countries growing at very strong rates, very similar to the overall segment growth. All countries are profitable. We have no kind of specific issues in any country. What I think what I can say about the international segment is that they are a couple of years, two, three, four years behind the DAS segment. And you also see that in the general profitability, when the DAS segment had like 17% adjusted EBITDA margin in 2020, and the International segment at 5%, I believe. So there's a huge difference still between those countries, and that's mainly because we rolled out the SHOP West Wing now, we rolled out private label, and organic marketing all between two and four years later than what we did in DACH. And you have unit economics, so contribution margin effects from Westwing Collection, you have loyalty effects and customer monetization effects from West Wing Collection and organic marketing. So all that is kind of the main reason why the international countries, despite very strong performance, are not yet on the level of DAF on profitability. But in growth, they were all similar in the last year. And most importantly, what you said, like any correlation between lockdown measures and what we saw in growth was not actually something we saw. That was something that we saw in the very, very early few weeks of last year when the lockdowns began. But then through the year, I couldn't tell you any correlation or any specific things. We obviously looked for that to try to understand it better, but I don't think it worked that way. I think customer sentiment is generally shifting more to ecommerce through the year, so there was initially a huge push, but then I think customers just got used to ordering online. That's our Even better, I guess. Yeah. Well, yeah. Number two, product mix. Really, the answer continues to be the one we had throughout 2020. We see it across everything. There's no specific category that increased. I mean, we see a little bit more home office. Obviously, before most people didn't have a home office, now people are buying stuff, but they're also buying just regular dining tables as an office table. We see a little bit more outdoor. Now the outdoor season already in Q1 started very early, which we expected, so that is something visible. But overall, there is nothing that in our category split, our supplier split or just generally the way we we offer products and offer merchandise and what customers react to is any different than than just structurally in the prior years. People are just more at home, and they're furnishing and decorating their home across everything. Right? So I couldn't tell you any specifics because we don't see them. We are reacting with our model to whenever whatever we see in the market. So we did do in Q1 a lot of like home gym, etcetera, and then thereby we drive demand ourselves. Right? So that that happens, but that's always been the case. We had home gym campaigns also in in q one two thousand twenty when when the pandemic wasn't there yet. We just do a little bit more of that. So we're adjusting the offering to what we call the site guide, so what at any point in time people have, like, for instance, also in q one, we had some campaigns about, you know, thinking about traveling. Obviously, people couldn't travel, but we tried to give them inspiration from faraway places where people were dreaming of. Right? So that's the beauty of our model that we can, on a day to day basis, react to whatever is happening. Or when new lockdown measures were announced, we're we're we're, like, intensifying campaigns and themes around kind of cooking at home and stuff like that. Right? So so we are driving this, but it's not that customers specifically ask for very different things. Perfect. Thank you. Okay. Then let me answer your third question. Like, I think, first of all, the the guidance we have published implies a growth rate of three to 14% in revenues for the remainder of the year. And this might might sound low compared to the q one as you have described, but I think the main reason is also what you mentioned that from q two on, we will start to compare against the massively increased baseline because we had a very strong growth from q two onwards last year. And so that is one of the main effects that we have a higher baseline and see lower growth rates compared to that new baseline, so to say. Additionally, we expect that people will also reprioritize some of their spending again towards more leisure activities, hopefully, over the course of the year into traveling, into out of home dining and those topics. So this will also could potentially impact our q two to q four growth rate. And last but not least, we also want to guide with an eye towards being conservative as you have seen from us in the past and also should expect. With regards to volatility across the quarters, it's it's very hard to predict. That's why also we kind of came up with with with the rather than for the remainder of the year guidance. We tried it first to do it on quarters, but I think it's just too volatile. So you can expect kind of the same volatility across the quarters given they have all an increased baseline. And and maybe to give you some more how we discussed this then in the business, in the retail, like but things are changing so fast that it's impossible to say. Right? In in in December, January, we would still expect that now in April, May, people would massively start traveling. That was our expectation actually. That's not gonna happen now. But then maybe in June, July, people will start massively traveling. So there will be some period we expect through this year, where people would just not be at home as much because people will, we have believed, literally flock outside for a couple of months, right, once once it's possible. And that obviously would have a impact on our short term demand. But then again, winter will be coming and there's Christmas independent of lockdowns or not, and we have now significantly higher number of active customers. So we believe that that will then lead to higher growth. But total mix of that plus with the risk adjustment, like kind of what if there is further lockdowns, we just don't know a lot. Right? It's just the we just don't know a lot about the future, and I think nobody really does. No. That's right. No. Great. Thank you very much. Thanks for the answer. That sounds really reassuring. So all the best. Stay healthy. Thank you. Thank you. Thank you, Parker. Our next question comes from Christian Zales, Haukolausen. Please go ahead. Your line is now open. Yes. Good morning, everyone. Also, congrats from my side with the great results and also the very reassuring guidance. I've got three questions, please. First of all, a similar question to the topic we've or you've discussed right now. But maybe again on the COVID impact on the 2021 guidance. So I mean there is a lot of discussion going on at the moment in Germany, whether there should be another lockdown, another hard lockdown going forward starting in Q2 maybe. So what have you basically modeled into your 2021 guidance, particularly with regards to the development in Germany? And then question on the DACH region on the profitability. I think it was very high, probably a new record level at more than 20% adjusted EBITA margin in Q4. So yes, could you maybe comment a little bit what has been driving that exceptionally high number? And to what extent is this really sustainable going forward? Or where would you see a normalized level in DACH? And the same question on international margins, where can they go through in the midterm? And finally, related to this, actually, on your long term margin assumption of 10% adjusted EBITDA margin, I think now in light of the 11.5% in Q4 and at least 12%, 13%, 14% in the past four quarters, this looks rather, yes, overly conservative, I would say. So yes, what are you thinking about this long term target at the moment? Thank you. Thank you, Christian. So I think I'm going to answer the questions one and three, and then Sebastian will cover the profitability impact in DACH as well as kind of the guidance and how that relates to actuals. So I think we really lockdowns or no lockdowns, the realistic answer is there is no way to model that. Right? There's no way we basically have to come up with a conservative assumption about the future. There's assumptions where just because of the higher growth, the higher marketing effects that we have, we could grow well beyond the guidance. You could also believe, if you model it very, very conservatively and people flock outside and suddenly everything changes back to a past kind of behavior, which we don't believe, however, that we would grow well below guidance. So in the end, we kind of had to set ourselves something where we say, okay, we believe there's still gonna be a little bit of growth, but given the baseline and the unpredictability not that high. And honestly, there's no more intelligent answer to that, because I think we we you can't just model something where customer behavior is basically in flux, right? And given that not just customer behavior, also any political environment is completely unpredictable, as well as the actual virus situation is completely unpredictable with variants, etcetera, etcetera, there's no better answer. In terms of international segment and where it can go, I think it can go generally to slightly below the levels of DACH in the long term. There is a few structural drivers which make international slightly less profitable than DACH, mainly because of distance from the main warehouse, mainly because of some more less scale. But overall, the general margin levels that we see in DACH should also long term be achievable for international. But they are lacking two main things right now, one is scale. So we have in the DACH segment three countries and in the international segment eight countries and DACH segment slightly higher. So there's a lot less scale in each one individual country of the international segment, so that will need to happen over time. And the second thing is just the West Wing Collection share, as West Wing Collection has, as you know, around 10 percentage points higher contribution margin and international has lower share. So as West Wing Collection penetrates through the international segment, which will take a few more years to reach the German levels, that will give us further upside. So if you want to model kind of a terminal margin for both business, I would probably see them by a few percentage points different, but not as different as it is today. And then, Sebastian, on the DACH profitability Q4 and the guidance topic. Yes. Okay. Hi, Sister. On q four DACH, think there are several reasons why this number is so extraordinary good. I think some of them I already explained with the full year numbers. So we had very low return rate with very low inventory obsolescence costs. And seasonally, also described in the guidance is q four is kind of seasonally the strongest quarter we have. So basically, we show very, very strong operating leverage in q four on basically g and a, on marketing, on everything. So basically, that's why you can't extrapolate q four for the remainder of the year. Still, it gives us a lot of confidence that with our business model, we can achieve superior margins. So when we then think about guidance, I think, yeah, first of all, we have gained a lot of confidence in our structural profitability, especially given our very strong private very strong private label business that we've seen lately and and also as Stefan described. Also, are re reviewing our target p and a constantly. And if we we're we will change it, we will update you in a timely manner at that moment. We will also discuss this in more detail on our Capital Markets Day in May and really like to a long long long term discussion around the long term p and l. So right now, it's still the 10% plus for now. Okay. Very helpful. Thank you. We haven't received further questions at this point. I will hand back to the speakers. Thank you very much for attending the call. I think you could see that results have been good. We're looking very much forward to 2021. We'll reach out to the analysts and the investors separately, obviously. And then we would be very happy to welcome you to our Capital Markets Day on May 12, two and a half hours, where we're gonna share all the details about the coming years and much more details also about p and l structure, strategy and and how to get there. With that, thank you very much, and I hope you have a great day. Bye bye. Thank you. Bye. Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.