Ladies and gentlemen, welcome to the Zalando SE publication of the Q1 Results 2025 conference call. I am Shari, the call's call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Patrick Kofler. Please go ahead.
Good morning and welcome to our Q1 2025 earnings call. I'm joined today by our Co-CEO and interim CFO, David Schröder, who will provide a brief overview of the quarter's financial performance, and our VP Finance, Roeland Loof, and David will be available for questions afterwards. As always, this call is being recorded and both the live webcast and the replay will be available on our Investor Relations webpage later today. David, over to you for the financial overview.
Thank you, Patrick. Good morning, everyone, and thank you for joining today's call. Last year, we announced our new ecosystem strategy, started to execute against it, and successfully delivered on our growth and profitability ambitions. This year, we aim to continue on this great trajectory by further advancing our B2C and B2B growth factors, accelerating our growth and driving further profitability improvements. At the same time, we also keep investing in future growth opportunities, reflecting our ambition and conviction to serve an even larger share of the EUR 450 billion total European fashion market in the long term. Our strong Q1 performance confirms that we are well on track and marks another step towards our midterm goals. Let me now start with the Q1 highlights on page two.
We delivered an accelerated GMV growth of 6.5% year- on- year in the first quarter, supported by successful end-of-season sales and a promising start to the new spring-summer season. Revenue growth outpaced GMV growth, reaching 7.9%. We also continued to increase profitability, delivering an adjusted EBIT of EUR 47 million, which represents a margin of 1.9%. Our adjusted EBIT margin improved by 0.7 percentage points year- on- year, mainly due to a stronger gross margin in our B2C segment. We are progressing on our strategy as planned across both our growth factors, B2C and B2B. In B2C, we further elevated and expanded our multi-brand platform across our three strategic growth pillars. We successfully rolled out our upgraded loyalty program to additional markets, further elevating the quality of our shopping experience for our customers.
I will talk about the exciting developments in our upgraded loyalty program, Zalando Plus, in more detail in a moment. We also saw double-digit growth in our Lounge, Sports, Designer, and in our Beauty propositions. This strong performance demonstrates our ability to cater to our customers' diverse lifestyle needs. Furthermore, we are rolling out our new Zalando Boards experience as part of our strategy to offer customers personalized inspiration and entertainment. The next step will be to allow users to create, share, and engage with curated and user-generated boards, fostering inspiration and discovery across the platform. More than one million customers have already interacted with the new experience. In B2B, we recorded revenue growth of 11.6%, significantly ahead of group revenue growth. This year is about further advancing our ZEOS offering with a particular focus on logistics and software solutions.
Recently, ZEOS and Tradebyte were selected as TikTok's preferred logistics and integration partners for fashion and lifestyle merchants. This partnership enables merchants to seamlessly connect to newly launched TikTok Shop in key European markets, including Germany, France, and Italy. During the first quarter, ZEOS and Tradebyte facilitated the successful launch of the first partner on TikTok Shop in Germany. By leveraging our ZEOS offering, they were able to quickly capitalize on a new growth opportunity and efficiently navigate the complexities of launching on a new sales channel, paying into our vision of unlocking multi-channel growth opportunities for brands and retailers across Europe. The proposed acquisition of About You perfectly fits into our strategy to build the leading ecosystem of fashion and lifestyle e-commerce. The acquisition is progressing as planned. Let me give you a short update on where we stand.
On December 11, we announced our intention to make a voluntary public tender offer for up to 100% of About You's share capital. Since then, 91.5% of About You shares in total, excluding treasury shares, have been successfully secured. To obtain the remaining shares, we intend to implement a squeeze-out of minority shareholders post-closing. In the meantime, we have received regulatory approval by the German Federal Financial Supervisory Authority, BaFin. The transaction is nearing closing, with only the regulatory approval from the EU antitrust authorities remaining, which we anticipate to receive by summer. Last but not least, in terms of Zalando's standalone financial performance, we are well on track to meet our full-year targets and confirm our 2025 guidance despite a fast-changing geopolitical and macroeconomic environment.
Before we turn to our Q1 performance in a bit more detail, let me briefly touch on the progress of our upgraded loyalty program, Zalando Plus. During our full-year update in March, we laid out our exciting plans to further advance our strategy to accelerate our growth trajectory this year and beyond. In B2C, besides bringing Zalando to more European markets and launching our propositions like Beauty and Lounge by Zalando in additional markets over the course of the year, one of the core initiatives is the rollout of our upgraded loyalty program, Zalando Plus. Zalando Plus rewards customers with points for shopping products and engaging with content on our platform. Customers can unlock three different loyalty levels with an increasing number of benefits as they collect points.
Since the initial launch in Spain in the third quarter of last year, we've successfully rolled out the program to a total of 13 of our 25 markets. Additional markets will be launched throughout the year. Already, more than 15% of our customer base in all live markets is participating in the program. Our ultimate ambition is to serve the majority of our customers with this program and to increase their average order frequency and hence our share of wallet with them through the program. Early data from our first markets indicates promising progress towards this goal. Let's now take a closer look at our Q1 financial performance, starting with group-level figures on page four. In Q1, we accelerated GMV growth. GMV increased by 6.5% to EUR 3.5 billion. This was driven by both retail and platform business.
Revenue grew even faster at 7.9% to EUR 2.4 billion, driven by strong performance in Zalando Marketing Services and B2B business, which generate additional revenues not reflected in our GMV figures. Our focus on driving profitability is reflected in the increase of adjusted EBIT recorded in Q1. Adjusted EBIT reached EUR 47 million, up EUR 19 million year over year. Adjusted EBIT margin improved by 0.7 percentage points to 1.9%, primarily due to a higher gross margin. Our Q1 results demonstrate continued progress towards accelerating growth while continuing to drive profitability improvements and investing in future growth. Let's turn to page five and look at our B2C segment performance in more detail. Revenues were up 7.6%, exceeding the GMV growth rate. Growth was supported by successful end-of-season sales and a promising start to the spring-summer season.
As mentioned before, our Lounge, Sports, Designer, as well as our Beauty propositions delivered strong growth, supported by our strategy to elevate these assortment areas into powerful lifestyle propositions. Additionally, strong growth in ZMS contributed to the revenue growth in B2C as well. Profitability improved by 0.7 percentage points to 1.9%, primarily due to improved gross margin. Let's turn to the corresponding B2C customer metrics on page six. Starting on the left, our acceleration in GMV was fueled by an active customer growth of 5.9%. By end of Q1, the number of active customers reached a high of 52.4 million in the first quarter, an increase of more than 2.9 million customers year- on- year. Looking at the right side, spend per customer remained flat at around EUR 296, with order frequency and basket size developments offsetting each other.
Turning to page seven now and having a look at our B2B segment performance. In the first quarter of 2025, we achieved B2B revenues of EUR 240 million. That corresponds to an increase of 11.6% compared to the previous year and significantly above group level. In Q1, our B2B segment achieved an adjusted EBIT of EUR 6 million, with a stable adjusted EBIT margin of 2.4%. As in previous quarters, the vast majority of growth in B2B came from ZEOS fulfillment, including ZFS and multi-channel fulfillment. In multi-channel fulfillment, we continued to scale the number of merchants and also the number of sales channels ZEOS is active in and supporting merchants with their sales. As mentioned at the beginning, we also started a new partnership with TikTok Shop.
It opens up a unique opportunity for merchants using both ZEOS and Tradebyte and allows them to be part of TikTok Shop's expansion, thereby accelerating their e-commerce growth across Europe. Let's now move to the group P&L on page eight. Our group gross margin improved year over year by 0.9 percentage points. This was driven by a continued strong sales growth of our retail inventory, which was further supported by a promising start to the spring-summer season in March. Additionally, strong growth in ZMS contributed since its advertising revenues come with a structurally higher gross profit margin. Fulfillment costs, with a cost-to-revenue ratio of 24.4%, are broadly unchanged. Marketing costs, on the other hand, saw a 0.5 percentage points uptick. We deliberately increased investments in performance marketing to support continued active customer growth.
Additionally, we continued to invest in several brand marketing campaigns to enhance brand visibility, among them our new spring-summer campaign with Sarah Jessica Parker. Admin and other expenses improved by 0.4 percentage points, driven mainly by increased operating leverage. Summarizing the group P&L, we achieved a year-over-year increase of 0.7 percentage points in profitability, driven primarily by an enhanced gross margin. Turning to slide nine for net working capital. Net working capital continues to be in negative territory and came in at EUR -86 million. Compared to last year, net working capital increased as a result of higher inventory levels, reflecting our preparations for the spring-summer season and a low prior-year baseline. Additionally, trade receivables rose by 22.6% as the business performed strongly, particularly towards the end of the quarter. Let's go to slide 10 now.
Our cash and cash equivalents remained strong and ended the quarter at around EUR 2 billion. This is around EUR 600 million less than Q4 2024. Major drivers for the decrease in cash are, one, a lower operating cash flow driven by inventory purchases for the spring-summer season, and two, restricted cash related to the About You tender offer. Here, EUR 403 million have been put into an escrow account. Consequently, this amount moved from cash to other current financial assets. This covers nearly 40% of the equity consideration of EUR 1.1 billion for About You. This concludes the financial update for Q1. Let's now move on to the outlook on page 11. Since we published our full-year outlook at the beginning of March, we've been observing a fast-changing geopolitical and macroeconomic environment. So far, we've not seen any notable impact on our business, as also evidenced by our strong performance in Q1.
Consumer demand has been rather stable, and our brand partners have not made any major changes. Going forward, our priority remains to successfully execute on our ecosystem strategy and to position Zalando effectively to handle any external developments. After Q1, we are off to a good start and confirm our standalone guidance for the financial year 2025, which we provided to you in March. In 2025, we will continue to focus on accelerating growth while delivering on our profitability target for the year and investing in future growth opportunities, with our loyalty program, Zalando Plus, being one key example we highlighted today. This concludes our presentation for today. Before we jump into Q&A, let me wrap up with the key takeaways of today. Our ecosystem strategy is progressing very well. In Q1, we delivered an acceleration in GMV growth, coupled with continued strong revenue growth and increased profitability.
We continue to advance our strategy across both our B2C and B2B growth factors. The proposed acquisition of About You is progressing as planned, with closing expected by summer. We confirm our full-year guidance for 2025. Let's now open up for Q&A.
We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. You'll hear a tone to confirm that you've entered a queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only hands while asking a question. Anyone who has a question may press star and one at this time. The first question comes from the line of Monique Pollard from Citi. Please go ahead.
Hello. Good morning, everybody. Thank you for taking my questions. I had three, if I can.
The first one is just whether you could please give us an update on the current trading and whether that strong momentum that you mentioned towards the end of the quarter has been maintained. The second question I had was whether you could please give us a sense of how much the gross margin increase, so that 90 basis points that you saw year- on- year, was underlying versus how much was driven by mix shifts from ZMS revenue growth. And then the final question I had was whether you could please quantify the gross margin impact in Q1 of the revenue deferral from the loyalty scheme. Should we still think about it as the mid-double-digit impact and about a quarter of it each quarter? Thank you.
Let me start with current trading and then hand it over to Roeland for the other two questions.
On current trading, I think, as we said, we are happy with how we started into the year. Especially March proved to be a very strong season start, and we have not seen major changes in consumer demand over the coming months. Obviously, that usual seasonality, right, with Easter, for example, in April, which typically is a period where people focus more on vacation and a bit less on spending time shopping. Apart from that usual seasonality, we have not seen any changes. Our view on the spring-summer season really has not changed. We are looking to deliver another quarter of, yeah, mid-single-digit growth in Q2. Therefore, we feel we are well on track for our full-year targets.
Yeah, I will cover the questions on gross margin. I maybe start with the question on loyalty, as that also plays into gross margin.
You heard us say in March that we expect a mid-double-digit million EUR amount of impact in 2025, which is a one-off, non-recurring, non-cash impact. You also heard David talk about the successful rollout of more markets in Q1, and also this impact is progressing as we expect. I would say for Q1, this amount is less than EUR 10 million, and it will slightly increase as we go through the year. When you asked about the gross margin increase in terms of underlying, I think we have seen progress across all three of the drivers. Underlying retail gross margin was slightly better. We saw growth in our partner program, which also contributed to an increase in gross margin. As said, we had a very strong quarter for ZMS. This comes also with a very attractive gross margin profile.
This also contributed to the gross margin increase. To get back to the loyalty impact that I referred to, that has a minor impact on revenue growth for Q1, and it has also a small impact on gross margin for Q1.
The next question comes from the line of Anne Critchlow, Berenberg. Please go ahead.
Good morning. Thanks for taking my questions. I know you no longer split out DACH and the rest of Europe in the segmental reporting, but I'm just wondering if you could comment on what you're seeing in the trend in profitability for the rest of Europe and what your expectations are there. I have a second question on the AR. I saw that small acquisition. Just wondering what you'll be working on there and how it might support, for example, virtual fitting rooms and so on. Thank you.
Sure.
I mean, when we look at the market picture, I think we were very happy with the developments in Q1 because we actually recorded growth in every single one of our 25 markets. As usual, growth was a bit more pronounced in the rest of the Europe region compared to the Dukk region, given that we are also at an earlier stage of maturity in some of these markets. On the profitability side, the picture was reversed, as usual. Stronger profitability in Dukk than in the rest of Europe. Yeah, overall, very happy with the fact that all markets show strong performance. On your second question, yes, we successfully closed the acquisition of DeepAR, a U.K.-based company specializing in 3D asset creation and augmented reality.
As we explained in our annual press conference in early March, one important focus for this year for us is to provide our customers with the best product detail page in fashion possible, meaning that when they look at a product on Zalando, we want them to get all the information of the product, but also, obviously, the best available visual content for these products. DeepAR, in the future, will contribute to that goal thanks to their 3D technology, which we've already started to pilot at a small scale and plan to roll out at a larger scale now, especially in the area of shoes. Secondly, we obviously aim to capitalize on their virtual try-on capabilities at a later point in time.
We are very excited about the capability that the company brings for us in terms of further elevating the level of content we have on our websites for our customers.
Next question comes from the line of Mia Strauss, BNP Paribas. Please go ahead.
Good morning, both, and thanks for taking my question. Maybe just one. I know you spoke briefly about the tariff impact, not seeing any changes, but are you seeing anything from Shein and Temu jumping into the EU, or what are your thoughts on that? The second question is, Zalando has been delivering quite a bit of growth over the last 18 months or so. What sort of market share do you have now of the online apparel market? How has that trended versus a year ago? Maybe just lastly, on marketing and fulfillment costs.
Marketing costs have increased quite a bit this quarter, and fulfillment was flat. How should we think about this for the rest of the year in terms of modeling? Thank you.
Sure. Yeah. On the tariff side, as said, so far, we haven't seen any impact. Keep also in mind that we are only serving Europe. That means anyway, in terms of direct impact, we wouldn't have expected anything else. Obviously, there is still a chance that we might see indirect impacts down the line, be it due to the consumer sentiment and also due to potential changes on the supply side or competition. So far, however, yeah, as also showcased by our Q1 numbers, no specific impacts. Vis-à-vis Shein and Temu, obviously, we've also read probably the same speculations and reports that you've read, but no particular insights or impact on our business that we can report on.
Keep in mind our own strategy is very much focused on multi-brand fashion, high-quality fashion, and therefore, it's also not directly comparable to what they are offering. On the second question with regards to market share, as you know, we typically look at the total European fashion market, EUR 450 billion. With our current size, that means we roughly have a 3% market share. However, with the growth rates that we've recently recorded, we are definitely growing faster than the overall market. We are gaining share thanks to the successful execution of our strategy.
We are also particularly pleased to see that while the overall environment is probably still a bit muted, right, as also shown by the rather still flattish, below average consumer sentiment, we actually see quite good traction in online channels, both evidenced by our numbers, but also by some of the publicly available numbers, for example, by BHF and others that report generally faster growth for online fashion than for total fashion. That is definitely contributing to the overall growth acceleration that we are driving this year.
Yeah. On your question on marketing spend, yes, we did record an increase in marketing spend in Q1. As a reminder, we obviously remain ROI-driven when we think about our marketing investments, and we saw good opportunities in terms of investments in Q1.
I think you have also seen the evidence of that with an all-time high in terms of customers. When we think about the rest of the year, we continue to expect a slight decrease in marketing spend versus 2024. However, again, we remain ROI-focused there, but in aggregate, we would expect a slight decrease still.
The next question comes from the line of Sarah Roberts from Barclays. Please go ahead.
Hi. Good morning. Thank you for taking my questions. Just three from me, if that is okay. Firstly, can you give some clarification on the point you just made around current trading? I think you mentioned that you are expecting mid-single-digit growth rates in Q2. Does that mean we should think about a slight slowdown versus what we have seen in Q1 at 6.5% growth rate?
I guess in terms of April, it seems as if it's fair to assume that it's decelerated month on month off the back of a strong March. How should we think about the growth rate of April trading in terms of versus Q1? Secondly, on ZMS, can you quantify what you're seeing in terms of ZMS versus Q4, where I think you called out it had returned to double-digit growth? Can you highlight what your expectations are for the full year? Thirdly, just again on the Shein and Temu point, I think we've seen some news reports over the past couple of weeks that Chinese players have started to increase their digital ad spend in Europe in light of the recent de minimis changes.
Have you seen anything in terms of higher performance marketing costs or kind of higher cost per clicks off the back of this over recent weeks? Thank you.
Sure. I mean, on the current trading, I think happy to confirm again that we are looking to generate mid-single-digit growth. I think that obviously does not mean that we can pinpoint the exact growth figure at the moment, given that there are still two months out. Yes, April also seasonally, as I mentioned, Easter is showing a bit slower growth than March, but that was also expected. We feel that for the rest of the quarter, we have a good plan and will be able to deliver on the mid-single-digit growth rate that I mentioned. I think further color on single-month performance is not something that we would like to provide.
On your second question with regards to ZMS, we are definitely pleased to see such a strong performance in ZMS. I think it's also showing that our platform is really attractive for brands, both as a channel to drive sales, but also as a channel to build their brand. We also expect ZMS to have a successful year overall and to continue to grow revenue significantly ahead of overall group. That will obviously contribute to good gross margin and also profitability development in line with the targets that we've set out for the group overall. Last but not least, on Shein and Temu, with regards to our own marketing and customer acquisition efforts, actually the customer acquisition cost has remained largely flat. No impact on our business so far.
Next question comes from the line of Luke Holbrook, Morgan Stanley. Please go ahead.
Morning, everyone, and thank you for taking my question. My first question is just on the inventories, which rose relatively significant in the course, and I appreciate there was a weak comp. Can you just comment a little bit more on how that's faring through the course? Are you seeing a typical sell-through or off-price? Just any comments in that regard would just be helpful. My second question is more conceptually. Social commerce has become a big vector in parts of Asia, and I'm just thinking that with your fulfillment for some of the brands on TikTok Shop, do you see it as just an alternative way to generate fees from a separate avenue? Is there any risk here of cannibalization of your core platform? That's just more of a conceptual one. Thank you.
Yeah. I'll start with commenting on the inventory question.
Yeah, you've seen our inventory grow. I think we're very well positioned for the spring-summer 2025 season with this and expect to continue to also see good retail growth in Q2. As you also called out, last year, we had a historic low, so that also plays into that growth rate. If you think about inventory mix, we also feel good there because we're skewed towards new-in-season inventory. We're also quite comfortable with our expected overstock level in terms of inventory.
On social commerce, I think we really see it as an opportunity for us as a business. As you know, we obviously have a very successful fashion and lifestyle platform that is growing and where we also still see a lot of potential for the future. Even in our boldest dreams, we don't think it will cover 100% of the market.
With our ecosystem strategy, as we explained, we really aim to serve an even larger share of the market. Obviously, a significant volume of transactions happening on our platform directly, but then also enabling transactions that happen outside of our platform, be it on other more transactional platforms or also on social and discovery platforms. I think from what we are seeing, that is a very compelling value proposition for brand and retail partners. They are choosing our B2B offering primarily because of this advantage of having one single integration, one single stock pool to serve all their channels, all the platforms, all the social channels, and their own dot-com.
The next question comes from the line of Yashraj Rajani, UBS. Please go ahead. Hi.
Thank you for taking my questions. I have got three follow-ups, please. The first one is on the market share point.
I appreciate you mentioned that you look at market share for an overall European apparel and footwear market. Just to dig a little bit more into the online space specifically, right, are you saying that your recent performance is basically just because of the strength in online, or do you think that you are taking share or exceeding growth of certain online competitors specifically as well? Can you give us some color there? The second one is on Germany and France. There was a beauty retailer that called out an alarming level of weakness in Germany and France consumer sentiment. Can you give us some idea of what you are seeing there? Is there any particular category where you are seeing weakness or strength? I think that would be helpful. The third one is on inventory.
I appreciate you mentioned that there's some speculation around Chinese e-commerce players, but more specifically in terms of what you are seeing with your partners. Are you seeing some of your partners, specifically sportswear names, pushing more inventory to you? In which case, do you think that there may be a potential overstocking situation going into the second half? Thank you.
On market share, and especially the question, what drives our growth, I think our view really hasn't changed to what we communicated at the beginning of March. Back then, as a reminder, we said that our growth would be based on two main drivers.
One is overall online market growth, and the second one is our strategy and the strategic initiatives related to it, for example, loyalty, but also lifestyle expansion, growing all our lifestyle propositions and to some degree, though obviously at a small scale at the beginning, also our investments in inspiration and entertainment. That view has not changed. I think when we look at how we got to the strong growth levels in Q1, I think it was really the combination of solid market traction and good demand in online in general from consumers. Secondly, us executing against our strategy and offering customers and partners an even better experience than we did at the same time last year. On your second question, Germany, France, as I mentioned earlier, we have seen growth in every single market in Q1, including France and Germany.
From our side, we definitely cannot confirm that there is any issue in France and Germany. Also, I think the example you mentioned probably came from a beauty retailer, and especially if we look at our Beauty business, I think we see outsized growth also in these core geographies. Hence, we are actually very happy with the traction overall, but also in the specific markets, Germany and France you mentioned. Last but not least, on the inventory side, what we have definitely seen is an increasing level of inventory in our ZFS proposition. That is actually something we are very happy about because it means that we have stronger availability and also can help partners drive more sales on our platform. As you know, it also means that we can offer customers the benefit of a one-parcel experience.
Last but not least, it also means that we enjoy better order economics because we can put more items in the same parcel when customers order. Hence, we are actually very happy to see this kind of development. I think it will further fuel our growth in the coming weeks and months. What we are not seeing, however, is a higher than usual degree of discounting on our platform, right? The sales that we are talking about, also from our partners, are primarily black price sales, which is also to be expected at this time of the season.
The next question comes from the line of Richard Chamberlain, RBC. Please go ahead.
Thanks. Morning, team. A couple from me, please. Just first of all, back to the loyalty program.
It sounds like that's leading to some good metrics so far in terms of order frequency, share of wallet, and so on, and based on the first sort of markets you've got data for like Spain, Austria, and France. I just wondered if you expect that pattern to be representative for the whole group, whether that pattern you expect to continue for other markets and whether you're seeing that sort of consistently across different markets so far. Then on to About You, I wondered if once assuming that completes this summer and you get the required regulatory approval, will you then be looking to update on the guidance and the synergy expectations and so on once that deal has completed? Thank you.
Sure. Yeah.
On loyalty, I think we are very happy with the fact that we were able to launch so many markets in a relatively short amount of time. Keep in mind, we are now live in 13 markets. That is significantly more than our previous Plus program was live in. We have also already surpassed by quite a margin the previous amount of loyalty members. For us, that is already a big success just a few months in. If you couple that with first read, as you mentioned, on the customer metrics in the markets where we already have a bit more data to look at since we already launched last year, I think we can be very happy with what we have achieved so far. Obviously, each market individually has a ramp-up curve.
However, we are actually seeing a quite similar pattern of this ramp-up across all the markets that we are launched. Therefore, we also are convinced that the program will add momentum to all the markets where we offer it. Yeah, we'll probably get a better read on especially the recently launched markets, so 10 of the 13 only having launched in Q1 in the coming months. So far, everything looks pretty similar to the markets we launched earlier. On About You, as we said, everything moving according to plan and expecting closing in summer. For sure, once we have had an opportunity to then also take an even closer look at the company and all the data post-closing, as you know, so far, our insights were limited for competitive reasons, of course.
We will be then happy to also provide you with an update of what we expect for the combined group, but also in terms of synergy delivery for the coming years.
Today's last question comes from the line of Georgina Johanan, JP Morgan. Please go ahead.
Hi. Thank you. I've got three, please. The first one, sorry if I missed it, but I just wanted to understand in the B2C GMV growth, is it fair to say that sort of the growth from partners and the wholesale growth is kind of tracking broadly in line with each other at the moment, or are we seeing actually an outperformance of wholesale at the moment, please? That was my first one. Second one was just given the progress in gross margins seen in the first quarter, and it sounds like whilst there's mixed effects in there, it is kind of underlying drivers.
Should we expect similar growth to come through in the second quarter as well? Would that be a sensible modeling assumption? Finally, just on the ZEOS partnership with Next, if you could just provide us an update on where that's at in terms of warehouse transition and if you have kind of the full range of stocks sitting in your warehouses already and so on, that would be really helpful. Thanks very much.
Sure. Let me take your GMV growth question and also the ZEOS Next question, and then hand over to Roeland for the gross margin question. When we look at the composition of GMV growth in the first quarter, I think it's fair to say that wholesale and partner are broadly moving in line with each other, so no major change in the underlying shares.
We were actually happy to see both models grow and contribute to our growth acceleration in the first quarter. On the ZEOS and Next partnership, everything is moving according to plan. We were even able to ramp up some of the joint operation a bit earlier than planned, which contributed to the growth in B2B in Q1, particularly the ZFS part of the partnership where we now are able to serve Next customers across a wider range of markets than before. This was also enabled by having more Next inventory in our fulfillment centers, which, yeah, also led to a nice acceleration of sales that Next has on our platform. I think we are both happy with how the partnership is progressing.
We are now obviously taking all the required steps to make sure that we can also power Next's own e-com channels as of summer this year, and everything is moving in that direction.
Yeah. In terms of gross margin, yes, we saw good progress in Q1, and I think we're also very well underway for our 2028 goals that we set out for this. If I think about Q2, we do not really specify at the cost line level by quarter, but we will continue to have benefit from an increase in partner business. As David said, we are positive on the ZMS development as well. We will also take into account that obviously our B2B business is growing at a higher rate than group or B2C, and that business comes with a structurally lower gross margin, so that will provide an offset.
I think on the whole, we'll not see as big of an increase as we saw in Q1, but rather being flat versus last year.
Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Patrick Kofler for any closing remarks.
Yes. Thanks, everyone, for joining this rather short call on Q1 2025. As always, the IR team is happy to answer all of your remaining questions in the course of today or over the next couple of days. With that said, thanks very much for joining today and listening into it, and happy Tuesday. Take care and see you soon. Bye-bye.
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