Hello, everyone, and a warm welcome to the Tonies' full year 2023 earnings call. I'm Manuel Bösing from Investor Relations, and also today, we will lead you through a presentation, and afterwards, we encourage you to use the Zoom Q&A function to ask any questions you may have. It's great to have our new CFO and CEO, Tobias Wann, on the call today for the first time, and of course, our CFO, Dr. Jan Middelhoff. And now over to you, Tobias.
Thank you, Manuel. First of all, a warm welcome to all of you from my end as well. Today is a special day for me as the new incoming CEO of Tonies, my first earnings call with all of you. I have already seen there are a lot of familiar names and faces on the list today, so welcome. Thank you for dialing in. I promise it will be an interesting presentation. As many of you know, I joined the firm in January of this year. Looking back at my first 100 days, I can say it was nothing short than exciting. Tonies is an excellent business with a wonderful team. Tonies is a category creator with a stunningly beautiful product that excites kids and parents around the world every single day.
This alone is very special and makes up for a great story, but what is truly unique, around this self-created category with its great products, Tonies has built a fantastic business model, and this is what we are going to show you today over the next 60 minutes or so. First, I'll provide a quick recap of the Tonies story, and then give an extensive overview of our business in 2023. Jan will lead you through the financials in more detail, and afterwards, I'll come back and provide an outlook of 2024. At the end, there's ample time for Q&A, as always. So, let's recap on the Tonies story. What is Tonies? If I had to put it in one sentence: Tonies has built the largest interactive audio experience platform for kids in the world, but very importantly, we are just getting started.
This incredible map is one of my favorite slides from my first 100 days. I come back to it time and again, and I do know I've shown it to many of you when I met you in person or over the screen during the last weeks or months. It shows where in the world Tonieboxes have been activated. As you can see here, we are not only operating successfully out of 5 and soon 6 markets, we have active Tonieboxes in more than 100 countries. Tonies is a global phenomenon, and I'm sure everyone agrees that we have achieved product market fit on a global level. We have sold 6.8 million Tonieboxes since our launch in the fourth quarter of 2016, and on top of those 6.8 million boxes now sit 82 million Tonies figurines.
But what is most important, with this, we have probably lightened up over 100 million eyes during the last years. Let's dig a bit deeper. We are creating value beyond just selling 6.8 million boxes and 82 million figurines. There are probably 5 things that you need to understand about our business, and I'd like to run you through them. First, we are a category leader with an unparalleled stickiness. 268 minutes average weekly playtime, this is almost 40 minutes per day per box. We are the largest platform of our kind in the world. We are taking our successful blueprint that originated in Germany and now roll this out internationally, market for market. Third, we operate a profitable repeat purchase model with almost subscription-like cohorts and a superior customer lifetime value of more than EUR 290.
On average, Tonies customers buy 20 figurines over a 4.5-year lifetime with us. We have also defined very clear value drivers that we pursue since 2020. I already mentioned that we are rolling out our profitable DACH blueprint internationally. We are improving our gross margin year-over-year through second sourcing, product or price optimization. We are developing and successfully selling more and more own content. I'll talk about this, in a moment. We are constantly seizing product and channel mix opportunities across all our markets, and we are generating significant operating leverage. We have also more details on this later in the presentation. And finally, something that is very close to my heart, we are a true love brand. We have a huge fan base that results in strong word-of-mouth effects and very strong net promoter scores.
For example, more than 70 in our daily U.S. e-commerce transactions. And what we are most proud of as a management team, we have delivered on all our promises made to you since the IPO. So without further ado, let's look at the 2023 numbers. We've seen another record year for Tonies. Revenue grew 40% to EUR 361 million, and for the first time, we have seen more revenue from international markets than from DACH. In 2019, international revenue was only 2%, and four years later, in 2023, it was 54%. Our international expansion strategy clearly works. We are also now officially a profitable hyper growth company with an Adjusted EBITDA margin of 4.0%, which is equivalent to a pure EBITDA margin of 2.4%.
When we say adjusted, please note that we are only adjusting it for share-based compensation. Our free cash flow is at the brink of break-even, with a very strong improvement of EUR 83 million compared to last year. Our cash at the end of the year 2023 was EUR 74 million, including unused credit lines of EUR 15 million. Jan will talk about this in more detail in a second. So where is this coming from? We have an incredibly strong business model that builds on the exceptional growth of our installed base. Picture this, 70% of all Tonieboxes ever sold are still active at the end of 2023. That is remarkable. In 2023 alone, we have sold more than 1.9 million Tonieboxes and 23.4 million Tonies.
Let's take a look at Q4 of last year, which was our most successful quarter ever. In Q4 alone, we added EUR 169 million of revenue, which came both from Tonies and Tonieboxes. Out of the 1.9 million boxes that we sold in 2023, we sold 500,000 within only 10 days over Black Friday week. That clearly demonstrates we get our commercial moments right. We know when to excel, and we deliver on it. You also see here our top 10 Tonies from Q4, including globally loved IP like Paw Patrol, Peppa Pig, Disney characters, Spidey, but also our own characters. Our first 360 brand campaign in the U.S. has reached more than 1 billion impressions, and we included many of our great partners that I just mentioned in one single campaign.
I can tell you this only happens on the Tonies platform. Now, let's dive a bit deeper into where our success comes from. 54% of our business is now international, and this is the result of a very well-planned and successfully executed international expansion strategy. We launched in the U.K. in 2018, many of you remember. Then in the U.S. in 2020, we added France in 2021, launched the European web shop in 2022, added Hong Kong in the same year in October, and then launched Canada late last year. By now, we are in 25 countries, and there's more to come. By now, we also know it takes about 3-4 years to take a market profitable. On the back of this, as you've seen, the group is now, has now turned profitable again.
Let us take a closer look at the DACH market. We are still growing mid-single digits, even though already every second child in Germany owns a Toniebox. But what is more important here is our growth in DACH is increasingly based on a growing share of high-margin Tonies, as you can see in the chart here. In DACH, we are also seizing opportunities to implement various value levers. For example, our channel mix, where we are continuously increasing the share of our direct-to-consumer business, that is, marketplaces and webshops. At the same time, we expand our wholesale footprint. We are very proud to announce today that we have now reached more than 10,000 points of sale in the DACH market. This excellent market position is also illustrated by an aided brand awareness of 84%. Let's move to the US.
I know this is very important to many of you. The U.S. will be our biggest market in 2024. Since our launch in the fourth quarter of 2020, we have sold around 1.5 million Tonieboxes. A couple weeks ago, we've been approached by Amazon, and they told us that we are now the best-selling German brand that has started trading on Amazon in Germany and then moved to the U.S. Two very impressive data points that show the impact that the Tonies already have in the United States. But you might ask, how exactly are we conquering this market so successfully? As you can see, due to our start during COVID, we come from the opposite channel split than in Germany, which proves that we can also execute a direct-to-consumer first approach. Now, we see the wholesale channel picking up.
That channel, as you know, is particularly important to us because it allows customers to learn and try the Toniebox product and later supports impulse buys. Let me explain, generally, our success in retail is depending on two factors: footprint or number of stores and shelf space. I'd like to demonstrate this to you with the example of our retail partner, Target, and you can follow my words here with the pictures that we are displaying. In 2020, we started online, a relatively risk-free way for Target to test the waters with us. We performed well, and they gave us store space in 2021. In 2021, we performed so well that we moved from 400 to 1,100 stores at the end of 2022, and we got half end caps with them.
After another strong performance in 2022, we got to more than 1,500 stores in 2023, with full Tonies branded end caps. Now, for 2024, I can proudly say that we will be in more than 1,750 stores and double our shelf space in 1,300 Target stores. This recipe we are repeating with all our other retail partners, for example, Walmart. Now that we've spent some time on our markets, I'd like to focus a bit more on the success of other profitability drivers. One important lever is the reduction of licensing, and that happens through partner negotiations, new products, regional effect, but also with own content or franchises. Let's take a look at our own content. Here you see our top 5 best-selling franchises in the world.
And when I say franchises, I mean, this means for us, a group of characters, for example, Sleepy Friends, where we have three characters. As you can see, in terms of volume sales, two out of the top five are our own franchises. And number five is particularly remarkable, the mentioned Sleepy Friends, because it took us only eighteen months from launch to making a top five franchise, a great testament to our content team. It is also the result of Tonies being a very data-driven tech platform. Why? Because the platform generates a lot of valuable insights for us. Sleepy Friends, for example, the mentioned own franchise, is based on the bedtime routine, something that we identified as a top use case from the customer data that we saw.
We also now have 3 golden records on our wall, something I personally always dreamt of as a kid. I can definitely test this stuff. Let's look at category leadership. As I said in the beginning of this call, we have created this category, and we are leading this category by innovation. Last year, we've been very vocal about being the first company in our field to have implemented a trusted AI application with our AI Story Generator. Now, over Christmas, more than 80,000 stories were created with this AI tool, and I can tell you, it really brought a lot of joy to our little customers. I've seen very, very fascinating stories. Our Night Light on the top right went from zero to hero, with great sales of more than EUR 2 million last year.
Lastly, I'm super excited about our new Clever Tonies category that is addressing kids in the age group of five and above. That's what you see on the lower right. We launched Clever Tonies in the U.S. last year, and in February of this year in DACH and in the U.K., and I can tell you from feedback that we got from retail and our own customers, it is overwhelmingly positive. I think this is a really, really big step ahead for us. And with this, I would hand it over to Jan, who will go through the financials. I'll come back later. Thank you.
Yes. Good morning, everyone, and thank you very much, Tobias. I think we also wanted to speak a bit about our working capital and the efficiency we see coming through our, in our inventory management and steering. And, those of you who have been on our call and tracking us, for some time and listened in during H1, remember that we said we deliberately chose to ramp up our inventory, in order to get ready for the second half of the year for the Christmas sales. Given we get some questions, we just wanted to show kind of the conceptual shape of a kind of general inventory ramp-up that we do seasonally.
You can see here from a certain baseline of load-ins throughout the year, over, for example, Easter peaks and towards summer, we're building up inventory, which then gets sold out during the busy Q4 period as we ship into retail. We have the important commercial moments around the Black Friday and Cyber Monday weeks. And I also want to caution that inventory levels also always depend on what our loading at year-end is relative, for example, to Chinese New Year, as we also need to make sure that we have sufficient stock then for the new trading period gearing up towards Easter. In general, it's important to understand that we only have good inventory. What I mean by that is we're not having any fresh or goods or seasonal items that could go bad.
It's rather important for us to hold inventory to fuel the growth, because our business model, as Tobias explained, is based on having a platform, having a Toniebox, and then continuing to bring those subscription-like cohorts with a high predictability, and they are making the profit for us in a good way, our consumers. That requires launches. That also requires availability on top sellers, and therefore, for us, holding inventory is good, but of course, we're always optimizing our working capital and our inventory holding, and you see a few of those effects today also in our free cash flow translating, and I'll speak about that a little more later.
I also wanna mention that, we're very, very proud that we could, substantially refinance this growth through a syndicated loan that we closed, over summer this year, with very reputable partners, and you can see the logos of our bank partners here. And it's a lot of confidence for us that those partners provide us with a EUR 30 million syndicated loan, that we use for this working capital financing. We could top it up, by another EUR 10 million. Currently, I don't see us doing this over this year, but, we'll come to that in a minute. With this, I'd like to spend some time on the financial results, and, Tobias has said it before, it's been a record-breaking year for Tonies.
We couldn't be any prouder of the team and the results because they are sensational. We show exponential revenue growth, and we achieved a profitability break-even, and this amidst some macroeconomic turmoil that still prevails. You can see it here, 40% year-on-year growth. That's just sensational. That's outperforming our guidance of EUR 354 million, so we came in at EUR 361 million. You can see that all markets are growing, and it's important for us because also our mature DACH market, that's really the cash cow business for us, and you see that a little later, is growing with single digits. These are great results. The US is doubling, and international share of 45% is an incredible development if you take into consideration that this company, just 4 years ago, was essentially 98% DACH business.
So our strategy of international expansion clearly works. Check mark. Adjusted EBITDA and also clean reported EBITDA margin is positive. 4% adjusted EBITDA margin, 2.4% EBITDA margin. These are incredible improvements. They come on the back of an, structural improvement of our contribution margin. I'll speak to that. Greater 35%. Unit economics are improving nicely. That's a high priority for us, but we also see leverage effects coming into the mix. Free cash flow, that's probably the figure, that is, exciting for some of you. We always said we will and want to be free cash flow break-even in 2024.
That's a clear goal, but we also saw, due to several effects I'll speak about in a minute, free cash flow coming in at EUR -5 million, which is an EUR 83 million year-on-year improvement, and it translates just into a very, very healthy cash available position of EUR 74 million. That is cash at hand, and that's also unused credit lines, so a very strong financial position for our company. And one of the factors that are really financially related, but it does so, is we introduced for the first time a segment reporting. And I know from the conversations with many of you in the last two years, two and a half years, that this is of high interest, especially understanding our margin structure in our mature markets, whereas our growing markets.
What is, I think has been out, that we always said we have a double-digit margin in the DACH business, and today I can tell you it is greater 16% EBITDA clean. So we have a highly profitable DACH blueprint, and this is a 100% confirmation of what we're trying to do, and that is an actual trying. We're doing it. We're bringing exactly this blueprint to our focused international expansion strategy. So overall, very exciting, and I'd like to run you maybe briefly through the P&L. It's difficult to digest now. You probably have done that if you looked into the presentation already, or you can do it afterwards. But you can see essentially on the right-hand side, the development versus prior year, and I just really want to call out an incredible improvement on our COGS.
It comes on a mix of pricing, product channel mix, better sourcing, and, and such effects. We also see our licensing costs are coming down further. There is a mix of, of better negotiation, bringing our own content that Tobias spoke about, but it's also a regional mix. Please remember, DACH has historically, and is historically, the most expensive licensing market we operate in. So as we're shifting towards more international markets, and we got tailwinds here, and there's also one off from the H1 that we reported, we released a provision of EUR 3 million with the collecting society.
Fulfillment, you see a negative year-on-year development, but clearly this is planned, because please consider we are raising our D2C share overall on the company level, so we planned for an increase in fulfillment costs, and it comes in nicely. And this is the driver behind our strong 35.3% contribution margin. I run a little bit quicker below. You see that on marketing, we have further improved relatively versus prior year. That comes on the back of a very good word-of-mouth effect. We see our products translating into the market. We have seen efficiencies overall and some great work by the teams.
I don't want you to, to go o ver optimistic on the marketing budget though, going forward, because always consider, as we're working now, the math of the U.S., Tobias talked about it, we are in mass retail across the United States. Of course, there's brand building, of course there's marketing support needed for our wholesale business. Therefore, I think it's a great result, and we will, of course, also going forward, take care of our brand and invest into our category. Personnel, you see some nice leveraging effects coming through. The one that sticks out is OpEx. There are some disproportionate one-off effects, and I'll speak to them in a minute, concerning legal costs, some FX headwinds. There are some provisions in there, so, but nothing structurally wrong.
We are not, we have some adjustment in the past our own capitalized work is now fully capitalized, and we have some other result effects on it, which translates then in the EBITDA towards adjusted EBITDA. I wanna make one call out. Tonies has historically adjusted for very few so-called items. Last year it was only on tech development and share-based payments, and this year you only find share-based payments being adjusted. So that is in EBITDA, we only clean off share-based payments according to IFRS 2. Let's dissect a bit the revenue development. Don't wanna spend too much time. Probably saw that already. It's close to what we released in our preliminary figures. Growth in all markets, U.S. business doubling, more than doubling in effect. The rest of the world becoming already a third of the DACH business.
DACH growing mid-single digit, and we spoke about the incredible 54% international revenue versus prior year, 39%. If we look a bit into the product category as well, we see all product categories are developing nice and healthy. Of course, as a CFO, I love everything grows, but also Tonies is surging up in growth is good news. That is a driver behind our profitability, so consumers are looking for our Tonies figurines, and that is, of course, benefiting the profitability of the company. Let's briefly look also into Q4. Tobias spoke about it, highly successful, highly dense and intense moment for us. Tonies is really good at delivering this commercial excellence. You can see it here.
Maybe I'll start with North America, because you can see really that the business almost doubled in three months versus prior year, and that's an incredible, incredible effort also from the team making that possible. And, if you look at DACH and see this slightly negative effect, it's a clear, just a clean baseline effect. Remember, in 2022, in Q3, DACH, German customers were very nervous about the Ukraine war and gas prices and whether they would have electricity and heating over Christmas. So very slow overall wholesale and retail sentiment over the summer. It fully caught up in Q4, and this year, in 2023, we saw just a normal seasonality again, meaning that the Q3 was stronger than the 2022, and the Q4 was already back in line with the previous year's Q4, so it's just a shift in between two quarters.
So very healthy and good. Also for Q1, as I see revenues coming in, it's coming in nicely, just as planned. Due to some baseline effect, it will be lower than what you will have seen in 2023, Q1 in comparison. Again, baseline effects between loading, retail industries, and so on and so forth. Nothing to be worried about. If you see them, it's all good, but just a little bit lower, and I wanna caution you on the call. Then, let's look a bit more on the new segment reporting that we're bringing. What you can see here is we have three operating segments that you know from us. It's DACH, it's North America, and it's the rest of the world. They are totaling up in the total operating segments.
We have a classical headquarters, costs and reconciliation, then we have the Tonies Group. What you can see here is that in the DACH business, you see a very strong EBITDA margin of 16.3%. And this is what I said before, this is the blueprint, this is the cash cow of our business. DACH shows what it is, what the inherent profitability is in our business model, and that's what we're replicating in other markets. You can already see North America towards a trajectory towards profitability, and if you compare with the contribution margin here, and you know we talk a lot about contribution margin due to the unit economics effect, you can see that it is lower, and that makes a lot of sense. That is influenced by product mix, so we're selling more boxes versus Tonies.
Toniebox is less margin versus Tonie figurine. We have channel mix effect, but that's all, all good and, as planned. And I think it's exciting to look at these figures, because that really shows that the DACH blueprint that we're operating is something that we see unfolding now internationally. Rest of the world, of course, we're investing, we're growing, and we've always said that we're investing in our international growth. So I think that is a very, exciting news, for you to take away, that you understand the dynamics in our profitable DACH market and what we're replicating. Let's maybe look at the, build-up of our EBITDA. I spoke to most of the facts already. Here is the, very, very strong improvement in our COGS position, and I already saw a few questions rolling in on that.
It is indeed driven by the price increases that we implemented in 2022, majority in the DACH region, and that was in May 2022, so some effect in 2023. We have fundamentally reduced our air freight, so that is important to take. In 2022, we saw large amounts, so we have been taking rather inventory than or taking inventory at the expense of therefore reducing air freight needs. We have a favorable channel and product mix also that is helping us, and it's just also negotiation with better prices and better management by the teams. Licensing costs, I spoke about, country mix effects, better negotiations, own content coming into the mix.
Marketing, we spoke about as well, of within as planned, marketing we spoke about, personnel we spoke about. OpEx is the one I said, I'll speak about a little more. What you have in here are FX effect, negative FX effects that we have seen hitting us. So with the FX effects, you have, positive effects then on the other bucket. But you also have additional legal costs, a few provisions in there, so there is some, periodic effects that just, inflate a bit here, the OpEx. Own capitalized work I spoke about, so I think you see nicely 6.4% improvement year-on-year on adjusted EBITDA.
Also, I wanna say that if you take out the EUR 3 million of licensing provisions that we released in H1, it's still an incredibly strong structural improvement that Tonies has been showing. So, this is, I think, very, very good news that we can show you today. Maybe we also look at our cash position. I don't want to spend too much time on it, but you can see it is healthy. We've increased it with the prior year. If I factor in also the unused credit lines, it's the EUR 74 million I spoke about previously. And I think what is even more exciting is on the next chart, looking at our free cash flow development, because here you see a fundamental improvement from 2021 and 2022, 2022 being -EUR 88 million, we improved towards -EUR 5 million.
This is on the back of a few great developments at Tonies. One is clearly we're managing our working capital much better, so improving payment terms, we are forecasting our inventory better. It also comes with a higher profitability, so our operating cash flow is much better. And we have overperformed, so we sold more inventory than we planned in our guidance. So this is positive effects that we see, but it's also very good structural improvements. And also in comparison, I wanna call out in 2022, and I spoke about it before, we had a higher inventory position at year-end, and then shifted it into Q1 and sold out. That was a bit when there was inventory shortage. We had the lower profitability and non-optimized working capital.
So, therefore, I'm very positive for our promise, and Tobias will speak about our guidance in a minute, that our free cash flow will break- even in 2024, and we see it being greater than EUR 10 million. With this, I'm coming to the end of my section, handing over back to Tobias, and looking forward to your questions in just a short while.
Thank you, Jan. We are coming from a record-breaking 2023, and here is what we are guiding for 2024. We will continue our exponential growth as a group with more than EUR 480 million in revenue. That corresponds to a growth rate of at least 33%. For North America, we project growth to more than EUR 200 million, representing a strong growth rate of 42%. We've already seen Q1 coming in nicely on the back of a great Easter business, and as Jan had mentioned just a minute before, it is exactly as planned, with a lower growth rate compared to Q1 last year due to expected baseline. Also, our profitability will continue to improve in 2024, with an adjusted EBITDA margin in the 6%-8% range.
Free cash flow, as Jan just said, will turn positive and come in above EUR 10 million. I'd also like to provide you with a bit more transparency on why we believe we are fully on track to deliver on our targets. One of my main objectives here as the CEO is exciting our customers with great experiences, and in a minute, I'll show you a few examples of that. We also continue to grow our customer base. We are the largest interactive audio platform for kids in the world, and it is important for us to continue to build on that. We will also leverage our full customer potential by driving further growth and profitability. And finally, focus on building a scalable company to fully utilize our potential and drive international expansion.
As just mentioned, here are a few examples of how we plan to excite consumers this year, 2024. You'll see from us limited editions to fuel the collectors' hype, as we see a very high popularity for our products. Building a new franchise around musical adventures. Entering another complete new category with literature and books, our so-called Book Tonies. This feeds into the important aspect of education and is something, again, that especially older kids will love. Very important to us from our sustainability angle, there are also two new exciting news to tell. We constantly improve the materials that we use, and we will produce more than 200 different Tonies with water-based colors. This clearly underlines the ambition of leading the change in our category.
And finally, by expanding our educational franchise, Conservation Crew, we are providing children with knowledge about endangered animals, thereby increasing awareness to this very important topic. And drum roll, in 2025, I can already tell you, we will reveal something very exciting, but you need to stay tuned a bit for that. As a last little look out, we also want to show you how we continue to grow the platform, and we are very excited to put Australia and New Zealand on the Tonies' map in the second half of this year. Here you can see a Toniebox in the hands of Ulrike, our general manager in Australia, and I'm sure I don't need to explain to you the iconic building in the back of the picture as proof of where we are.
Even before the launch, we already see a very excited consumer base. Remember my 100-country map, with more than 6,400 Tonieboxes already activated in Australia and New Zealand. We will have the biggest Tonies launch portfolio ever, and have very strong retail partnerships already in place, with more than 250 points of sale throughout both countries. I'm definitely very much looking forward to all these exciting developments in 2024. And now over to you, Manuel, for the Q&A session.
Perfect. Many thanks, Tobias. Just as a reminder, if you have questions for us, please put them in the Zoom Q&A function. We have already seen the first questions coming in, and we can start right away. The first one is: Tobias, could you please let us know about your first impressions at Tonies and which initiatives you have planned already?
Yeah. So I think I said it in the very beginning of this earnings presentation. It's a fantastic company with a wonderful team, and I've seen a few companies in my professional path, and I always was very focused on great product experiences. But there's only very, very few times where you find a company that is able to create its own category, and creating its own category usually only works when you have a fantastic product. And that is what we see here at Tonies, and it's something that brings joy to all of us and me specifically. I spend a lot of time with all of you and all other relevant stakeholders. I've been visiting all the teams in all the different countries. I've been speaking to many retailers.
I've been speaking to our production companies, speaking to employees, customers, and I took away a lot of interesting insights. The focus probably for me, immediately coming out of these 100 days, will be to improve some of the performance levers and take some of the performance levers to the next level. I mean, this is normal in a company like us that grows so fast. There's always things that can be done better, and I think with my experience also running larger companies and equally fast-growing larger companies, I have already identified a number of things that I would like to work on, but stay tuned for that.
The next question is: Free cash flow was much stronger than you anticipated in 2023. What were the drivers?
Yeah, good question. I'll probably take this one.
Yes.
So, as I spoke before, or I said before, free cash flow was very much benefiting from our working capital measures. So we, we're pulling classical levers like factoring. We improved those. We worked on payment terms, did stuff like this. But I also wanna call out that, we have been improving our profitability, too. So, this has been a strong lever, and that is clear. That's also why we said we wanna be profitable, as a company in 2023, and then be cash flow break- even in 2024, because it translates through. And also in the mix, and I think that is important, is our overperformance, in terms of revenue, of course, means that we have reduced our inventory position further. So it's a mix of those.
I also a question in the chat here on if we can break down more how we're building up our greater EUR 10 million free cash flow. I think, we're not guiding and reporting on such figures in detail, but what you can expect us to do is to continue, of course, to improve our profitability and continue with our working capital measures. However, as everyone knows, you're implementing some, and there's always the big levers you can pull first. We'll continue to do so, but I wouldn't expect such big steps then or easy wins to be implemented going forward. Maybe that's enough of a clarification on that question.
Thank you, Manuel. The next question is: How did you see trading in Q1, particularly the Easter business?
Yeah. Great question. I think I can probably start, and then, Jan, if you would like to continue. We've said it in the presentation. We're fully on plan, and exactly as we have budgeted and expected, we are very happy with the Easter business so far. And you also mentioned the baseline effects, but maybe, Jan, you can just point this out one more time.
Yeah. Makes a lot of sense. I also saw a question that was saying, like, are we declined? So no, maybe I was- I wasn't precise enough. What I meant was, we had a very strong year-on-year growth in Q1 2023, and I just wanna be explicit, we are not expecting the same growth in Q1 2024. And this is due to, A, baseline effects, so different loadings, retail entries. But what I can say is that, as Tobias said, the Q1 is coming in nicely as planned. Everyone also knows there has been the Suez Canal difficulties, so goods are taking a little bit longer. We have made sure that we have a great Easter business. Of course, there are some supply chain things that you need to manage, but it's nothing that Tonies could derail Tonies' path.
It's just, I just wanna be cautious that these baseline effects tend to influence our year-over-year performance, and, and I just wanted to make that comment. We're very happy with our Q1 and development in all markets.
The next question is, could you please provide a price volume split for DACH? What was the impact of the price increases on sales growth in full year 2023?
Okay, so in DACH, we did not implement any sales price increases in 2023. We only implemented price increases in 2022. That was in May 2022, so we had about four months in last year with a price increase headwind, so to speak. But for the majority of the business, and we really make the business in the second half of the year, this was already on a comparable baseline. We're not providing a detailed split on that, and I hope that helps to explain the effect. You've seen it also in Tobias's presentation. We have been successful in increasing our online share. We have also been successful in expanding our retail footprint, and you can digest from that also from a product mix perspective, that we are very healthy.
There's a good demand for our Tonieboxes, but also Tonies, and that is what I wanna see in a mature market, and that makes me happy. Again, this is our cash cow market, over 16% EBITDA margin, so, a nice and good, good blueprint.
The next one: Why are the adjustments on EBITDA much lower than in full year 2022? Is this sustainable?
So, I think it's also an interesting question. So we are adjusting for share-based payments. After IFRS 2, I don't have to explain this to you. This does have an effect. We're a young company, and we have an incentive scheme in place, and this is, of course, depending also on our share price development. So it's very difficult to do projections here. This is something, the only factor that we're adjusting for, I wanna call that out. So it's there has been a larger effect in the past from our founders and co-CEOs, Marcus and Patric, that left, but this is due to the founders program. This has come to an end.
There's a normal, share-based incentive scheme for top management in place, but guiding or providing more clarity on this is, I think, depending on too many factors. I prefer to reference you to our guidance that we have issued, because on adjusted EBITDA, that does include share-based payment.
We will stick with the financials for a bit more. Why are, why did you pay income tax even though you should have tax loss carry-forwards? Assuming a positive net income in full year 2024, what tax rate would be fair to assume?
Yeah. I think very interesting and also detailed question. So the main effect is the minimum taxation rules that applies. So that is something that you have to be considered, and maybe for the taxation rate, that's very detailed, maybe that can be followed up in one of the more bilateral conversations that you can have with our investor relations team.
Given the strong margin improvement of more than 60%, where do you see a sustainable gross margin level in the mid.
Tobias, we're taking this one as well. So you've probably, those of you who met me in the past, we have an ambitious plan on improving our gross margin in the mid-term. And a lot depends also on product mix, because if we're bringing more Tonieboxes out versus Tonies, we have, of course, less margin. So what is a sustainable level? So a sustainable level is, of course, if you look at a mature market, and in a mature market, you should find good balance between boxes and Tonies. On a company level, it's also a function of growth, and it's also a function of macroeconomic developments.
So if we see supply chain disruption, inflation, et cetera, et cetera, I expect us to further improve the gross margin, but and that's also inherent in the plan, otherwise we wouldn't be guiding for a higher profitability of the company. But it's very difficult to pinpoint an exact figure here, and I prefer not to do it. We have a mid-term guidance, and that's the path that we're taking. Let's see how macroeconomic effects play out overall.
Are you planning to expand to more Asian countries like Japan, Korea, or even China?
I think I can take this one. I think I probably explained throughout the presentation, we're extremely happy with our progress on international markets. For now, we have a clear and strong focus on our current markets, U.S., U.K., France. We will capture this potential that we see, the biggest absolute growth will probably be coming from those markets. So as a relatively young company with limited resources, it is very important to actually make sure that you focus the teams on your biggest absolute opportunity right now. But clearly also, I mean, as part of our strategy, we will continue to look at other markets.
We, I mentioned the European online webs hop, so we will add additional European markets to that. We just added Denmark, Sweden, and Finland, bringing the country count to 17 in that E.U. web shop. But then I also said, I mean, Australia and New Zealand is a country that we enter now in 2024, and we are reviewing different go-to-market models, including partnering with distributors, to see what other opportunities we will have. Most importantly, when we roll out into new countries, we will do this in a standardized way.
The next question is, will there be ever a Spotify Tonie? I would love to give my son the possibility to play his frequently changing favorite songs by his own by a Tonie.
This is a great idea. I like it. I'll take it, and I'll report on it, to see whether this is possible or not. I don't have an answer on this one now.
The next question is, is there any discussion of going to be listed in the SDAX?
Yeah, probably I'm going to take this. There have been actually two questions on listing now, or maybe I combine them. There's also a question on listing in the U.S., so maybe I combine it. So we listed on the stock exchange Prime Standard SDAX. There are- we're already on the list, so our market cap qualifies. There are certain formulas that that you need to meet, and they also have to do something with with the liquidity of the stock. So we would qualify for it. Of course, that's something that Deutsche Börse, the German stock exchange, has to look at.
Right now, this would, of course, be great for the Tonies, but there are also other companies competing for this, and I think the formula needs to be fulfilled, and then there is something. On the U.S. listing question, there are currently no plans for a U.S. listing. We're happy in Frankfurt, for the time being.
20 Tonies sold at 4.5 years. Will you have some figures in 6 years, as your chart is going further now?
Jan, do you wanna answer this one?
Sure. So, those of you who track us know that this is one of the key KPIs we refer to because it's making me personally, but also the company very proud. And of course, we look at our cohort in more detail. We can slice it and dice it, but please understand that, also here, we would like to keep it very focused, and there's no plan at this stage to dive deeper. But we're proud that we continuously can report this figure and KPI to be very static and reliable, and I think that's the most important piece you should take away. This is why we talk about subscription-like cohorts, and this is what makes our business model so nice and predictable.
Could you provide some more color on the Book Tonies?
Yeah, happy to do that. As I said, super exciting. On the back of the success of Clever Tonies, which you probably know, this is a slightly different format than our other figurines. It's a standardized format, and you print on the top side of it, whatever content you have on that specific form factor. The Book Tonies do actually look very similar. They have a slightly different form factor because it's more obviously looking like a book. The idea behind that is we can see again. I told you about being a data-driven tech company. We can see how relevant this type of content is for our older age groups. We felt we wanted to bring up this new format to allow also audiobooks to actually be played on a Toniebox. That's the idea behind that.
What are your margin levers going forward in your mature DACH region?
Yeah. So I think we mentioned the key value levers in the very beginning of our business model of this presentation. You'll also find it on our investor relations website, and I think it's simple. We have—we are the category. We are leading the category. We're defining the category. Every second child in Germany, in the DACH region, owns a Toniebox in our target age range. And here we have the opportunity to continue our path of gross margin improvement, licensing improvement through own content, own franchises, and so on and so forth. So there are many, and we're pulling them, but I think it's too detailed now to go into what the DACH team is doing. You probably can find it and see it, also on the streets, but be assured that the DACH journey is continuing.
When are you launching the exciting AI story to all users?
Yeah, this is a fantastic question, and I am as excited as you are. For now, we have, so as I think I said, this was a test. We wanted to, we have built it in a really phenomenal time. We rolled it out first in the U.K. We added a number of DACH users. We had the Christmas campaign that I referenced to in the presentation. We now took it back offline to actually consolidate all the great feedback we had from thousands of users to come up with a final launch and launch product. This will probably take a little bit, but it it's also not years, right? I mean, we are very close to a final version.
Do I understand correctly that all Tonies are produced in China? Do you have any plans, efforts on diversifying your production?
No, it's not correct. We have, and we do continuously look into second sourcing and multi-sourcing. I mentioned that in the presentation. The Tonies are produced in China, but also in Tunisia, so there is more countries, even more regions and continents where we produce them.
Can you comment about your rollout with Walmart, please?
Yeah. So I mentioned that the fact that we are having a really, really good partnership with Walmart, similar basically to the partnership with Target, right? They almost behave like twins, you could say. Also, in Walmart's, we are increasingly having more stores. I told you about basically the two drivers in wholesale, which is number of stores, and then shelf space, and we see exactly that same pattern, basically, that we currently have in Target, and that I was able to show you with pictures also working in Walmart. We are adding more stores, and we're adding more shelf space. So very, very similar to the success that we have at Target, and that I was able to show you, same, same pattern with Walmart.
Now, there's another very, interesting question. Tonies growth, trajectory, and profitability improvement is impressive. The stock price has been caught in a very narrow range. What's your best explanation why the market is not honoring Tonies' operating achievements?
I'll let the CFO take this one.
Yes, I think it's a question that we've been discussing in the past. I think the company has been delivering on every promise that we've made. We have not changed our targets and our performance. Since our IPO, despite substantial macroeconomic turmoils, I think that just shows the resilience of the business model. And as a matter of fact, I think the share price hasn't fully reflected this. I understand that also, and everyone does with high interest rates, of course, tech rotation, unprofitable tech, certain companies have seen valuations drop. We are a profitable company now, and we're guiding for a free cash flow break-even. So I think these are the two inflection points that I expect markets want to understand.
But of course, this is the only thing I can see and comment on. If I look out into the world, I see that analysts and brokers have a good opinion. Some conversations with investors on the road, I hear great feedback on the company performance, and I let the markets then decide on where the share price is. But of course, from an operational performance, this company is showing great results.
We have a question on competition, and if it's a big competitive advantage for us that we have already a very broad portfolio of licenses and a lot of shelf space with renowned retail partners already.
Yeah, I think, I mean, Jan, you probably also have your own thoughts on it, but, on competition, I have a pretty clear view. I would personally be worried a lot more if we had no competition. Because that would mean we are seeing something that no one else is seeing. So as I said, we created this category. We are very, very successful in this category, as you also mentioned in your question, so I'm not, I'm not at all worried nor surprised about competition. Yes, there are, interesting products that, people like to put on the market, but, I just continue, to reference to our numbers, 6.8 million Tonieboxes sold, 82 million Tonies sold. We are just basically focused on our own execution, and we'll build on that.
Why don't you invest this increased cash flow in more aggressive growth?
Cash flow, I'll let you answer. Yes.
I like the question. There is the fundamental question of what- how does the business model work? We touched upon it also on the gross margin, the decomposition and contribution margin. Product mix has an impact on our profitability. What we have set out to do is delivering the DACH blueprint in international markets, and of course, the more Tonieboxes I sell, the lower the margin, hence the lower the cash flow. The more I put, let's say, a slower growth profile, the higher the cash flow.
So in theory, you could argue for more boxes means more future profitability, but I also think, and we had the conversation on the share price, that we have, as a company, said that we want to be profitable on an Adjusted EBITDA level in 2023. And I think it's important that we build trust and show that we have a resilient business model, and we have a reliable execution of the strategy that we have set out. I think that is most important for us, the management team, to show to our shareholders and stakeholders. And I'm sure that free cash flow break-even is another important factor that the markets currently appreciate. So we are 100% convinced, and our business model shows it, that it's achievable.
I think also there will be a point in time where one can debate what the right free cash flow levels are and whether additional growth might be better for the company. But right now, I think we want to continue our growth track, we want to improve our profitability, and we want to show free cash flow break-even. Then, of course, we're also further investing into our company.
The next one is: Could you create a do-it-yourself Tonie? A lot of people create Zauber- Tonies, the German word like for magic Tonies, because there isn't every item available. So they use a custom Tonie and use the NFC of a Creative- Tonie. So just say, develop a Creative- Tonie, where people can build their own custom Tonie. I guess this would be another good market for you.
Yeah. I like that in general. It's actually a global phenomenon. I've seen amazing self-created Tonies. But do not please forget, we are producing a kids' toy here for even very small children. We put a lot of effort into producing Tonie figurines that don't break, they don't create potential harm with magnets or other parts being swallowed. And we would most probably lose control over that if we do a do-it-yourself create a Tonie. So for now, I'd probably refrain from doing this. But I like the creativity that our fan base is displaying here. This is exactly what I mean when I talk about Tonies being such an amazing love brand.
From love brand to factoring. How much was the factoring impact in 2023? How many receivables sold?
So maybe what we're doing is, I don't wanna go into too many details, because that's also always a point in time view that you have to assume. We are factoring, we have the factoring implemented in DACH, and we implemented a factoring in the U.S. in late summer of this year. And this comes on the back of, of course, continued work with big wholesale retail partners. As you can imagine, they have payment terms where from a working capital efficiency perspective, we as a company need to take certain trade-offs and optimize that. You see some of the results in this year's working capital efficiency improvement, but I think it's misleading if I now pinpoint to certain numbers. A few details are in our annual report as well.
We have spoken about that topic already a bit, but there's another question, and it's a very important market for us. So what's the feedback of U.S. distribution partner with regards to the Q4 business? Are there already indication for more shelf space and point of sales among all partners, or is that only Target?
Oh, thank you for that question. And I definitely want to clarify, I used Target as an example. Target is what we—so the example of Target is what we see with almost all other retail partners that we have in the U.S. I mentioned Walmart, but there are many, many others. This evolution of wholesale that I was able to show you on that slide is a pattern throughout all chains, throughout all partners. Usually, I mean, you start either online or you start with a seasonal setup, and then you continue growing the number of stores and the number of shelf space. What I can refer you to when you wanna see how this looks like in a mature market, go to some of our large German retailers.
Go into a large Müller or into a MediaMarkt or Thalia, and you'll see this wall of Tonies figurines, up to 100 figurines and boxes and accessories. I am convinced we will actually see something like that in the near future with our first U.S. retailers as well.
How is the expectation concerning market potential and market differences in Asia versus E.U. and U.S.?
I mean, we are not officially in Asia. If you just take out Hong Kong, which we launched with English Tonies and Australia and New Zealand, obviously the same thing. Why am I focusing on that? As you can imagine, we need not only boxes, we need local content. But once we actually agree in entering a new market, and that can be any market, we start producing this local content, and this is a very important ingredient to the success. Generally, Asia, we, and I said this again, with a grain of salt, we are not there, present there. It works—I mean, you see it on the map, the Toniebox works in every country and with the exact same kind of mechanism. Kids love stories. Kids love to hear stories.
I think mankind has listened to stories since thousands of years around the fireplace or whatever. So the idea of actually telling a story and kids listening to it and playing to stories works all over the markets in the world, whether this is Asia, whether this is the U.S., whether this is Europe. And then market specificities usually are just about the content that needs to be local or localized.
Is it possible that Tonies could pay dividends in the future?
Jan?
So, we're definitely investing into growth, and this company is on an international expansion path, and this is, I think the focus for us now. We discussed also the reinvestment, so, for the time being, we're not paying dividends. We are executing the strategy, and I also saw a few questions here, and we've always said that we want to be operationally profitable on an adjusted EBITDA basis, and I think it's great that we are profitable on an adjusted EBITDA basis, but also on a clean reported EBITDA basis. And from there, we're now moving forward as we roll out our profitable blueprint towards free cash flow break-even. So I think, this is the path, and therefore, on the dividends, and not for the time being, we're still growing.
Can you provide the comparable DACH EBITDA margins for 2022?
Jan, you want to take that one?
Yes. So, no, we cannot. That comes also with the fact that it takes some time to prepare this. We prefer to work now a clean baseline from 2023. From IFRS 8 perspective, you need to assess how you can prepare and how much work is involved and whether there is a material difference that you would see, and you can't see it the same pattern that we have invested into our operating segments internationally, and that we have a highly profitable market in the DACH business. That holds true, so therefore, no, comparable values available for 2022.
70% of the Tonieboxes sold are still in operation. Is this a good or a bad thing? As of today, what's your planned annual churn rate?
I mean, let me be clear. I think it's an absolutely great thing. We are selling Toniebox since over eight years now, and we have still 70% active. That means someone put a Tonies figurine on a Toniebox, active in December 2023. So, what I mean with this is we have a durable product here that people love, that works throughout the various age groups, cohorts. And as I said, we continue, even specifically in the more mature markets, we continue to sell more and more Tonies figurines, which is important because they are obviously at a much higher margin.
You have a lot of corporations.
Maybe, maybe I can add just one thing. I just think it's phenomenal that the boxes are still being used, because I have rarely seen a product that has such high stickiness. And if you think about it, this. We always keep saying, like, this is a kid's first device, and it shows us that the kids take this device very, very deeply to their heart. There are strong emotional bonds, and there's an occasion to use this product over and over again. So I think this is actually a great KPI. We also always said that we're always surprised by how many boxes we still sell in a mature market like that.
So, it's a fantastic and just a fantastic KPI that we love to look at, and it just expresses the stickiness that we have with our consumers. And that is, yeah, just testament to a great product, I think.
You have a lot of collaborations with Disney. Will there also be a cooperation with LEGO? I'd like to see a LEGO Tonie.
I'd like to see a LEGO Tonie, too. We have a Playmobil Tonie. And I can definitely tell you, we have so many interesting conversations going on in our content licensing departments. I can't comment on any specific ones, but this is, I mean, the opportunities are huge. Agree on this one.
Hi, Tobias. You said we are officially a profitable company, but in 2023, we see a EUR 12 million loss for the period. How does that fit?
Thank you for calling me out on this one. Yes, I said we are officially a profitable company with the EBITDA margin of 2.4%. Yes, this is correct. Obviously, we-- but on an EBITDA level, that is the point we wanted to make. We turned profitable, and we continue to actually see high adjusted and, or higher adjusted and fewer EBITDA margins. This is the point I wanted to make.
What is the total market revenue potential in U.S. and DACH?
Jan, you wanna talk to this?
Sure. So it's similar also to the Asia question. I love them because it just kind of references back to the map that Tobias shows, which is just breathtaking. Over 100 countries in the world where Toniebox has been activated. We know there's a product market fit in every market. If you just look by the statistics of the market, we typically consider birth rate and of course, GDP. And everyone knows the U.S. is the biggest consumer market in the world, and this is why we're there. And therefore, it's exciting that we're growing at this pace that we're growing, and we're really, really bullish about the opportunity in the U.S. So, the total market potential is something, of course, depending on how well we can penetrate it.
It's also depending on the spend. So it is much larger than the U.S. I don't wanna comment on the exact figure, but the same goes for Asia, right? And that goes for the rest of the world. There's a huge potential for Tonies. However, for the time being, we're staying focused. Focused on the biggest bets that we've placed, and that's the U.S., U.K., France, and a few other markets. But I'm pretty sure that Tonies also has some other exciting international opportunities ahead of us, but not to be talked about today.
I saw images of a Tonies board game. Will there be a release soon?
Maybe you can post the link.
Yeah, I am actually not 100% sure what this could be. I mean, I like the idea of a Tonies board game, but this may be like we just discussed. This may be something similar where like an external family or whatever is creating something. But I'd be very honest, I don't know exactly what it is right now.
Okay, then we have a question in German. Let me quickly translate. Okay, regarding the question around the Creative- Tonies, I fully understand your reasoning in terms of safety and control. Do you know the principle of LEGO Ideas? This is where fans can hand in suggestions, and if they reach more than 100, more than 10,000 votes, they get to LEGO directly. LEGO checks the idea and then decides whether there's going to be a specific LEGO set, and the original designer afterwards gets 1% of the license fee. Is that something that would also be a good system for us at Tonies?
I totally like the idea. Let me run with it. I can totally imagine that our basically our fan base would participate in something like that. Thank you for that.
Will there be new versions of the Toniebox with new features, more storage and Wi-Fi and so on?
We continuously work on new improvements on our box. The box is, even if it has, let's say, the original shell, as you know it, for many, many years, parts of the inside has already changed. So, it's not exactly the same box that it used to be a couple years ago. So, you will see us continuously improving left and right. I think the most important thing is, this is a fantastic product. It works. It works every year. Every year, in all our markets, new kids are born, and those new kids actually receiving the Toniebox as it is right now, and they love it.
They, I mean, we don't see any difference in average playtime or in Tonies figurines being built, despite the fact that the box is getting older. So why wouldn't we change anything here right now? Look, this could be the case sometime in the future, but this is a product that continues to work exactly as it is right now.
Then we have a follow-up question on the profit question that we've answered before. Thanks, Tobias. So when do you plan to make your first real profit? At the end of one year or at least one quarter? It's a question for Tobias and Jan.
Maybe I can take it.
Yeah.
Tobias. So, I understand the question, but I think also what is important that we as a company guide the markets on our strategy and what the main KPIs are, and I think we're doing so in a very reliable way. And I prefer to continue to guide in an official way also on those figures, because there are a lot of facts in there, and we had a discussion on reinvestments of profits, on the question of product mix and growth. So I think what we have guided for and where we stick with and what we have always said, that we are profitable on Adjusted EBITDA in 2023. We also delivered profitability on clean EBITDA in 2023, and I think these are fantastic results.
We're guiding for free cash flow break-even in 2024, and I think we as a company want to focus on that and just continue to execute our plan, and I hope that is sufficient, sufficient guidance and commenting I can do at this stage for you.
Then we have our last question and follow-up. I'm wondering that the growth in DACH is only 5%, hence, when comes the growth rate down in the U.S.? Jan, I think you can also talk to this one.
Interesting, that you only wonder. I think. If you look at mature businesses, other companies of our industry seeing, 5% growth on a mature market is actually a pretty good result. So, therefore, I'm very confident, and happy with 5%. I think what our DACH team is doing is incredibly exciting. I think there's further potential for us to grow in DACH. So I expect DACH to grow, and I think that is, that is a fantastic opportunity. If we look at the U.S., the U.S. is only getting started. So the U.S. has been in the fourth year of operations, and the U.S. is hyper-growing, and we will still be hyper-growing.
We've guided for over EUR 200 million in revenue, which is substantially already above the today revenues of DACH, and we continue to grow. So of course, from a year-on-year growth rate perspective, growth will slow down, but in absolute terms, we're just adding some really, really, really sizable business on the U.S., and I expect to see a very exciting growth path still ahead of us. And therefore, I'm actually super happy with these growth rates, because I think they're very, very healthy for Tonies and also the future outlook of the company.
We got another question that we also want to take, and this is really the last one for today's session. Could you create a subscription Tonie so where the content is always up to date without to remove and upload new content manually?
Yes.
Got it.
We have it. It's a great question, so I can talk to subscriptions a little bit, but here is a Tonie that we have produced or issued in the U.K. This is called Today with Tonies. And every day, this Tonie is basically being filled with new stories, with jokes, explanations. It's almost like a radio program for kids. It's very, very successful in the U.K. It's actually the Tonie that has the most playtime right now. And so it is exactly the idea that you're asking here right now.
Also, when you ask about subscription in total, I think we are definitely—this is a very interesting thing for us to look into. We already have some subscription-like distribution models. For example, in the U.S., you can subscribe on Amazon to basically a Tonies figurine subscription. A little bit different than what you suggest here, where you basically receive new Tonies every month. It works really, really well. It's small, but you can see the whole idea around subscription is just one other interesting opportunity for us that we can tap into.
Perfect. Thank you very much, Tobias and Jan. This concludes our Q&A session. Was also a record in terms of the questions that we have received, so many thanks for the very interactive discussion, and I hand back to Tobias for the final remarks.
Thank you. Yeah, I really appreciated all these questions, and then I take it as a good sign that you've asked all these questions to us. So let me summarize the key takeaways from today's earnings call. We have outperformed our plan, and we see exceptional growth in all markets. We are clearly capturing on the U.S. market opportunities by doubling our numbers year-over-year. Tonies is now a profitable company when you look at it from an EBITDA margin point of view, where we are at 2.4% EBITDA margin. For the first time, we have introduced segment reporting, and we are happy to show an EBITDA margin of 16% in our core DACH market. We have improved free cash flow. We are at the brink of break-even in 2023, and we are forecasting a free cash flow of over EUR 10 million in 2023.
And maybe I should also say thank you, Tobias, for having you on board. It's been a management transition at the end of last year, so we should also thank the founders, Marcus and Patric, for building this great company, and I think they deserve a lot of credit for inventing the product, bringing it off the ground, and leading us in 2023. But I think it's fully understandable that at some point in time, you also hand over the baton, and I'm really, really positive and excited to have you on board, Tobias.
We have had quite some time already back in 2023 to get to know each other and start the onboarding, so it already feels that we are playing out here as a well-running team. I think with you, we have exactly the expertise on board that we were looking for. Somebody who's taken over from the founders before, you did it twice already. Somebody who has scaled companies internationally, and thank you very much for the first three months and the good ride. I'm very excited for 2024, so stay tuned and speak to everyone very soon about our future results that I can make.
Thank you. Thank you, Jan. With this, I would like to thank you for taking the time and your interest in Tonies. As I said, Tonies is a fascinating business. Tonies is a category creator and a truly loved product, and it's growing fast and profitable, and we're just getting started. Thank you very much.