Welcome to Pierce Group Q4 Report 2025 Presentation. During the Q&A session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now, I will hand the conference over to the speakers, CEO Göran Dahlin and CFO Fredrik Kjellgren. Please go ahead.
Good morning, everyone, and welcome to Pierce Group's Presentation of our Q4 Result for 2025. I'm Göran Dahlin, CEO of Pierce Group, and with me is Fredrik Kjellgren, our CFO. Thank you for joining us today. Today, we begin with a brief recap of who we are and where we stand in the European market, followed by a summary of our financial performance in a quarter. We will provide updates on our ongoing transformation and strategic initiatives before we look ahead to our outlook and growth drivers for the coming quarters. We'll close with a Q&A session at the end. Pierce is Europe's number one online destination for motorcycle gear and equipment, and we sell everything you need when you ride a motorcycle, except the motorcycle. The company was founded in 2008 in Stockholm.
We are a pan-European e-commerce company, and we have more than 15 years experience of operating across Europe. We generate around SEK 1.8 billion in sales with a 5% EBITDA margin, and we have approximately 290 employees in Sweden, Poland, and Spain. We serve more than 1 million customers, and we've built a strong digital presence with 1.8 million followers on social media. Our assortment includes over 200,000 products, and we operate local e-commerce sites in 20 countries. All logistics are handled through our central warehouse in Poland, enabling scale and efficiency. And since 2021, we're listed on Nasdaq Stockholm. We operate in three verticals through 24MX, XLMOTO, and Sledstore. Motocross represent around 60% of sales in a market of approximately SEK 10 billion, and that's offline and online market.
So we hold more than 10% market share of the total market. Motorcycle accounts for roughly 35% of sales in a significantly larger SEK 90 billion online and offline market. So our share is still below 1% of the total market, highlighting substantial growth potential. Snowmobile represent around 5% of our sales in the SEK 2 billion market, where we hold around 5% market share. And we offer a broad product assortment across gear, protection, parts, and accessories. Around 60% of sales comes from gear and protection, where fashion and innovation are key drivers, while 40% comes from parts and accessories, where function as well as wear and tear are key drivers. Our mix is approximately 35% private brands and 65% external brands, and we will have one of the highest private brand shares among European competitors.
This strengthens both margin and our differentiation. We operate on a pan-European scale, with around 60% of sales in Central and Southern Europe and about 35% in the Nordics. And we have offices in Stockholm and Barcelona, and offices and central warehouse in Szczecin, Poland. E-commerce penetration varies across Europe, and it remains high in the Nordics and parts of Western Europe, while it's still lower in Southern and Eastern regions. This creates room for continued online shift. Within our categories, penetration is higher in off-road and lower in on-road. Overall, the niche is well suited for e-commerce, where we can offer superior selection and availability compared to physical stores. The rider base continues to grow, and electrification will further broaden the customer base by lowering entry barriers with easier handling, less noise, lower maintenance, and improved accessibility in urban environments.
We think this will attract younger riders and new customer segments. Our supply chain and logistics setup is best in class and a key competitive advantage for us. We operate more than 37,000 sq m of warehouse space and manage over 60,000 SKUs in stock, ensuring strong availability across our assortment. We handle more than 20,000 orders per day with pick and pack within 24 hours, supporting high service levels and customer satisfaction. The setup is agile, combining cross-dock and own operations, and supported by our own long-distance haulers, giving us control, flexibility, and cost efficiency across Europe. Our competitive landscape is fragmented and consists of five main segments. First, leading pure online specialists such as 24MX and XLMOTO. Second, general marketplaces like Amazon and eBay. Third, large European omni-channel retailers with roughly balanced online and physical sales.
And fourth, traditional brick-and-mortar players, often local stores, many of which have added basic online presence during COVID. And finally, some of our leading brands, even though they primarily sell via distributors and retailers, some of them also operate their own web shops. We are the largest pure e-commerce player in our market. We're the Nordic champion and clear leader in off-road across Europe. We are also the only truly pan-European specialist with local sites, languages, and payment options, customer service, and delivery partners across our markets. In addition, we're the only player with a pan-European long-haul logistics setup. Most of our other players are local champions focused on their home markets, often primarily on-road and generally with a relatively low share of private brands. Several are financially owned, which could facilitate future consolidation.
Overall, the market structure creates a clear opportunity to build a significantly larger pan-European category leader, with a scale to stock a wider assortment, offer superior availability and lead times, strengthen private brands, and improve purchasing power with key suppliers, and unlock meaningful back-office synergies. To summarize our investment case, our focus is to enhance the customer experience, expand geographically and into new adjacent categories, and drive profitability, with a midterm EBIT target of 5%-8%. We combine strong pan-European footprint, one of the highest private brand shares in the industry, a scalable and efficient logistics platform, and a state-of-the-art IT stack, which creates clear competitive advantage and operational leverage. We are the undisputed leader in the European online market for motorcycling gear, accessories, and parts, and we are operating a large and still under-penetrated SEK 100 billion market.
The market remains fragmented and ripe for consolidation, and we are uniquely positioned to lead that process. And now we will walk through our Q4 financial performance. So in Q4, adjusted EBIT improved significantly from SEK 1 million last year to SEK 30 million this quarter, demonstrating a clear progress in our operating model. We continued to grow in the quarter, with the revenue up 3% year-on-year or 7% in local currency. This was done despite tougher comparables, geopolitical uncertainty, and continued subdued economic conditions in several major European markets. Against this backdrop, we believe that we gained market share both in the quarter and for the full year. Gross margin improved slightly to 43.5%, up 0.3 percentage points, mainly driven by lower in freight cost and obsolescence effects.
Variable costs decreased slightly relative to revenue as we continued to improve efficiency in our performance marketing. Overhead costs declined to SEK 75 million and were down relative to sales, despite SEK 7 million in transformation expenses related to our SaaS transition. According to accounting standards, these investments cannot be capitalized, but needs to be taken as OpEx. At the same time, we're still carrying depreciation from legacy on-prem systems. This temporary negative cost carrying will fade as transformation completes, and after all the systems have been launched, first half of 2026, we expect roughly SEK 30 million-SEK 40 million in EBIT improvement on an annualized basis. We ended the quarter with SEK 235 million in cash, which is a solid cash position. Looking forward at some of our KPIs, they reflect a stable and healthy development.
Private brand share over the last 12 months was 36%, compared to 39% a year ago. The decline is mainly mix driven, as external brands have grown very strongly. In absolute terms, private brand sales remain solid. We launched a large number of new products in 2025, and while the ramp-up has taken longer than expected, we continue to invest strategically in private label, and our ambition is to accelerate growth there. But we remain realistic about the time required to build up successful new products and categories. At the same time, we're unlocking significant growth with our external brand portfolio by improving availability and assortment depth. This remains an important growth driver. As we grow both private brand and external brands, we do not expect major structural shifts in private brand share long-term. Customer satisfaction remains a clear strength.
Trustpilot scores are stable at a high level of 4.4 out of 5 across Europe, which is a good score comparing with many of our direct European competitors. Continuing on some of our KPIs, our active customer base continues to grow, with last 12 months active customers increasing steadily compared to last year, reflecting improved acquisition and retention. At the same time, we see a gradually increase in both average order value and order volumes. This development is driven by better product availability and underlying demand rather than increased promotional intensity. Overall, this confirms a healthy combination of customer growth, higher engagement, and improving purchasing behavior. I hereby hand over to Fredrik Kjellgren, our CFO.
Thank you, Göran. If we zoom in on gross margin, we can see that our gross margin improved slightly compared to last year, landing at 43.5%, an improvement by 30 basis points versus Q4 2024. The year-over-year improvement was driven by a combination of reversal of provisions for obsolescence and lower inbound freight cost. In turn, the improved obsolescence was driven by active sales measure, resulting in improved inventory profile, while the inbound freight is more related to the development of freight rates and sales mix. Looking ahead, we expect the market to remain price sensitive, so our focus is on maximizing gross profit in absolute monetary terms. That said, we need to be price competitive, but not the cheapest in the market. Our shipping costs, we saw freight price improvements versus last year, while quarter-on-quarter levels remained stable.
Market freight rates from Asia continue to be volatile, though we observed a slight decline since late 2024. Next slide, please. Now, let's, double-click and give some context on the adjusted EBIT this quarter. The Q4 adjusted EBIT increased from SEK 1 million in 2024 to SEK 13 million in 2025. But in order to fully capture the underlying trend, it's also good to be aware of other unusual items impacting the adjusted EBIT. Two items not classified as items affecting comparability impacted the EBIT in the quarter. About SEK 1 million from trademark amortization and around SEK 7 million in transformation costs. Excluding these effects, the adjusted EBIT would have been approximately SEK 21 million for the quarter.
The amortization of trademark systems from our early decision to consolidate smaller own brands into Proworks, and these charges will continue until the second quarter of this year. Transformation costs are tied to the implementation of our new SaaS-based systems, which cannot always be capitalized under accounting rules. They primarily consist of overlapping license fees and external consultant expenses during transition period. If we look ahead, we expect these transformation costs to decline significantly as we complete our final systems during the first half of this year. Once the new tech stack is fully operational, we expect to see meaningful improvement in operating leverage and annual EBIT on the order of SEK 30 million-SEK 40 million on an annual basis.
So, overhead costs decreased by SEK 1 million year-over-year to SEK 75 million, and that this is despite the SEK 7 million in transformation expenses that we incurred during the quarter. Since Q3 2023, we have right-sized the company by reducing our white-collar workforce by more than 35%, while increasing net revenue by 15%, resulting in roughly 85% higher sales per white-collar FTE. This demonstrates the scalability of our model and the efficiency gains from streamlining processes and empowering teams, reducing bureaucracy, and empowering teams to make faster decisions. Now, over to net working capital. Our net working capital has increased since the exceptionally low levels that we saw back in Q2 2024. This is mainly the results of our efforts to strengthen the assortment and improve product availability, which are all key enablers of growth.
The increase this quarter is a combination of higher inventory and temporary prepayments to secure stock as we exceed our credit limits with some of our largest suppliers. Both of these are based on deliberate decisions to ensure that we can meet customer demand and capture growth opportunities. Net working capital in Q4 represented a decrease versus Q3, and as of Q4, the year-over-year development start to stabilize as we meet relevant comps from last year. We expect net working capital to stabilize going forward as we balance a strong availability with disciplined inventory management. Our focus remains on continuously improving our purchasing methodology to drive higher efficiency, keeping the stock fresh and healthy by acting early on slow-moving items, while maintaining the right levels of inventory to support customer satisfaction and sales momentum. And with that, over to you, Göran.
Thank you, Fredrik. So let's look at our outlook and growth drivers. Looking ahead, we will continue with what we call Enhance, which is carried by our Pierce 2.0 program, which is a transformation that where we strengthen our fundamentals by improving customer experience, streamlining operations, and increased scalability. We target completion of this program by the first half year, 2026, after which the temporary overlap of all system, all systems will fade and profitability will structurally improve. At the same time, we're entering a new phase, which is the expansion phase. We will roll out 12 localized markets and continue to grow in mountain bike and scooter market categories. This will broaden our addressable market, create cross-selling opportunities, and add new revenue streams over time. This will take time to scale.
We are aware of that, but it will be an important contributor to long-term growth. And finally, the European motorcycle e-commerce market remains fragmented and is ripe for consolidation. As the largest and only pan-European listed player with a scalable platform already in place, we are uniquely positioned to participate and potentially lead in the next phase of this industry consolidation. And with that, I would like to say thank you for your attention, and we'll open up for questions.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Adrian Elmlund from Nordea. Please go ahead.
Hi, Göran, and pleased to meet you as well, Fredrik. Good morning, guys. A couple of questions from me, please. We've seen here that the shares of, you know, private brands kind of continue to slide. How should we think about the trajectory here? Is this something that you have expected, and would you—or should we expect any, you know, change of this going forward?
This is highly dependent on that we have grown exceptionally strong on the external brands, mainly due to that we have increased our stock availability and have products that the customers want to buy. In absolute terms, we have still grown year-over-year, our private label. We are continuing to invest in our private label with many new launches also this year. We do think that we should have continued growth in private label and in external brands. It's not our ambition to decrease in share, but rather to maintain the share. That's our best projection that we can give.
Right. And the focus here on MTB and the scooter moped, will that lead to higher share of own private, you know, brands or contrary? And the second question to that, do you think it will affect the inventory levels as well? You know, tying into the broader, you know, discussion here regarding working capital, do you think that are the stock levels at a decent level now?
T hat's a very relevant question, and we have said that, I think that we've said that in a previous quarterly call, that our ambition is to stay roughly at this inventory level. It varies a lot quarter by quarter, as you know. We will continue to improve our purchasing and our stock management. The ambition is to be able to improve the assortment and add the assortment without increasing the stock levels in a significant way. When it comes to the private label mix, we don't think that it will affect the mix that much because we will have private label and external brands in the new categories.
They are so small today that it will take a long time before we will see a substantial effect on any mix. During that time, we will also be able to develop further private labels. We do not expect that to have a big impact on the private label mix.
All right. Fair enough. You also mentioned in the CEO word, you know, the weather effects affecting sales performance in different regions. Could you give us any sort of, you know, trading update here in January, February, regarding how weather has impacted, you know, each category, I suppose, or geography, I mean?
We don't give guidance, but what I write in the letter is that quarters will, for sure, you know, we will be up and down, over depending on different factors, quarter- by- quarter. I think you need to see this long term. We all need to see this long term. We're on the right track. We have increased our profitability from SEK -69 million in 2023 to +SEK 25 million in adjusted EBIT last year, in 2024, and SEK 45 million now in adjusted EBIT, all a little bit more than 80% increase.
Then we are weather dependent, especially in Q4 and Q1 especially, where the perfect weather is a very warm winter in Europe and lots of snow in the Nordics, so that we have a lot of motorcycle riding in Europe and a lot of scooter riding or snowmobile riding in the Nordics. But, you know, you never get what you wish for. So, having said that, I mean, last year we had a pretty bad quarter one with -SEK 11 million. In spite of that, we made a really good year, I think. So quarter one is our least important quarter of the year.
Right. Okay. But could we have some color, I guess, on the, you know, the new localized websites? Have you seen any initial reactions that you could share with us?
Yeah. We have launched pilot markets with our new website, and it's working well. Then we are calibrating because we have ambitions to grow, of course, and then we need the site to be top-notch. And when we feel that we are on the level where we should be with the new site, we will continue to roll it out, both in the new markets that we call them, where these are the markets that historically have been served by our pierce.eu site, where we have. You can only buy in Euro, it's only in English, and you only have one delivery option, which is not, you know, locally adapted, and you only have one payment option.
And so we are going to fully localized sites with a local currency, local delivery options, local payment options, and we think that that will increase conversion rate a lot, and then we will also start investing more in marketing, which also will increase traffic. But all of these things takes time. It we're breaking a little bit new ground. There are, of course, already actors in these markets, so we even if it's more juvenile than, if I can say so, than Western Europe, there are still actors there. So it will take time, but it will be very important for long-term growth for us.
Yeah. Okay, fair enough. Last question here, if I may. So you had some 7% organic growth here in the quarter on a rather difficult comp. And you know, looking into 2026, when comps are you know, meaningfully more difficult, can you share any ambitions, at least, in terms of you know, organic growth for the coming year? You're a growth company, so should you be targeting double digits, or what should we expect?
Yeah. Again, Adrian, as you know, we're not giving guidance, but, Our ambition is to continue to be a growth company. Then what we say is that the growth that we've had, where we had several quarters with 20% growth, we've clearly taken a lot of market share. And we've done a lot of things right, in hindsight. And our ambition is to continue to improve. But of course, when we meet tougher comps, it's reasonable to expect that the growth from what we call enhance, will moderate somewhat. And then it is important that we start to get the expansion engines firing, so that we can continue a good growth momentum.
Okay. Thank you very much.
Thanks, Adrian.
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. The next question comes from Martin Bunge-Meyer from Private Investor. Please go ahead.
Hello, thank you for taking some questions. I had a question about the cash position. It's quite considerable. I mean, how much cash do you really need to continue to grow? And, would it-- do you have any discussions about, you know, pre-purchasing of shares? If you're taking part of the consolidation, it could be good to have a, a highly valued currency, so to speak.
Thank you, Martin. Yeah, that's true. We have quite a substantial cash position at the end of the year. Then, as we are so seasonal, this varies quite a lot, so we go down certain weeks to around SEK 100 million in cash. So we need cash to operate. But then I think we need also to look in a historic perspective of the company, that during 2022, when the full flare of the crisis and huge overstocks at all, with all the competitors and a very unbalanced stock with Pierce for different reasons, we were in a cash squeeze.
This was before my time, but that is, as I have understood the situation, that we were forced to go out and take in external, new, fresh capital. So I would say that with that backdrop, it's natural, I think, that the board is quite risk-averse and wants to have, you know, a very solid cash position. Then, of course, that also opens up possibilities for us when it comes to buying clearance deals and making good businesses, like that. But also, if there would be some smaller competitor, maybe in a problem situation or, you know, with-- there are different uses for this cash, in my view. And then, of course, this is the board that decides. I'm happy with having, I must say, I'm pretty happy with having, in the current situation, to having this cash, because I think it helps us and creates a stability and security.
Yeah, okay. Because, I mean, you have a considerable credit facility as well on top of that. So I mean, you, you have cash if you need to do stuff. But, okay, fair enough. Can you say anything about the general market growth prospects for 2026? Not particularly for your company, but maybe for the market in the whole.
Yeah. What we believe is that the Nordics, especially Sweden, will have a quite strong development. We must remember that we're a pan-European company, of course, and certain of the larger European economies, like Germany and France, and Italy, it's not great. It continues to be quite subdued. Again, we think that we are taking market share. Spain is a good market and has good growth potential going forward. U.K. is a bit of a-- Yeah, that's a special case, Brexit and all of that. We don't see that to be a very strong market for us because we have a clear disadvantage compared to the local players there.
But we're optimistic also about Eastern Europe, since this is, again, a more juvenile market. Quite large markets, that if you take them all together, quite a substantial population, and a motorcycle is a motocross is not that big, except in Romania and a few other countries, but on-road is big there. We think that we have good growth potential by market expansion. But we're not really getting lots of tailwind from a general market improvement as we see it.
As a follow-up question, but you still see these kind of bigger markets in Europe as growth markets, or you're taking market share on top of that, or you still is gonna believe a still standing market for Europe or?
Our ambition is to grow. We want to take market share. So it's up to us, basically. But I want to say that it's-- Those markets are quite mature now. There are incumbent players, local players, that are very good, very strong. And to grow, to really grow in those markets, I think the M&A track is the most relevant. If you're, you know, looking at so some transformational development, while east, going east and going, you know, that's more organic growth focus for us.
Going to the stock levels, you were talking about a grace period before. Is that grace period over now, since the stock was enhanced so much? Is it more than 12 months now?
Yes. Yes, correct. We see that we have a stable stock situation. We see that we're making progress on the way that we are managing stock, the way that we are purchasing. We say in the report that we do not foresee any exceptional events regarding obsolescence and overstock, et cetera. Having said that, you never know, but that's at least the view that we have now, and I would say that we have a lot of data on this.
All right. Thank you.
Thank you.
There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.
Oh, thank you for listening to us today. Fredrik and I wish you a great continuation of the day. Thank you.
Thank you.