Marley Spoon shares on watch after strong second quarter update

The Marley Spoon AG (ASX:MMM) share price could be on the rise today after the release of a strong second quarter update…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Marley Spoon AG (ASX: MMM) share price will be one to watch this morning after the subscription-based meal kit company released its second quarter update.

How did Marley Spoon perform in the second quarter?

Marley Spoon's global revenue came in at €32 million in the second quarter of FY 2019, which was an increase of 54% on the prior corresponding period and 9% on the first quarter of FY 2019.

Pleasingly, this strong revenue growth was achieved despite the company's significantly lower marketing spend during the quarter. Management believes this highlights the strength and importance of orders from repeat customers.

Solid growth was exhibited across all geographies, but the star of the show was its U.S. business which delivered revenue growth of 91%.

The lower marketing spend also helped support ongoing margin improvement. At the end of the quarter the company's global contribution margin increased to 24%, compared to 20% in second quarter of FY 2018. This was in line with the company's guidance for a contribution margin in the mid to high 20s on a global basis in 2019.

Another positive is that the company is now profitable in Australia. The release explains that its Australian operations were profitable on an operating EBITDA basis during a busy second quarter which included the roll out of its new manufacturing technology and the announcement of a strategic partnership with Woolworths Group Ltd (ASX: WOW).

Marley Spoon's CEO, Fabian Siegel, said: "Reaching operating EBITDA profitability in Australia in Q2 for the first time and kicking off our strategic partnership with Woolworths in early Q3 are great achievements by our team, and a testament to the long-term viability of our business model."

Thanks partly to this, the company narrowed its EBITDA loss to just ~€5 million during the quarter. This compares to an EBITDA loss of ~€12 million in the first quarter and ~€8 million in the prior corresponding period.

Looking ahead, the company reaffirmed its previous guidance to reach a global contribution margin in the mid to high 20s in 2019 and profitability on an operating EBITDA basis by 2020.

And if the company continues to build on this strong second quarter result, I suspect it will achieve its guidance with ease.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Share Gainers

These were the best-performing ASX 200 shares in March

These shares made their shareholders smile in March thanks to some very big gains.

Read more »

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
Opinions

2 ASX shares I have been buying in 2024!

I’m a believer in the long-term outlook of these stocks.

Read more »

Stock market chart in green with a rising arrow symbolising a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a massive day for the ASX 200, with a new all-time high recorded.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Burgundy Diamond Mines, Clarity Pharmaceuticals, EML, and Zip are sinking today

These ASX shares are ending the week in the red. But why?

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Mesoblast, Newmont, Pilbara Minerals, and Platinum shares are jumping

These ASX shares are ending the week strongly. But why?

Read more »

a young boy dressed up in a business suit and tie has a cute grin and holds two fingers up.
Opinions

2 of my top ASX 200 shares to consider buying before April

I would happily exchange dollars for these two shares right now.

Read more »