The Marley Spoon AG (ASX: MMM) share price will be one to watch on Thursday.
This follows the release of the global subscription-based meal kit provider's second quarter update.
How did Marley Spoon perform in the second quarter?
During the second quarter of FY 2020, Marley Spoon continued to experience strong demand for its meal kits.
Management advised that this has been driven by the pandemic, which has accelerated the long-term adoption of online grocery shopping. Marley Spoon more than doubled its customer base year on year during the quarter to 350,000 active customers.
Also growing strongly was its revenue. The company's second quarter revenue came in at 73.3 million euros. This was an impressive 129% increase on the prior corresponding period.
Pleasingly, the company reported that the retention of new customers remained strong and its customer acquisition costs significantly reduced. Marketing expenses as a percentage of revenue represented 13% of revenue in the quarter, compared to 18% in the prior corresponding period.
This supported a 6-point increase in its global contribution margin (CM) to a record 30.5%, which ultimately led to global operating earnings before interest, tax, depreciation, and amortisation (EBITDA) of €4.5 million.
The latter comprised operating EBITDA of 3.6 million euros in Australia and 4.6 million euros in the United States, which was offset slightly by a 3.7 million euros operating EBITDA loss in Europe.
"Surge in demand."
Marley Spoon's CEO, Fabian Siegel, was understandably very pleased with the company's performance during the second quarter.
He said: "The COVID-19 pandemic has changed lives globally. Due to the crisis we continue to see an accelerated adoption of online shopping for all kinds of goods, including groceries. The resulting surge in demand for our brands has led to strong growth, a record margin and a full quarter of profitability."
"Given our reduced customer acquisition costs, higher growth rate and associated scale benefits, we now expect significantly better results for the full year than we did previously, and are upgrading guidance," he added.
Management has increased its revenue guidance for FY 2020. It now expects revenue growth of at least 70%, compared to previous guidance of ~30%.
One metric that won't be upgraded is its CM guidance. Although it notes that its CM has already exceeded the previously guided level for the year (29.5% in Q1 and 30.5% in Q2), at this point it is not updating its CM guidance due to the uncertainty caused by the pandemic.
