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Marley Spoon share price on watch after upgrading revenue guidance

paper bag filled with fresh food representing marley spoon share price
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The Marley Spoon AG (ASX: MMM) share price is on watch following the release of the company’s half-year results after the market close on Thursday. 

The company is a leading global subscription-based meal kit provider.

Half-year results

The coronavirus pandemic has accelerated the adoption of online grocery shopping and the growth of Marley Spoon’s business. As a result, it has upgraded its 2020 full-year guidance for revenue growth to be in the 80% to 100% range compared to the prior corresponding period (pcp). 

1H20 revenue grew 89% to 116.2 million euros compared to the pcp. Additionally, Marley Spoon’s contribution margin is at a record 30%, up 6 percentage points year-on-year (YoY). Slower increases in marketing, general and administrative expenses has led to increased earnings. 

Q2 revenue grew 129% to 73.3 million euros compared to the pcp.

Marley Spoon’s net loss was 67.5 million euros in the first half, primarily due to a non-cash fair market value adjustment on derivatives related to convertible bonds and warrants. 

Pleasingly, Marley Spoon turned cash flow positive in 1H20 to over 8 million euros. Its cash balance has increased by 13 million to 18 million euros. 

It delivered positive operating earnings before interest, taxation, depreciation and amortisation (EBITDA) in Q2, but an overall loss of 2 million euros in 1H20.

Favourable market

CEO Fabian Siegel said:

Since we last reported to the market at the end of July, the impact of the COVID-19 pandemic continues to create a favourable environment for us. We still see an accelerated adoption of online shopping for all kinds of goods, including groceries.

The company was preparing for a sizeable drop in quarter on quarter revenue for Q3, due to uncertain economic conditions, but this didn’t materialise. Marley Spoon is experiencing significantly reduced customer acquisition costs and strong demand in all regions. 

The temporary closure of its Melbourne facility due to infected team members did not materially impact the business or customers. It has since re-opened the Melbourne manufacturing site. 

Outlook

Marley Spoon continues to see strong momentum in customer acquisition and better than usual unit economics, driven by a high level of retention and significantly lower customer acquisition cost. The company intends to take advantage of this trend and invest in customer acquisition where targets are being met or exceeded.

The company will continue reinvesting profits back into business while improving its cash position and balance through lowering debt and increasing equity through conversion of convertible bonds. 

The Marley Spoon share price was trading at $3.40 per share at market close on Thursday night, down 2.86%.

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Returns as of 6th October 2020

Motley Fool contributor Matthew Donald 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.

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