The Adore Beauty Group Ltd (ASX: ABY) share price is racing higher on Tuesday following the release of its half year results.
In morning trade, the online beauty retailer's shares are up 7% to $2.89.
Adore Beauty share price higher following further strong growth
- Revenue up 18% on the prior corresponding period (pcp) to $113.1 million
- Active customers increased 13% on the pcp to 876,000
- Returning customer growth of 56% on pcp
- Gross profit margin up 0.6 percentage points to 33.1%
- EBITDA of $3.8 million and EBITDA margin of 3.3%
- Cash balance of $25.1 million and no debt
What happened during the first half?
For the six months ended 31 December, Adore Beauty delivered record revenue, customer numbers, and multiple record trading days.
During the first half, Adore Beauty reported an 18% increase in revenue to $113.1 million and EBITDA of $3.8 million.
This was driven by a 13% lift in active customers to 876,000, returning customer growth of 56%, and a 5% increase in annual revenue per active customer to $224.
Management commentary
Adore Beauty's CEO, Tennealle O'Shannessy, appeared to be pleased with the half.
She said: "Adore Beauty has delivered another strong financial result with record revenue, active customers and multiple record trading days, one of which was achieved postlockdown. Valuable returning customers were the key growth driver in H1 FY22, growing 56% on the prior period and delivering 71% of revenue. These loyal returning customers become more valuable the longer they are with us, increasing their basket size and order frequency every year they spend on our platform."
O'Shannessy also revealed that Adore Beauty is faring better with its marketing spend than other ecommerce players thanks to its various marketing channels. This is allowing the company to focus on reinvesting in its business instead of extra marketing.
"Our owned marketing channels are also positively impacting marketing costs, which are trending significantly below industry inflation. We continue to re-invest in our longer-term strategic priorities, including private label, mobile app, loyalty and adjacency expansion, which support future outperformance and increase our market share within an $11 billion category benefitting from significant structural tailwinds," the CEO explained.
Outlook
The second half has started positively for Adore Beauty. During the first six weeks of the half, the company's revenue has grown 14% over the prior corresponding period.
Though, it has warned that there is ongoing uncertainty given the current COVID situation.
Looking ahead, Adore Beauty has reaffirmed its target to achieve an EBITDA margin of 2% to 4% in the short to medium term while reinvesting to drive above market growth. In the longer term, as the business grows, scale benefits are expected to increase operating leverage and deliver further EBITDA margin expansion.
Overall, management believes the company "is well positioned to capture market share in a large and growing market benefitting from structural tailwinds."
