Ao World Plc · LSE:AO.
Ao World — H1 FY2022 Earnings Presentation
35 slides from Ao World's earnings presentation, Nov 23, 2021
Slide 1: HY22 Interim Results
HY22 Interim Results 23 November 2021 © 2021 AO World All Rights Reserved
Slide 2: Forward-looking statements disclaimer
Forward-looking statements disclaimer This presentation contains oral and written statements that are, or may be, “forward-looking statements” with respect to certain of AO World plc’s (“AO”) plans and its current goals and expectations relating to its future financial condition, performance and res
Slide 3: Welcome
Welcome John Roberts Founder and Chief Executive Officer
Slide 4: Financial Performance
Financial Performance Mark Higgins Chief Financial Officer
Slide 5: HY22 Revenue Highlights
HY22 Revenue Highlights 2 year YoY % 2YoY % HY22 CAGR change change Group £760m +29% +6% +67% UK £661m +28% +7% +65% Germany €115m +37% +3% +88% • Robust revenue growth across our businesses against strong Covid comps • 67% increase 2YoY Group revenue • 88% increase in Germany 2YoY • CAGR of 37% for
Slide 6: MDA market share
MDA market share Ppt increase 6 Month to Sep 6 Month to Sep 6 Month to Sep UK post 2019 2020 2021 vs pre COVID Average total 14.9% 22.9% 19.5% 4.6% market share Average online 35.2% 31.9% 34.0% -1.2% market share Ppt increase 6 Month to Sep 6 Month to Sep 6 Month to Sep Germany post 2019 2020 2021 v
Slide 7: Gross margin %
Gross margin % Gross Margin UK • Stable product mix 18.1% Group 18.0% • Increasing cost to deliver 16.9% expected to continue into H2 19.7% UK 19.8% Germany 19.2% • Improved margins with extra volume through Logistics from 7.6% Third Party Logistics Germany 7.3% • Structurally lower than in UK -0.3%
Slide 8: UK SG&A costs
UK SG&A costs UK SG&A Expenses as a % of revenue * 25% • Investment in people and IT systems as highlighted at Full Year which carried into the first 20% half of 2022 10.5% • Increased spending on 15% sponsorship and brand 10.1% 8.0% 8.6% marketing 10% 1.5% 1.2% • Increased warehousing costs 1.1% 0.
Slide 9: Germany SG&A costs
Germany SG&A costs Germany SG&A Expenses as a % of revenue* 25% • Costs relatively stable as a percentage of revenue, with increase due to lower volumes 20% • HY22 lower than HY20 as volume 11.4% increases offset fixed cost base 15% • Increase in Advertising & Marketing 10% 6.8% 7.2% expenses reflec
Slide 10: UK EBITDA progression
UK EBITDA progression 40.0 UK HY22 EBITDA Vs Prior Year* • Increase in trading 11.7 2.9 (11.3) (6.0) offset by sharply 35.0 (20.8) increased cost to 30.0 deliver, mainly in 3.3 drivers 25.0 32.1 (1.1) • In PY Mobile had write- offs following changes £ms 20.0 15.0 in consumer behaviour 10.0 10.6 5.0
Slide 11: Germany EBITDA progression
Germany EBITDA progression DE HY22 EBITDA Vs Prior Year* (0.0) • Increase in customer (1.0) acquisition costs in a highly competitive market (2.0) (3.0) 0.3 (1.6) • More competitive (4.2) market resulted in € ms (4.0) slightly lower product (5.0) (1.3) margins (6.0) (0.3) (7.1) • Gross margin offset
Slide 12: Working capital consumption
Working capital consumption 300 124 126 days days 163 200 days • Inventories remained 30 33 days high to ensure product 100 27 days days availability 0 • Receivables reflect an increase in revenue in B2B, timing of supplier £m -100 -200 support, and accrued income from -300 51 days insurance sales 4
Slide 13: Cash flow
Cash flow HY22 £m HY21 £m • Liquidity of £66m Adjusted EBITDA 5 28 • Financial net debt (pre IFRS16) of Exceptional cashflows - (1) Non cash movements 3 1 c.£20m Net change in working capital (64) 69 • Cash outflow primarily due to NWC Taxation received / (paid) 1 (1) outflow Cash (used in) / genera
Slide 14: FY22 financial outlook
FY22 financial outlook • Markets volatile with direct prior year comparisons difficult • Macro challenges with continued supply chain disruption and product availability • Full year group revenue flat to -5% YOY • Group Adjusted EBITDA expected to be in the range of £10m – £20m 14
Slide 15: Strategic Progress
Strategic Progress John Roberts Founder and Chief Executive
Slide 16: Introduction
Introduction • Continued confidence in strategy • Macro market changes all aligned despite short term challenges • Fundamentals in place to become the global destination for electricals • Cemented gains but ongoing volatility expected • Thanks to AOers and partners 16
Slide 17: Strategic plan
Strategic plan • A better way to buy electricals with huge TAM • Long term structural shift in our market • Goals of double-digit growth and international expansion • Maintained world-class customer service 17
Slide 18: Scale Matters
Scale Matters 18
Slide 19: Growth through new and repeat customers
Growth through UK New Customers vs Repeat Customer % new and repeat 140 60% Number of customers (000’s) 120 50% customers 100 40% 80 30% • German customers 60 20% 40 repeat faster than 20 10% UK customers 0 0% FY10 Q1 FY11 Q1 FY12 Q1 FY13 Q1 FY14 Q1 FY15 Q1 FY16 Q1 FY17 Q1 FY18 Q1 FY19 Q1 FY20 Q1 FY
Slide 20: Scale: Repeat after first purchase (UK)
Scale: Repeat after first purchase (UK) 2020 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 2014 2015 2016 2017 2018 2019 2020 20
Slide 21: MDA customers (since 2016)
MDA customers (since 2016) When they came back to AO; what categories 22.5% did they go on to buy? 14.2% SDA AV CE 8.3% GAMING 2.2% 0% 5% 10% 15% 20% 25% 21
Slide 22: SDA customers (since 2016)
SDA customers Scale - MDA (since 2016) When they came back to AO; what categories 26.5% did they go on to buy? 15.2% MDA AV CE 11.3% GAMING 3.0% 0% 5% 10% 15% 20% 25% 30% 22
Slide 23: AV customers (since 2016)
AV customers (since 2016) When they came back to AO; what categories 29.7% did they go on to buy? 23.6% MDA SDA CE 15.3% GAMING 5.0% 0% 5% 10% 15% 20% 25% 30% 35% 23
Slide 24: CE customers (since 2016)
CE customers Scale - MDA (since 2016) When they came back to AO; what categories 24.0% did they go on to buy? 21.9% MDA SDA AV 16.7% GAMING 6.5% 0% 5% 10% 15% 20% 25% 30% 24
Slide 25: Scale: Repeat after first purchase
Scale: Repeat after first purchase 2020 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 2014 2015 2016 2017 2018 2019 2020 25
Slide 26: AO Flywheel
AO Flywheel The "AO Flywheel" sits at the heart of the strategy, focused on building a winning B2C customer proposition to drive momentum in sales and profit Leverage new opportunities and Grow addressable B2C Market develop a profitable ecosystem OO Innovate and invest bravely Efficiencies through
Slide 27: Manufacturer partners
Manufacturer partners SAMSUNG Samsung VE7OAU8000 70" Smart 4K Ultra HD TV 4.615 Read 1 customer reviews 27
Slide 28: Germany
Germany • Investing to grow MDA online penetration-DE • Fixed the 40% fundamentals 35% • P&L in good shape 30% 25% • Working on driving 20% traffic & sales at a 15% sensible cost 10% 5% 0% Jan-19 Jan-20 Jan-21 28
Slide 29: Germany
Germany • Investing to grow • Fixed the fundamentals • P&L in good shape • Working on driving traffic & sales at a sensible cost 29
Slide 30: Further International expansion
Further International expansion • Built a model for international expansion • Ambition for future territories 30
Slide 31: Brand
Brand
Slide 32: Brand awareness in electricals
Brand awareness in electricals 90% 82% 81% 80% 78% 70% 67% 66% 62% 60% 50% 42% 40% 36% 32% 30% 28% 20% 10% 0% Currys PC World Argos John Lewis AO.com Amazon Spontaneous Prompted 32
Slide 33: Doing the right thing
Doing the right thing 33
Slide 34: Looking ahead
Looking ahead • Challenges are short-term • Think and invest for long-term while navigating current uncertainty • Continue putting customers first • Invest for scale benefits • Incredible long-term value 34
Slide 35: Thank you and Questions
Thank you and Questions