Slide 1: Today's Storefront - Verkkokauppa.com Q3 2017
Verkkokauppa.com Q3 2017 20.10.2017, Samuli Seppälä, CEO TODAY’S STOREFRONT RETAIL IS GOING ONLINE. COME ALONG. Questions during or after the presentation - investors@verkkokauppa.com
Slide 2: Aggressive Q3 with +14% revenue growth, EBITDA -50%
Verkkokauppa.com Q3 2017 Aggressive Q3 with +14% revenue growth (€105m), EBITDA* -50% (€2.1m) Market share gains in most categories, up to 10 percentage points Q3 dividend €0.043 (previous Q €0.042) *) Comparable EBITDA 2
Slide 3: Verkkokauppa.com Q3 2017 Income Statement
*) Comparable Verkkokauppa.com Q3 2017 Income Statement Q3 2017 Q3 2016 Ch% Revenue, € million 105.4 92.6 +14% Gross profit 13.9 14.5 -4% Gross margin 13.2% 15.6% Personnel expenses* -5.7 -5.3 +7% Other opex -6.1 -4.9 +25% EBITDA* 2.1 4.2 -50% EBITDA margin* 2.0% 4.6% EBIT* 1.8 3.9 -55% Net profit*
Slide 4: Verkkokauppa.com Q3 2017 Balance Sheet
Verkkokauppa.com Q3 2017 Balance Sheet • Inventory 47.0 (40.3) million euros on 30/9/17, change +16%. • Cash flow from operating activities -4.1 (+6.1) million euros. • Capex 1-9/2017 was -1.2 (-0.7) million euros . • Equity ratio 40.4% (42.6%) • Cash 29.9 (29.4) million euros, change +2%; no intere
Slide 5: Verkkokauppa.com updated targets
Verkkokauppa.com updated targets Verkkokauppa.com has updated its low-costs and low-prices strategy and medium-term targets: Net sales growth of 10-20% per year, growing EBITDA and EBITDA margin of 3-5%. Policy of paying out an increasing dividend. Paid quarterly. 5
Slide 6: Verkkokauppa.com rolling 12 months
*) Comparable Verkkokauppa.com rolling 12 months Q4/17-Q3/16 Q4/16-Q3/15 Ch% Revenue, € million 419.9 363.8 +15% Gross profit 60.7 56.1 +8% Gross margin 14.4% 15.4% Personnel expenses* -23.9 -23.9 0% Other opex* -22.8 -18.9 +21% EBITDA* 14.1 13.4 +5% EBITDA margin* 3.3% 3.7% EBIT* 12.8 12.2 +4% Net
Slide 7: Retail market in 2020
E-commerce share of total global retail sales from 2015 to 2020 Global online share 16% forecast 2015-2020* Retail 14.6% 14% market in 2020 13% Share of e-retail sales 12% 11.5% Verkkokauppa.com aims take large part of 10% future growth of online retail 10% in Finland (~€40b), as it grows from curre
Slide 8: U.S. E-Commerce Sales Growth per Quarter
U.S. E-Commerce Sales Growth per Quarter Source: US Census Bureau 8
Slide 9: Verkkokauppa.com's targets and categories
Verkkokauppa.com’s targets and categories Continuous and systematic expansion into new categories that are fully suitable for low-cost online model and efficient logistics. • Medium-term target of 10-20% revenue growth and EBITDA margin of 3-5% is split between 26 main categories with some being mor
Slide 10: Share of retail revenue
E-commerce share of total retail revenue in the United State 2011, 2016 and 2021, by product category U.S. E-Commerce Share by Product Category Source: eMarketer; Kantar (Kantar Retail) 40% 33% 32% Share of retail revenue 30% 28% 28% 24% 21% 20% 19% 19% 18% 17% 15% 12% 13% 10% 10% 9% 6% 6% 3% 0% Ele
Slide 11: Prefer to buy In-Store vs Online
Sources: Market Track and IRO Research, Feb/Jun 2017 Prefer to buy In-Store vs Online Categories for which US and Finnish shoppers prefer to buy In-Store/Online. In-Store USA FIN Online USA FIN Major appliances 85% 88% 15% 12% Tools/hardware 77% 89% 23% 11% Electronics 69% 79% 31% 21% Apparel/footwe
Slide 12: Verkkokauppa.com Q3 2017 sales growth drivers
Verkkokauppa.com Q3 2017 Growth every quarter sales growth drivers • Retail continues going online • New bigger Pirkkala and Oulu stores • CE market* development +0% (7-8/17) • Updated aggressive strategy • Market share gains in most categories • Finnish economy returning to growth 57.0 67.9 83.2 92
Slide 13: New megastore in Raisio will be opened in Q1 2018
New megastore in Raisio (Turku region) will be opened in Q1 2018 • Mailorder sales are higher around our stores compared other areas. Capita/km2 • Lot reservation in Eastern Helsinki has been made for planning a possible future Myllypuro area store and logistics center. 13
Slide 14: New Apuraha Business launched
New Apuraha Business launched www.verkkokauppa.com/fi/ kohta-apurahaa-yrityksille 14
Slide 15: Verkkokauppa.com's gross margin and fixed costs
Verkkokauppa.com’s gross Gross margin % margin and fixed costs Fixed costs % 30 EBITDA 3.8% 30.3% 25 27.5% Cheaper prices enabled by lowest 25.0% 25.9% 20 fixed costs 23.1% 22.1% 15 18.7% EBITDA EBITDA 15.5% 3.8% 15.8% 2.0% 10 13.2% 11.2% 11.8% 5 0% Retail in Finland Verk.com Verk.com Gigantti Power
Slide 16: Verkkokauppa.com's gross margin and fixed costs
EBITDA 3.1% Verkkokauppa.com’s gross Gross margin % Fixed costs % 30.0% margin and fixed costs 27.3% 15 16.7% EBITDA EBITDA EBITDA EBITDA 3.9% 15.5% 2.0% EBITDA 14.6% 2.8% 15.2% 3.4% 15.4% 3.1% 10 12.9% 13.6% 11.8% 11.8% 12.4% Retail in 5 Finland (w/o cars) 2014 0% (total €38b) Verk.com Verk.com Ver
Slide 17: Verkkokauppa.com's gross margin and fixed costs
EBITDA 3.8% 30.3% Verkkokauppa.com’s gross Gross margin % Fixed costs % 27.5% margin and fixed costs 15 EBITDA EBITDA EBITDA 1.6% EBITDA EBITDA 15.6% 3.2% 15.3% 15.6% 4.6% 15.3% 15.5% 3.8% 5.1% 13.7% 10 12.5% 11.8% 11.0% 10.2% Retail in 5 Finland Power Finland 2016 Record launch EBITDA! (w/o cars) 2
Slide 18: Medium-term targets and dividend policy; business outlook
Medium-term targets and dividend policy • The company targets an annual revenue growth of 10 - 20 per cent in the medium-term. • The company’s objective is growing EBITDA and EBITDA margin of 3-5 per cent in the medium-term. • Policy of paying out an increasing dividend. Dividend is paid quarterly.
Slide 19: Web visits last 18 months (desktop and mobile)
Web visits last 18 months (desktop and mobile) *) Visits from Finland, estimate gigantti.fi Amazon* power.fi 19
Slide 20: Web Traffic from Finland (desktop only available)
Web Traffic from Finland (desktop only available) Amazon.com Gigantti.fi Power.fi Amazon.de 20
Slide 21: Largest owners on 30 Sep 2017
Largest owners on 30 Sep 2017 Shares % 1 Seppälä Samuli Sipi 22 487 496 49.900 2 Keskinäinen Eläkevakuutusyhtiö Ilmarinen 2 419 451 5.369 3 Keva 2 171 000 4.817 4 Keskinäinen Työeläkevakuutusyhtiö Varma 2 065 932 4.584 5 Rite Ventures Finland Ab 1 967 576 4.366 6 Op-Suomi -Sijoitusrahasto 994 378 2.
Slide 22: Share development last 12 months
Share development last 12 months (17 Oct 2017) http://www.nasdaqomxnordic.com/aktier/microsite?Instrument=HEX100175 22
Slide 23: ... we aim for lower prices and costs!
While the traditional retail Gross margin % sector is increasing gross Fixed costs % margins and fixed costs ... EBITDA EBITDA ... we aim for lower EBITDA 30 3.4% 3.8% 30.0% 3.1% 30.2% 30.3% 25 27.3% 27.5% 27.5% 20 prices and costs! 15 EBITDA EBITDA EBITDA 15.4% 3.1% 15.1% 3.6% 15.5% 3.8% EBITDA 2.0
Slide 24: Thank you & Q&A
Thank you & Q&A Upcoming events: • Q4/2017, Friday 9 February, 2018 • AGM, Wednesday 21 March, 2018 • Q1/2018, Friday 4 May 2018 • Q2/2018, Friday 10 August 2018 • Q3/2018, Friday 26 October 2018 Quick links: • Investors site - www.verkinvest.com • Company Releases mailing list - www.joinverk.com •
Slide 25: Disclaimer
This document is not an invitation to subscribe for or purchase any securities or make any investment decisions in respect of the Company or its securities. This document is not for publication or distribution, directly or indirectly, in or into Australia, Canada, the Hong Kong special administrativ