Slide 1: Verkkokauppa.com Oyj Q3/2015
Verkkokauppa.com Oyj Q3/2015 23.10.2015, Samuli Seppälä, CEO TODAY’S STOREFRONT RETAIL IS GOING ONLINE. COME ALONG. Questions during or after the presentation - investors@verkkokauppa.com
Slide 2: Continuous strong growth and profit in a tough retail market
Verkkokauppa.com Q3/2015 Continuous strong growth and profit at Verkkokauppa.com, in a tough retail market Revenue +22% and EBITDA +70%
Slide 3: Retail continues going online
Digitalization is fundamentally changing the retail industry Retail continues going online Finland Total Retail Sales Finland Online Retail Sales €B €B 50 +3% 5 0% +3% 42 7 42.7 +11% 40 38.7 38.8 38.4 4 37.2 34.7 34.1 35.4 3.5 +15% 30 3 +20% 20% 2.0 20 2 1.8 1.5 1.3 1.1 0.9 10 1 0.7 0 0 2008 2009 20
Slide 4: Retail continues going online
Retail continues going online E-commerce is the natural development and evolution of retail business. Why are consumers buying online? • E-commerce offers consumers lower prices enabled by lower fixed operating costs. • Wider selection, no need to keep everything in stock, and less need for capital.
Slide 5: Verkkokauppa.com concept
Verkkokauppa.com concept LOWER PRICES “Probably always cheaper” WIDER PRIVATE - MODULAR BEST 24 H SELECTION IT AND ERP SYSTEM AVAILABILITY TRANSPARENT AND CUSTOMER CENTRIC ”Sales growth driven by Verkkokauppa.com’s strong, trusted and focused online concept”
Slide 6: Verkkokauppa.com concept
Verkkokauppa.com concept Price according with Capital efficiency enabled by the leanest LOWER PRICES slogan - regardless operating model “Probably always cheaper” of sales channel WIDER PRIVATE - MODULAR BEST 24 H SELECTION IT AND ERP SYSTEM AVAILABILITY Finland’s best and trusted Customer lifetime
Slide 7: Respondents valued trust and easy shopping highest
Verkkokauppa.com concept Respondents valued trust and easy shopping highest Broad assortment and prices placed behind top 3, service and content elements in the bottom Rate the importance of following factors for you when shopping online Important Somewhat important Neutral Somewhat unimportant Unim
Slide 8: Q3/2015 Income Statement
Verkkokauppa.com Q3/2015 Income Statement 7-9/2015 7-9/2014 Change% 4-6/2015 Revenue, € million 83.2 68.0 +22% 80.0 Gross profit 12.3 9.9 +24% 11.4 Gross margin 14.8% 14.6% 14.3% Personnel expenses 5.2 4.3 +21% 5.6 Other opex 3.9 3.8 +4% 4.1 EBITDA 3.2 1.9 +70% 1.7 EBITDA margin 3.9% 2.8% 2.2% Depre
Slide 9: Q3/2015 main sales growth drivers
Verkkokauppa.com Q3/2015 main sales growth drivers Q3 +22% • Verkkokauppa.com’s trusted concept Revenue • Retail continues going online • Good wholesale trade and B2B sales • Bolder, growth-oriented pricing • Easy and convenient experience 57.0 mEUR 75.1 mEUR 60.6 mEUR 60.6 mEUR 68.0 mEUR 86.6 mEUR
Slide 10: Q3/2015 fixed costs and gross margin development
Verkkokauppa.com Q3/2015 fixed costs and gross margin development • Long-term low prices enabled by low fixed costs is one of the key growth drivers for any e-commerce, including Verkkokauppa.com. • New product categories typically have higher gross margin compared to older categories. Sales by cons
Slide 11: Q3/2015 balance sheet
Verkkokauppa.com Q3/2015 balance sheet • Inventory 36.0 (34.4) million euros on 30.9.2015, change +5%. • Cash flow from operat. activities 1-9/2015 was -4.1 (-13.0) million euros. • Investments on fixed assets 1-9/2015 were 0.8 (0.4) million euros . • Cash 23.2 (28.5) million euros on 30.9.2015. • I
Slide 12: Verkkokauppa.com's gross margin and fixed costs
51.2% 47.0% Verkkokauppa.com’s gross margin and fixed costs 34.6% 30 EBITDA 32.6% 30.0% 3.1% 25 27.3% Gross margin% Fixed costs% of sales 20 19.7% 15 EBITDA 16.8% 17.0% 14.8% 3.9% 10 13.2% 11.0% 5 0% Retail in Finland Verk.com Qliro Group (SWE), Amazon (USA) Gigantti Stockmann (w/o cars) 2014 2015/Q
Slide 13: Verkkokauppa.com's gross margin and fixed costs
EBITDA Verkkokauppa.com’s gross 30.0% 3.1% Gross margin% margin and fixed costs Fixed costs% of sales 27.3% 15 16.7% EBITDA EBITDA EBITDA 3.9% EBITDA EBITDA 15.5% 2.0% 14.6% 15.2% 15.4% 3.1% 2.8% 3.4% 10 12.9% 13.6% 12.4% 11.8% 11.8% 5 0% Verk.com Verk.com Verk.com Verk.com Verk.com Retail in Finlan
Slide 14: While traditional retail sector is increasing gross margin% and fixed costs%
While traditional retail sector is increasing gross margin% and fixed costs% ... 30 EBITDA EBITDA EBITDA 3.1% 29.1% 29.1% 3.5% 30.0% 3.7% 25 27.3% 25.3% 25.7% 20 15 EBITDA EBITDA EBITDA 0.4% 15.7% 3.2% 15.4% 3.1% 10 13.1% 12.7% 12.6% 12.4% 5 0% Retail in Finland Retail in Finland Retail in Finland V
Slide 15: Industry average product margins
Industry average product margins Fixed costs% of sales Gross margin% • Mobile Phones <5% 30 • Computers or Tablets 10-15% EBITDA 30.0% 3.1% 25 • Televisions 20% 27.3% • Washing Machines 25% 20 • Hammers and Drills 25% 15 • Sporting Equipment / Watches 25% 15.4% EBITDA 3.1% • Baby Strollers and Safet
Slide 16: New product categories
New product categories Verkkokauppa.com has continuously expanded into new categories • Track record of appr. one% market share gain per category per year. 4• Target to be in top-3 (r)etailers for each category. Strictly private and confidential Verkkokauppa.com has continuously expanded into new ca
Slide 17: Apuraha consumer financing launched - better profitability
Apuraha consumer financing launched - better profitability
Slide 18: Apuraha consumer financing service launched in September
• Apuraha (Eng:”Grant”) consumer financing service launched in September. • Almost immediately, Apuraha became the most popular installment payment method. • Apuraha provides customers with a new flexible payment alternative, and company with better profitability than any other payment method. • The
Slide 19: Largest projects
Largest projects • The company continues developing and exploration of its consumer-to-consumer market place (C2C), which is about attracting more traffic, increasing add-on sales and sales of new products and improving customer loyalty and experience. Boston Consulting Group has identified top-3 mo
Slide 20: Medium-term targets and Business outlook
Medium-term targets The company retains its existing targets: • The company strives to grow faster than its operating market and targets an annual revenue growth of over 10 per cent in the medium term. • The company’s objective is to improve its EBITDA margin in the medium term when compared to the
Slide 21: Largest owners on 30.9.2015
Largest owners on 30.9.2015 Shares % 1 Seppälä Sipi Samuli 22 487 496 49,900 2 Rite Ventures Finland Ab 4 617 576 10,246 3 Keskinäinen Eläkevakuutusyhtiö Ilmarinen 2 308 728 5,123 4 Keskinäinen Työeläkevakuutusyhtiö Varma 2 065 932 4,584 5 Keva 1 488 000 3,302 6 Op-Delta -Sijoitusrahasto 1 291 668 2
Slide 22: Share development (21.10.2015)
Share development (21.10.2015)
Slide 23: Web visits comparison
Verkkokauppa.com Web visits comparison • Verk.com vs Gigantti Sep -15, +80% • Verk.com vs Gigantti Sep -14 +50% • Verk.com vs Expert Sep -15, +571% • Verk.com vs Expert Sep -14 +510%
Slide 24: Shopping expected to increase in most popular webstores
Verkkokauppa.com Shopping expected to increase in most popular webstores Over 5% of consumers net2 to shop more at Tori.fi, Ebay and Verkkokauppa.com Rate the claim 'I have bought from this webstore' for each of the following webstores; How do you expect your purchases to develop in the following st
Slide 25: Verkkokauppa.com
Verkkokauppa.com • Verkkokauppa.com is the best known, most visited and largest online retailer in Finland. • Verkkokauppa.com is profitable and operates with much lower fixed costs compared to other e-tailers and especially traditional retailers - thanks to its strong concept. • The company aims to
Slide 26: Q&A
Q&A Upcoming events: • Q4/2015, Friday 12 February 2016 • AGM, Tuesday 15 March 2016 • Q1/2016, Friday 22 April 2016 • Q2/2016, Friday 5 August 2016 Quick links: • Investors English Summary - www.verkinvest.com • Company Releases mailing list in English - www.joinverk.com • Company Investor Webcasts
Slide 27: Product highlight - Advent Calendars!
Product highlight - Advent Calendars!
Slide 28: Thank you!
Thank you! TODAY’S STOREFRONT RETAIL IS GOING ONLINE. COME ALONG.