Adore Beauty : Half Year Results - Investor Presentation

About this update from Adore Beauty Group Ltd.

ersonal use only RESULTS PRESENTATION | H1 FY22 15 February 2022 DELIVERING STRONG REVENUE GROWTH RECORD REVENUE DRIVEN BY VALUABLE RETURNING CUSTOMERS ersonal use only $113.1M 33.1% REVENUE GROSS PROFIT +18% ON PCP MARGIN +47% 2-YEAR CAGR +0.6 PPTs ON PCP $3.8M $25.1M EBITDA 1 CASH 2 -27% ON PCP -14% ON PCP +44% 2-YEAR CAGR 876k +56% ACTIVE RETURNING CUSTOMERS 3 CUSTOMERS 4 +13% ON PCP +43% 2-YEAR CAGR Market leader 5 in fast-growing $1.3b online beauty & personal care category Online destination of choice for brand partners and loyal returning customers who increase in value each year Strong start to FY22 with multiple record trading days & strong AOV growth Re-investing in strategic initiatives to drive sustainable, long- term growth 1. 2. 3. 4. 5. Historical proforma adjustments are detailed in the appendix. EBITDA margin in line with guidance provided in FY21 results media release on 30 th August 2021 "Adore Beauty expects to maintain a 2-4% EBITDA margin in the short to medium term while reinvesting to drive above market growth". Balance as 31 December 2021 compared to 30 June 2021. Active customers refer to customers who have ordered in the last 12 months; comparison of CY21 to CY20. Returning customers are customers who have previously placed an order on the Adore Beauty website; comparison of CY21 to CY20. Adore Beauty is the leading pureplay online beauty retailer in Australia, based on management estimates. Results Presentation | H1 FY22 2 MORE RETURNING CUSTOMERS, SPENDING MORE EXPANDING SHARE OF WALLET only REVENUE ($A MILLION) ACTIVE CUSTOMERS 1 ('000) 113 777 +43% CAGR +47% CAGR +18% +13% 876 use 96 33 439 36 497 427 52 19 61 80 251 ersonal 436 33 176 280 H1 FY20 H1 FY21 H1 FY22 CY19 CY20 CY21 Returning New Returning New Returning customers driving strong revenue Sustainably growing active customer base, driven by growth, accounting for 71% of revenues (up from 56% growth in returning customers, who become 64% in H1 FY21) increasingly valuable over time 1. Active customers refer to customers who have ordered in the last 12 months, comparison of CY21 to CY20. ANNUAL REVENUE PER ACTIVE CUSTOMER 1 +3.3% CAGR +5.3% $224 $210 $213 CY19 CY20 CY21 Higher annual revenue per active customer reflecting larger proportion of returning customers and strong Average Order Value (AOV) growth Results Presentation | H1 FY22 3 SUBSCRIPTION-LIKE RETENTION RATES AFTER YEAR 2 CREATING MORE LOYAL RETURNING CUSTOMERS only ■ ■ ■ use ■ ■ COVID lockdowns accelerated new customer acquisition and returning customer repurchase Transition out of lockdown seeing return to more sustainable growth rates off elevated base Returning customer growth of 56% on PCP (2-year CAGR of 58%), offset 12% decline in new customers CY21 aggregated retention 1 of 56.2%, down 9.3ppts on PCP and up 2ppts on CY19, reflects cycling of larger proportion of new customers acquired during COVID Strategic initiatives to reduce year-one churn and improve retention, including Mobile App and Loyalty # CUSTOMERS ('000) 350 300 250 200 150 100 NUMBER OF CUSTOMERS New Returning ersonal 50 COVID COVID LOCKDOWN LOCKDOWN SUPERIOR LOYALTY METRICS OVER TIME 2 71% ~3x SPIKE SPIKE 0 FY19 FY19 FY19 FY19 FY20 FY20 FY20 FY20 FY21 FY21 FY21 FY21 FY22 FY22 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 of revenue from returning per year customers who order from us on average 1. Aggregated active customer retention rate = (Active Customers as at the end of the relevant year - Active Customers acquired during the relevant year) divided by Active Customers as at the commencement of the relevant year. Results Presentation | H1 FY22 4 2. Returning customer period of H1 FY22; Average order frequency period of CY18-CY21. CUSTOMER LIFETIME VALUE IS STRONG & GROWING CONTENT AND LOYALTY STRATEGY SUPPORTING RETENTION, REDUCING RELIANCE ON PAID CHANNELS only ■ ■ use ■ ■ ersonal Key ratio to measure customer acquisition and engagement is LTV (Lifetime Value) / CAC (Customer Acquisition Cost) 1 Strong unit economics CY18-CY21 average LTV/CAC continues to recover investment in just under one year (CY21 LTV/CAC was 0.9) Return on investment continues to grow over time, with year four LTV more than five times acquisition cost Investing in a disciplined, data-driven way to acquire and retain customers; working with brand partners to scale brand funded marketing Content engagement strategy and loyalty-focused strategic initiatives (Loyalty program and Mobile app) supporting engagement, retention and LTV growth Investing in "owned" channels with media and content that supports discovery and fulfilment, driving higher customer loyalty and growth in returning customers Reduces reliance on competitive paid channels, which are showing price volatility at present CY18 - CY21 AVERAGE LTV/CAC 1 BY YEAR 5.5x 3.8x 2.4x 1.3x Y1 Y2 Y3 Y4 1. LTV (Lifetime Value) is calculated as the cumulative contribution margin (where contribution margin is gross profit margin less bank and merchant fees) generated from the relevant customer cohort, net of customer churn for that cohort . CAC (Customer Acquisition Cost) represents the total advertising expense (this is a fully loaded advertising cost, including cost related to acquiring new and retargeting returning customers, and also includes brand awareness above the line (ATL) spend) over a period of time per new customer acquired during that period). Results Presentation | H1 FY22 5 This is an excerpt of the original content. To continue reading it, access the original document here .

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