Marley Spoon : Appendix 4C - Q4 2021 and Business Activity Report

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Appendix 4C - Q4 2021 & Business Activity Report

CONTINUED GROWTH AND MARGIN EXPANSION

Berlin, Sydney, 31 January 2022: Marley Spoon AG ("Marley Spoon" or the "Company" ASX: MMM), a leading global subscription-based meal kit provider, is pleased to share with investors its highlights from the quarter ended 31 December 2021 ("Q4 2021") and guidance for FY 2022.

Conference Call

Management will present a business update to investors on a conference call at 6.00 pm AEDT on 31 January, the details of which have been released separately to ASX.

Highlights

• FY2021 net revenue at €322m, delivered within guidance range: +27% growth year-on- year
• Q4 2021 net revenue at €85m, +24% growth year-on-year resulting in a 2-year Compound Annual Growth Rate (CAGR) of 56% on a reported basis
• Global Contribution Margin (CM) in Q4 at 31.0%, up 2.1pts versus the previous year thanks to operational improvements. FY 2021 CM at 28.5%, in-line with guidance
• Q4 Operating EBITDA loss of €4.8m due to disciplined growth investments
• Year-endcash balance of €39m providing balance sheet capacity to fund growth strategy
• Chefgood Pty Ltd acquisition in Australia completed in January 2022, accelerating strategy to expand customer choice and increase ARPU

COMPANY INFORMATION:	INVESTOR QUERIES:	REGISTERED ADDRESS:
Fabian Siegel, Marley Spoon	Michael Brown, Pegasus	Paul-Lincke-Ufer 39/40
CEO	0400 248 080	10999 Berlin
[e-mail]	[e-mail]	Germany

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Marley Spoon CEO, Fabian Siegel, highlighted, "Q4 net revenue was in line with our expectations as growth accelerated again compared to the prior quarter. Overall FY 2021 revenue grew 27% landing at €322 million.

We are particularly pleased with our team's strong operating performance leading to the highest quarterly contribution margin of 31% in a challenging operating environment.

The contribution margin performance was aided by successful price increases, demonstrating the pricing power our brands enjoy. We also improved our marketing efficiency allowing us to acquire more customers at costs in-line with previous years despite significant CPM inflation.

The contribution margin expansion and disciplined investment in marketing led to an improvement in Operating EBITDA versus previous quarters, landing at €(4.8m), in line with our expectations.

I would like to thank our teams for going the extra mile in a challenging year that was impacted by supply chain challenges and inflationary pressures, among others. Through these many headwinds, we ended the year with accelerated growth and our highest contribution margin globally. I would also like to welcome the Chefgood team that joined us at the beginning of the year."

Q4 & FY 2021 BUSINESS UPDATE

FY 2021 net revenue grew 27% vs. the PCP to €322.4m, in-line with guidance. For the fourth quarter of 2021, Marley Spoon reported net revenue of €85.2 million, an increase of 24% vs. the PCP (+56% 2-year CAGR).

The Q4 net revenue growth was driven by Australia (+52%) and the United States (+15%), as the Company continued to invest in increasing its subscriber base and in offering more product choices.

CM landed at 28.5% for FY 2021, also in-line with guidance. Q4 2021 CM landed at 31.0%, up 2.1pts year-on-year. Operating Contribution Margin (Operating CM), defined as CM excluding the impacts of marketing vouchers and fixed costs such as expenses relating to site leases, reached 39.2% globally in Q4, up 2.6pts year-on-year. The quarterly margin performance was supported by operational improvements as well as the successful implementation of the Q3 2021 price increases to offset inflation, particularly in the US.

The improved margin performance at a bigger scale led to an improved Operating EBITDA margin and an Operating EBITDA loss of €(4.8m) for the quarter. The FY 2021 Operating EBITDA loss was €(32m), in line with expectations.

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SEGMENT REVIEW

United States

• Q4 2021 net revenue up 15% year-on-year, or 62% on a 2-year CAGR basis
• Q4 2021 CM at 29.5%, up nearly 4 pts vs. Q4 2020; Operating CM reached 38.1%, also 4pts better vs. Q4 2020
• Operating EBITDA was a loss of €(1.6m) in Q4 2021

Revenue grew 15% (+10% on a constant currency basis) primarily driven by retention-driving initiatives and price increases implemented to offset food, labour and fuel inflation. Orders per active subscriber declined compared to the PCP due to higher skip rates during the holiday season compared to the prior year.

The company successfully ramped up production in its new California manufacturing centre, supporting the overall strong CM and Operating CM performance. Operational improvements despite a volatile operating environment also contributed to the margin performance.

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Australia

• Q4 2021 net revenue up 52% year-on-year and 55% on a 2-year CAGR basis
• Q4 2021 CM at 35.4%, down 50bps vs. the PCP, while Operating CM reached 43%, up 60bps vs. the PCP
• Operating EBITDA totalled €2.5m in Q4 2021

Active Subscribers grew 45% year-on-year (+52% 2-year CAGR), and meals ordered grew 52%, leading to the strong YoY revenue growth.

CM was slightly down year-over-year, primarily impacted by higher investments in customer acquisitions.

Operations were also expanded during the quarter, with the recent launch of the Marley Spoon brand in WA, making both of the Company's meal kit brands available in all states and mainland territories across the country. Marley Spoon completed its acquisition of Chefgood, which will start contributing to the Company's results as of January 2022.

Europe

• Q4 2021 net revenue flat year-on-year (+40% 2-year CAGR)
• Q4 2021 CM at 24.1%, (1pt) below the PCP, and Operating CM at 33.5%, in-line with the
  PCP
• Operating EBITDA loss of €(5.7m) in Q4 2021

Active Subscribers grew 18% year-on-year though sales remained flat, driven by an increase in skip rate during the holiday season and a shift in sales mix toward Dinnerly. Europe also experienced a volatile supply chain environment as well as wage and food cost inflation. Nevertheless, the Company was able to maintain stable Operating CM versus the previous year.

KEY OPERATING METRICS

Q4 2021 active subscribers grew 18% compared to the PCP, driven mainly by Australia (+45%) and Europe (+18%).

The Company's Active Subscribers generated on average 6.2 orders in the quarter, down 9% versus the PCP due to higher skip rates during Thanksgiving and the December holiday break. However, the Company saw a sizable increase in average order value, reaching €51.2, a 15% increase versus the PCP largely due to activities to increase choice for customers and a successful price increase to offset input cost inflation.

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Active Customers are customers who have purchased a Marley Spoon or Dinnerly meal kit at least once over the past 3 months.

Active Subscribers are customers who have ordered or skipped a Marley Spoon or Dinnerly meal kit, on an average weekly basis, during the quarter.

CASH FLOW

Marley Spoon ended Q4 2021 with a cash balance of €38.7m. Cash from operating activities was €(4.8m) driven in part by an outlay of cash for marketing activities anticipated in Q1 2022. Cash from investing activities was €(4.3m), approximately half of which was for equipment for the Company's new California manufacturing facility which opened in September 2021 and became fully operational in Q4.