Bike24 Holding AG (BIKE) Earnings Call Transcript

Good morning, ladies and gentlemen, and a warm welcome to today's H1 2026 Earnings Call of the Bike24 Holding AG. I'm delighted to welcome the CEO, Andrés Martin-Birner; and CFO, Sylvio Eichhorst, who will give us an update on the results in a moment. Following the presentation, we will move on to our Q&A session. So I would say, let's jump straight in, Andrés the stage is yours.

Thank you very much. Good morning, everyone, and welcome to Bike24 Q2 2026 Earnings Call. Thank you for joining us today. My name is Andrés Martin-Birner, I'm the CEO and Founder of Bike24. On the call with me today, again, is Sylvio Eichhorst, our Chief Financial Officer. We will start to walk you through the key developments of the second quarter in the first half of 2026 before we conclude with your questions. Please also note that the presentation is available on our Investor Relations website. Today's call is structured in 4 parts. I will start with a general update on Q2 and first half year's overall performance. Sylvio will then move into the detailed business update and our financial performance, followed by our outlook for the remainder of the year. Finally, we will take your questions. Let us start with Q2 at a glance. Bike24 continued its profitable growth trajectory in a challenging and price-sensitive market environment. Group revenue increased by 20.1% year-over-year to EUR 96.1 million, while adjusted EBITDA improved by 15.8% to EUR 5.9 million. This means we continue to grow strongly, while also keeping profitability at a solid level. Our growth was broad-based. Localized markets again outperformed, growing by 29.7% to EUR 21.5 million. while the DACH region grew by 17.2% to EUR 66.4 million. We also took the next step in our European expansion with new localized web shops launched in Denmark and Slovenia at the end of June, followed by Ireland in July. On the product side, PAC, that means part accessories and closing remain the main growth driver. PAC increased by 22.3% to EUR 78.9 million. Full bikes also continued to grow with revenue up 11% to EUR 17.2 million resulting in around 9,100 bikes assembled and shipped through our workshop. In addition, we introduced our collect and right option at the end of Q2 in our webshop, enabling customers to collect fully assembled bikes from selected distribution partners in 7 different locations in Germany, which might also serve as local service and support points. Finally, we deliberately built inventory to secure availability for the second half of the year. Inventory increased to EUR 91.6 million while the inventory to sales ratio remained almost unchanged at 28.8%, underlying that the stock buildup is in line with our growth. With this overview, I would now like to hand over to Sylvio, who will take you through the business and financial details.

Thank you, Andrés, and good morning, from my side as well. I will start with the business update. As Andrés already explained the quarter was characterized by a strong demand, improved product availability and continued traction from our localized market approach. The most relevant point is that growth was not driven by one isolated factor. We saw positive momentum across categories, regions and customer cohorts. Turning to the category fuel. Group revenue grew from EUR 18 million to EUR 90.6 million in Q2. The strongest absolute contribution came from PAC, which increased by EUR 14.4 million to EUR 78.9 million, supported by strong demand for electronics and bike service products. This confirms that the core assortment remains the backbone of our business with a proportion of 82.1% compared to 80.6% last year. Bike revenue increased from EUR 15.5 million to EUR 17.2 million. Growth in full bikes was somewhat below PAC rose, but still positive in a very competitive market. Gravel and road bike showed particularly encouraging demand and bikes remain an important contributor to customer relevance and basket size. Looking at the regional split, the picture remains very consistent with our strategy. GSA, meaning Germany, Switzerland and Austria is still our largest region and delivered solid growth of 17.2%, reaching EUR 66.4 million in the quarter. This shows that our core markets continue to perform well despite overall market environment. At the same time, our localized markets grew significantly faster increasing by 29.7% to EUR 21.5 million. This confirms the traction of our platform strategy and the value of local customer experience. Rest of Europe also grew by 29.7% to EUR 7.4 million, while the rest of the world declined in line with our focus on Europe and our attractive customer economics. In short, GSA provides scale and profitability while localized markets provide an important incremental growth trajectory. Looking at the customer KPIs. We continue to see a solid and high-quality customer base. Active customer reached 1,244,000 on the last 12 months basis, up 21.7% year-over-year. Orders increased by 22.3% in Q2, while the average order value remained broadly stable at EUR 143. Importantly, repeat customers' behaviors remain strong. The share of orders from recurring customers increased to 71.2% and the return rate improved to 17.1%, down 1.7 percentage points year-over-year. For us, these KPIs are important because they show that growth is not only coming from more customers but also from a healthy level of engagement among existing customers. The regional customer picture shows 2 complementary effects. Localized markets are driving customer acquisition with active customers up strongly by 31.5%, while GSA continues to provide a large and valuable base with 343,000 customers with a very resilient average revenue per customer of EUR 193, up by 4.8%. This balance is important for a sustainable growth profile. On the next slide, we will show you the development of our inventory. Inventory remains a central operational level. At the end of June, inventory stood at EUR 91.6 million, up 26.9% year-over-year. The increase was deliberate and is intended to secure high availability for the second half of the year, a need that had already become apparent in July. At the same time, the quality of inventory improved meaningfully. Aged stock, older than 12 months decreased from EUR 40 million to EUR 6.3 million, a reduction of 55%. More importantly, the inventory buildup remained almost stable in relation to the size of the business. The inventory to sales ratio stood at 28.8% at the end of June, almost unchanged versus 28.7% in the prior year period. From a mix perspective, inventories also show our category focus. PAC remained the largest component at EUR 66.2 million while bike inventory increased to EUR 25.5 million, reflecting our strategy focus on growth in the full-bike category. Let us now turn to the income statement. In the first half year 2026 net sales increased by 20.8% to EUR 167.1 million. Gross profit rose by 20.7% to EUR 44.3 million, with gross margin remaining stable at 26.6%. Contribution profit, meaning gross profit less performance marketing costs and selling costs increased by 18.6% to EUR 27.3 million in the first half year. Adjusted EBITDA improved by 25.7% to EUR 7.7 million, which means the adjusted EBITDA margin increased from 4.1% to 4.6%. In Q2, specifically, revenue increased strongly to EUR 96.1 million. Gross profit rose to EUR 26.3 million and adjusted EBITDA reached EUR 5.9 million. Looking at the cost structure. As a percentage of revenue, gross profit remained stable in the first half at 26.6%. In Q2, gross margin was 27.4%, slightly below the prior year level of 27.7%, mainly reflecting the promotional environment and continued price pressure in parts of the market. Performance marketing increased as a percentage of revenue, reflecting our continued investment in customer acquisition and market share. Selling costs were broadly stable in the first half year as a percentage of revenue, but slightly higher in Q2 due to higher carrier costs and the changing country mix. At the same time, personnel expenses and miscellaneous income expenses improved as a percentage of revenue. The key message is that Bike24 delivered growth and improved earnings at the same time. This demonstrates the operating leverage in the model, even though capacity buildup and temporary staffing are still required to support strong order growth. Turning now to cash flow and net leverage. The main effect in cash flow of Q2 was primarily driven by the intentional inventory buildup to secure availability and support growth in the second half of the year. EBITDA contributed EUR 5.9 million by the development of the trade working capital and other operating cash flow items led to a negative free cash flow of EUR 8.5 billion. At the same time, stronger profitability over the last 12 months combined with a slight improvement in net debt from minus EUR 16.7 million to minus EUR 15.2 million resulted in a clear reduction in net leverage from 2.1x to 1.1x year-over-year. Overall, we continue to finance our growth in a disciplined way, investing in availability and future scaling by keeping our financing position under close control. To summarize again, Bike24 continued to gain market share by investing in future growth. Revenue growth of around 20% in Q2 clearly outpaced the broader market environment. Availability remains a competitive advantage. The stock buildup was intentionally quality-driven and aligned with expected demand. From a profitability perspective, adjusted EBITDA increased both in Q2 and in the first half year. We are seeing operating leverage while still investing in marketing, fulfillment in localized markets and operational capacity. Overall, we have created a clear foundation for continued profitability, profitable growth. With that, let me hand over to Andrés, who will share our outlook for the quarters to come.

Looking ahead, we remain confident in our strategy and our ability to grow profitably in a challenging market environment. The market is still characterized by uncertainty. At the same time, we see opportunities from market stabilization, high availability, structural weaknesses of some competitors and the continuing demand for cycling products across Europe. Based on our strong first half year performance, current developments and the basis we have created for the second half year, we confirm our full year 2026 guidance. We continue to expect revenue in the range of EUR 318 million and EUR 332 million, corresponding to growth of 10% to 15% year-over-year and an adjusted EBITDA between EUR 16 million and EUR 20 million, implying an adjusted EBITDA margin of approximately 5% to 6%. As always, this outlook is subject to the unusual risks and uncertainties, including macroeconomic developments as outlined in our half year report. Before we move to Q&A, let me briefly point out the upcoming dates on our financial calendar. We will attend Hamburg Investors Day on August 26 followed by the Berenberg and Goldman Sachs German Cord Conference in Munich on September 22 and European MidCap Conference on September 30, 2026 in Paris. Our Q3 2026 results are scheduled for November 12. With that, we have reached the end of our prepared remarks. Thank you for your attention. We are now happy to take your questions.

[Operator Instructions]. With that said, we have already received a risen hand by Mr. Schmidt.

Ingo Schmidt speaking from Montega. First of all, congratulations on the strong performance in the first half and then I have 2 quick questions. First, on your geographic expansion. We recently launched in Denmark, Slovenia and Ireland. Could you give us an update on how these new markets are performing so far? Are you planning to add more specific countries in the coming quarters? Or do you now feel that you cover all of your sufficiently? And second question on profitability. Given the positive scaling effects we are seeing, what main levers do you plan to use to further improve the EBITDA margin going forward? And what would be a realistic target level for 2026 and beyond?

Okay. Maybe I catch the first questions regarding to the start of our localization in Denmark, Slovenia and Ireland. The first thing, I think, it's good to know for you, we start, yes, I would say, a little bit late for launching these 3 markets. So that's why it's a little bit too early to be fair. But we see a strong development in sales. This is what we can say today. And yes, and we have to -- as we always do, invest a little bit more in marketing and so penetration for these countries just started. And I think the second one for the question is that for us, the 3 markets are very interesting for us because bikes, scrabble bikes. And you know this is a little bit our Bike24 DNA. It's a very important market there. and many, many enthusiast customers. That's why we decided for these 3 countries. And the next thing is that we think that when we look to maybe more localization, I think it could be better decision when you see our market shares in all the countries, we localized that it could be more interesting to invest a little bit more in the existing localized markets and not to launch, I would say, small and also smaller countries, yes. I think it would be more interesting for you -- for us.

Regarding gross margin, then I will take this question from your Mr. Schmidt, thank you very much. As you know, and as we said also last year and this year as well we are focusing not particularly on gross margin, even though we have this in focus, but we were focusing on more on gross profit, and this is where we want to grow even more also in the future. And we see also there operating leverages, of course, and to improve this margin and opportunities to improve as we lay in our product mix that we can slightly adjust in our favors. And of course, we continuously looking also to try to lift up prices where possible. But like I said at the beginning, I think also we can increase our gross margin, but the target is difficult to predict since we are more focusing on increasing our profit in absolute terms.

We're moving on to our next question by Mr. [indiscernible].

Congratulations to both of you Mr. Andrés or your colleagues, I remember well when I was sitting in your office, let's say, 3, 4 years ago, much more difficult situation. And my questions are a little bit all linked together. First of all, return ratio. I saw on LinkedIn that you work with bike metrics, which sounds really very exciting where actually when you can really find the fitting part for your bike, that should have positive impact on your return ratio. So could you elaborate on that a little bit? Then aging stock, it's tremendous, how you reduce that. And that's certainly because of your big effort you made with SAP. I think unfortunately, you never present enough what you have done there and what the effect will be of that, having successfully introduced SAP. And then in this difficult market, markets are how they are -- but shouldn't that be the case that you would -- or what you have done in the last year is SAP reducing return ratios. In the end, you should profit out of it. In the end, you should be the guy who still can survive with extreme competitive pricing. That's actually the broad questions I have.

Okay. Maybe I catch the first question. So yes, I think it's important for our customers especially, as you know, we have many, many enthusiast, customers on our platform to find the right part for their bike, so that's why the cooperation with Bike Matrix is very interesting for us and especially for our customers, and we see it as a benefit for them in customer experience. And that's why we see a slightly lower return rate in -- especially in parts in the first half of this year. But the main thing is still the high return rate in closing. And this is what we -- where we are also have ideas that customer find I think the right size for maybe the shirt or the -- yes, that's what I think a little bit more important thing for Bike24, but to be honest, Bike Matrix is technically very sophisticated and very interesting for us, and we see a slightly better return rate than last year. So I think we and our customers benefit from that.

And [indiscernible], can I ask you to repeat your questions regarding --

SAP, I mean, you have you reduced the aging of the stock from 14 to 6 months. And in my, I don't know, day dreaming, I would say that is also mainly because you have introduced SAP, I think, 2 years ago or 18 months ago, and that should be one of the already big result of that. And I think you should much more emphasized and presentation that you have built up with SAP, what not many of your competitors have done?

Yes. I mean, generally speaking, is we have some advantages from SAP delay, but more in the procurement and how fast we can procure or reorder products. In regards to the aging, I mean, as you might at least understand we should have been or we should be able also to see our stock before SAP, and this is what we also monitor that we build up more aged inventories or aged stock was driven by the markets in '23 and '24. Currently, of course, we can monitor them, but we could -- we were also able to monitor this before, and we did it. Of course, we need to be ahead of our stocks that we have. We need to know what's there that we now have reduced its it's an ability to be okay, we created 24, where we're focusing -- and this is what we're also telling to the market regularly that you're really focusing on being more competitive also in our pricing. And this is what we also do when it comes to how we're monitoring our products. And of course, we have certain life cycles in products. Different products have different life cycles. And we have products that turn faster, which we monitor closely, but we have also a long tail that are intended to stay a little bit longer, and this is how we also manage our stock or how we keep stocking here.

And then maybe the last point was how do you see your position in this difficult market, which is what you mentioned in the statement, still very price competitive. Where do you see your company set up what you have done in the last years to compete in this market?

I think we did many, many good decisions in the last 2 and 3 years. Part is, of course, introduction of SAP, and it's also that we have now lower obsolete stock, and we have now fresh stock and yes, we invested a lot in technology, especially as you also asked for bike. It's all many, many of small points, I think, is the tailwind we have from the -- I would say, from our customers because, as you know, the market is not -- is solid, is, I would say, stable, but it's not too much tape from the market and also not from consumer sentiment. So we gained market shares from -- yes, we have to say it from our competitors. And I think we have the right assortment. We have good pricing. We have a good availability and this also is our -- we have very often told you, it's our secret sauce, yes. Now it's not too big secret. But It's, I think, all of these we master, we handle very good. And this is why we are able to grow faster than the market in the last 18 months.

We have another risen hand by Mr. [indiscernible]. We just could hear you for a second. Now you're gone again, but I can see that you unmuted.

Yes. I have 3 follow-ons, if I may. The first one on the logistics side. We noticed, let's call it, revitalization of the Barcelona hub which currently forms a burn in the ramp-up phase. But can you give us some idea how we should look at it in the midterm is Barcelona a tool to bring down the, let's say, cost per unit or per parcel down over time? Or will it be just working side by side with as on similar economics? And then also on the logistics shipping side, do you see options to, let's say, rollover rising costs to your end customers? Second point is on the inventory side. I noticed the reversal of impairments was roughly EUR 1 million is more to come or the option of more to come as you are driving down the amount of aged inventory further. And then finally, the elephant in the room, the guidance, for sure, the at least top line guidance looks very conservative now having delivered the first half year sales results. So what holds you back from increasing at least the sales outlook for the full year?