TIDMTHG
RNS Number : 2511Q
THG PLC
26 October 2021
26 October 2021
THG PLC
Third quarter trading statement for the period ended 30
September 2021
Group revenue of GBP507.8m, +38.0% YoY and +93.8% 2 year growth
(constant currency)
2022 Ingenuity Commerce revenue expectations increased by +20%
to +25% to a range of GBP108.0m to GBP112.0m
Appointment of SoftBank Managing Director to the Board
Commencement of process to appoint an Independent Non-Executive
Chair in preparation to step up to Premium listing
THG PLC ("THG" or the "Group"), the proprietary technology
platform specialising in taking brands direct to consumers ("D2C")
globally, announces its third quarter results for the period ended
30 September 2021 ("Q3 2021").
Q3 2021 Group Trading Performance
GBPm Q3 2021 Q3 2020 YoY(1) YoY 2 Year 2 Year
Growth Growth Growth Growth
CCY(2) CCY
-------- -------- ------- ------- -------
THG Beauty 247.6 157.5 +57.2% +61.1% +127.9% +135.7%
THG Nutrition 159.3 145.4 +9.5% +13.4% +56.4% +64.1%
THG Ingenuity 51.1 35.4 +44.1% +45.5% +58.7% +65.1%
THG OnDemand 30.1 24.0 +25.3% +29.4% +127.3% +134.7%
Other 19.8 15.7 +25.7% +24.7% +17.5% +19.9%
-------- -------- ------- ------- ------- -------
Group Revenue 507.8 378.1 +34.3% +38.0% +86.2% +93.8%
-------- -------- ------- ------- ------- -------
Ingenuity Commerce
Revenue 11.7 5.1 +131.0% +131.0% +526.8% +526.8%
-------------------- -------- -------- ------- ------- ------- -------
GBPm YTD 2021 YTD 2020 YoY YoY 2 Year 2 Year
Growth Growth Growth Growth
CCY CCY
THG Beauty 708.4 453.2 +56.3% +59.7% +137.0% +142.2%
THG Nutrition 487.6 403.4 +20.9% +24.2% +62.8% +66.3%
THG Ingenuity 136.9 96.9 +41.3% +43.6% +46.8% +51.2%
THG OnDemand 81.6 59.4 +37.4% +41.0% +131.2% +135.6%
Other 52.1 41.0 +27.1% +23.3% +20.5% +18.0%
-------- -------- ------- ------- ------- -------
Group Revenue 1,466.6 1,053.8 +39.2% +42.3% +90.4% +94.6%
-------- -------- ------- ------- ------- -------
Ingenuity Commerce
Revenue 30.0 12.0 +149.9% +149.9% +578.5% +578.5%
-------------------- -------- -------- ------- ------- ------- -------
(1) YoY defined as year-on-year statutory sales growth. (2) CCY
defined as constant currency basis. Removing fluctuations arising
from translation of foreign exchange by restating prior year
numbers at current year exchange rates.
Matthew Moulding, CEO commented:
"We have delivered a strong trading performance in Q3 and enter
our peak trading period with confidence. The recent successful
migration of Cult Beauty onto the Ingenuity platform is testament
to the resilience of the infrastructure and the expertise of our
digital talent. In under 10 weeks we have seamlessly migrated Cult
Beauty, whilst delivering significant website and customer
user-experience improvements at the same time.
"I would like to thank all of our employees given how much they
have achieved in the 12 months since IPO. Our talented workforce
has grown considerably and as well as significantly outperforming
the trading guidance provided at IPO, they have been tirelessly
expanding the business model across all divisions. The appointment
of two independent non-executive directors and four special
advisors since IPO has been hugely beneficial to the Board, and we
have real optimism for 2022 with the step-up to a Premium listing
on the Main Market of the London Stock Exchange following the
appointment of an independent Chair.
"Finally, we extend our warmest welcome to Dr. Andreas Hansson
from the THG Board and management. Our experience with Andreas and
the entire SoftBank team has been first-class and this appointment
is testament to the strength and depth of the partnership that we
have developed. The separation of Ingenuity remains on track for H1
2022."
Q3 2021 highlights
-- During the third quarter, Group revenues increased by +38.0%
on a constant currency basis ("CCY") to GBP507.8m, bringing year to
date revenue growth to +42.3%.
-- Further to the acquisition on 4 August 2021, Cult Beauty has
been successfully migrated to the Ingenuity platform ahead of
schedule, delivering immediate improvements including a 30% uplift
in conversion rates, a 6% uplift in average order values, a 36%
improvement in page load times and lower technology costs to serve.
A highlight post re-platforming has been the success of the Cult
Beauty Advent calendar which sold over 11,500 units in 2 hours with
no website downtime.
-- THG Nutrition revenue growth of +24.2% (CCY) year to date was
broad based, with exceptional 2-year growth of +66.3%. The solid
performance this quarter is against the highest growth quarter in
2020 for THG Nutrition and with over 80% of revenues coming from
repeat customers our category conviction remains high. As a result
of the international revenue mix THG Nutrition has seen the most
marked impact from the FX environment this year. The integration of
Brighter Foods and Claremont is on track, improving speed to market
for new and localised products.
-- Whilst logistics, labour and product inflation have persisted
in Q3, the Group's vertically integrated business model, focus on
cost control and increased automation have largely mitigated these
pressures.
-- Early phasing of buying and production means product
availability is good ahead of peak trading.
-- The Group has a very strong liquidity position as it enters
its peak trading season, with available cash
as at 30 September 2021 of c. GBP700m including long dated 3-5 year facilities.
Ingenuity Commerce Update
-- Momentum continued to build during the third quarter, with
reported revenue growth of +131.0% year-on-year, with a record
number of clients acquired in the quarter (+50% vs Q2 2021). The 44
new clients won in Q3 cover: a broad range of consumer sectors;
re-platforming from existing technology solutions and new market
launches; 3 to 10-year agreements; productised components of the
stack, such as fulfilment-only services, in addition to end-to-end
services; and penetrating new CPGs, including supporting Kao Group,
the Japanese Beauty and Household products conglomerate, with a 5
year multi-brand (including Molton Brown), multi territory roll out
(UK & international).
-- 59% of Q3 revenue was recurring in nature, providing strong
visibility on FY 2022. Our confidence is further supported by a
strong pipeline of new client wins expected to complete during the
fourth quarter of 2021, and a substantial order book of over 280
new websites for existing clients, which will see the total number
of live websites increase from 163 to 400 by the end of 2022.
-- Annual Revenue Run-rate ("ARR") is the annualised recurring
revenue from live websites plus the 12 months trailing
non-recurring revenue. ARR at the end of the third quarter of
GBP44m rises to GBP53m inclusive of websites scheduled to go live
in Q4 2021. Note that non-recurring revenue for Ingenuity Commerce
is highly predictable as whilst costs are one-off for clients, they
are always incurred on new site launches (whether for existing or
new clients) and so are recurring in nature for THG.
-- Based on deployment of 85% of the website order book during
2022, we have visibility of c. GBP112m ARR at Q4 2022, assuming
GBP170,000 revenue per site and the 60% of recurring revenue is
grossed up to include the 40% of non-recurring revenues (such as
site build fees).
-- In addition to the existing website order book underpinning
the GBP112m ARR, we expect the ARR to increase over the next 15
months through the business development function. Accordingly, we
have a high degree of confidence that consensus estimates for 2021
will be achieved and that FY 2022 consensus reported revenue of
c.GBP90m revenue will be exceeded by +20% to +25%.
Ingenuity Commerce KPI's methodology statement
-- KPI methodology statement: in order to address and support
longer-term visibility of Ingenuity Commerce, the Group is
providing new, regular KPI metrics, which coupled with already
publicly disclosed financial information, will enable an improved
understanding of the high repeat, high growth nature of the
Ingenuity Commerce revenue model.
-- A slide pack providing additional information on the revenue
model and KPIs entitled "Ingenuity Commerce Q3 2021 Update" is
available in the Results, Reports and Presentations section of
THG.com.
Q2 Q3 Q4 2022
2021 2021 Target
------ ------ ---
Number of live client websites(1) 133 163 400
Average recurring revenue
per website(2) (GBPm) 0.17 0.17 0.17
Recurring Revenue %(3) 55% 59% 60%
Annual Revenue Run-Rate(4)
(GBPm) 37 44 112(5)
----------------------------------- ------ ------ --- --------
(1) Number of websites defined as website with a specific domain
name/URL live at end of period
(2) Average recurring revenue per website is presented on an
annual basis
(3) Based on total Ingenuity Commerce revenue
(4) Annual Revenue Run-rate is based on annualised recurring
revenue and trailing 12 months non-recurring revenue
(5) Q4 2022 Annual Revenue Run-rate calculated 15 months in
advance by aggregating the annualised recurring revenue from the
400 sites expected to be live, representing 60% of the revenue mix
and the implied non-recurring revenue at 40% of the mix.
Outlook and guidance
-- As reiterated at the Group's interim results, FY 2021 Group
revenue guidance is growth of between +38% to +41% on a constant
currency basis (reported growth of +35% to +38%).
-- The Group remains on target to trade comfortably ahead of IPO
expectations set out in September 2020. At IPO the Group guided to
FY 2021 revenue growth of between +20% to +25%. For FY 2021, we
expect M&A to contribute c.GBP260m to revenue.
-- Management believes the impact of the recent inflationary
environment and rising commodity costs can be largely offset by
increased logistics automation and an ongoing cost improvement
programme.
-- Margin guidance therefore remains unchanged at stable
adjusted EBITDA margins on a constant FX basis, before taking into
consideration the dilutive full year contribution of Dermstore
(which is expected to be in
line with Group margins by the end of 2022).
-- As noted above, revenue for Ingenuity Commerce is expected to
be in the range of GBP108.0m to GBP112.0m in FY 2022.
Corporate Governance
On 18 October 2021, the Group announced its intention to step-up
to the Premium segment of the Main Market of the London Stock
Exchange in 2022, with Matthew Moulding confirming his intention to
cancel his Special Share rights. Further to its ongoing review of
corporate governance arrangements in conjunction with its
application to step-up, the Board has appointed Russell Reynolds
Associates to undertake a search for a new Independent Chair for
the Company. This will align THG to the recommendations of the UK
Corporate Governance Code.
Non-Executive Board appointment
On 10 May 2021, THG announced that SB Management Limited
("SBM"), a subsidiary of SoftBank Group Corp., had subscribed for
approximately $730m of ordinary shares in THG and that SBM had
signed a collaboration and option agreement with THG.
The partnership between THG and SBM has developed positively,
and THG is pleased to announce the appointment of Dr. Andreas
Hansson to the Group's Board as a Non-Executive Director with
immediate effect.
Dr. Hansson serves as a Managing Director at SB Management,
having first joined SoftBank Group in 2017. Until August 2020 he
was a Partner at SoftBank Investment Advisers. Dr. Hansson serves
on the Board of a number of SoftBank investments, including
AutoStore, the leading automated storage and retrieval system
provider and as Chairman of the Board of Kahoot!, a leading EdTech
platform. Before joining SoftBank, Dr. Hansson held multiple
positions at Arm Ltd., where he served as technical adviser to the
Executive Vice President and the CTO, leading strategic activities
around business development and incubation.
Dr. Andreas Hansson, Non-Executive Director at THG,
commented:
"I am delighted to be joining the THG Board. Since our initial
investment, the technological capability of Ingenuity has proven
compelling for several portfolio companies. T here is a clear need
for a global, purpose-built and end-to-end e-commerce platform, we
believe that Ingenuity has the right suite of products to serve
this market, and we continue to be confident about our investment
in THG and the Ingenuity investment opportunity. "
Analyst and investor conference call
THG will today host a conference call and webcast for analysts
and investors at 9.00am (UK time) via the following links:
To register for the webcast, please use the below link:
https://brrmedia.news/7edhzs
To ask questions, you must dial in via conference line using the
below details:
-- Room number: 7302787
-- UK dial in: +44 (0)330 336 9127
For further information please contact:
Investor enquiries - THG PLC
Kate Grimoldby Investor.Relations@thg.com
Media enquiries:
Powerscourt - Financial PR adviser Tel: +44 (0) 20 7250
1446
Victoria Palmer-Moore/Nick Dibden/Nick thg@powerscourt-group.com
Hayns
THG PLC
Viki Tahmasebi Viki.tahmasebi@thg.com
ENDS
Notes to editors
THG ( www.thg.com ) is a vertically integrated, digital-first
consumer brands group, retailing its own brands in beauty and
nutrition, plus third-party brands, via its proprietary,
end-to-end, e-commerce technology, infrastructure and
brand-building platform (THG Ingenuity) to an online and global
customer base. THG's business is operated through the following
businesses:
THG Ingenuity : Ingenuity Commerce provides an end-to-end
direct-to- consumer e-commerce solution for consumer brand owners
under 'Software as a Service' (SaaS) licences. The wider Ingenuity
division provides stand-alone digital services, including hosting,
studio content, translation services and beauty product development
and manufacturing.
THG Beauty : The globally pre-eminent digital-first brand owner,
retailer and manufacturer in the prestige beauty market, combining
its prestige portfolio of eight owned brands across skincare,
haircare and cosmetics, the provision of a global route to market
for over 1,000 third-party beauty brands through its portfolio of
websites, including Lookfantastic, Dermstore, Cult Beauty and
Mankind and the beauty subscription box brand GLOSSYBOX.
THG Nutrition : A group of digital-first Nutrition brands, which
includes the world's largest online sports nutrition brand
Myprotein, and its family brands (Myvegan, Myvitamins, MP Clothing
and Myprotein Pro), with a vertically integrated business model,
supported by six THG production facilities.
THG OnDemand : Personalisation and customisation is a key
offering within THG OnDemand, enabling brands to offer unique
products to a vast range of consumers across THG's global
territories through websites including Zavvi, IWOOT and Pop in a
Box.
Other : Luxury D2C websites including Coggles, AllSole and
MyBag, in addition to THG Experience. The latter comprises prestige
events locations at Hale Country Club & Spa, King Street
Townhouse Hotel and Great John Street Hotel, providing deeply
experiential brand building environments, most notably in support
of THG Society, the Group's proprietary influencer marketing
platform.
Cautionary Statement
This announcement may include "forward-looking statements" in
respect of the Group's operations, performance, prospects and/or
financial condition. Forward-looking statements are sometimes, but
not always, identified by their use of a date in the future or such
words and words of similar meaning as "anticipates", "aims", "due",
"could", "may", "will", "should", "expects", "believes", "intends",
"plans", "potential", "targets", "goal" or "estimates". By their
nature, forward-looking statements involve a number of risks,
uncertainties and assumptions and actual results or events may
differ materially from those expressed or implied by those
statements. Factors which may cause future outcomes to differ from
those foreseen in forward-looking statements include, but are not
limited to, those identified in the "Risk Management" section of
the Group's 2020 Annual Report. Accordingly, no assurance can be
given that any particular expectation will be met and reliance
should not be placed on any forward-looking statement.
Additionally, forward looking statements regarding past trends or
activities should not be taken as a representation that such trends
or activities will continue in the future.
Except as required by any law or regulation, no responsibility
or obligation is accepted to update or revise any forward-looking
statement resulting from new information, future events or
otherwise. Past performance cannot be relied upon as a guide to
future performance and persons needing advice should consult an
independent financial adviser. Nothing in this announcement should
be construed as a profit forecast.
This announcement does not constitute or form part of any offer
or invitation to sell, or any solicitation of any offer to purchase
any shares or other securities in the Group nor shall it or any
part of it or the fact of its distribution form the basis of, or be
relied on in connection with, any contract or commitment or
investment decisions relating thereto, nor does it constitute a
recommendation regarding the shares or other securities of the
Group. Statements in this announcement reflect the knowledge and
information available at the time of its preparation.
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END
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