HelloFresh ((DE:HFG)) has held its Q3 earnings call. Read on for the main highlights of the call.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
The recent earnings call for HelloFresh presented a mixed sentiment, highlighting both achievements and challenges. While the company has made strides in efficiency and strategic initiatives, it continues to face hurdles in the Ready-to-Eat segment and a decline in overall orders. Despite these challenges, there are promising signs of recovery, with positive trends in customer satisfaction and innovation, although financial performance remains impacted by past operational issues and market pressures.
Stable Revenue Trend
HelloFresh observed a stable revenue trend in the third quarter, with a decline of about 9% in constant currency. This was primarily driven by a double-digit decline in orders, which was somewhat offset by a 4% increase in Average Order Value (AOV). This indicates that while fewer orders were placed, the value of each order increased, providing a partial cushion against the overall revenue decline.
Adjusted EBITDA and Margin Improvements
The company reported an adjusted EBITDA of EUR 40.3 million for the third quarter. Despite facing headwinds, HelloFresh maintained a double-digit adjusted EBITDA margin in its meal kits segment, with improvements noted in both North America and International markets compared to the previous year.
Efficiency Program Progress
HelloFresh is on track with its EUR 300 million efficiency program, having implemented about 70% of the initiatives. This has resulted in a significant improvement in free cash flow before leases, which has increased by over EUR 140 million year-to-date, showcasing the program’s effectiveness.
ReFresh Strategy and Product Innovation
The company’s ReFresh strategy has expanded meal kit weekly options to over 100, which has improved customer satisfaction and retention. The positive response to menu expansion and packaging upgrades has been noted among both loyal and lapsed customers, indicating successful product innovation efforts.
Free Cash Flow Improvement
HelloFresh’s free cash flow year-to-date has increased fourfold year-over-year, and free cash flow per share has risen over fivefold, largely due to the company’s share buyback program. This improvement underscores the company’s strong cash management and strategic financial planning.
Revenue Decline in Ready-to-Eat Segment
The Ready-to-Eat segment experienced a revenue decline of about 5% year-over-year, attributed to lower order rates from customers acquired in the first half of the year. This segment remains a challenge for the company as it seeks to stabilize and grow this part of its business.
Continued Order Decline
Group orders were down by about 13% year-over-year, with meal kits showing improvement but the Ready-to-Eat segment worsening sequentially. This continued decline in orders presents a significant challenge for HelloFresh as it works to reverse this trend.
Challenges in Ready-to-Eat Operations
HelloFresh faced temporary operational setbacks in its Ready-to-Eat segment earlier in the year, which impacted customer satisfaction and retention, leading to additional costs. Addressing these operational challenges remains a priority for the company.
USDA Recall Impact
The company incurred a EUR 1.7 million inventory write-off due to a Listeria issue from a third-party manufacturer. This recall has added to the operational challenges faced by HelloFresh in recent months.
Forward-Looking Guidance
During the HelloFresh Q3 2025 Results Call, CEO Dominik Richter emphasized the company’s strategic focus on improving unit economics and customer experience over short-term revenue growth. The company aims to implement 80% of its EUR 300 million efficiency program by year-end and has seen significant improvements in free cash flow. Despite challenges, HelloFresh anticipates a recovery in the Ready-to-Eat segment and aims for profitable growth in 2026.
In summary, the HelloFresh earnings call highlighted a mixed sentiment, with notable achievements in efficiency and strategic initiatives, yet ongoing challenges in the Ready-to-Eat segment and overall order declines. The company is focused on improving customer satisfaction and innovation, with a strategic emphasis on long-term growth and profitability.