HelloFresh SE

Welcome, everyone, to our Second Quarter 2021 Earnings Call. The second quarter kept us really busy.

It was a record quarter for us in many dimensions, and the business has been coming out of the pandemic on a really strong footing, with fundamentally, all underlying KPIs better than anticipated at the beginning of the year. Before we go into the highlights of the quarter, let me quickly refresh your memory on our vision and mission for HelloFresh.

At HelloFresh, we often seek about our mission to change the way people eat forever. Cooking at home is such a massive category, with 7 out of 10 dinners globally and 5 in 10 dinners in the U.S., which are being cooked and consumed at home.

It's one of the biggest consumer spend categories and a massive total addressable market. When we refer to our mission internally, it very often helps us to make decisions on the customers' behalf such as making our product more affordable, investing in greater choice to allow everyone to eat better, and also which food suppliers we want to work with to really make a difference for our consumers.

With the massive impact we have, we're on track for over 900 million meals this year. We fundamentally changed a lot of consumer's cooking habits and their experience and allowed them to eat better, cheaper and more delicious meals than with traditional alternatives.

While we have come closer and closer to fulfilling our mission, we've also made huge progress on delivering on our vision in the second quarter. And you'll be able to see with our forays into new geographies, we have broadened access to meal kits for consumers worldwide.

With the acquisition of Factor late last year and with Youfoodz in Australia in early Q3, we are firmly committed to also becoming a leading player in the ready-to-eat market. With the launch of the HelloFresh market in Benelux and the U.S., we have further broadened our suite of products and increased our relevance to consumers, so that we're on a clear trajectory to actually becoming the world's leading food solutions group as outlined in our vision.

Christian will talk later about our cash flow and around our cash balance, but with the cash balance that we have on our balance sheet, I can promise you that we will continue to focus relentlessly on making our value proposition to consumers better and better, put more meals on the menu, better service levels and more competitive pricing. These are some of the dimensions that we'll be using to go after the huge home cooking TAM.

With that, let's focus on the near past and cover some of the recent second quarter highlights for HelloFresh. First of all, we continued with our impressive customer growth rates.

We grew strongly both year-on-year and sequentially to 7.7 million customers as the world has been coming out of the pandemic in all of our markets in the second quarter. Secondly, order rates have stabilized sequentially at rates higher than pre-pandemic, also slightly lower than at peak COVID 1 year ago, very much in line with our projections.

The second quarter also marked the highest ever net revenue quarter in the company's history, amounting to €1.6 billion in a single quarter, an increase of over 66% year-on-year. Moreover, we continued to deliver impressive profitability with €158 million in adjusted AEBITDA.

That's a 10.1% AEBITDA margin in the huge growth quarter where we added a lot of new customers. The key focus is strongly on a number of TAM expansion initiatives, launching Norway as a new geography, GreenChef as a new brand in the U.K.

Hence, after the close of the quarter, we also acquired Youfoodz, the leading ready-to-eat player in Australia, giving us access to a lot more households globally that are actually now in our top group. Finally, based on the positive trading year-to-date and the strong growth we've been seeing, we've updated our outlook for the remainder of the year.

We now expect revenue growth about 10 percentage points higher than before, a massive upgrade to our internal projections, now expected to amount to between 45% and 55% in constant currency. As a result of the strong cash flow we have delivered, we will also aggressively go forward with the roll out and scale up of our infrastructure, so we won't run into any capacity limitations in 2022 as we innovate for our consumers.

In terms of AEBITDA, it's now expected to come in at 8.25% to 10.25% for the full year 2021. Let me quickly elaborate on 2 recent launches for HelloFresh that we conducted in the second quarter.

We've been focusing more on the Nordics after a very successful launch in both Sweden and Denmark in the past, and so we are now also relaunching in Norway. Norway has about 2.5 million households to our overall TAM, has a strong e-commerce penetration and very high household income levels.

So we think it has all of the right ingredients to become a very successful geography for us as well. We're going to be fulfilling orders out of the new state of the art FC near Oslo, providing Norwegian customers with its broad suites of products and meal kits.

Secondly, we also launched GreenChef in the U.K. It's the first international market for GreenChef.

And this is on the back of strong market share gains during and after the pandemic in the U.K. with the cheapest prices on the market for our HelloFresh brand.

With GreenChef, we now offer a great alternative for health-conscious U.K. consumers, and it's the most sustainable meal-kit brand in the U.K., allowing us to attract a new segment of the market that we haven't been able to tap into before, and that will allow us to expand our market share further.

Now let's dive into our KPIs. For many metrics, we have actually added both sequential evolution as well as year-on-year and year-over-2-year metrics, to foster a better understanding how we have improved across the board against prepandemic KPIs.

Customer numbers set a new record in Q2 with an increase of 83% year-over-year and 220% year over 2 years. We even sequentially added about 400,000 new customers after already hitting a previous record in the first quarter.

That outperformance was broad-based and the result of debottlenecking our capacity in a number of markets. If we look at segment trends, the U.S., including Factor grew by 93% year-over-year, and international grew by 75% year-over-year.

Without Factor, both growth rates for our core HelloFresh brands would have been very closely served. If you look at year over 2-year numbers, you can see why we have been investing so strongly into capacity expansion and will continue to do so going forward.

Within 2 years, we have basically tripled the volume through our supply chain while continuing to add a lot more complexity, for a lot more choice for consumers and with the rollout of HelloFresh market in some of our geographies in that period as well. Our order rates also remained high and stabilized at the same level we actually already saw in Q4 and Q1, our 2 most recent quarters, which were, by the way, much more strongly affected by the pandemic than the second quarter.

It's been a great achievement and testament to the fact that our improvements to choice, service levels and competitive pricing versus the supermarkets have been paying off. With about 4 quarters -- for 4 orders per quarter, we have improved order rates by 8% compared to pre-pandemic levels albeit down from the peak COVID number of 4.3 orders that we saw last year in the second quarter when COVID hit most of our markets in a short period of time.

A similar story can be observed for our average order value. In Q2, average order value came down compared to last year's peak COVID quarter by about 6% in line with our projections.

However, AOV grew both sequentially compared to the first quarter of 2021 and has now stabilized on a higher levels than pre-pandemic, about 3% higher than what we were 2 years ago. The root cause of that improvement can be traced back, number one, to our market offering that we have started to roll out in Benelux and in the U.S., and also to a higher AOV that we're seeing from Factor, the brand that we acquired late last year in the U.S.

Putting everything together, we grew net revenues by 66% year-over-year in the second quarter. Both of our operating segments, the U.S.

and international, contributed strongly to that impressive growth momentum. U.S.

grew a little stronger, with 76% in constant currency year-over-year, a combination of easing capacity constraints and the addition of Factor, which has been performing really strongly for us. International grew by 55% year-on-year stand-alone, I think, a really great result on top of extremely tough comps from last year.

That top line outperformance has been based on super strong fundamentals and sets us on a great trajectory for the remainder of the year. That's why we have upgraded our top line outlook to bring forward additional investments in the second half of 2020 right now.

Okay, it's Christian here. Let me continue with our profitability metrics and start as usual with our contribution margin.

Our contribution margin has remained broadly stable year-on-year at around 26%. Now this is a combination of, on the one hand, further improvement of our ingredient procurement expenses by circa 0.9 percentage points, and on the other hand, an increase in fulfillment expenses by about 1.4 percentage points, driven by the rapid ramp-up of our production capacity.

Now it's probably worthwhile to discuss both of these line items separately on a segment basis. Let's first talk about our procurement expenses.

That's the light green line here on both of these charts. What you see is we have improved our procurement expenses in both segments since Q2 2019.

And this by the way should hopefully provide some reassurance that we can cope well with a certain level of ingredient price inflation which is something that a number of investors have cycled in [Indiscernible] recently. Now let's talk about our fulfillment expenses.

That's the dark green line on this page, and to understand the year-on-year comparison in Q2 2021, you have to keep in mind the impact of COVID on our fulfillment expenses in 2020 by segment. First, let's have a look at the left side of this page at our U.S.

fulfillment expenses. Those were in Q2 last year, heavily impacted by COVID-related inefficiencies.

You see those fulfillment expenses increasing from 39% of revenues to 46% of revenues. Now what you see this quarter is a meaningful improvement versus these COVID inefficiencies last year, and those are somewhat offset by the impact of a fast production ramp-up.

Now in international, the picture is somewhat different. There, COVID related inefficiencies were less of a topic last year.

You saw that we even improved our fulfillment expenses in Q2 last year versus Q2 2019, primarily driven by higher capacity utilization across our network internationally. So this year, there is no different to the U.S.

There's no meaningful benefit from any elimination of those COVID inefficiencies, but you still see the temporary negative impact for a fast production ramp-up, and therefore, a quite meaningful increase, temporary increase in our fulfillment expenses. There's also a certain mix effect within international.

And international as you know is a composite of 14 individual markets, and there, we realized somewhat faster growth in markets with a slightly lower contribution margin. Okay, let's now come to our marketing expenses.

Our marketing expenses as a percentage of revenue was 13.7% in Q2. Whilst this is obviously up on Q2 last year, when we currently have marketing meaningfully during the peak lockdown quarter, this is still below the range of 15% to 17% we have guided for, for the full year.

And this is despite us continuing to grow customers strongly, as you've seen on a couple of slides before from €7.3 million in Q1 to €7.7 million in Q2. When you put all of this together, so strong revenue growth, steady contribution margin and normalization of marketing expenses, this means for our AEBITDA that we managed to slightly increase absolute AEBITDA in the second quarter to €158 million.

Whilst our AEBITDA margin is down from the exceptional level of Q2 2020, we still achieved the level of 10.1% in the second quarter this year. And we have achieved this despite our significant capacity ramp-up and our continued investment into new markets and new verticals, such as ready to eat and HelloFresh Markets.

When you look at our segments, you will see that both have done well from an AEBITDA perspective supporting our segments as we see on Page 14, has increased in absolute AEBITDA in both segments have achieved good AEBITDA margin well in excess of 10%. Okay, let's now have a look at our cash flows.

We have further increased our cash position in Q2 to €933 million, up from €876 million at the end of the first quarter and up by €200 million from the €730 million reported at the end of 2020. We did this through strong organic free cash flow in Q2 alone.

We generated cash flow from operations of €103 million. Over the same period, we invested €40 million into CapEx, a meaningful step-up versus Q2 2020.

And this is an area where you should expect quite some additional CapEx to come in H2, driven by the ongoing capacity expansion. We now plan with approximately €200 million to €250 million CapEx for the full year of 2020.

Let me now conclude with our updated outlook for the full year 2021. Based on a strong revenue growth to date, we have increased our revenue growth outlook significantly, again Dominik had alluded to that earlier, on a constant currency basis from previously 35% to 45% to now 45% to 55%.

Given the strong ramp-up in production capacity, we plan with somewhat higher fulfillment expenses now. We also plan to scale certain central functions, especially our tech and data use faster.

This means we changed our margin outlook downward for the year to 8.25% to 10.25% adjusted AEBITDA margin, which still represents one of the best margin profiles you can get in the e-commerce and Internet factors. With that, we very much look forward to your questions.

[Foreign Language]

Yes. Three questions for me.

The first one, if we look at the 200 basis points increasing fulfillment cost based on your new guidance. Could you share with us how much is due to the ramp-up of the new DCs, the faster ramp up, and how much is due to the preparation of new DCs?

And as a follow-up to that, Christian, I think you said last time that in Q2 2022, you could have €7 billion sales in terms of capacity. So how has this number changed would be my first question.

Second question, could you quantify the wage inflation that you saw in your P&L in the U.S.? And the last one would be do you have a view regarding the sales shape of the sales growth you expected for Q3 and Q4 this year?

[Foreign Language] Fabienne, okay. Those were actually 4 questions, but let me go through them one by one.

The first one on the 200 bps, how that breaks down, I think that the best to think about it is that this is broadly a run rate of oil capacity expansion we've got in full flight, and that's to come now for the next couple of quarters because we're obviously not launching all of these fulfillment centers at exactly the same point in time. While some of those will be then already reasonably harder to track in terms of getting to the productivity levels we are targeting, other maybe come onstream, so let's say, 200 basis points impact is, I think, what you should assume as a baseline from existing ones and we want some time now for the next couple of quarters into the second half of 2020.

On the capacity impact, so with, I would say, 2 points to that. One is from all that we have in flight and planning on top of that.

That gets us to a theoretical production capacity of north of €8 billion. On top of that, and that's quite important, what this also enables us to create enough flexibility that if we decide further down the road to treat the automation level in our fulfillment centers and the increase that we have enough rules, so to speak, to implement that by running our operations at the same time, not impacting our desired growth at those points in time.

On wage inflation in the U.S. and across our other markets where there's a certain impact of that, both in terms of [Indiscernible] as well as in the next couple of quarters, having said that, the impact of that is definitely more modest than the impact of those capacity expansions that we tried to highlight here.

So if you think about impact so far it's definitely inside of a point.

And let me comment quickly on the outlook for Q3 and the remainder of the year. I think as you see on the outlook, on our bullish outlook and upgrade to guidance, we're quite confident that we can continue on a very successful path.

Having said that, it's very clear that in Q3, much of the world has moved out of the pandemic and will be seeing sort of like normal seasonality return, as well as sort of like a holiday season, people generally eating out more in summer. So that is something that we have factored into our guidance.

And if you break that down, then certainly sort of like we'll continue to see very strong revenue for the remaining 2 quarters but also will continue to see sort of like strong underlying profitability. However, sort of like lower than initially expected but which can really be factored back to the capacity expansion, as Christian outlined.

We were starting the year expecting to grow 20% to 25%. We're now at 45% to 55% at our level.

This is billions more in sales. And obviously, for that, we need to ramp up capacity in a very quick fashion, and that will impact some of the numbers for the remainder of the year.

But with the updated guidance, we're very confident and comfortable that we can stay within that.

Maybe 2 questions to Christian. Thanks for giving the detail on the cost items.

Maybe the first one on procurement. Clearly, a very strong performance.

What is your view why you didn't have to deal so much with the cost pressure and inflation as some of your smaller peers? That would be interesting.

And do you expect this to remain like this also going forward? And then the second question is again on fulfillment and the related impact on guidance, could you just explain a bit more what exactly these costs really are?

Coming from the phase there, the CapEx was very much known and you rolled out the capacity. So I don't fully understand why the corresponding OpEx that follows this CapEx, if that makes sense, wasn't the initial guidance.

Did I understand what really these additional costs really are?

All right, Marcus. Firstly, on your point on procurement expenses, how we managed to just to trade at those levels despite some input cost inflation.

The reason is that we -- as you know, we have some flexibility in our business model in terms of data collection, how we combine those recipes. We have very robust data tools behind that, and that certainly helps on that front.

On top of that, given our scale, we are also able to, on a continuous basis, improve our procurement based on the combination of that, these [Indiscernible] us to mitigate any meaningful impact from cost inflation so far. On your second point on the fulfillment expenses, what we do and why this to go through, what really the impact or the drivers are for a step-up here is there are a couple of things.

When you think about when we ramp up a new fulfillment center, there is quite meaningful upfront cost invoice. We have that high-end direct labor colleagues, line lead site managers and so forth.

All of these costs are produced in the [Indiscernible] start to previous the first [Indiscernible] and then once we start to produce the first [Indiscernible] take another 3 quarters or so until we get towards the productivity levels that we want. Now the faster we then do those ramp-ups, the more you see these type of inefficiencies upfront.

And that's what you see in some of the fulfillment centers, we are about to ramp up as we have recently ramped up. And then on top of that, given a stronger growth outlook that we have now, then we have that at the beginning of the year, but also still in April.

We also pulled forward some of the expansion projects initiated, earmarked for 2022 and added actually a couple more on top of that in CapEx cost both of our segments because our U.S. segment as well as across our [Indiscernible] segment.

Two questions, if I can. So firstly, just on the margin outlook, obviously, very early to be giving thoughts on 2022, but just to help us on our modeling, should we expect some of this to continue into the early parts of next year?

The second question, just on the CapEx. Firstly, could you just repeat the figure for this year?

Sorry, I missed it when you said before. But secondly, again, just thinking about the outlook, to what extent should we be modeling in materially really high CapEx for maybe the next few years?

On the contribution margin point, you should expect that we will claw back of those [Indiscernible] that we're discussing here, that we did claw back quite a bit of that in the second half of next year. So until then, you should a few broadly that it is a temporary drag on contribution margin.

Obviously, with some seasonality [Indiscernible] structurally about the 200-point drag into mid next year, the second half of next year, you should expect us to be able to claw quite a bit of that back. On CapEx for this year, we are planning with €200 million to €250 million that compared to the €120 million to €150 million we initially planned at the beginning of the year, which we then took up to €150 million to €200 million in April, May, so another 50 plus on top of that roughly.

Now 2022 CapEx is still a bit early, frankly, towards the guide. I would say on the capacity expansion side, we will have made most progress by Q2 next year.

And then the remainder of potential CapEx is really favorable somewhat by what we decide on some of our automation projects, which is still a bit too premature to discuss at this point.

Okay, that's clear. And then just sorry, 1 more.

Just going back to the seasonality, obviously, we didn't see much of that last year. This year, it's come back.

I think if we look at 2019 as a guide, revenue in Q3 was pretty flat with Q2. Is that loosely what we should be thinking for this year, or again, far too soon to really have a clear view?

Yes. So on a like-for-like basis, we will see in Q3 revenue somewhat down seasonally down, which is on a like-for-like basis, if you need market launches and so forth.

[Indiscernible] for that is obviously that in July, August, still all of our markets, except for Australia, let's -- we call it as even fir our customer's sake the 2 to 3 weeks off during that period. On top of that, we're also doing July, August dial back on any marketing activities and then all of this comes back in September.

Therefore, for the quarter, you typically see capacity utilization in our fulfillment centers, slower and basically revenues is slow as well. And that's what you should expect for this year as well.

So we see a return back to normal seasonality across most of our markets. So yes, that's what you should expect.

Yes. I've got 2 questions from my side, if I may.

The first one is on Australia. Are you currently benefiting from a COVID [Indiscernible] in Q3 since the implementation of lockdown in some biggest [Indiscernible] such as Melbourne and Sydney?

And my other question is on Canada. Now according to [Indiscernible], HelloFresh incoming traffic has been materially lagging behind a good foot since early July.

Do you have any comment to make on this side of specific issues to highlight?

Over the last couple of quarters, massive market share. So with regards to your first question on Australia, the coming back of COVID is probably a small tailwind on revenues, but it's also a headwind on some of our operations and margins.

So it's factored into the guidance already. But we have seen that we have to pay higher wages to labor, have to overhire so we can make sure that if certain people are not showing up for work that we can still get a great product out to consumers.

So overall, a very small tailwind on revenues and some small headwinds on our overall structure of operating costs that we'll see. With regards to Canada, Canada is actually the 1 market where we had the most market share gains over if you look at the last 12 months.

So I think we've expanded our market share in Canada by over 10 points in that period. So if you see any of these trends reversing or traffic data reversing, then that should only be temporary.

I think it's been the 1 market where we have gained market share the most and where we've actually also been very aggressive in our approach and where we have been able to win a lot of customers from the brands.

Great. I will limit myself to 3.

The first is on the tech and data sort of investments you've said you're making this year. Could you tell us in what specifically are you investing?

Is this going to be part of your G&A cost? And out of the sort of revised margin guidance, how many basis points is applicable to the tech and data investments versus the fulfillment cost ramp up?

And secondly, on marketing for the full year, given that the run rate seems to be quite nice already, could the outlook for the full year be lower than the 15% to 17% that you typically guide for? Some color there would be great.

And my last question is on HelloFresh market. I mean the U.S.

seems like a massive opportunity how much of sort of incremental revenue are you anticipating, for example, in the first year of rollout? And what's the potential there?

And will you then roll it out to other European markets as well outside of the Benelux? Those are my 3.

Nizla, let me take the first 2. So tech investments at what that represents and where chart, you're right, it shows up in our G&A effectively what we have -- what we are planning is to almost double the size of our tech and data gains between end of Q2 to end of 2022.

Now in terms of impact on our margin profile, this will be a gradual build up, obviously. So we think just about 2021.

The impact is certainly inside of 1%, yes, so below 50 bps actually. But in 2020, the effect is somewhat higher.

So when we are closer to the full head [Indiscernible] run rate we're targeting there. Your second question on marketing and that versus our full year guidance of 15% to 17%.

I think it's reasonably fair to say that at least we can -- right now, we're more tracked towards the lower end of that marketing expenses as a percentage of revenues than the other half this year.

And let me add just on your question around technology sales, which areas are we investing. The boring answer is basically a slide to almost all areas of the business.

So for example, the fact that we've been able to offset sort of like any inflationary trends around our procurement cost is really down to the fact that we've been able to much better see our suppliers in some mutual benefits in how we source products together with our suppliers, which is all driven by some of the software solutions. Same with the rollout of our home logistics, we're creating a lot of software to be able to track and trace sort of like all of the deliveries that we're doing ourselves.

We're launching new geographies, we're launching and scaling up the HelloFresh market, which is a completely new logic and how we actually think about products store products and inventory, et cetera. So those are all things that require a lot of the software development.

But all of those steps have very high incremental ROI. With regards to the question on HelloFresh Markets, I agree that's a big opportunity at the moment, we are capturing with HelloFresh only about 5% to 7% of our consumers' food budget on average -- And so whatever we can do to provide them with better solutions also for other meal occasions and increase our share of their budget.

That's obviously a big opportunity for us. It's still in the early phases.

And if you look at the assortment, we've been starting in the U.S. with about 100 products.

100 products is obviously a lot less than where we wanted to be at scale. And so it's going to be a gradual ramp-up.

It should show up in some way in our AOV in terms of overall contribution to net revenues. I think we need to see sort of like how much and how fast we can scale it, and that has some dependencies on our fulfillment automation that have some dependencies on resourcing, that have some dependencies on our capacity in fulfillment centers.

So there's a couple of unknown variables, which is why I don't want to give out too granular guidance. But overall, certainly like a big opportunity that over the next couple of years, should add meaningfully to revenues first in the U.S.

and Benelux and then also in other markets that we plan to roll it out.

Great. Three for me.

Just firstly, on the active customer growth. If you could just give us a bit more color on the mix between new customer growth and reactivations.

And then secondly, on the procurement expenses, Just to follow up here. If you could just confirm that whether or not you put through any price rises in the quarter or whether you plan to do any before the end of the year?

And sort of where do you think you are now in terms of sort of the gap between yourself and competitors on prices? And then finally, just on new geographies.

Does the fulfillment capacity ramp-up bring forward any new launches in Europe? And can you just remind us on where you are in terms of sort of the pipeline for new launches before the end of the year?

Let me go for the first 2 questions. In terms of active customer growth, reactivations have stabilized in terms of gross additions at about the same level that we've seen in the previous quarters.

So as we come out of the pandemic, I think that sort of like towards Q4 and also Q1 next year, we're probably expecting the activations to increase. But for now, for the second quarter, the last quarter that we had it was more in line with what we've seen before, about mid-20s in terms of percentage compared to the overall customer gross additions that we saw.

In terms of price increases and also price increases versus competition, we've actually seen almost all of our competitors increase prices, which we like because that makes us more price competitive than the direct comparison. We haven't done any large scale price increases and will most likely not do them.

I think we've always seen that if we can have very competitive pricing, both versus competition, but also versus supermarkets, that really helps us with the order rates of our existing customers, acquiring new customers. And so our goal is to opportunistically, we always look for opportunities to optimize pricing, but we don't plan any large scale price increases like some of our competitors have done quite the opposite.

And we think price competitiveness is a key variable for consumers to buy meal kits. And if we can keep prices stable and optimize around the margin, that will make all products in relation to overall supermarket prices, which see inflation, as well as that of competition, just a better deal for consumers, which is something that should contribute to our growth rates going forward.

And then Miriam, on your last point, new market launches, Dominik has spoken a little bit about Norway, which we just launched for the remainder of the year, we will have Italy upcoming towards the end of the year and going into next year, and the pre-launch for Japan. Hopefully, by the end of October or thereabouts, we can also close on our announced acquisition of Youfoodz, a ready-to-eat business.

in Australia. So we will also be able to count that business into the HelloFresh growth going into next year.

I have some small outstanding ones. So first of all, obviously, June was a pretty lockdown-free month.

Where did those 400,000 incremental active customers came from in the second quarter versus first quarter? Again, you talked about reactivations, but in general, probably it's an indication of sort of incremental demand into the next quarters.

And also in this context, do I understand correctly that your guidance upgrade of revenues for 2021 is also an upgrade of the second half? Was sort of, I don't know, €1.2 million, €1.3 million of sales in the first and fourth quarter.

That would be my first question. In terms of capacity, could you please run us through the open facilities in 2021; the facilities to be opened as well as the volume, maybe in the number of orders type of capacity you are bringing on board.

So we just understand what those extra costs run against in terms of incremental impact. And of course, it's extremely helpful that you talked about €8 billion of overall sales capacity.

Does it suggest that your €10 billion of revenues, 2025, '26 target is also moved forward now?

So let me start with the incremental customers. I think our cost performance on active customers was pretty broad-based.

So we've seen very good numbers in the U.S. And we've seen very good numbers and contribution from Factor higher than we initially anticipated.

And then thinking with regards to the International segments, especially in the U.K. we've managed to further expand market share, been really aggressive in the U.K.

and as well as in Canada, the 2 markets where we have. Where we do face some competition.

So in those markets, in particular, we've actually stepped up our new customer additions to really make sure we can expand the market leadership position that we have. But overall, there were no countries which growth was extremely slow.

So it was more that in those countries I just mentioned, Swiz, U.K., Canada is probably sort of a meeting the overall pack in terms of gross customer additions and also volume towards net customer additions.

Victoria, and then in terms of in terms of our upgrade to the full year revenue outlook, that growth outlook that also imply in our [Indiscernible], yes, it does. So you look at the midpoint, for example, of our upwards revised guidance and see how that compares, what that implies for us and how that compares also to consensus out there, which stood at the midpoint, roughly or the upper half of where we've been before.

You see that it also implies an upgrade to [Indiscernible]. On your other question on capacity, where exactly are we planning to work to expand incrementally.

So let's first talk about what we've announced and done already in the U.S. We added 2 big sites on the East Coast now, dedicated site on top of that for every play.

in international, we -- And it's being full happen in the U.K. We recently launched our [Indiscernible] in Australia and also expanded in the Netherlands and in Canada.

So quite a lot of activity in international as well. In terms of additional sites that come on top of that, there is, in the U.S., there are 2 additional big size planned out of which we actually announced one already in Phoenix.

And then also on top of that, some expansion that we're planning for our HelloFresh U.S. brand.

On International, there are also further sites planned. For competitive reasons, we would not like to say in which geography or which geographies that is incrementally flat to what we have communicated before.

But one thing that we, for example, also brought forward, [Indiscernible] is a big German site where we now this year already where we start and will incur costs for that site as well. To your last point, Victoria, on whether we are also bringing forward our €10 billion revenue target from the 2025 the [Indiscernible], so it's great that you keep us on our toes, but I think this is still a journey.

And right now, we're well on check on the journey.

If I may just ask 1 additional question. your marketing expenses in absolute terms and as percent of sales are down quarter-on-quarter versus first quarter '21, it's probably a mix of seasonality and customer acquisition costs.

Can you maybe very briefly comment on that? To what extent your customer acquisition increased, they probably increased in the second quarter, and what impact of seasonality.

It wasn't how you managed to keep it relatively low.

Yes, yes. So it's exactly that is back to a normal or more normal seasonal pattern where in Q1, we typically are the most for in terms of our marketing activities, and in Q2, we're going to start to bring that somewhat some of bank, especially when we approach the summer season.

So from, let's say, mid-May onwards in terms of -- so second part of your question, our customer acquisition costs have developed the statement broadly stable from Q1 into Q2.

Just 2 for me. So I suppose just on the revenue seasonality and your updated guidance, I think when I look at it, it looks like a pretty strong drop in revenue in the second half versus the first half.

Can you just comment on how much that is due to seasonality versus actually seeing kind of some demand normalization in the kind of 2020 cohort? -- And then secondly, just on discounting.

I've seen kind of revenue per meal trending down year-on-year. I suppose how has discounting trended over Q2?

How is it relative to FY '19? And how are you seeing that going forward into Q3?

With regard to revenue seasonality, certainly, we've grown in the first half of the year about 70%, and our guide for the full year is between 45% to 55%. And that then implies that the second half of the year, we're not going to be growing at 70%, but obviously lower than full year guidance.

Nonetheless, I think it's both in relative as well as in absolute terms, quite a big step up from what we had initially projected at the beginning of the year and then again in April. So something that's overall, I think, is a very positive message.

Now thinking about revenue seasonality, especially in Q3, what we continue to see is very strong order rates from people that we have acquired in the past 18 months. What we also see is that as people spend more time outside, less time in front of their laptops, computers, TVs, that we also dialed back on advertising, it's usually not the great time for us to advertise heavily in July and August.

And so, let's say, revenue seasonality that you will see in Q3 is number one, that people have lower order rates because they have spent more time on the beach or in the mountains, wherever they make holiday. And secondly, because we take the foot off the gas in terms of advertising because July, August, just historically have never been good seasons for us, which again can be explained with people being not existing customers but potentially new customers lead away from their computers and phones and laptops, which they obviously need to see our advertising and [Indiscernible].

And then, William, Christian here. On your second question on the discounting and price incentives, as you know, pricing are primarily targeted towards new customer acquisitions.

So they see a similar trend towards what Victoria just described on the paid marketing expenses. So quarter-on-quarter, less overall price incentives that we've given in the second quarter versus Q1 year-on-year.

We worked with higher banking assets given that Q2 last year was obviously impacted by the peak lockdown quarter, so to speak, where we reduced price incentives across the board also to households with the capacity we have available, which is more the odd one out, I would say that's from a let's say, a sequential perspective, in absolute terms, down the price incentives versus Q1 of this year. So in line with our paid marketing.

Thanks, everyone, for attending the second quarter earnings call. We look forward to welcoming you and updating you on our Q3 performance in November.

Thanks, everyone. Bye-bye.