GFG.DEGFG.DEXETRA
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Helen Hickman: Good morning, everyone, and welcome to Global Fashion Group's Q3 2025 Results Presentation. I'm Helen Hickman, CFO of GFG, and I'm here today with our CEO, Christoph Barchewitz, who will join us for Q&A. Today, I'll provide an overview of our third quarter results and full year guidance. After that, we'll open it up for questions. Starting with a summary of our Q3 performance. Our NMV was broadly stable year-on-year with 0.4% decrease on a constant currency basis. Our gross margin improved by 1.3 percentage points year-over-year to reach 46.1%. Our adjusted EBITDA margin benefited from the gross margin expansion and disciplined cost management to deliver a strong 4.4 percentage point improvement year-over-year to a positive 1.6%. This marks our first positive adjusted EBITDA on a last 12-month basis for our current footprint. Let's take a closer look at our group KPIs. For over a year now, we gradually slowed the rate of active customer decline each quarter. In Q3, active customers declined 2.3% year-over-year to 7.4 million, driven by fewer churn customers in all regions. Order frequency increased 0.4% year-over-year to 2.3x, marking the first increase since Q1 '23. In Q3, we generated EUR 239 million of NMV, which is broadly flat from last year on a constant currency basis. The group's marketplace participation increased 2 percentage points to 39%, supported by ANZ's fulfilled by offering. Average order value rose by 1%, primarily due to price inflation, which was partially offset by reduced items per order. Orders declined by 1.4% year-over-year. We continue to experience FX headwinds this quarter from a significant impact of the Australian dollar remaining weak, down 8% year-on-year against the euro. This means we had a lower euro reported value for NMV, and average order value earned in Australia, our largest market. Moving on to revenue and margins. Our revenue decreased by 1.5% on a constant currency basis year-on-year. Our continued gross margin improvement resulted mainly from a higher share of marketplace and platform services across all regions. This flowed through to improved our adjusted EBITDA margin, and combined with cost reductions led to a strong 4.4 percentage point improvement year-over-year. Our robust year-to-date performance has resulted in an adjusted EBITDA loss of EUR 7 million, representing a significant EUR 20 million improvement versus last year. Importantly, we achieved a major milestone for GFG by reaching an adjusted EBITDA profit of EUR 2.4 million on a last 12-month basis. Now let's turn to our regional performance. Both ANZ and LatAm have continued their positive trends by delivering top line growth each quarter this year. ANZ NMV grew by 4.9% and LatAm by 3.8% year-over-year on a constant currency basis. LatAm also made return to active customer growth in the quarter. SEA remains challenged and a focus area for us to stabilize and turn around business. All regions delivered year-on-year improvement in gross margin. Now let's move to our cash flow for the quarter. Our normalized free cash flow improved to EUR 11 million year-on-year as it benefited from a EUR 7 million improvement in adjusted EBITDA and a EUR 6 million CapEx reduction in part to the completion of our 2024 OWMS project investment. We had EUR 6 million working capital outflow, which was elevated versus last year due to payables timing differences. Normalized free cash flow for Q3 was negative EUR 15 million. Looking ahead, Q4 is our largest quarter along where we seasonally generate strong positive cash flow. We continue to have a solid liquidity position with EUR 136 million of pro forma cash and EUR 85 million of pro forma net cash at the end of Q3. Pro forma net cash excludes our outstanding convertible bond liability and other smaller loans. Since the Q3 close, we repurchased EUR 6.7 million more of the bond at a discount. We remain open to considering all opportunities to strengthen our liquidity, including potential debt financing and repurchases of the remaining EUR 40.9 million of outstanding bonds. Now looking to the rest of the year. We have delivered on our expectations to be year-to-date. We are now narrowing our NMV expectation for negative 5% to positive 5% to negative 2% to positive 2% on a constant currency basis. This equates to around EUR 1.01 billion to EUR 1.06 billion. Given our positive trajectory on adjusted EBITDA and considering Q4 is our most important trading quarter, we expect to achieve our breakeven target and deliver single-digit euro million results of adjusted EBITDA for the full year. Our full year expectations that leases, working capital and CapEx remain unchanged. We will share our expectations for 2026 at our Q4 and full year results presentation in early March. We'll now open the call to your questions. If you'd like to submit a written question, please take on the speech bubble at the bottom of the screen. Thank you.
Operator: [Operator Instructions] We will now take our first question from Anne Critchlow of Berenberg.
Anne Critchlow: I've got a few questions, so I'll ask them one by one. First of all, on the level of inventories at the end of Q3. I just wondered how those compared to last year? And also, if you could comment on the composition of those inventories in terms of aged stock and stock being in the right place and the right time and so on.
Helen Hickman: Yes, of course. So our stock in quarter 3 this year is broadly flat with where we were this time last year. With regards to quality, we are confident in the quality as we are heading into obviously our busiest trading season across all of our regions. And our aging profile is broadly the same as we disclosed at the H2 results on our aged inventory and for us, we define that as over 180 days being about 14% of our total stock.
Anne Critchlow: 14%. And I guess, much depends on Q4. But with regard to normalized free cash flow for the full year, where would you expect to be compared to last year's EUR 42 million outflow at this point?
Helen Hickman: So obviously, yes, I think you hit the nail on the head, because obviously, a lot depends on the coming couple of months with regard to that being our seasonal peak. But if we sort of go through the component parts, we obviously are guiding into a breakeven to single-digit positive adjusted EBITDA so that will give us a significant improvement year-on-year on our profit flowing through to cash. Last year, we did have significant inflow sort of over EUR 30 million on working capital. And we're saying that this year, that will definitely be muted and closer to sort of a breakeven. And then we've also given an indication with regards of what our leases will remain broadly constant year-on-year and our CapEx is running at about EUR 15 million. So all of those will then give us constituent parts to normalize free cash flow. Obviously, the quantum of the profit is the key moving items in there and the delivery of where we have over the next couple of months will define that.
Anne Critchlow: That's very helpful. I've got a question on CapEx outlook for next year as well. So I understand that various systems investments have been completed now. Do you have a sense of where CapEx could come down to next year, please?
Helen Hickman: I mean we'll obviously provide all of our next year guidance when we announce Q4 and full year in March. But I think it's safe to say we have no significant infrastructure projects on the horizon in the short to medium term. So our CapEx will definitely be concentrated around our internal technology CapEx, which again makes up the majority of the EUR 15 million this year.
Anne Critchlow: Very helpful. I understand the new -- a question on Southeast Asia. The new Chief Executive has started only in September. But I think previously, you talked about focusing on the top 30 brands in Southeast Asia. So I just wondered if you have a sense of early thoughts on what the potential strategy might be first impressions and possible turnaround.
Christoph Barchewitz: Yes. Thanks, Anne. I'll take that. So we -- as you say, we have our new CEO for the region in the seat since September. So it's obviously early days for him. But what his mandate is and the objective obviously is to continue the turnaround actions we initiated already quite a while back. The activities we focused on both on the commercial side, so you mentioned the top 30 brands and really curating the assortment more narrowly around the 4 categories and the most relevant brands. That is continuing, and it's also yielding results. So we see better results in the bigger brands than we see in the longer tail, and that's obviously part of the deliberate strategy of discontinuing along the long-tail assortment. And then also on the marketing side, we're seeing some progress in terms of both our efficiency, which protects our bottom line to some degree in this turnaround as well. So I think we're broadly on track with the turnaround action. We don't expect the significant change in direction. And from all I know we -- I would definitely be very confident in the leadership team in place now there, which is driving all of these actions. So I think, as always, these things take a little bit of time to come through. The one that has the longest kind of period is obviously the buying activity since we have quite a bit of forward commitments. We don't think we're in any way overcommitted, and we've brought down our commitments for this year relative to where we were at the beginning of the year quite substantially. And we're taking a cautious approach for our retail buying and concentrating that on the largest brands for 2026. And I think as you know, we have a very large share, over 50% of our business in the region coming from marketplace. And so from a balance sheet and risk management perspective, we are in a quite favorable position there, and that will also protect cash and help us manage profitability overall.
Anne Critchlow: That's pretty helpful. So you mentioned the share of marketplace giving you some protection. Does that confirm your sort of view in patience in turning this around? And how many years do you think you would give it until you might consider an exit from that region?
Christoph Barchewitz: Yes. I think -- I mean the -- while we're obviously not pleased with the top line trends and the double-digit declines we've not seen for quite a number of quarters is not where we want to be in and there's many factors that we've also covered in the past calls that affirm that. But I think we see definitely a core base of the customer and a core assortment that is very relevant and that is an attractive business to pursue. One thing we don't talk about as much that I think is also very important is we have a quite sizable B2B business in the region, which helps us on the overall financial profile. And so when you look at the last disclosed regional EBITDA we have is LTM for June this year, and that was under EUR 1 million negative on EBITDA. So it's not like despite all the challenges on the top line we are improving on the gross margin side, and we are managing costs, be it marketing investments and other variable costs, but also the fixed cost base very, very carefully to make sure that the overall, let's say, financial burden on a group is within a manageable range. And we expect that to continue in that way and then obviously improve in the course of '26 and '27.
Anne Critchlow: Just got 3 more questions, but I wondered if anybody else wanted to have a go.
Operator: And we will now take our next question from Russell Pointon of Edison.
Russell Pointon: A couple of questions, if that's okay. First of all, great to see the narrowing of the guidance range for the NMV. That implies obviously -- some good things are not coming quite through as quickly and perhaps there's less negative on some side. So could you just talk about what is a little bit better, what is a little bit worse to narrow that range? Interesting that ANZ and LatAm, the revenue -- the annual revenue growth will decline in Q2. And the second question was in terms of the gross margin, it's mainly mix, which is driving that improvement in gross margin. So therefore, retail margin is flat. So could you just talk about some of the drivers to that retail margin, please?
Helen Hickman: Yes. So let me take your first question, Russell, with regards to guidance. So we have been broadly consistent throughout the year and considering we are hitting at that midpoint. So if you think about Q4, we're minus 0.4% and year-to-date, the group we're 0.1%. So given some of it is actually more mathematical in the fact that we've now only got a quarter of trade left. And whilst it's our largest trade to then be reaching the extremities of potentially plus 5 and minus 5, we've been over a quarter worth of trade would have actually made the quarter performance beyond aspiration and terribly bad on the other end. So the narrowing is a reflection of the passage of time and to the fact that to date, where we are at 0. And actually, we still within the quarter, have a relatively large range even to hit the plus 2 for the year minus 2 for the year. And we wanted to maintain that breadth because as you know, it is our most critical, it's also hugely competitive time of the year. So we need to see ourselves to manage that. You're right with regards we've continued to see the growth in LatAm and ANZ. LatAm has come off a little bit compared to where we were at quarter 2. Some of that has been driven by the sort of the change in season and it being seasonally very cold when we're not -- traditionally, it would have been much hotter in Brazil. So some of our winter inventory running out. But on the flip of that, that whilst we're still disappointed with it, obviously, we're seeing a reduction in the decline in Southeast Asia. So hopefully, that covers the way around the top line. With regards to margins, so yes, with regard to our 1.3 increase, again, there's a variety of components. But we're seeing trading margin increase predominantly in LatAm and Southeast and -- LatAm and Australia and some of that driven by actually reduced discounts on a year-on-year basis. This year -- this quarter, sorry, marketplace participation has had a key driver in that 1.3% increase as we've increased our overall participation by 2 percentage points and also was still relatively small. We've also seen a year-on-year increase in our platform services, which has also contributed quite strongly to the gross margin increase in the quarter.
Operator: We'll now take our next questing from Antonio, NuWays.
Antonio Perez: Could you provide us a little more color on the main cost drivers of the improvement in adjusted EBITDA, please?
Helen Hickman: Yes. Of course, Antonio. So they're in line with some of the cost drivers that we've spoken about. So looking around fulfillment efficiencies and capability around picking, scheduling, batching, we've done a lot of work with regards to delivery and improving some of our -- times of our delivery carriers. We have had a continued review of our organizational structures, which we've been speaking about for many quarters, so sort of year-on-year, we're about 10% down in total headcount as a result of organizational design and restructuring. We've even reviewed all of our tech contracts, so it's really a mixture of efficiencies in our fulfillment, cost savings with regards to people and structure, all of our sort of G&A contracts, whether that be tech or more general G&A and also being disciplined around reviewing our leases and we've come out of a couple of more expensive sites, office sites, et cetera. So it's very holistic both operationally and more sort of G&A focused.
Antonio Perez: That's super helpful. I have two more questions, if that's okay. What's the short-term plan to turn around Southeast Asia? Is there anything in particular you have in mind that could have a good impact? And also, is there -- maybe this was also asked before, but do you have a time horizon in mind? Or maybe is there a certain point, a certain decision point in which divestment could become an option?
Christoph Barchewitz: Yes. Thanks, Antonio. I'll try to address that. So I mean there isn't a silver bullet, obviously, in these types of turnarounds in terms of one activity that would drive all the financial profile we'd like to see. So the challenges that we're facing, we see as really at the core of the activities of the business. So on the one hand, that is the commercial side, the assortment that we're offering, the level of relevance, exclusivity and competitiveness of the assortment. We've had a very broad assortment to cater to different price points, very different audiences across the region. Obviously, between Singapore customers and Indonesian customers, there's many, many differences in their interest, their spending power, their fashion trends, et cetera. But what we're trying to do and have already executed quite a bit on in the course of this year is to really sharpen and focus on the big brands that resonate basically across the region and generally with our global brands as well. So if you look at the side of the app, you will see very familiar global brands has been highlighted as the most relevant assortment. I think Helen has also talked about the freshness of our inventory. We have had -- because of the historical performance sometimes challenges with just too much aged stock. And obviously, that impacts the relevancy to the customer. So bringing in as much newness as possible on the retail side where we do the buying, but also working very closely with the marketplace partners to make sure that the stock that is available for sale on the marketplace side is of the current season, most relevant stock, which has not always been the case. So that's the supply side, if you want where there's much more to be done where we're making some good progress relative to where we were a year ago. And then the other side, on the demand side, what we're trying to move to is a much stronger focus on higher-value loyal customers and really growing share of wallet with those customers. So what that will eventually mean is that we will have a shrinking customer base, but hopefully, a higher spend per customer for the remaining base due to higher frequency and partially also higher price points that those customers are buying. And so we've adjusted our CRM, our VIP program and other things to really focus on that customer side and that demand side. So also, I would say of the two sides of the equation that we're focused on, our operations are very efficient and work well, and we don't have significant issues. There's always room for improvement, but it's not a substantial issue. And our tech is also stable and reliable and not a significant issue in this turnaround. And then the last point I'll add to this is the B2B business where we are serving brands to support sales on the dot-com, and that is something that we will continue to focus on and try to also broaden the customer or the partner base to have a larger number of meaningful partners that can also then leverage the spare capacity we have in the fulfillment centers in the region in a better way. So while we want to turn around the top line of the B2C business, getting a bit more volume from the partners on the B2B business can help with the overall financial profile. And so at this point, we don't have any intention of divestment or anything like that. As always, in any business, we will always reconsider and look at options that present themselves, but fundamentally, we want to improve the core dynamics of the business, and we are confident that we can do that with the team in place, the learnings over the years and also our track record of growing the business in ANZ and LatAm after some challenging periods in those markets post-COVID as well. So I hope that gives you a bit of context of where we're going here.
Antonio Perez: This is super helpful. If there's still room for one question, I would like to ask you, in terms of seasonality we -- or I know that Q3 is usually weaker compared to the high peak quarters due to Ramadan or to the holiday season in Q4. But it was this Q3 a normalized weaker Q3, so to say, as usual? Or it was more pronounced or even better? What did you see? What were the trends for the quarter?
Christoph Barchewitz: Yes, that's a good question. So you're completely right on the seasonality, and I think one thing always to call out that the holiday period and Black Friday, 11/11 are fixed in the calendar, although even there the day of the week that these events fall on, we see as usually a bit of an impact on how a year turns out or a simple trading period turns out. Obviously, on a Ramadan season, we have a change in the calendar every year. And so it moves earlier in the year, every year. So that seasonality we've obviously seen this year in particular, that the cutoff between Q1 and Q2 in Southeast Asia having an impact. Coming back to Q3 in your question, we have had no abnormalities on a year-on-year basis or any hard or soft comps that would be material. Yes, there's always some details around certain actions, certain events in the market when exactly did a certain campaign fall in the calendar, but big picture, I would say this is a fairly normal quarter that we've seen.
Antonio Perez: Maybe just thinking about your last answer to the strategy in Asia. You told us that the continuous focus is to target the core customer base, the loyal, high-value customer base. But we've seen that the, for example, the turnaround efforts in customer numbers in LatAm and Australia and New Zealand have paid off with successful marketing campaigns. Can we expect as well a significant marketing effort to drive or to reconnect or to capture this or engage better with this core customer base? Or will it be more on the price side or the offer side?
Christoph Barchewitz: Yes. Thank you. Great question, actually. So we definitely see an opportunity and a need to reinvest into our brands in Southeast Asia. We have very high brand awareness. But I think we clearly need a refresh of what the brand stands for, for the customer. From a timing perspective, we only want to do that when we feel like we have all of our capabilities and our assortment lined up to exactly deliver that. So simply speaking, if we're still going through clearing a lot of a stock it's probably not the right moment to go with a brand campaign that is focused on business, exclusivity, the best global brands, et cetera. So we need to bring that in balance. And that is definitely something that is on the horizon for 2026. And we have seen, in particular, with the "Got You Looking" campaign in Australia that, that can really make both existing customers perceive the brand in a new and different way and also bring back a lot of churn customers or bring new customers to the platform and certainly as a business that's now 12, 13 years old, 14 in some markets, we have had continuous need of reinvigorating the brand and articulating to customers of what the brand stands for. And so this is on the cards for 2026. Don't expect a big one-off investment that goes materially beyond our existing marketing budget or so, but we may have some quarters in which we put some extra marketing investment in and that may delay some profitability improvements by the business.
Operator: We'll now take the follow-up question from Anne Critchlow of Berenberg.
Anne Critchlow: I've got about 5 questions, please, if that's all right. So just a follow-up on Southeast Asia for background understanding, Do you target different products between the different country sites? So Singapore versus Indonesia, for example, or do you put everything on all of the sites and basically let the customers filter it down themselves?
Christoph Barchewitz: Yes. Thanks, Anne, that's a really good question. So this is part of the complexity of Southeast Asia because it is not fully up to us. So the principle we try to apply is all brands, all assortments across all markets. That's the ambition level. But then when you go into the next level of detail, we run into the brands very often having different setups. So a given brand may have a distributor in Indonesia, have a subsidiary in Philippines and have no presence in Malaysia. And so in Philippines, we may be able to have trade on marketplace; in Indonesia, we have the distributor trade on marketplace. But for Malaysia, we need to buy in the stock. So these complexities are a big driver of challenges in the region. If you word it more positively, when you build those capabilities of actually operating across multiple geographies, multiple business models and multiple partners for the same brands, that is a moat that is not that easy to crack and to replicate in the market. So we have the ambition of having all stock and all products available, but we run into the degree of restrictions and preferences of the brands that make it different. And then from a consumer perspective, we obviously have different preferences. And even within the same brands, different products, different price points may resonate. So to give you an example, as you know, the big sports brands will be in our top brands, they may be contributing significantly to sales in all markets, but when you double-click into what products are selling, there may be slightly lower price points in Indonesia and in Philippines and higher price points, for example, in Singapore, in terms of what the customer is actually buying, and we need to obviously reflect that in the assortment that we offer. So there's definitely a significant degree of complexity around that, which we think has some structural impact on all players around gross margins and inventory efficiency in the region, but we're not trying to use that as an excuse. We definitely want to do better in how we manage our commercial activity. I hope that gives you some context.
Anne Critchlow: It does. But just to be clear, in a particular country, for example, a brand may say that you mustn't show the customer's product for that brand. Is that correct? Or do you just put everything on all of the websites?
Christoph Barchewitz: No, it depends on the relationship and the contractual agreement with the brand. So the brand will say, okay, if you're buying this from us, this is only for sale in Malaysia because in another country, we have a local distributor who has an exclusive right to that market. And so you need to work with that distributor in that market to have new products on the platform. So there are these restrictions, and we -- as you can imagine, we're always pushing against those or can trying to partner to kind of maximize sales for our brand partners across the region, and we will be much more comfortable taking inventory risk when we can settle the product across the market. On balance, the vast majority of our assortment is regional. But when you go into the nuances of what sells and the restrictions behind it and the business model of how it is implemented, it is not only a regional assortment.
Anne Critchlow: Understood. That's really helpful. I've got a question about social media, but also now agentic commerce. So from the two channels that, in theory, threaten online aggregators, but also two channels that you can work with. So I just wondered what your approach was here? And where you think this is headed for the industry?
Christoph Barchewitz: Yes, very exciting topic. I think we -- so one of the big benefits here is we've been at this for many years, and we've seen evolutions of both for the customers they are -- in terms of the platforms they're using, what type of engagement they have. You were obviously trying to be in sync with the customers. And so that has led us to be more active on TikTok, et cetera, et cetera. So in terms of the platforms, we're obviously agnostic, and we're going where the customers are and that's very important. From an agentic perspective, this is emerging, and it's going to be very exciting and interesting. I think we are very well positioned given that we have a long history of making sure that our assortment, the brands we carry, the content that is on our platform is very visible historically on SEO with especially Google. Perhaps, the same kind of applies in this new world. So obviously, we're learning, there are many things where it's a bit foggy and it's not clear where that lands. But I think we feel very, very comfortable that we can adopt this. And again, one benefit we have with our footprint is that by and large, a lot of these things play out first in other geographies. So if you think about the rollout of certain features in some of the global AI platforms, they usually start in the U.S. and then kind of roll out abroad in some cases in China and then roll out into other geographies. And so we can get the insight of what the impacts are and how to work with it and then give an early adopter in our geography. So we feel pretty comfortable that on balance, this is upside for us and not downside.
Anne Critchlow: Really interesting. And I've got a question on tariffs, of course. And just an update on tariff impacts, if you would, either in the supply chain or from the consumer perspective.
Helen Hickman: Thanks, Anne. We've been consistent in talking about this in previous questions that we're not seeing anything of significance, we haven't in the past, and there's nothing to note now across our relationships with our suppliers or customer sentiment in our region. So obviously, it's an ongoing dialogue with our suppliers, but there's nothing to note on and nothing that -- nothing of wide concern.
Anne Critchlow: So second to last question on the competitive environment in various regions, just wondering how that's trending with regard to, say, Shein. And also perhaps the growing importance of secondhand, how does that affect your markets? And then any insight into consumer behavior and sentiment generally would be interesting.
Christoph Barchewitz: So yes, Anne, I'll try to cover that. That's a very broad question. But I think -- so on Shein and the broader, let's say, low price on fast fashion side, there isn't really any significant new development. We've moved our assortment upwards quite substantially, and we're definitely seeing more the competition playing out between the different platforms being fashion specific or general merchandise that are offering those lower price point, largely unbranded products. So there's very, very intense competition in Brazil around this, also in Southeast Asia, obviously. So in that sense, nothing new for us, and we don't see any change in the impact to us from that side. Sorry, what was the second part of your question?
Anne Critchlow: Just if you could give an insight into consumer behavior generally ANZ versus LatAm, for example?
Christoph Barchewitz: Yes. So ANZ's consumer sentiment is reasonably okay. I think we see people focused on big campaigns and big events and maybe sometimes rolling back a little bit in between. So the promotional activity and the competitive intensity around that is quite high. But as you can see from the gross margin, we're able to manage that and very healthy position around our inventory. We know from some of our competition that they may have a bit more overhang on the inventory side and then that obviously drives the pricing behavior. The big campaigns or seasonal sales is just underway at kind of kicking off these days. So we'll see how that plays out over the 4 to 6 weeks. But generally, I would say the consumer is there, but knows there's going to be deals and is kind of looking for those deals, and I think that's fairly consistent. Obviously, we always try to push further on our exclusive product with our own brands and also exclusive third-party brands or lines from third-party brands and kind of differentiated that way our loyalty program is now fully launched in the region, and that's very exciting, and we think this is going to be a driver of getting more of the wallet share from our higher value customers and really getting people who maybe currently are buying, let's say, 4, 5 times a year to give us another 1, 2 or 3 purchases every year. So that's a big focus to feel pretty good about that. And then LatAm, I mean, some of the headline indicators recently have been more negative in terms of consumer sentiment. But then at the same time, when we look at the industry more broadly, we do see some growth. So it may not be clearest of pictures there and the reporting season for Q3 that gives us better visibility on some of the fashion players is underway right now. So I think we see that and maybe to comment on Colombia, that has been in the news from a geopolitical perspective a lot. And certainly, that has a degree of influence on what's happening in the market, but we've been executing very well on that market. And I think as we highlighted also at the Q2, Colombia is growing better or in line with Brazil. So very pleased with that performance in particular.
Anne Critchlow: Very helpful. And then the final question from me is just on fulfilled by. If you could talk a bit about the margin structure? And how that basically benefits the gross margin? Because I think as many players fulfilled by is largely logistics and really quite low margin. So just wondering how that works and also how it's progressing?
Helen Hickman: Thanks, Anne. So fulfilled by obviously is part of our wider marketplace offering with our marketplace partners, so as you would imagine, we have a higher commission rate with those partners to actually be able to manage their inventory and delivery and fulfillment within our existing infrastructure. So where we see the benefit is obviously we are firstly utilizing some potential excess capacity within our fulfillment center. We then obviously get many more benefits for our customer with regards to more seamless deliveries, especially if they're ordering maybe a retail product and marketplace product, actually, that's the pick and packing delivered at the same time. There's also the efficiency with that with regards packaging. With regards to our sort of profile. So we're most advanced in our Southeast Asia region with regards to fulfilled by offering. It's now very much a growth engine in Australia. The implementation of our OWMS system at the back end of last year actually opened up and facilitated fulfilled by to make it much more easy for our connect business and our brand partners in Australia and whilst it's on our pipeline in Latin America, it's relatively nascent but again, a growth engine for '26 and beyond.
Operator: We have no further questions in queue. I'll now hand over for webcast questions.
Helen Hickman: So two questions from Dan Curtis on the webcast. First, Netflix recently said Brazil, CIDE tax had a big impact on their results? Does the [indiscernible] face similar learn exposures to that 10% tax on overseas payments? Yes. I mean what I'd say is [indiscernible] has got quite different exposure to Netflix with regards to our mix of payments et cetera, is different compare something like the Netflix licensing where that licensing content from offshore. So it's not something that high on our radar, but we're super confident that all of our cross-border supplier payments are managed within existing intercompany and transfer pricing rules and obviously, we're compliant with all taxable countries. The next question, how do you see an increase in referral traffic from customers via AI chatbots? And if so, do those convert materially better than traditional SEO traffic?
Christoph Barchewitz: Yes, that's a good question. And I think we've touched on that briefly earlier. It's still a very small share of our traffic. I think what is very important is that our ambition, especially for our core existing customers is that the starting point for engaging with fashion is our app. And we obviously have now very high app share across the group. And so we want people really to start from the app either because they get a notification from us or they may get an e-mail from us that kind of pique their interest or because the natural go to place is the app. And then obviously, within the app, we want to drive a better and better discovery journey, leveraging AI and letting the customer engage in a somewhat similar but more relevant way than they would be on a generalist AI platform like chatGPT. So I think that's a focus area for us in particular. Then when it comes to acquiring outside traffic and new customers, certainly, this channel will play an important role, and we do see that it is a high intent channel relative to some others. But I think it's very early to say. And I think we also can't obviously tell at this point, what the types of customers are that are coming through this channel, generally, we would expect it to be early adopters probably a little bit more affluent than the typical customer, et cetera. So there will be some bias in that data. So we're monitoring that fully.
Helen Hickman: Next we have some questions on M&A. To summarize, are we planning to pursue any external growth opportunities via M&A and what are our debt financing plans?
Christoph Barchewitz: Yes. So we're not looking at any acquisitions or anything, at least not of any meaningful size in the context of the group. So -- and that's not a focus area for us. We're very focused on delivering, obviously, this year, profitable EBITDA and then continued improvement next year and improving cash flow situation as well within the balance sheet that we have. And I think we've been very clear around our financing that, obviously, we've managed the convertible liability very proactively over the last few years, given the change in circumstances for the group. And I think captured a very significant discount for our shareholders, and we will continue to manage all of our debt, including some of the smaller facilities we use for working capital bank guarantees and those types of things. And so there's no bigger plans here, but we always look at how we optimize our balance sheet and in particular, manage the seasonality in our business, which, as you all know, is quite strong with significant cash out in Q1 and significant cash in, in Q4.
Helen Hickman: That is all the questions. Thank you all for joining today. If you have any further questions, please reach out to the Investor Relations team directly.