HelloFresh is out with its third quarter results, which show an increase in revenue but a drop in earnings as company invests in growth.
A bigger and more diverse portfolio of offerings was a highlight of HelloFresh’s third quarter. The global company leveraged the additional products to help post a 31.4% gain in year-over-year revenue and boost its customer base by 8.2% compared to the third quarter of 2021. The 7.5 million active customers of HelloFresh helped propel a lift in average order value on a group level, to the tune of 11.5% on a constant currency basis.
That said, the company’s performance came in slightly below analyst expectations, as the adjusted EBITDA measure of core profit fell 10% to nearly $72.3 million in U.S. dollars. High marketing costs contributed to the decline, as those expenses as a percentage of revenue rose by 3% during the quarter.
HelloFresh acknowledged the marketing investment and the fallout from stubborn inflationary headwinds, noting that it is working to provide budget-friendly solutions to consumers who turned to meal kits during the pandemic era. “Over the past years we have succeeded in building a very resilient business model. While the cost for food is impacted by the inflation worldwide, HelloFresh has been able to remain very affordable,” summed up Dominik Richter, group CEO and co-founder. “In fact, HelloFresh has been able to further improve its relative affordability, mitigate inflation effects and has avoided passing on every price increase it receives in full to its consumers, while keeping the procurement margin stable.”
Richter projected that this meal solution model will continue to have its place in a high-cost environment for consumers. "In times when consumers are thinking more broadly about how to save money on food and deciding to eat out less, home-cooked meals with HelloFresh are not only more convenient, but also less expensive than ordering take-out or eating at a restaurant,” he declared.
The greater choice of meals, designed to appeal to value- and variety-seeking users, include new culinary concepts that have been added to most of the 18 global markets that HelloFresh serves. Over the summer, for example, the company rolled out new family-friendly recipes developed by cookbook author David Burtka as part of a new collaboration with Burtka and his husband, actor Neil Patrick Harris.
According to the latest financial report, HelloFresh will focus on product innovation in 2023, as the company “is no longer confronted with capacity constraints, following strong progress on the successful build out of its network infrastructure.”
As HelloFresh grows its customer basis and menu, it’s continuing to invest in new marketing capabilities and technologies. This month, the meal kit provider announced that it is streamlining and digitizing its media partnership process through a new collaboration with owned media platform Brandcrush. The partnership will provide brand partners with a one-stop-shop for media management.
Berlin-based HelloFresh operates in the United States, the United Kingdom, Germany, the Netherlands, Belgium, Luxembourg, Australia, Austria, Switzerland, Canada, New Zealand, Sweden, France, Denmark, Norway, Italy and Japan. With U.S. offices in New York, Chicago, and Boulder, Colo., the company is No. 50 on The PG 100, Progressive Grocer’s 2022 list of the top retailers of food and consumables in North America.