The Marley Spoon AG (ASX: MMM) share price will be one to watch this morning after the subscription-based meal kit company released its second quarter update.
How did Marley Spoon perform in the second quarter?
Marley Spoon's global revenue came in at €32 million in the second quarter of FY 2019, which was an increase of 54% on the prior corresponding period and 9% on the first quarter of FY 2019.
Pleasingly, this strong revenue growth was achieved despite the company's significantly lower marketing spend during the quarter. Management believes this highlights the strength and importance of orders from repeat customers.
Solid growth was exhibited across all geographies, but the star of the show was its U.S. business which delivered revenue growth of 91%.
The lower marketing spend also helped support ongoing margin improvement. At the end of the quarter the company's global contribution margin increased to 24%, compared to 20% in second quarter of FY 2018. This was in line with the company's guidance for a contribution margin in the mid to high 20s on a global basis in 2019.
Another positive is that the company is now profitable in Australia. The release explains that its Australian operations were profitable on an operating EBITDA basis during a busy second quarter which included the roll out of its new manufacturing technology and the announcement of a strategic partnership with Woolworths Group Ltd (ASX: WOW).
Marley Spoon's CEO, Fabian Siegel, said: "Reaching operating EBITDA profitability in Australia in Q2 for the first time and kicking off our strategic partnership with Woolworths in early Q3 are great achievements by our team, and a testament to the long-term viability of our business model."
Thanks partly to this, the company narrowed its EBITDA loss to just ~€5 million during the quarter. This compares to an EBITDA loss of ~€12 million in the first quarter and ~€8 million in the prior corresponding period.
Looking ahead, the company reaffirmed its previous guidance to reach a global contribution margin in the mid to high 20s in 2019 and profitability on an operating EBITDA basis by 2020.
And if the company continues to build on this strong second quarter result, I suspect it will achieve its guidance with ease.
