elumeo published better than expected Q2 figures and outperformed the overall market despite the current macro headwinds:

• Sales came in € 11.5m

  (7% qoq, 4% yoy), 11% above our estimate of € 10.4m, driven by a higher average sales price of € 78 (11% qoq, -10 yoy vs eNuW: € 70) and increased number of items sold (148k, -4% qoq, 16% yoy vs eNuW: 149k), on the back of an improved sales mix and a more personalized approach to customer.

• EBIT turned positive again with € 0.1m

  (vs € -0.8m in Q1) against our expectation of € -0.7m, thanks to the sales and cost performance program that start to bear fruit, visible in the improved topline, reduced selling expenses (€ 4.0m, -11% qoq, -11% yoy vs eNuW: € 4.2m) and reduced administrative expenses ( € 1.7m, -20% qoq, -18% yoy vs eNuW: € 2.1m).

While the overall declining online jewelry & watches market (-17% yoy) and teleshopping market (-19% yoy), elumeo was able to grow its revenues. Key contributor was the web business, which grew by 15% in revenues and 21% in new customers. On top, the AI-based video shopping platform and the “rising star” of the group, jooli developed nicely: As of Q2, the number of channels and videos played stand at 1,769 and c. 8m. Next milestone is the launch of joolipay in India until the end of the year, marking the starting point of the monetization of jooli that should further fuel group revenues.

Furthermore, management introduced the growth program #juwelo100 with the goal to grow the core business to € 100m by 2030. This would imply 10% CAGR2022-30e which is in broadly line with our estimates (eNuW: 11% p.a. to € 71.5m in 2026e). Since the business model is highly scalable, EBIT margin looks set to increase to 5% in 2026e, thanks to declining OPEX relative to sales.

While the war in Ukraine paired with challenging macroeconomic developments such as inflation, rising interest rates and declining GDP growth rates should continue to burden the business in the short term, the outlook for the mid to long term is bright. Favorable trends as well as the start of the monetization of jooli (expected for end of 2023) should further fuel the topline from FY24e onwards.

BUY

and an increased PT of € 5.70 (old: € 5.50), based on DCF.