Yesterday, we hosted a digital roadshow with the CEO of Marley Spoon. Here are our key takeaways:

Adjusted voucher strategy and turnaround. In Q3, the company rectified a previously changed voucher strategy and has already seen promising signs of increasing marketing efficiency and early cohort retention rates in Q4, paving the way to return to sales growth in 2024e aided by a more stabilized order frequency, growing basket size (c. 2% eNuW), as well as growing subscriber quality and base (c. 3% eNuW; currently 15% retention rate over > 20 quarters).

Ongoing reduction in G&A expenses should contribute to a positive operating EBITDA in 2024e. Executing on its strategic shift from growth to profitability, Marley Spoon managed to significantly decrease G&A expenses by 20% yoy in Q3 2023 (excl. one-time charges) as it continues to reduce costs through automation, business service centralization, and realizing cost synergies from its Chefgood integration. Moreover, installed capacity should help it produce c. € 1bn in sales, rendering future capex superfluous and supporting break-even to positive free cash flow generation starting 2024e.

Process of ending dual-listed status underway. The company is in the process of transferring its float from ASX to Frankfurt Stock Exchange through a tender offer to acquire the remaining shares of the Australian-listed Marley Spoon SE (< 15%) in exchange for Frankfurt-listed Marley Spoon Group SE (MSG) shares, ultimately benefiting liquidity for MSG shares and helping to reduce investment complexity. As of December 4, 2023, more than 23% of the Australian free float had accepted this offer with other holders expected to follow suit and conclude the delisting towards the end of H1 2024e (eNuW).

Growth outlook. Management emphasized its goal of reaching its sales goal of c. € 600m mid-term through (1) organic growth in the still vastly underpenetrated $ 7tn global food & grocery market, harnessing consumer trends like convenience and wellness (2) growing basket size via better service offering and (3) exploring inorganic growth opportunities in adjacent categories (e.g., ready-to-heat) and market consolidation, thus leveraging its multi-region and multi-brand meal kit platform.

Despite a challenging transition year against the backdrop of temporary depressed consumer sentiment, Marley Spoon remains attractively priced trading at only 0.3x EV/Sales 2024e. We reiterate our BUY rating with a PT of € 8.2 based on DCF.