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Good morning, everyone, and welcome to Global Fashion Group's Q1 2026 Results Presentation.

I'm Helen Hickman, CFO of GFG. Today, I'll provide an overview of our first quarter's performance. Our CEO, Christoph Barchewitz, will then join us for the Q&A session.

In quarter 1, we delivered another strong step forward in our profitability journey. Our adjusted EBITDA margin increased by 3.5 percentage points year-over-year, driven by a combination of gross margin expansion and cost discipline, proving that our focus on healthy order and customer economics is delivering tangible bottom line impact.

On a regional basis, ANZ remained resilient, with growth across all top line metrics, which helped mitigate the group's overall small NMV decline. Our focus on customer quality is delivering clear results, with order frequency over the last 12 months rising to 2.4x, up 1.9% year-over-year. This marks our third consecutive quarter of growth and a turnaround from the past 2 years.

By prioritizing frequent shoppers who drive long-term value, we're building a higher-quality active customer base currently at 7.2 million customers. Our more loyal customer provides a resilient foundation to navigate current pressures on new customer acquisition and volume. Our average order value grew by 5.2% to EUR 61. This growth was mainly driven by inflation and a favorable regional mix, with increased contribution from ANZ's higher average order value. This increase helped mitigate the impact of lower volumes on our NMV, which declined by 3% on a constant currency basis to EUR 215 million.

Moving on to revenue and margins. We generated EUR 138 million in revenue, representing a 4.3% year-over-year decline. The gap between revenue and our 3% NMV decline was driven by the continued shift in our business model mix as marketplace share increased to 42% NMV. Gross margin improved by 0.5 percentage point year-over-year to 46.5%, with higher margin contribution from Platform Services balancing our retail performance. This demonstrated our ability to maintain margin gains even as business model mix and inventory benefit from '24 and '25 normalize.

On adjusted EBITDA, we delivered a strong EUR 5.4 million increase year-over-year as we realized savings from our 2025 and early 2026 cost initiatives and continued fulfillment efficiencies across the group.

Now, let's turn to our regional performance. ANZ proved resilient this quarter for a softer consumer spending environment. ANZ achieved a 3.5% increase in NMV, and a 4.0% revenue growth on a constant currency basis. This was supported by a 3.7% rise in Active Customers, driven by successful new customer acquisition and reactivation initiatives. ANZ's gross margin compressed slightly by 0.4 percentage points due to investment in our new loyalty program.

In LatAm and SEA, we prioritized margin health as we faced lower demand. In LatAm, a greater contribution from Marketplace drove a 1.4 percentage point gross margin expansion. In SEA, Platform Service drove a 1 percentage point increase.

Now, let's move on to our cash flow for the quarter. Q1 normalized free cash flow improved by EUR 10 million year-over-year to negative EUR 51 million. Whilst Q1 is a seasonally high outflow period, our trajectory towards breakeven is strong. On a last 12-month basis, normalized free cash flow has improved by EUR 24 million year-over-year to negative EUR 22 million. The year-over-year progress in Q1 was primarily driven by the EUR 5 million improvement in adjusted EBITDA, supported by further discipline in working capital and CapEx.

Looking at our liquidity position, we had a EUR 19 million net reduction in borrowings this quarter, which was driven by the EUR 32 million redemption of our convertible bond completed in March. This redemption was partly offset by a EUR 13 million drawdown from our working capital facilities, which primarily consists of our new Australian RCF with NAB. Following the redemption, we now have EUR 9 million of our convertible bonds outstanding. We closed quarter 1 in a strong position with EUR 109 million in pro forma cash and EUR 86 million in pro forma net cash.

Now looking to the rest of the year. Our Q1 results were in line with expectations. The softer top line described at our Q4 results was successfully offset by improving margin trends. Therefore, we are reconfirming our full-year 2026 guidance as set out in March. We expect NMV growth to range from negative 4% to positive 4% year-over-year on a constant currency basis. This implies an NMV range of EUR 990 million to EUR 1.07 billion.

On adjusted EBITDA, we expect to deliver EUR 15 million to EUR 25 million. Whilst our guidance is based on December 2025 closing rates, we've observed currency tailwinds with the Australian dollar and the Brazilian real strengthening against the euro as of the end of Q1. If this persists throughout the year, we may see a benefit to our euro ranges. Our guidance range continues to reflect softer first half expectation whilst factoring in different trajectories for the second half.

GFG has no direct exposure to the Middle East, and is closely monitoring the secondary impacts on global supply chains and consumer sentiment. Our guidance reflects factors specific to our markets such as interest rate increases in Australia and upcoming election cycles in LatAm. Our guidance does not assume prolonged geopolitical volatility as this cannot be reliably predicted.

We remain highly confident in our overall strategic direction. By prioritizing customer quality and maintaining rigorous cost discipline, we've built a solid foundation that allows us to navigate external variables whilst continuing to drive forward our profitable growth goals.

We'll now open the call to your questions. If you'd like to submit a written question, please kick on the speech bubble at the bottom of the screen. Thank you.

[Operator Instructions] Our very first question this morning is coming from Russell Pointon of Edison.

A couple of questions. First of all, there's a very clear message that you're focusing on quality customers, which is showing up in a slight increase in the rate of decline quarter-on-quarter. So, I suspect this is quite a difficult question to answer. But can you help say anything that helps understand what percentage of your customers are kind of where you want them to be? And what percentage are probably not where you want them to be from a quality perspective? And I suspect within that, there's quite a lot of drivers in terms of product, marketing, promotions, that type of thing. So, where is the focus?

Great. Thanks, Russell. I'll take a stab at that. It is not an easy question to answer. But I think fundamentally, the way we look at it is we look at it from -- in driving profitable growth from 2 angles. We look at order profitability, and we look at customer profitability. On the order profitability side, we are constantly looking to drive efficiency into fulfillment, delivery proposition, all of those things because obviously, as we can kind of better economics to each individual order that helps the overall picture.

And then through the customer profitability lens, we look very much at the entire life cycle of the customer. As you know, we're now 15 years into this business and in these markets. And so we have a huge amount of historical data around which types of customers through which channels, in which locations, which devices, et cetera, and also with which initial browsing, search, purchase behavior end up being the ones that really become long-term loyal customers. And there's a lot of effort in terms of driving our new customer acquisition and also our reactivation towards those higher-value customers such that we are not investing marketing spending on customers that have a high probability of turning out to be lower value customers.

To your percentage question, it's obviously a distribution. That's why things like the loyalty program we announced in Australia are so important to us to really make sure that the very high-value customers, so let's say, the top 5% or 10% of customers who are accounting for a large -- much larger percentage, obviously, of spend are feeling particularly special and looked after from every aspect of the experience. And then at the other end of the distribution, we do have customers that through also behaviors around returns and other things end up being very, very unprofitable. And that's an area where we are tightening some of our policies and behaviors as well.

So, I would say it's a very multi-dimensional effort to try to drive this. Ultimately, where we think this will be most visible is through the purchase frequency of the average customer base and moving that upwards. And I think that's what we want to be measured against as the ultimate outcome from this effort.

Great. And secondly, on Southeast Asia, it's interesting that you saw a lower revenue decline than you did in Active Customers. So, could you just talk about what's happened in Southeast Asia, please?

Sorry. Yes, Russell, I mean, what we're seeing really in Southeast Asia again sort of goes back a little bit to Christoph with regards to the customers that we're retaining and attracting actually are increasing their overall purchasing. So, we're seeing that buildup is actually the decline in revenue as a result then ends up being lower than the declining customer.

Okay. And Helen, there was a broad improvement in profitability, EBITDA and EBIT year-on-year. So, was that across all 3 divisions? Or did it effectively follow the trends in gross margin because the gross margin in Australia was a little weaker?

Yes. The gross margin was a little weaker, but we've seen sort of consistent improvement in profitability across all of our regions. So yes, we've got the improvement in gross margin at a total level, but also you'll see a 3.5 percentage point improvement on adjusted EBITDA. There's been significant efficiency and further cost out, which we've seen across all regions. So, all regions stepping forward.

And my final question is, I know it's not long since the last set of results. I'd just be interested in how your thoughts have evolved over the last month or so to how you get to the improvement in profitability this year, given the conflict is going on a bit longer? So, do you think you're having to work a bit harder on OpEx this year than perhaps you previously thought?

I mean, we set the year out, as you say, it's about 6 weeks since we last spoke. So, I mean, a lot has happened over that time. But we set the year with a broad top line range from minus 4% to plus 4% and are confident that within those bookends, we have plans to be able to deliver the profitability improvements that we've set out in the guidance.

Obviously, the longer that the wider macro impacts last, et cetera, we need to be mindful overall around OpEx, CapEx. But as you can imagine, we're making very conscious decisions on a day-to-day basis with regards to intake, with regards to CapEx, with regards to headcount, et cetera. So as we stand at the moment within the range that we feel -- still feel comfortable with, we're committed to that improvement in profitability.

Our next question is coming from Anne Critchlow of Berenberg.

I've got 3 questions, if I may. So the first one is on current trading because last time you spoke to us, I think, at the beginning of March, you did mention a weaker consumer in January and February compared to Q4 in Australia and Brazil. So, I just wondered if that had actually weakened further since you last spoke to us due to any impacts on consumer sentiment given the Iran conflict.

And then the second question is on average order value, that 5% growth year-on-year. Just wondered what the drivers were behind that, whether it's like-for-like inflation or not?

And then the third question is on the gross margin. So, just wondered what the drivers were behind the gross margin increase in LatAm and Southeast Asia? So was it mix or whatever was going on there?

So, let me take all of those in order. So current trading, I mean, Q1 has played out in line with our expectations and in line with the trade that we described when we did our full-year results at the start of March. And we're really seeing similar trends at the group level as in April. So, we're not seeing anything particularly worse at a group level than the Q1. So, we're broadly in those similar trends. That remains in line with the way in which we've described guidance that overall, we expect a softer half 1 overall for the year.

Your second point was on average order value. I think with regards to what's driving that increase, so we are seeing the 5% improve or increase we're seeing, about half of it coming from wider inflation and then the rest really around country mix. So as the average order value, which is higher in Australia grows as well, proportionately, that's driving the overall group average order up as well. So, I broadly look at it in 2 buckets, overall inflation and then country mix driven by Australia.

And then lastly, Anne, your question on gross margin. I think specifically, it was what was driving some of the increases in LatAm and then in Southeast Asia. So overall, retail margins remained broadly stable across the board, a little bit of movement within each region. Within LatAm, we've seen a larger participation in marketplace. So, that's really driven the overall increase within LatAm. And the main driver in Southeast Asia is Platform Services. So, we've seen a higher participation in Platform Services revenue in the quarter, which has driven the increase there.

As we have no further audio questions at this time, I'd like to turn the call over to Saori for any questions submitted through webcast.

So, a question from Christian at NuWays. Are you seeing any first impact from the loyalty program in ANZ?

Yes. Thanks, Christian. I'm happy to take that. So as you, I think know, we launched the iconic Front Row in October last year. So, we're still probably 6 months into it. So far, customers are earning ICONS and rewards, and the program is meeting our expectations around the level of engagement, the level of people using those ICONS and rewards and also the cost to us as a business. We are also seeing the improvement in purchase frequency and loyalty that we expected.

I think overall, we're also very conscious that it does take time to really embed this in and make sure that all of our customers understand it. Clearly, the high-frequency, high-value customers understand it more quickly given the very frequent engagement they have with the platform, but then we obviously have a large number of customers that show only a few times a year. And so for those, they will take a bit longer to really understand the dynamics.

And so we are working on continued communication and engagement with customers to really make sure they all understand the mechanics of the program, the benefits of the program and then expect that to continue to drive further improvements in the customer behavior. And we will also continue to look at ways of how we increase the value of the program to the customer. But overall, very much on track and very pleased with the launch and the rollout of that program last year.

Just going back to the live questions. I think Anne has another one. Maybe disconnected. If that's the case, we have no further questions.

I'm sorry to interrupt, ma'am. We just have Anne Critchlow, has just signaled again for an audio question. If it's okay, we'll take that question now. Is that okay? Here we go.

Yes, please.

So, I've got 2 questions, sort of thematic ones. The first one on AI because last time you said that about a low single-digit percentage of traffic was coming from AI. So, just wondered if that's building fast or not.

And then the second one is on the idea of software-as-a-service because you've got proprietary tech and you've got fulfilled by. So, I'm just wondering if you've ever considered doing a Zalando or NEXT basically and putting them together to offer other brands and retailers help with website tech perhaps or software generally in addition to logistics?

Yes. Thanks, Anne. I'll take those 2. So on AI and specifically the traffic, I think what you're referring to is the traffic volume we're getting from the Geminis, ChatGPTs, Claudes, et cetera, of the world. That remains very, very small. But we do obviously see it growing, and it is growing at a good percentage, but not in a way that we think that there is a fast path to that becoming a very important traffic source. That's the current status. Obviously, there's a lot of things around commerce protocols and other things on the technology side evolving there.

Please keep in mind also that very often a lot of these, let's say, more headline grabbing rollouts, they start in the U.S. They eventually come to Europe, and it takes a lot longer until they land in all of our markets. And so we can often see quite a lot of these kind of innovations that are driven by, let's say, the Western technology companies in the real world in markets like the U.S., U.K. or other European markets before they come to us. What we are very focused on is making sure that we are showing up as an important retail platform on all of the AI tools. So, when people look for fashion advice, look for products, et cetera, that we have the same strong visibility that we enjoy on the traditional search engines., So that's on the AI traffic side.

On the SaaS question, very good question. Thank you. We are very focused on enabling our Marketplace and Platform Services for brand partners. There's a lot of opportunity to grow this, in particular, Fulfilled by GFG and the marketing, and we're focusing most of the tech investments on those platforms. We are enabling brands to sell on other marketplaces in Southeast Asia through our single-stop solution. And so in that case, we do provide technology that lets the brands sell on their brand.com, not the front end, but basically the back end of that in terms of the fulfillment, but also integrates them into our ZALORA platform as well as into other marketplaces if they want to sell on those.

We have made a quite conscious decision not to go into the business of e-commerce stores or front ends or those types of things because we don't think we have a particular competence to do that well for brand.coms. And also, please remember that most of the global brands make those technology choices in their largest markets. And for most of the global brands, obviously, our markets are not the largest. And so they are often more follower markets when it comes to technology choices. And therefore, we've looked at this opportunity in the past, but never concluded that, that would be a worthwhile investment to make for us.

We have no further audio questions at this time.

Okay. Thank you all for joining today. If you have any further questions, please reach out to the Investor Relations team directly.

Good morning, everyone and welcome to Global Fashion Group's Q4 and Full Year 2025 Results Presentation. I'm Christoph Barchewitz, CEO of GFG and I'm joined today by our CFO, Helen Hickman.

I'll start today with an update on the strategic actions we have executed over the past 3 years, followed by an overview of our 2025 regional performance. Helen will cover results for the group and the outlook. Then we'll open it up for Q&A. To start, I want to briefly remind you of what underpins GFG's long-term potential. We hold leading positions across large fashion and lifestyle markets where online penetration continues to increase over time. We serve these markets with a tailored customer-centric approach that it reflects local needs and we maintain strong relationships with both global and local brands. These partnerships are supported by flexible business models that help brands grow in complex markets. We also have a unique operational footprint, supported by proprietary technology and scalable infrastructure, which enables us to deliver a fashion-specific customer experience efficiently at scale.

With these foundations in place, we are on track to deliver profitable growth and positive cash flow across our markets. And we do so from a position of financial strength with a healthy balance sheet and a substantial net cash position. This long-term potential is underpinned by the work we have done to reset and strengthen the business. Looking back to 2022, 2 main events have shaped the challenges our business has had to navigate over the past 3 years. One, a difficult post-COVID macroeconomic and fashion e-commerce environment that significantly depressed consumer demand and led to a decline in our active customer base and order volumes; and two, the sale of our CIS business due to the Russian invasion of Ukraine, which significantly reduced the scale and profit of the group. This initiated a reset period for our business.

We have successfully actioned this since 2023 by evolving our business model, strengthening our customer flywheel and driving cost efficiency. On business model evolution, we strengthened our brand partnerships and rationalized our offering. We took a prudent approach to inventory. And since the end of 2022, we reduced inventory levels by 43% on a constant currency basis. We curated our assortment by reducing the brand count by 26% as a result of removing long-tail brands from our platforms. On customer flywheel, we dedicated our attention to our high-value customers and increased gross profit per active customer by 14% on a constant currency basis. We delivered this step-up all while applying discipline with marketing costs remaining stable at 7% of NMV each year. Finally, on cost efficiency, we reduced and simplified everywhere across the group. From 2023 to 2025, we reduced our total cost base by EUR 106 million, a 16% reduction in constant currency and released EUR 88 million from working capital.

So now let's look at how this reset period has translated into our financial results. As mentioned, we've been operating in a period of demand downturn, which resulted in EUR 168 million reduction in NMV from 2023 to 2025. FX devaluation against the euro accounted for about half of this reduction. Despite facing a lower top line, we substantially improved profitability and cash flow. Adjusted EBITDA improved by EUR 62 million since 2023. Normalized free cash flow improved by EUR 31 million since 2023. Let's now turn to our regional segment results. By executing with discipline across all aspects of our business, we have significantly strengthened our financial operating model. As a result, we delivered a positive adjusted EBITDA for all 3 regions and the group in 2025. This milestone was driven by a return to NMV growth for the full year in our 2 largest regions, ANZ and LATAM. While our reset actions have built stronger foundations group-wide, each region is currently at a different phase in their journey to profitable growth.

Starting with ANZ, which now represents half of the group's NMV. ANZ has completed its transition and is now operating as our profitable growth engine. In 2025, ANZ's NMV grew 6% year-over-year in constant currency. Profitability was strong at EUR 26 million in adjusted EBITDA, marking a EUR 28 million improvement compared to 2023. ANZ has strong cash conversion and delivered a positive normalized free cash flow. LATAM represents 30% of group NMV and also delivered 6% NMV growth in 2025. LATAM has achieved a significant turnaround moving from a declining business with negative EUR 22 million adjusted EBITDA in 2023 to a positive EUR 3 million in 2025. Cash flow has improved materially as well with LATAM now near normalized free cash flow breakeven. As the initiatives we put in place continue to flow through, we expect LATAM to move toward the end of its reset phase and into a more profitable growth position.

SEA is our smallest region at 21% of group NMV and continues to face a decline with NMV down 15% in 2025. Despite this backdrop and thanks to its strong cost discipline, SEA has remained resilient on profitability, delivering a positive EUR 3 million adjusted EBITDA in 2025 and was also near breakeven on normalized free cash flow. SEA's financial resilience is also partly attributable to its high Marketplace share and sizable Platform Services business. Let's look at that next. Evolving toward a platform-led model by scaling our Marketplace and Platform Services is a core part of our strategy. In 2025, Marketplace represented 39% of group NMV and Platform Services represented 4% of group revenue. Through our reset phase, all regions contributed to our progression toward our group goals of 45% Marketplace share and more than 5% Platform Services share.

SEA is the most advanced in this evolution and is also the only region so far to offer a solution where we use a single stock pool to fulfill orders across multiple brand partner channels. This service is the main driver behind SEA's step-up in Platform Services revenue from 2023 to 2025. In ANZ and LATAM, we expect Marketplace to continue expanding, particularly following the rollout of Fulfilled by in 2023 and 2024, respectively. Additionally, our growing marketing platform service is expanding across these regions, serving as another key driver of profitability. Let's now take a closer look at ANZ's results. 2025 marked a clear step up forward -- step forward for ANZ as the region returned to growth and delivered stronger profitability. NMV and revenue steadily grew each quarter, including Q4 with NMV up 6% and revenue up 3% on a constant currency basis. Active customers also closed the year up 4% year-on-year. ANZ achieved a record full year gross margin of 49%, up 2 percentage points from 2024 and we held at the same level in Q4.

This flowed through to adjusted EBITDA margin, which expanded 3 percentage points to 7%. ANZ's strong performance has been driven by 3 key areas: a scaling platform mix, more efficient infrastructure and stronger customer engagement. Looking at platform mix. We are strengthening our fashion proposition while shifting to a more inventory-light model. In 2025, more than 20% of NMV came from our own brands and exclusive partnerships, helping us differentiate ourselves. At the same time, our brand partners are participating in our partner offerings. Marketplace now makes up 36% of NMV and 115 brands are live on Fulfilled by since we launched it in 2023. This gives customers more choice and gives brands an efficient and reliable way to grow with us.

Additionally, our marketing services revenue is up 36% since 2023, indicative of another great value add for our brand partners. The second major driver is our more efficient infrastructure. With our new order and warehouse management system and expanded partnership with Australia Post, we've had a delivery upgrade. About half of all orders are now delivered in under 48 hours across Australia and New Zealand. In Q4 alone, delivery speed in major cities improved by 10% year-over-year. In Australia, we are the only fashion player to have rolled out Saturday standard delivery at scale for East Coast metro areas. And in New Zealand, we have achieved a meaningful improvement by reducing delivery times by 15% and introducing express next day service for key metro areas.

These operational wins support our profitable growth momentum and our third driver, customer engagement. Our Got You Looking masterbrand campaign continues to demonstrate strong results. Amongst the campaign's target audience, unprompted awareness is up 70%, customer trust has increased 62% and 57% of viewers take action after seeing our ads, meaning more visits to the ICONIC app and site. To further strengthen the ICONIC's customer flywheel, we launched the Front Row loyalty program in October last year. This program was co-designed with input from 50,000 customers and is built around ICONS, the loyalty currency members earn when they shop to unlock rewards, special offers and exclusive experiences.

Members progress through 4 status levels with higher levels unlocking greater benefits and faster earning. The Front Row is helping us recognize and retain our highest value customers, which deepens loyalty and drives higher order frequency. This supports ANZ's growth agenda, which also includes greater geographic penetration and increased cross-category shopping. In parallel, we continue to drive profitability through scale, ongoing fulfillment optimization and leveraging technology and AI. Turning now to LATAM. 2025 was a year of continued recovery. NMV returned to growth for the full year and LATAM became adjusted EBITDA profitable. We did see LATAM's momentum moderate in the second half. This was partly due to slightly stronger year-over-year comparators and partly due to a more challenging market and competitive environment.

Though active customers ended 2025 down 2% year-on-year, LATAM saw higher order frequency and average order value, which reflected our focus on higher-value customers. LATAM's margin profile strengthened with gross margin improving to 44%, up 1 percentage point year-on-year and adjusted EBITDA reaching 1%, up 5 percentage points. Next, we'll cover the strategic drivers for LATAM that have laid the foundation for profitable growth. First, we are changing how we engage with our customers. We have started to refresh our cash back program to increase customer loyalty. We're promoting Club Dafiti, which is where shoppers can access personalized rewards and exclusive promotions. It's highly effective in keeping our high-value customers engaged and coming back to Dafiti. Second, we are scaling our brand partner proposition. A major piece of this is our Fulfilled by offering, which launched in 2024 and now has over 60 brand partners live.

We saw 4x more revenue from Fulfilled by in 2025. It is a true win-win where brands leverage our fulfillment network to grow while we monetize our automated fulfillment center capacity. Our partner services go beyond logistics. We have been growing our marketing services with revenue up 42% in 2025 and our revenue per session doubling in Q4. 2025, we also rolled out financing to support our partners' working capital needs while simultaneously optimizing our cash flows. Finally, we are deploying AI-generated product imagery at scale. This reduces our reliance on traditional studio photos and gets products online much faster. This new workflow is about 30% faster. And as we scale it, we expect it to cut production costs by around 2/3. All of these initiatives are building a more resilient and profitable foundation for us in LATAM.

Let's now turn to SEA. In 2025, we continue to see the rate of decline steadily ease even as the top line remain challenging. By Q4, NMV was down 10% year-on-year compared to 15% in Q3. SEA's revenue declined less than NMV for both Q4 and the full year. This was a result of improved marketplace commissions and stronger contribution from platform services. Our SEA business is now operating with a more favorable margin mix and leaner cost base. As we work through our initiatives to stabilize demand, SEA is well positioned to translate any return to growth into stronger profitability. To drive stabilization, we are focusing on sharpening our customer proposition while driving simplification and efficiency to progress toward profitable growth. This includes focusing on our top-performing brand partners. In 2025, more than 60% of SEA's NMV came from our top 30 brands.

To support this, we have refined our assortment. In retail, we have reduced our intake by 28% from 20% fewer brands since 2023. On our Marketplace, we have reduced long-tail complexity, resulting in a 20% increase in NMV per brand compared to 2023. Alongside our assortment strategy, platform services continue to scale and be an important growth lever for SEA. Our single-stop solution, which is part of our operations services has generated 48% higher revenue in 2025 versus 2023 on a constant currency basis as it enables sales for brand.com and other channels in 2025. An exciting recent development in Q1 is the launch of our Got You Looking in SEA.

We took our learnings from ANZ and adapted the masterbrand for ZALORA. Got You Looking is now live across all of our channels. It is designed to demand attention and improve brand preference, drive higher quality traffic and ultimately rebuild a healthier, more profitable customer base over time. Finally, we are continuously driving simplification and efficiency across the business. We successfully reduced SEA's total cost base by 19% on a constant currency basis and released EUR 29 million in working capital since 2023. Altogether, these actions give us a solid foundation in SEA as we progress towards sustainable, profitable growth.

I will now hand it over to Helen to take you through the group results and outlook.

Thank you, Christoph and good morning, everyone. I'll start with customers. At the end of 2025, our active customer base was down 4% year-on-year as we continue to prioritize profitable customer acquisition, engagement and reactivation. This strategy includes engagement initiatives that encourage cross-category shopping, app usage and loyalty program participation. These initiatives in ANZ and LATAM have successfully offset headwinds in SEA to result in a 2.3% increase in group order frequency. In 2025, we generated over EUR 1 billion in NMV, with Q4, our key trading season contributing about 1/3 of the full year. Whilst our full year and Q4 NMV were broadly stable on a constant currency basis, our reported figures were significantly impacted by FX headwinds. Specifically, the Australian dollar and Brazilian real were weak against the euro in '25, both down about 7% year-on-year.

With Australia and Brazil being our 2 largest markets, this translated to a lower euro reported value for our NMV and revenue. Our average order value increased in constant currency terms for both the full year 2025 and Q4, offsetting lower volumes in SEA, which drove the group year-on-year decline. The order value increase was driven by inflation, along with a combination of a higher price point assortment and regional mix. Now turning to revenue and margins. We increased our adjusted EBITDA by EUR 27 million against the backdrop of broadly flat constant currency revenue to turn the group full year positive for the first time within our current footprint. Now let's take a closer look at the 2 contributors to this milestone, gross margin improvement and ongoing cost and efficiency actions. Starting first with gross margin improvements. Over our reset period, we have successfully reduced our overall inventory position by 43% on a constant currency basis from the end of 2022 to the end of 2025.

We've achieved a healthier inventory profile by reducing discount through a more relevant assortment, increasing inventory turnover and decreasing our share of aged inventory by 10 percentage points. This, combined with a steady increase in Marketplace and Platform Services share has resulted in a 4 percentage point increase in gross margin, rising from 42% in 2023 to 46% in 2025. The second key contributor to the significantly improved adjusted EBITDA position is ongoing cost discipline. Our cost efficiency programs have been a crucial part of our business reset and remain a core part of our strategy going forward. From 2023 to 2025, we've reduced our total cost base by EUR 106 million, representing a 16% reduction on a constant currency basis. This cost reduction has more than doubled the pace of our 7% NMV decline over the same time period. The largest saving came from fulfillment. 2/3 of the reduction was as a result of our own initiatives where we captured efficiencies, including from automation and the order warehouse management system, OWMS, that we implemented in ANZ last year.

Another 20% was due to reduced volumes and the remainder related to external factors such as FX. We also delivered significant savings across tech and admin. We continue to streamline our organizational structure along with ongoing reviews and negotiations of all our non-people costs. Across all cost lines, we've reduced our headcount by over 40% over the past 3 years. Together, our 4 percentage point gross margin expansion and EUR 106 million cost reduction have enabled us to reach our milestone of becoming adjusted EBITDA profitable. Turning to our cash. Our normalized free cash flow improvement in 2025 was primarily driven by the EUR 27 million increase in adjusted EBITDA. Lease costs remained broadly stable year-on-year. Working capital moved towards neutral as we cycle the one-off timing benefits seen in 2024. We delivered a CapEx reduction of EUR 16 million following the completion of the OWS (sic) [ OWMS ] investment and ongoing rationalization of our broader technology spend.

After adjusting for operational tax and interest, we had a normalized free cash outflow of EUR 32 million, representing a EUR 10 million improvement compared to 2024. In Q4, we generated EUR 46 million of normalized free cash inflow. As a reminder, our cash flow cycle is highly seasonal, generating significant cash flows in Q4, our key trading season and experiencing significant outflows in quarter 1. We closed 2025 with a strong liquidity position of EUR 185 million in pro forma cash and EUR 143 million in pro forma net cash. Pro forma net cash deducts our outstanding EUR 41 million convertible bond liability and other small levels of third-party borrowing. Throughout 2025, we strengthened our balance sheet by repurchasing EUR 13.8 million in aggregate principal amount of our convertible bond, bringing our total repurchase volume at a discount to 89% of the original issue.

We have 2 significant funding events taking effect in quarter 1, which I'd like to overlay against our closing December 2025 cash position. Firstly, following bondholders exercising their right to redeem at par on the 16th of March, we will redeem EUR 31.8 million, which is about 3/4 of our outstanding convertible bond. This will leave EUR 9.1 million of the bond outstanding at an attractive terms of a 1.25% interest rate maturing in March 2028. After this redemption, based on the December 2025 balance, this will leave us with EUR 153 million in pro forma cash. Secondly, we increased our funding flexibility through a new credit line. In December, our ANZ business signed a EUR 17 million revolving credit facility to efficiently manage our seasonal working capital needs. When combined with our undrawn funds from our facility with HSBC, we have EUR 23 million in additional available funding.

This brings our total adjusted available liquidity position for year-end 2025 to EUR 176 million. This represents a strong financial foundation and significant headroom we have to support our next phase. We're also pleased to announce this morning the launch of a EUR 3 million share buyback program. The repurchased shares are expected to be used to partially meet our ongoing share-based employee remuneration scheme. Now let's look forward to our outlook, starting with guidance for 2026. For NMV, we expect a range of negative 4% to positive 4% on a constant currency basis. As at December 2025 closing effect rates, this translates to EUR 0.99 billion to EUR 1.07 billion. The global macroeconomic environment remains highly volatile, compounded by ongoing geopolitical tensions with distinct macroeconomic factors impacting demand across the 9 countries where we operate.

Specifically, our 2 largest markets face near-term headwinds. In Australia, weak consumer sentiment is driven by recent interest rate increases and persistent inflation. Whilst in Brazil, higher interest rates remain and the upcoming general election and World Cup add additional volatility considerations. Our NMV guidance reflects softer current trading and half 1 expectations as well as different half 2 trajectories to account for these dynamics. For adjusted EBITDA, we expect EUR 15 million to EUR 25 million, again at closing December FX rates, building on the EUR 9 million we delivered in 2025. CapEx and leases are expected to be broadly in line with 2025 levels. For working capital, we expect a slightly higher inflow than we delivered in 2025. Our strategy to deliver profitable growth remains unchanged and is built on 3 key pillars. Firstly, business model evolution. We continue to create our assortment across retail and marketplace while scaling our brand partner offerings through our platform, including expanding Operations by, Fulfilled by and Marketing by GFG.

This platform mix shift continues to support our evolving business profile towards a gross margin in excess of 47%, 45% Marketplace share and 5% Platform Services share, whilst maintaining broadly neutral working capital. Secondly, the customer flywheel. We are continuously refining our customer strategy with a clear focus on quality and profitability. This means disciplined engagement initiatives, stronger adoption of our loyalty programs and using AI across the entire customer journey. These actions will drive order frequency growth and improve customer economics, whilst keeping marketing investment broadly stable at 7% of NMV. Thirdly, cost efficiency. We will remain focused on cost and capital discipline.

As we grow, we create operating leverage from our existing assets, particularly our fulfillment network without requiring significant incremental investment, which keeps CapEx and lease costs broadly stable. Technology and AI are embedded in our operations, helping us execute faster, improve customer experience and remain resilient through market volatility. In summary, applying these 3 pillars through our research phase has established a stronger financial foundation. We will continue to execute this strategy to deliver NMV growth, adjusted EBITDA margin expansion and normalized free cash flow breakeven.

We will now open the call to your questions. [Operator Instructions]

[Operator Instructions] Our first question is from Anne Critchlow from Berenberg.

I've got 3 to start us off, if that's okay. First of all, please, could you comment on how much weaker trading was in January and February compared to Q4? And then secondly, if you could just comment on the behavior of customers in the last few days. I think in the past, we've seen a sudden drop-off in sales around sort of big global crises and then a return to normal. But just wondering if you're seeing the same pattern. And then also thirdly, on the gross margin outlook, the 30 basis points improvement in Q4 was a bit lower than we've seen looking backwards. Just wondered if that's the sort of trajectory you're looking at perhaps over the year ahead and how quickly you might reach your 47% gross margin target?

Anne, I'll take the first one, pass to Christoph for the second and then come back to you, Anne, on the gross margin question. So as I mentioned, we have seen some softer trading in January and February compared to where we were in Q4. We've seen sort of a declining customer sentiment in Brazil and Australia at the start of the year. And also, we've also had the classic timing impact of some key seasonal events. So whilst the Q4 as a whole, there will be less of an impact within the months, we've seen a shifting of Chinese New Year and Carnival in Brazil, which also has an impact on January and February to date.

Yes. And just over the last few days, I guess you're referencing, obviously, the headlines and events in the Middle East. We haven't seen any substantial deterioration beyond what Helen just said. And also the year-on-year comparisons are impacted by the timing. So there's a bit of difficulty in really parsing through day-by-day numbers but there is no material drop off or something that we have seen in the context of past events around COVID or other major moments. So that is not happening.

And then moving on to gross margin. So yes, obviously, our Q4 year-on-year improvement was softer than the full year as a whole, so the full year stepping forward 1.5 percentage points. We very much continue to expect gross margin expansion into 2026, albeit probably slightly lighter than the full year that we saw in 2025. And also I sort of caution that, that won't necessarily be equal improvements every quarter. But again, our strategy continues and we expect to see those improvements driven by increased marketplace and platform services participation and also continued focus around our retail and our assortment.

Our next question is from Russell Pointon from Edison.

Congratulations on the results. Three questions, if that's okay. First of all, you referenced the active customer declines in LATAM in Q4 and that's due to competitor activity. Could you just talk a bit more about that? Was it focused across certain categories? Or was it fairly broad-based? And my second question is for LATAM and Southeast Asia, you're highlighting that you're near cash flow breakeven. I appreciate that you're expecting EBITDA to improve in those regions over time. But are there other levers that can help you to generate more positive free cash flow? I assume there's still something to go on inventory. And my third question is finally just in terms of the medium-term guidance, it isn't in the presentations deck. So can you just reconfirm that the medium-term targets of 6% EBITDA margin and breakeven free cash flow? And perhaps looking back versus 12 months ago, how are you tracking versus what you probably expected 12 months ago?

Yes. Thanks, Russell. Maybe I'll start here and then Helen can build on that. So on the active customer, general comment, I would say is, it's obviously important to recognize, #1, it's an LTM number. So it's always a bit of a lagging indicator. And we've obviously seen that when you look at, for example, the ANZ evolution over time. And as we're going through, for example, the turnaround in Southeast Asia, we would expect to have NMV lead the recovery before it comes fully through in the active customer, partially because of the LTM and partially because of our focus on higher-value customers and the very disciplined approach around customer activation, both new acquisition and reactivation.

So from a LATAM perspective, it is a function of our approach and the competitive environment and us being disciplined in protecting both the gross margin and the marketing cost at a level that we think is ultimately the optimum from a profitable journey going forward. To answer the second part of your -- or second question around LATAM and Southeast Asia, yes, we're near normalized free cash flow breakeven, which I think clearly indicates we're not doing much on the CapEx side, as you can see from the group number but it's particularly in those 2 regions, it's really a modest investment into technology. We have obviously the leases that go into a normalized free cash flow and we've been releasing a degree of working capital, in particular, in Southeast Asia to counter the decline in the top line. And the working capital will not repeat in that way. We think there's a bit more to go in Southeast Asia on that. We're very optimized in LATAM, if not maybe a little bit light on the working capital.

We will continue to look at all ways of optimizing cash flow but the big driver is really the EBITDA at this point and that's where we want to push in those 2 regions to move higher. And then maybe coming back to the medium-term guidance question around margin. We still believe that we need somewhere around that 5%, 6% or so level of adjusted EBITDA margin. But I think we've chosen to kind of look at the building blocks slightly differently and really focus on the absolute EBITDA, the stable leases, the stable CapEx and generally neutral working capital, although as Helen said, this year, we do expect a bit of cash inflow from the working capital side. So maybe the nuance here is less driving this off the percentage margin and really more looking at the absolute building blocks into moving towards cash flow -- normalized free cash flow breakeven. Hope that helps.

[Operator Instructions] And we have a follow-up question from Anne Critchlow from Berenberg.

So I've got 3 follow-ups, if that's all right. And firstly and what steps did you take to focus on higher-value customers? I'm just wondering what that looks like in practical terms. And then secondly, just an update on your AI strategy and the extent to which you're allowing bots on to your site and maybe supporting them to find information. I'd also be really interested to hear your thoughts on how marketplaces can remain relevant in an AI world, lots of discussion around that topic recently. And then finally, just on Southeast Asia. Just wondering what sort of time frame you're thinking about to reach profitability?

So I'll take the first 2 and then let Helen answer the SEA profitability question. So on the higher-value customers, what it really means is, like every business, we have a very broad range of customer base from people who shop with us literally every other week, very high frequency, very high loyalty, buy both full price and discounted during campaigns and have been with us for many, many years. We're very focused on retaining those customers and giving them value at every part of the journey. And the Front Row program in Australia is a way of doing that in a very tangible way. We have our ZALORA VIP program in Southeast Asia. We're working through a number of initiatives in LATAM around this as well. So this is really focusing on, let's say, the top 25% of the customer base where most of the value comes from in NMV but more importantly, a very, very large share of our profit is really generated. So that's one end of the initiatives.

And the other end of the initiatives is to really look at the customers that are not profitable for us and within that to identify how we can either move them into a profitable position and levers there are around shipping fees, they're around the marketing channels that we use. They're around how we trigger conversion from first-time buyers to second and third purchase because we know that once we have 3 purchases, our loyalty forecast is very, very strong. And so it is really both ends of the distribution, if you want, where we're applying. And I think what we're not saying here is we're only going to focus on higher-value customers. We recognize there will always be a distribution but we're trying to tilt the distribution upwards. And as you can see, for example, from the gross margin per active customer improvement of 14%, this is also about moving those numbers forward.

So there's a marketing side to this and a marketing efficiency side to this whole strategy but there's also a gross margin per active customer element to this and making sure that, in particular, our discounts are targeted at customers that are loyal or can become loyal versus just churning through and taking advantage of a deeply discounted product but are not actually staying on the platform. So I hope that gives you a bit of color around our customer strategy. The AI topic is definitely very, very high up on the agenda. Our strategy so far is to make sure that our visibility across all of the AI players is strong. We're digitally native. We have 15 years of history of optimizing for that visibility. We have a very large assortment. We have a very well-known brand. And in all of the searches that you can do on those platforms, we come up quite well when people are looking for fashion products, categories, specific trends, those types of things, we are doing already quite well but we're continuing to focus on that and making sure that we're ready for an increase in the traffic coming from those players.

So far, this is a very low single-digit percentage across all of our markets. So we're still very early in actually seeing a change in traffic there in our category. How are we addressing the question around the role of platforms in an AI world? I think we generally believe that we are an AI winner, not an AI loser. And obviously, there's a lot of debate in the investor community around that. But we see ourselves as an AI winner. Why is that? #1, because we're digitally native and technology enabled. And so we have a 15-year history of adapting to technology, deploying new technology for the benefit of our brand partners and customers. And we are doing that currently. We've been doing that over the last couple of years. So this is our natural, let's say, playing field. #2, we think that we have always seen players up the funnel that are playing a role in customers coming to our platform. And frankly, this was a fairly concentrated universe of basically 2, 3 companies driving this in all of our markets.

So to some degree, more competition in that, let's say, discovery layer is actually, we think, not a bad thing. And we will -- we are looking very actively at both deeper integration and deeper partnering with those players but also where we want to restrict and make sure that we protect our customer base, our organic traffic, those types of things. It's an evolving topic. We are all over it and very, very focused on it because it is a critical driver of the future. In the end, we're in fashion, which we think is a not purely transactional category but we're browsing, discovery, inspiration, entertainment plays an important role. And we have a very large physical component to delivering to the customer.

And that side, I think, is very far away from being disrupted by any LLMs or other AI players. And so that side of building the assortment and then making it available with fast delivery, with easy returns, with a trusted player is something that we believe is very important. But just to be clear, we [ believe ] both the discovery funnel up to the checkout and the post-checkout experience is something that we will continue to own and benefit from the adoption of AI by our customers but also throughout our business.

Helen, you want to cover the SEA question?

Yes. Thanks, Christoph. And in your question, you asked when we think SEA will become profitable. So on an adjusted EBITDA basis, SEA turned profitable this year. So it stepped forward close to EUR 5.5 million year-on-year despite the full year NMV decline of 15%. So that's sort of a two-pronged approach around gross margin accretion and then also a disciplined focus around cost. We very much go into 2026 with that same approach, focusing around how we improve our gross margin within the region, also maintain a strong focus around cost discipline whilst we then work very much to turn the rate of decline in the region and to slow that and to ultimately move to growth within the region.

Hopefully, that helps.

That does. And sorry, a quick follow-up on that. Could you comment also on free cash flow outlook for Southeast Asia?

Yes. So like all of our regions, our focus very much is to continue to improve their cash position predominantly through improved sustainable profit. So the way Christoph, I think described to an earlier question with the overall structure, it's very much focused around how we improve profit whilst we maintain a disciplined level around CapEx, leases and a slightly favorable working capital position. SEA fits very much in that same framework as we see the evolution of the group.

It appears there are currently no further questions over the phone. With this, I would like to hand over for any webcast questions.

So we have a few questions about SEA, specifically, at what point do you expect the SEA top line to stabilize? And what is the competitive strategy against intensifying regional players as well as when do you expect the decline in customer numbers to turn around? So we'll start there.

Yes. So it's obviously hard to predict the timing. But I think from a NMV stabilization, we're looking at it sequentially. As you heard earlier, we have improved from the minus 15% in Q3 to the minus 10% in Q4 and that was clean in terms of the like-for-likes, in terms of the phasing. We now have obviously Q1 in which we have quite a few changes, like Helen mentioned around the real and the Chinese New Year seasonality. And so there's a bit of differences there but we are looking at it really from that perspective. We're planning conservatively for the year to make sure that we are not overstocked. But we do think that we are moving gradually towards a positive territory but that's definitely still a few quarters away given that we're coming from minus 10% in Q4.

The active customer number will be lagging and it's also impacted by us focusing on the higher-value customers. So what we would expect is that you see improvements in NMV first and then the active customers kind of following that eventually but instead really driving order frequency and average order value as a way of returning to NMV growth. Competitive strategy is very much focused on our assortment differentiation. So the most relevant brands, driving exclusivity within the brands, so having access to segmented product, brands that are only available on our platform and the dot-com.

We also have obviously differentiated experience on the app, especially relative to the general merchandise platforms, which are the main online competitors. And our overall customer engagement is obviously very fashion-centric. The Got You Looking campaign is really stressing that point of differentiation by really being about fashion, style in all aspects of life and about the emotional part of our product category, not focused on price or delivery promise or those types of more hygiene factors that's really dialing up the fashion credibility as a platform and that's a big part of our turnaround strategy here.

Next, we have a few questions on costs. One for marketing. How much of your net cash position will be reinvested into marketing to reverse the declining trend in active customers? Overall, where do you expect to see cost reductions over the next year? And then also, could you address central costs? Do you expect this to stay flat? Or is there a specific plan to scale that down? And finally, on inventory, where do you expect to see these levels overall, those are the cost areas to cover?

Okay. Thank you. So let's start with marketing. So we expect to see our marketing percentage of NMV to stay broadly stable at around 7%, which is a trend that we've seen for the past few years. Our focus very much is in investing in marketing with regards focusing on loyalty and profitable -- and attracting our profitable customer base. I think the second question was more about our general overall cost focus and we are expecting to see cost savings into 2026. The answer to that is very much yes, actually broadly sort of an initiatives level. So proactive things that we are doing at sort of at a similar level to that, that we've seen in 2025. Areas of focus continue to be fulfillment, which is a large cost base but we feel there's more efficiencies within the overall fulfillment network. We continue to optimize and streamline our corporate organizational structure.

And also, obviously, activities that we implemented towards the back end of 2025 also flow through into an annualization benefit and we'll see the benefit of that coming into 2026. I think there was a specific question with regards our central costs, which are at an adjusted EBITDA level, about EUR 22 million. These consist of both corporate and admin costs, so people and non-people fees but also include our central tech teams of which the majority of the work and focus is supporting our regional platforms. So whilst it's included within our other segments, it's worth noting that they're purely for the benefit of the regional operations. We've seen these costs come down by about 20 -- 10%, sorry, year-on-year and over a 2-year basis, closer to 20%. So the same rigor around organizational structure and nonpeople cost review has been applied to the central costs as it has been, as you'd expect in our regional businesses.

And then lastly, on inventory. So we've seen significant declines in inventory over the past 3 years. We expect that very much to stabilize into the future, especially as we then start to build the top line. So we will have to invest in inventory to build and rebuild an retail NMV. However, our focus very much is around efficient assortment. So how we manage the retail and marketplace mix, how we ensure that we've seen improved turns on our inventory and how we maintain that. And also how we keep our aged inventory at levels that we feel comfortable because, again, we've significantly reduced the proportion of our aged inventory over the last couple of years.

The next question we have is, you say you can double NMV without material additional investment in infrastructure. What does that imply for incremental EBITDA margins? And is that the basis for your medium-term margin ambition?

Yes. So this is definitely one of the key opportunities. I think for anyone who's been following us for a longer time, we've been very clear that we have significant capacity in our infrastructure, especially in LATAM and in Southeast Asia, which we're obviously trying to leverage through growing the top line but also through shifting more to Fulfilled by and in Southeast Asia services for brand partners and sales that are not on our platform. We do expect that when -- if you were to get to the scale that is mentioned in this question, we would be definitely materially more profitable than we are today because the incremental flow-through from that NMV and that volume would help our fixed cost coverage in fulfillment but also in other aspects of the business quite materially.

But equally, as you know from our guidance and the building blocks we've talked about, we are not saying that we need a couple of hundred million euro of incremental NMV to achieve normalized free cash flow. So just want to be very clear about that. We think we're on a good journey. Obviously, if we can get to the upper end of our guidance range this year, we would be closer to that. If we're at the lower end on top line and adjusted EBITDA, we'd be a bit further away from that. So I hope that gives you a bit of color of how we think about the path here.

Next, we have a few questions around 2026 guidance, specifically on ANZ, is customer growth accelerating? And is that underpinning the top end of your guidance range? And then can you elaborate on the different H2 dynamics regarding NMV growth? If January and February are starting somewhat slower, should we be interpreting this as a warning sign for the year?

Thank you. So let's firstly touch on Australia. So yes, we're expecting a continued positive trend in our Australia active customers and this being off the back of our focus around customer engagement. So the continued Got You Looking campaign and then the more recently launched loyalty program, Front Row, that was launched back end of the quarter 4 and that gaining momentum into 2026. With regards guidance and half 2, so our 2 largest markets do face near-term headwinds. So as I mentioned, in Australia, we're seeing weaker customer -- consumer sentiment that was driven by a recent interest rate increase and we're seeing persistent inflation.

And in Brazil, we're seeing -- continue to see high interest rates and also is the uncertainty in the middle to back end of the year of the upcoming general election in Brazil. We've also got a general election in Colombia in May and the World Cup, which adds additional volatility. I would say that -- those scenarios are obviously built into our guidance of today of minus 4% to plus 4%. And obviously, it depends on both those big markets but also our rate of reduction or NMV decline and then this -- the rate of that turnaround in SEA also plays into the ability for us to achieve within that range or the pace with which we have achieved in that range.

We have no further questions on the webcast. So thank you all for joining today. If you have any further questions, please reach out to the Investor Relations team directly.

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 a 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 sloped the rate to active customer decline each quarter. In Q3, active customers declined 2.3% year-over-year to EUR 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 [indiscernible] fulfilled by offering. Average order venue 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 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 rate 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 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. SCA remains challenged and a focus area for us to stabilize and turn around business. All regions delivered year-on-year improvement in rate 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, and it debited from a EUR 7 million improvement in adjusted EBITDA and a EUR 6 million CapEx reduction in part to the completion of our 2024 AWMS project investment. We had EUR 6 million on 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 176 million of pro forma cash and EUR 35 million of pro forma net cash at the end of Q3. Pro forma net cash tax due to outstanding convertible bond liability and other smaller loans. Since the Q3 close, we repurchased EUR 6.7 million more the bond 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 volumes.

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 Instructions] We will now take our first question from Anne Critchlow of Berenberg.

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.

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 confidence in the policy of relating into obviously our busiest trading fees across all of our regions. And our aging profile is broadly the same as we disclosed at the Part 2 results were on our aged inventory and for us, we define over 180 days being about 14% of our total [indiscernible].

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?

So obviously, yes, I think you hit the nail on the head in because, obviously, a lot depends on the coming couple of months with regard to that being our seasonal our seasonal peak. But if we sort of go through the component parts, we obviously are guiding to 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 definitely muted and closer to sort of a breakeven. And then we've also given an indication with regard of what our levers for a broadly constant year-on-year and our CapEx is running at about EUR 15 million. So all of those will then give us constituting parts and or 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, we'll define that.

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?

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 internally technology CapEx, which again makes up the majority of the EUR 15 million this year.

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.

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 this 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 online 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.

That's pretty helpful. So you mentioned the share of marketplace giving you some protection. Does that inform your sort of view in patients in turning this around? And how many years do you think you would give it until you might consider an exit from that region?

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 cost calls that -- from 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 improved in the course of '26 and '27.

Just got 3 more questions, but I wondered if anybody else wanted to have a go.

And we will now take our next question from Russell Pointon of Edison.

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 testing that ANZ is kind of revenue -- the annual revenue growth will decline to? 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?

Yes. So let me take your first question, Russell, with regards to guidance. So would be broadly consistent throughout the year and sort of hitting at that midpoint. So if you think about Q4, we're minus 0.4% and year-to-date, a 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, still 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 fabs data. 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 -- we are seeing trading margin increase predominantly in LatAm and Southeast Asia and LatAm Australia and some of that driven by actually reduced discounts have on a year-on-year basis. This year, this quarter, on 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.

And we'll now take our next questing from Antonio [indiscernible].

Could you provide us a little more color on the main cost drivers of the improvement in adjusted EBITDA, please?

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 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 reviewed all of our tech contracts, so it's really a mixture of efficiency at [indiscernible] cost savings with regards people and structure, all of our G&A contracts, whether that be [indiscernible] general GMM 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 focus.

That's super helpful. I have 2 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?

Yes. Thanks, Antonio. I'll try to address that. So I mean the -- 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 a 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 Indonesia 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 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 a 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 the current season, most event stock, which has not always been the case. So that's the supply side, if you want to 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 IT program and other things to really focus on that customer side of that demand side. So also, I would say the 2 sides of the equation that we're focused on, our operations are very efficient and 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 take 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 on 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 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.

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 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 pounced or even better? What did you see? What were the trends for the quarter?

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 concept 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 low quarter that we we've seen.

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, this loyal, high-value customer base. But we've seen that the, for example, the turnaround efforts, the 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 doing better with this core customer base? Or will it be more on the price side or the offer side?

Yes. Thank you. Great question, actually. So we definitely see an opportunity and a need to reinvest into our brands in South 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, we're still going through clearing a lot of a stock it's probably not polite 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 [indiscernible] campaign in Australia that, that can really make both existing customers for [indiscernible] brands in a new and different way and also bringing 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 we 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 budgets. I saw, 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. .

And we'll now take the follow-up question from Anne Critchlow of Berenberg.

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 down themselves?

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 happen trade on marketplace in Indonesia, we have the distributor trade on marketplace. But for Malaysia, we need to buy the stock. So these have complexities are a big driver of challenges in the region. If you order 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 try to replicate in the market. So we have the ambition of having all stores 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 references. 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, 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 exclusive. We definitely want to do better in how we manage our commercial activity. I hope that this clears some context.

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?

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 through 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 all the regional assortment.

Understood. That's really helpful. I've got a question about social media, but also now identic commerce. So from the 2 channels that, in theory, threaten online aggregators, but also 2 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?

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 the same kind of applies in this new world. So obviously, we're learning, there are 2 things. We're -- 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 the board 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 down to it.

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 in the consumer perspective.

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 nothing that's looking as wide concern.

So second to last question on the competitive environment in various regions, just wondering how that's trending with regard to, say, [indiscernible]. And also perhaps the growing importance of secondhand, how does that affect your markets? And then then any insight into consumer behavior and sentiment generally would be interesting.

So yes, Anne, I'll try to cover that. That's a very broad question. But I think -- so on [indiscernible] 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 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? .

Just if you could give an insight into consumer behavior generally ANZ versus LatAm, for example?

Yes. So ANZ 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 top position around our inventory. We know from some of our competition that they may have a bit more hang on the inventory side and then that obviously drives the pricing behavior. The big campaigns or seasonal sales is just underway at kind of [indiscernible] these days. So we'll see how that kicks out of over the 4, 6 weeks. But generally, I would say the consumer is there, but what 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. So we 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. So 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's 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 note also enter Q2. Colombia is going better or in line with Brazil. So very pleased with that performance in particular.

Very helpful. And then the final question from me is just on fulfilled. 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 buyers largely logistics and really quite low margin. I'm just wondering how that works and also how it's progressing.

Thanks, Anne. So fulfilled buyers 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 packing delivered at the same time. There's also the efficiency with that with regards packaging.

With regard 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 buy to make it much more easy for our connect business and our from partners in Australia and want it on our pipeline in Latin America, it's relatively but again, a growth engine for '26 and beyond.

We have no further questions in queue. I'll now hand over for webcast questions.

So 2 questions from Dan Curtis on the webcast. First, [indiscernible] Brazil, CIDP tax had a big impact on their results as the [indiscernible] and 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 enhance pricing rules and obviously, we're compliant with all taxies.

The next question, how do you see an increase in referral traffic from customers via AI chat box? And if so, do those materially better than traditional SEO traffic?

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 expansion in our app. And we obviously have now early 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, so they may get an e-mail from us that kind of keeps our interest or because the [indiscernible] will go to place is the app. And then obviously, within the app, we want to drive a better and better discovery journey, leveraging an eye 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-end channel relative to some others. But I think it's very early to say. And I think we also can 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 for data. So we're monitoring that fully.

Next we have questions on M&A to summarize, are we planning to pursue any external growth opportunities via AI and what are our debt financing plans?

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 open 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 in 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 Q4. .

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.

Good morning, everyone, and welcome to Global Fashion Group's Q2 2025 Results Presentation. I'm Christoph Barchewitz, CEO of GFG, and I'm joined today by our CFO, Helen Hickman. I will start the group highlights for Q2 and then cover our regional results and key developments. Helen will then take us through the group results and our outlook. After that, we'll open up the call for Q&A.

We've had a successful quarter in the first half of the year, maintaining our top line and improving our profitability, positioning GFG to deliver sustainable future growth. We continue to stabilize NMV, driven by robust double-digit growth within Latin America and strong momentum in ANZ, offset by continued top line declines in SEA. Our top line has been supported by improving customer trends across the group with continued active customer growth in ANZ in the second quarter.

Churn rates have improved across all our regions and in Lat Am and ANZ, new and reactivated customers exceeded churn for the period. Gross margin expansion has continued, primarily supported by retail margin improvements as a result of inventory management and increased marketplace participation. The combination of gross margin growth and continued cost control measures have delivered significant savings, resulting in a material uptick in adjusted EBITDA margin for the quarter.

We delivered a normalized free cash flow breakeven quarter and ended the period with a strong cash balance of $151 million pro forma cash. In the quarter, we delivered net merchandise value of $249 million, decreasing by 0.4% year-over-year on a constant currency basis. Continued efficiency in inventory management led to a fresher assortment, lower retail discount rates, resulting in a stronger retail margin.

This, combined with a strong marketplace performance drove a 2.9 percentage point increase in gross margin to reach 47.7%. Our adjusted EBITDA margin improved by 3.9 percentage points to positive 1.8%, our highest ever Q2 margin, benefiting largely from the gross margin uplift and ongoing cost efficiency program.

We ended Q2 with 7.4 million active customers, down 2.5% year-on-year, marking our fifth consecutive quarter of slowing decline assisted by the growth in our largest market, ANZ. These customers placed 4.1 million orders at an average order frequency of 2.3x.

Next, we have our segment results and business updates. We remain firmly focused on executing our strategic priorities with discipline and we are making good progress across all of them. Our priorities are to provide a best-in-class customer experience being the preferred partner for brands and operating in a way that is positive for both people and the clients.

With that in mind, let's review each region's performance and key achievements in advancing our strategy. You may recall, we shared this chart in our full year results back in March. It depicts the ratio of new and reactivated customers over churn customers since before the COVID period. As a result of ongoing initiatives to retain active customers, reactivate past customers and attract new customers, our overall trends continue to improve, with our customer replacement rate now close to 100%.

Notably, both LATAM and ANZ increased their overall customers in the period, whilst SEA continued to fall. This has been achieved whilst maintaining marketing spend as we remain focused on attracting and reactivating high-value customers and further integrating our marketing and CRM capabilities. While the trend in SEA continues to be challenging, we are confident in our plans to reverse the decline and return the region to growth.

Looking first at LATAM. Q2 performance demonstrated sustained positive momentum on the top line with a 10.2% year-on-year increase, making -- marking the fourth consecutive quarter of NMV growth in the region with both Brazil and Colombia experiencing double-digit growth. Strong retail execution delivered 1.2 percentage points of gross margin improvement year-on-year to 46.7%. In H1, Lat Am's adjusted EBITDA margin improved by 5.3 percentage points year-on-year to negative 1.9%. This improvement was primarily a result of continued actions on fixed costs and a better retail margin.

The decline in active customers slowed to negative 0.3% in Q2, marking the sixth consecutive quarter of an improved trend. This was supported by better customer retention and replacement rate.

Next, let's turn to some specific examples of how we have improved performance in Lat Am. We continue to improve our customer KPIs. New and reactivated customers exceeded churn, which was down in the period due to our focused marketing and commercial efforts to retain and reengage customers.

During this period, we trialed a new CRM communication tool aimed at engaging target customers who downloaded our app within the past week, but have not yet signed in. This initiative focused on boosting first-order conversion rates, resulting in more than a 20% increase in conversion in both Brazil and Colombia. Our Lat Am team has achieved a 15% increase in H1 NMV across our 10 biggest brands. This success was driven by creating collaborative business plans with our largest brand partners, setting shared goals and executing targeted actions to ensure optimal stock availability in our fulfillment center.

We have employed AI to produce marketing campaigns Pioneer during our Valentine's Day event in June. This hybrid approach using human creativity and AI capabilities delivered significant gains in our ability to create campaigns at speed in addition to significantly reducing production costs.

Now moving on to SEA. SEA top line remains challenged due to heightened competition across markets with NMV down 22.5% in Q2 year-on-year, partially impacted by the earlier timing of Ramadan, which fell fully in Q1 in 2025. While the top line declined, gross margin advanced 4.5 percentage points, largely supported by a mix shift to marketplace and platform services and actions to manage excess aged stock. SEA continues to focus on strengthening its overall market position and a number of actions have been taken to turn around performance.

These actions include a transition to a purely function-led management team structure across our 5 markets, the removal of noncore categories and long tail marketplace assortment and move towards a more focused and curated offering in our core categories and company-wide cost reductions. As a result of our strong gross margin improvements and robust cost actions, we have delivered a significant increase in adjusted EBITDA during a period of declining volumes.

In Q2, we delivered a 13% reduction year-over-year in our total cost base. This was largely driven by a series of cost reduction initiatives and to a lesser degree, the volume-driven impact on our cost base, partially offset by inflation. As a result, at the end of Q2, headcount in the region was 22% lower year-on-year.

As part of our plan, we have shortened our fashion and lifestyle offering by supporting our largest brand partners across retail and marketplace and focus on our core categories, apparel, footwear, accessories and sportswear. As part of this process, we are removing SKUs in nonessential categories and the long tail. The turnaround in SEA is well underway and I am pleased to share the appointment of our new CEO for the region.

Felipe Garcia Alvarez brings over 20 years of experience in fashion and consumer industries, having helped fashion e-commerce leadership roles at several major e-commerce organizations. We are confident that his expertise, leadership and vision, will be instrumental as we drive our strategic plan to position the business for long-term success.

We remain committed to improving SEA's performance and continue to look for opportunities to drive efficiencies whilst improving the customer proposition in the region. With our proven track record of successfully transforming our Lat Am business, we are confident in our ability to deliver improved results and achieve profitable growth in SEA.

Now, looking at ANZ. In ANZ, Q2 NMV increased 5.8% year-over-year, driven by high participation in the Vogue and Mother's Day campaigns, enhanced delivery offerings in key cities and the growing strength of our overall platform proposition. Growth in higher-margin categories and the optimization of our aged stock resulted in retail margin improvements have contributed to a 3.5 percentage point increase in overall gross margin, reaching 48% in both the quarter and the first half.

In addition to a gross margin improvement, our continued cost efficiency program drove year-on-year strengthening in our adjusted EBITDA margin, with a 3.7 percentage point increase to 3.2% margin for the first half. Another key highlight in the region has been the 4.3% increase in active customers in Q2. This reflects the strong appeal of the ICONIC's unrivaled retail and marketplace brand portfolio and our ongoing operational improvements.

The continued success of the Got You Looking master brand campaign has also boosted its momentum by increasing customer engagement and awareness. In ANZ, we are continuing to deliver operational improvements. Building on the success of our OWMS implementation, we have expanded delivery capabilities across key urban centers, including reducing delivery time for free standard delivery in Melbourne to 1 to 2 days, positioning the ICONIC as one of the fastest e-commerce retailers delivering to Melbourne.

We have expanded our parcel locker capabilities now offering customers an express delivery option. Our order shift to parcel lockers have grown by 40% year-on-year, demonstrating the strong customer demand for flexible and faster delivery solutions. The region has delivered some excellent campaigns in collaboration with some of our largest brands. Highlights include our outrun your delivery collaboration with Nike and Speedo's Run & Plunge campaign, both of which have driven increased customer engagement with the ICONIC and our partner brands.

For example, the Nike campaign attracted over 1,000 observers and participants, generating nearly 0.5 million organic social impressions. We are differentiating ourselves in the ANZ market by becoming an enabler to the fashion industry. Leveraging our scale, fashion credentials and marketplace platform services.

Our Fulfilled By capabilities are making a big difference for New Balance, we moved their highest volume SKUs to fulfill by the ICONIC in March to accelerate the growth with the rest of the range utilizing drop ship. This allows the ICONIC customer to receive all purchases of items from our warehouse in 1 parcel in a time frame that suits them.

As a result, New Balance experienced a 26% increase in conversion on the FBI assortment. Returns are also simplified. Products come directly back to the ICONIC and we're able to get them back on the shelf quickly, reducing costs for the brand.

Typically, about half of these return products are sold within a week. The New Balance story is a great example of how our platform strategy is strengthening our leading market position and resulting in a continued increase in marketplace share during the period.

GFG continues to advance its platform strategy with marketplace comprising 40% of NMV in H1 '25, and up 1.1 percentage points year-on-year. While the present increase is only moderate, we are still making progress as new brand partners are onboarded and set to scale with our suite of services. Our target remains to increase this to around 45% whilst ensuring we optimize our customer experience and deliver value to our brand partners.

Our share of items Fulfilled By GFG and cross-docking has increased by 2.2 percentage points to 38% of marketplace items shipped. Fulfilled By GFG delivers an enhanced customer experience, add scale to our fulfillment operations while also contributing incremental gross margin to GFG. Platform Services represent 3% of revenue. We continue to advance offerings in this space to grow this revenue stream towards the 5% target.

I'll now hand it over to Helen for the group results and outlook.

Thank you, Christoph. Now let's move on to our group KPIs. The rate of active customer decline has continued to slow with a 2.5% year-on-year decrease in Q2. As mentioned previously, we're seeing stronger customer trends in both ANZ and Lat Am with new and reactivated customers exceeding churn in the quarter. Order frequency remained stable compared to quarter 1 at 2.3x that declined marginally versus last year.

Before going into the detail of our financial metrics, I'd like to take a moment to explain the impact of recent FX movements on our financial KPIs. For the first half of the year, we've experienced FX devaluation in our key markets, notably a 13% devaluation in the Brazilian real and a 5% devaluation in the Australian dollar against the euro. As a result, our reported NMV has been negatively impacted by EUR 30 million in Half 1 and our adjusted EBITDA to a lesser extent EUR 0.4 million.

To mitigate the impact of FX and highlight the operational performance of our business or growth rates presented are on an FX-neutral basis. In the second quarter, NAV was relatively stable with a small 0.4% decline with Marketplace share of group NMV increasing to 39%.

In Half 1, we saw NMV growth on a constant currency basis of 0.4% year-on-year to EUR 476 million, the first Half 1 growth, we have delivered since 2022. During both quarter 2 and Half 1, orders declined by 2.1%, mainly due to reduced traffic. However, this was partially offset by improved conversion rates.

Notably, the rate of order decline has continued to slow from a 16% decline experienced during Half 1 last year. Average order value grew 1.8% year-on-year in Q2 on a constant currency basis, largely driven by price inflation and a favorable category mix shift. Due to the devaluation of the Brazilian real and the Australian dollar against the euro, our AOV is down in absolute year returns versus the prior period.

Now looking at revenue and margins. In Q2, whilst revenue declined 1.2% on a constant currency basis and 0.3% in the first half, gross margin increased 2.9 percentage points year-on-year to 47.7% in quarter 2. This improvement was driven by retail margin expansion to a healthier inventory profile with reduced discounting and lower age stock levels, along with an increased share of marketplace and platform services.

Adjusted EBITDA margin also had a significant uplift improving by 3.9 percentage points year-on-year to reach 1.8%, our first positive second quarter on a like-for-like basis. This development is the result of our continued focus on enhancing gross margin and disciplined cost management across the group. As we move forward, we remain focused on maintaining these improvements and delivering further progress towards our goal of achieving sustainable profitability.

Moving on to costs. Our commitment to continued cost efficiency resulted in a EUR 26 million cost reduction year-over-year in Half 1 '25. This is a 7.8% decrease on a constant currency basis. The majority of the reduction was due to cost and efficiency initiatives. The OWMS integration in ANZ is delivering significant operational benefits.

Additionally, further cost reductions were achieved through targeted actions, primarily from headcount reductions, relocating headcount to lower-cost regions and marketing efficiencies. Regional FX devaluations contributed to approximately 1/3 of the absolute cost base reduction.

These efficiencies have helped offset top line pressures and improved our overall profitability, whilst allowing us to continue to invest in projects that support our long-term growth. We continue to maintain a healthy inventory provision with a key focus on reducing aged stock. The proportion of aged inventory, that being stock held for more than 180 days improved to 15% compared to 20% a year ago.

As we return to top line growth, we'll start to invest further into inventory to support the increased sales. We remain committed to manage this in an efficient way by carefully monitoring sell-through rates and inventory days cover. Thanks to our efforts to improve our inventory management, we successfully reduced our inventory days to a healthy level over the last 3 years. I'd now like to turn our focus on to cash. In the quarter, we broke even on normalized free cash flow.

Whilst this was a similar performance to happen last year, the composition was different. In Q2 '25, the cash flow was driven by adjusted EBITDA profitability of EUR 3 million rather than significant one-off working capital gains, which we saw last year. This makes our cash delivery more robust and sustainable going forward. Our level of leases remained broadly flat year-on-year at EUR 4 million. Whilst lower than last year, we delivered further working capital gains of EUR 6 million in the period.

Our total CapEx reduced significantly to EUR 3 million in the quarter, down year-on-year as we annualize the elevated CapEx investment in '24 driven by the OWMS project. Our 2025 investment is mainly focused on internal technology development. In the first half of the year, our normalized free cash flow was a EUR 62 million outflow. We closed the quarter with a strong liquidity position with EUR 151 million of pro forma cash and EUR 97 million of net pro forma cash as at the end of June. Our net pro forma cash position, which excludes our outstanding convertible bond liability and other smaller loans, has remained broadly flat since quarter 1.

This follows a EUR 7 million discounting bond repurchase during the quarter. We now have EUR 47.6 million of convertible bond liability outstanding and have canceled EUR 257 million of the repurchase bonds. We remain open to opportunities for further buybacks whilst considering our overall cash needs. Before we open the floor to questions, I'd like to reconfirm our full year guidance for 2025 as outlined in March.

We have made strong progress in the first half of the year with positive customer and top line trends, continued gross margin progression and incremental cost savings driving further adjusted EBITDA improvements. It's important to note that the second half of 2025 laps ANZ and Lat Am's improving performance in 2024, creating tougher comparatives.

The second half historically accounts for more than 50% of NMV in the year. And while there remains some volatility and uncertainty, we remain confident in our guidance for full year NMV year-on-year growth of between negative 5% and positive 5% on a constant currency basis.

We expect to see year-on-year adjusted EBITDA improvements in Half 2, carrying on the momentum that we've seen in Half 1. This puts us on track to deliver our full year guidance of adjusted EBITDA breakeven to 2025. Our direction on leases and working capital inflow has not changed since the start of the year.

We're revising our CapEx indication from circa EUR 20 million to circa EUR 15 million primarily due to the timing of our regional investments. The combination of these factors sets us up well to reach our longer-term ambition of achieving positive normalized free cash flow.

We'll now open the call to your questions. If you'd like to submit a written question, please click on the speech bubble at the bottom of the screen.

[Operator Instructions] We'll now take our first question from Anne Critchlow of Berenberg.

I have a number of questions, so I'll ask them one by one. So starting with the time line for Southeast Asia turn around. It's great to see Lat Am and ANZ improving further. Just wondering sort of when we might expect Southeast Asia to turnaround? Is this a kind of multiyear project? And then sort of related to that, as you're cutting the long tail of brands, as you mentioned in the presentation, do you think that will impact sales trends? So we're still likely to see a decline, but could be accompanied by improving profits?

Thanks, Anne. I'll take that one. So I would say we're probably somewhere in the first quarter or 1/3 of the overall turnaround. And it's obviously very hard to predict in terms of when do we see what you're probably looking for, which is positive NMV trend or return to growth, which is ultimately obviously very much our objective. In this initial phase, we are very much focused on laying the foundations for that, resetting the cost base, which we've largely done and also making sure that any revenue or NMV streams that are noncore or not profitable are basically removed, which does have a negative impact on the top line. It is not very sizable.

So you shouldn't think about this as most of this decline is driven by things in terms of categories or assortment or markets that we are no longer focusing on, but it is a contributor to this, and it's probably going to take us until Q2 or so next year to fully lap that. So that, I think, is important to keep in mind. We do think that we are on a path for consistent improvement in profitability and gross margin overall over the next couple of quarters. And then the more tricky question is how can we go from the minus 18% in the first half, and I think you're aware of the Raya Ramadan calendar shifting from Q2 to Q1.

So I think you shouldn't read too much into the Q1, Q2 sequential pretty similar high single digit ultimately, if you normalize for that for the full first half. But our objective is certainly to bring the level of decline down gradually over the next few quarters and then eventually move into positive territory. But we will do this with a very strong focus on profitability and a very disciplined approach around both inventory.

So rather be on the low end of intake and very conservative around this and a very conservative approach to marketing spend as long as we're not seeing the customer flywheel move in the right direction, we are not going to prop up NMV with unhealthy marketing spend. So I hope that's helpful in addressing this one.

That's very helpful. And moving on to the Fulfilled By proposition. Thank you for those extra details in the presentation. Could you talk a little bit about differences in Fulfilled By between the regions? And to what extent you can transfer the success in Fulfilled By at the ICONIC into Lat Am and Southeast Asia?

Yes, sure. So we -- actually, Australia has been the last market to launch Fulfilled By. So we are now having Fulfilled By services in all of our core markets, our major countries, life of Brazil, Australia and also across Southeast Asia. It is basically the same business model everywhere and works very, very similarly. What we're also doing, and I think New Balance is a good example for that is looking at hybrid approaches where part of the assortment is sitting in the Fulfilled By, another part may come from drop shipment or in some cases, we also have brands where part of the assortment is sitting in the retail business, and then we're complementing that with either size refills. So if it's out of stock in the size in retail, it gets replenished from marketplace or the longer tail of the assortment that we don't want to buy in retail sits on the marketplace.

So we're really mixing this to optimize ultimately availability, stock efficiency for both the brand partner and for us. The one call out where there is a difference is that in Southeast Asia, we also operate the Fulfilled By services for sales on brand.com as well as on other platforms. And so we really offer what we call a single stock solution of all inventory for the online channel sitting in one warehouse managed by us. And H&M is a good example as one of our partners in Southeast Asia who are operating in this model with us across most of the markets there.

Great. And then just thinking back to one of the comments you made in the last quarter that you might rely a little bit more on marketplace to meet any sort of additional customer demand and be a little bit more conservative on inventory within retail. Are you still sort of continuing on that trend? And do you think that's an ongoing trend to continue reducing your core inventories within retail, relying a bit more on marketplace?

It's Helen here. Overall, you have seen a constant gradual increase in our marketplace share to all NMV. And as Christoph mentioned in his presentation, whilst in the quarter, we're at 39%, our overall target model is closer to 45%. So based on that, we are looking at how we will increase our marketplace share. But obviously, we need to make sure that, that is done in alignment with the assortment that our customers want and also how it works best also for our brand partners. So as we return out to a period of decline into growth, we will then obviously also want to start investing but cautiously a little bit more back into inventory to be able to support that retail growth. So very much a blend, and we're not stepping away from that sort of NMV participation increasing slightly to closer to 45%.

And then perhaps you could talk a little bit about how the trend was through Q2. I think April was perhaps a bit softer than Q1. You mentioned the shift of Ramadan as well. But if you could comment a bit on the exit rate, please, and maybe current trading, if you're able to.

Yes, definitely. I mean, obviously, there's always differences within months and also within months within regions, depending on some of the seasonality. So we have Valentine's Day in the summer or in our summer in Brazil as an example, but that's not the case across our other regions. So overall, I think -- and especially then you mentioned sort of current trade, we're broadly seeing a similar trend across current trend versus that, that we've reported. So the inter-month volatility isn't significant or concerning. So the sort of trend around growth in our 2 largest markets and then obviously, still the double-digit decline that we've been seeing in SEA is currently still prevailing.

Great. On the subject of tariffs, could you talk a bit about the developments you've seen across consumers, your competitors and suppliers, any shifts there? For example, are you seeing lower consumer confidence due to tariffs or increased competition in the market or better or worse terms from suppliers? Anything to comment on, please?

Yes. Thanks, Anne. We've obviously been following this very closely. I think it's quite hard to tell what the actual impact is in our markets. We haven't seen any dramatic impact on the supply side, which initially was our concern. And there's obviously continuous news flow about this and changes all the time. Certainly, Brazil with some of the headlines there, it is definitely not a confidence boost to the economy there. However, I think I would more describe it more broadly as a sentiment of broader concern about what's happening in the world, tariff being one aspect of that, but just the other geopolitics headline, conflicts, political instability, all those types of things in addition to consumers certainly not feeling great around some of the interest rate environments and inflation, et cetera.

So I would say tariffs probably doesn't make it to the very top of the consumer minds in most of our -- or in our markets. It's more a broader sense of -- this is definitely not a period of very positive and strong, but it's more shades of negative, I would say, from a consumer sentiment that we've now had for quite some time.

That's helpful. And in Australia and New Zealand, where you seem to be taking market share and had very strong NMV growth of 5.8%. Do you have a sense of the online apparel background market growth in this region, just for the context?

Yes. We think we're probably a little bit ahead of the overall market, but not that much. We think it is -- the market growth is somewhere in the low to mid-single digits as well. So we definitely have the aspiration to be taking share and especially to do that in the mid- to higher premium segment of the market. There's obviously a very big value or high-volume unbranded segment in the market as well that has seen a lot of volatility, especially from the cross-border online players in Australia, but we're obviously quite a bit away from that with our price positioning. And in that market -- in that segment, we don't really follow that, that much in terms of the trends there. But in our segment, we think we're positioned well and probably taking a bit of share.

Okay. And you alluded that to maybe -- she and Tim. What have you seen from them in terms of marketing in your territories? Any big changes?

We have seen from them as well as TikTok Shop who are in some markets, more recent entrants than the other 2, continued very intense competition, also the general merchandise platforms, Mercado Libre in Lat Am, Shopee continue to compete very aggressively. I think the main area where we see an impact because ultimately, the proposition towards the customer, the types of customer we're going after, et cetera, is quite distinct, where we do see a bit of impact is where there is overlapping assortment with some of these platforms, which is obviously less so with a Temu or Xin, more so with the general merchandisers.

What they often do is they subsidize that very strongly and basically give no commissions or even basically negative commissions. And that has an impact in our price competitiveness. And so we follow that sometimes, but not all the time depending on the specific situation with what brand it is, what product it is.

Okay. Moving on to the gross margin, please, and profitability. I wonder if you could split out the main drivers of gross margin increase in terms of sort of quantifying the impacts there that you touched on. And also perhaps talk a little bit about the outlook and whether aged stock, for example, aged stock reduction continue to drive market share -- sorry, gross margin increase.

Yes, Anne, definitely. So we sort of take the quarter 2 gross margin uplift of 2.9%. I think of it in sort of the 2 main buckets. So retail margins are probably driving about half of that improvement. So as a result of things like, as you say, our aged inventory, but also a better focus on the quality and the timeliness of our assortment. The increase in platform services and marketplace participation is then driving the majority of the rest of that increase.

Going forward, we continue to improve or we continue to focus on improving our gross margins. I would say, probably at a slightly more moderated level than we've seen in the first half of this year. We've continued to do work around aged inventory. We've continued to do work around the quality of our assortment, but as we start to sort of lap some of those more significant activities that we've done, I'd expect to see improvements but more moderated into the second half.

That's really helpful. On marketing, I was very interested about what you said regarding AI-driven marketing in your presentation and how that can reduce costs. Could you talk a little bit more about that and how it works and also the outlook for perhaps marketing cost to sales given the use of this AI in marketing?

Yes. It's a very exciting development for sure. There's huge opportunities, but there's also obviously some risks around this as customer behavior shift, discovery moves maybe away from search engine into ChatGPT and the likes and all that. The specific example we used here in the presentation was very much around the imagery and the marketing campaign creation, which for us is a huge part of the business.

Obviously, that always comes with a cost in terms of preparation, photography, video editing, design, et cetera. The more we can do that with AI in terms of actually creating the imagery, but also automating a lot of the process flows around this, it has 2 effects. It just drives the cost on a per campaign basis down. And then at the same time, because of that cost going down, we can do smaller campaigns and more targeted campaigns. So if you think about it, we may have only done 2, 3 campaigns for a big sales event in the past.

We could now do 20 and probably overall still at a lower cost of production to all of that and without building up a huge organization around it. And so I think what it does, it helps us to become more segmented in how we speak to different parts of our customer base, and thereby increase the relevancy. So instead of trying to a campaign that tries to speak to 1/3 or half of all of our customer base, we may have campaigns that is really only aiming at 10% or 20% or even less of our customer base. So this is one aspect where automation and AI and the capabilities around that can really change it.

I think where we are also seeing a lot of opportunities is just in the automation and AI use around all of our marketing channels, CRM in particular, but also when it comes to how we think about, which products we're using for performance marketing and really all the learning behind and the optimization behind that, where obviously, there is a long history of a marketing tech stack that is trying to do many of those things, but I think the incremental capabilities, some of which we've started deploying well ahead of the general public looking at generative AI more from the side of machine learning and all those types of things, but there's a lot here.

Another area I would highlight is certainly product description and those types of things and also on the search side, where our search is becoming a lot smarter. I'll give you one example. If you type in a brand that we do not carry, we can now, because we're using external data, basically understand what that brand is in terms of the types of product and give the customer similar products to that brand. And that's just using potentially whatever the website or the web shop of that brand that we do not carry to then find similar product.

And I think that's very exciting for the customer when you may have a certain product in mind, you think you were looking for this brand, but you then receive recommendations of similar products. So in this broader discovery marketing area, there's a huge amount of opportunities. Many things that we're doing are experimental, they're early stage, and we're learning as we go, but we feel very well positioned to be in the top quartile of players in this space.

Brilliant. Really interesting. Could we move on to operating cost savings? And you're still achieving these in Q2. But I'm just wondering how we should factor those in into the second half and maybe beyond into 2026? Or should we be relying more perhaps on top line growth and leverage for margin improvement?

We've still got a program of cost efficiencies and cost savings. So we're definitely focused on our cost base so for the balance of the year and actually ongoing, it's now perhaps a little bit more embedded in our DNA in the way in which we're really challenging all costs and efficiencies. So I would expect continued savings into the second half. And some of that will be through sort of just natural initiatives that example, sort of headcount reductions that we've done in the first half.

Obviously, we'll then see that continue into the second half. Also where we've got efficiencies, things like sort of fulfillment efficiencies through things like OWMS, our second half is a much higher volume half. So as a result, actually, we'll be getting proportionately high efficiencies coming through there. So definitely think about a continued focus around cost. And as we've mentioned, our top line, there is volatility out there. So we very much really want to be able to protect the top line volatility by focusing on efficient and well-managed costs.

[Operator Instructions] And we'll now move on to our next question from Russell Pointon of Edison.

I have a couple of questions on Southeast Asia, if that's okay. First of all, I appreciate you've been reducing SKUs and that affects the revenue growth. I was wondering if you could talk about are there more encouraging signs on the new products and brands that you've been introducing from a customer reception and sales perspective.

Yes, there are definitely some encouraging signs. I think what is very important here is that we are, the SKUs and the brands that we are removing from the assortment are really what I would consider the very long tail and the fringes. So they accounted for a small single-digit percentage of sales in the last 12 months or so. What we're doing on this -- on the more positive side is that this is really driving focus both from the team, but also in terms of just how the traffic moves towards our larger brands.

We have a fantastic set of brand partnerships across sports, women's, men's apparel. We also have a pretty good off-price category in luxury. So that is -- there is a very strong assortment. I would more say it was maybe a little bit buried under just too many SKUs and the discoverability for the customer, therefore, a bit impaired. And so that's what we're really focusing on is driving the traffic and the attention and the marketing effort towards especially our top 30 or so brands that really make the vast bulk of the business and have much further room to grow when we look at the level of reach and scale we have.

We have roughly 2 million active customers. So there is a lot of scale actually. And I think we also believe we can drive wallet share. I think the other thing that we're doing here, which I think is very positive is we have a what we call ZALORA VIP program geared towards membership and loyalty. And there are some opportunities to really optimize that and make sure that our highest value customers really are part of that program. And so we're pushing that as a strong priority because within that customer base, we obviously have the usual distribution of a top 10 or top 25% of customers being a very, very large driver of the overall business. And so really focusing on the needs of those customers is a big priority, and we made some good progress on that.

Okay. That's great. And just ahead of the new CEO arriving in September, I appreciate you've been quite busy, Christoph with the 2 jobs. So, have any initiatives been put on hold ahead of his arrival in September? Or has progress been a bit slow anywhere?

I would say not at all. If anything, the opposite. I mean, generally, my approach to this and working very closely with the team there, and we have an excellent leadership team in the region has been to say, let's do all the hard and really difficult choices as quickly as possible and move on from that and prepare for this next chapter under a new CEO. And certainly, my objective is to not leave behind unresolved issues for him, but rather lay the foundations for what's next. And I think we've had a similar situation 2 years ago in Lat Am.

And I think that has worked very well, and we're applying some of that template of how we also make sure that the handover in leadership is not creating a moment of change in direction or ambiguity, but rather really keep on running hard at improving the customer experience and working closely with our brand partners. One thing in particular that I'm excited about for Felipe arriving is that he will be based in Kuala Lumpur, and he will have an opportunity to really engage with not only our team, but also our brand partners in the region very deeply. And with someone with his background, very commercial background, he will make that a big priority in really unlocking further opportunities with our biggest partners.

Okay. So the focus will be more on moving forward in terms of introducing brands, categories rather than just actually just making the organization, putting the organization into a better place?

Yes, absolutely, it's not so much, I would say, introducing new brands. We have a great assortment. It's more about working with the brands, having very clear joint business plans, a very clear strategy around how we optimize the assortment. The feedback I definitely get from engaging with the brands more deeply in the region in the last 6 months is that the brands are very keen for us to succeed. They do see a very important role for us as a business in the region as the only multi-brand fashion platform that only sells authentic product in a fashion-only environment. And so that is what they want us to do. That's perfectly in line with our group strategy, and that's where we're focusing.

Okay. And my final question, I mean, amongst the countries in Southeast Asia, was the performance relatively uniform or were some countries much better than others?

It's not like there's a huge divergence. The 4 out of the 5 countries that really matters is Philippines, Indonesia, Malaysia and Singapore, Hong Kong is much smaller. So that is less of a focus for us, but it's obviously an affluent, quite attractive market. We really believe we need to succeed across these markets. They have all their unique complexities, opportunities, but also challenges.

We are deeply local with deeply local setup and deeply local teams in each of the markets. And so I think that's ultimately our strength, and we need to play to that strength while making also sure that we ensure that we are not reinventing the wheel between different markets, but using a somewhat consistent playbook and way of operating across each of the markets. And that's one of the reasons why we moved to a purely functional leadership structure.

And we'll now take our next question, a follow-up from Anne Critchlow of Berenberg.

I've just got 2 more follow-ups, please. So to follow up on the Southeast Asia questions there. Can we just sort of talk a little bit about -- sorry, I just lost my call. How the online apparel market is performing in Southeast Asia. So I'm just trying to get an idea of whether you're gaining market share or losing market share and I recognize probably quite a difficult market.

Yes. I think it's somewhat hard to get really reliable data, but I think it's fair to assume that if we are down 18%, we're losing share. If we take a longer-term horizon, broadly speaking, and go back all the way to 2019, our business is pretty similar size to where we were in 2019. The market has roughly doubled. So if you take a long-term view over that period, we've lost a lot of share. The main difference since then, I would say, is that the brand.coms have really developed. And so we've obviously enabled some of that as well, and we have a quite sizable enablement business or platform services business, as you know, as well.

So we are obviously capitalizing on some of our brand partners succeeding more in their own dot-coms. And we do see, and I think the brand partners also see the brand.coms and us as a multi-brand as very complementary and should actually feed off each other's online efforts. And that's, I think, what we're focused on and kind of syncing up more strongly across all brands to make sure that we're really maximizing that opportunity. And so going forward, our ambition is certainly to stop the share loss and eventually get back to a position of growing with or slightly ahead of the market.

And then just finally, I wonder if you could give your thoughts on the outlook for free cash flow. I mean, clearly, the sales trajectory will have an impact here. But I'm just wondering what your time line will be towards becoming sustainably free cash flow positive in terms of the controllables and your planning?

Yes. Thanks, Anne. We look at it in sort of 2 distinct phases. So our first goal is very much around becoming adjusted EBITDA breakeven and then positive. So we've made huge progress on that, as you've seen in the first half, and it aligns with our guidance for the year to actually achieve this milestone. Normalized free cash flow will follow thereafter, but we're not currently providing specific timings around that just because of the number of variables in our market, especially around our top line, but what we are doing is very much trying to protect our P&L and other cash items with regards to that volatility.

So if you think about the first half, actually, year-on-year, we had a similar cash profile in quarter 2. But actually, the makeup of that has been driven by profitability and lower CapEx rather than relying on or delivering that position through working capital benefits. And whilst they are great and actually working capital management is a very strong focus for us, the nature of those obviously are onetime. So as we move forward, we're focusing around adjusted EBITDA breakeven, then becoming profitable and actually how then we grow that profit in a strong way through both the top line, but also the focus on cost, but also how we then manage those costs below. So continuing very focused investments around CapEx, managing our working capital and minimizing our leases where we can.

We have no further questions in the queue, handing over to Chris for webcast questions.

We have a number of webcast questions. The first one comes from Christian. Where is the financial improvement? And what will be the new future vision for real growth on markets?

Thanks, Chris. Well, that question, I think, follows on very nicely from Anne's last question. So as I mentioned, our financial strategy and to keep focus around our profitability, so to achieve breakeven adjusted EBITDA and then to become free cash flow positive. So all of that then is in the constraints of the markets that we're operating in, but ultimately returning all of our markets to growth.

I have another question on the line from Dan Curtis. Is ANZ on a stand-alone basis, cash flow positive? How much of the acceleration in conversion in Lat Am and ANZ is attributed to paid marketing? What is the strategic reasoning for keeping Southeast Asia and not just focusing on ANZ and Brazil?

Yes. Thanks for the question. I'll take that one. So I think we've disclosed in the full year results that ANZ was cash flow positive already back in '24. And as you can see from the half results, we're making further progress on profitability. So I think that's a good read across that also for full year this year, we obviously expect ANZ to be in positive territory. In terms of the second part of the question around paid marketing, I mean, in the end, the conversion rate is an output of a huge number of factors. A huge part of our traffic is coming organically, some coming from paid marketing. So there isn't a big shift in any of that, that somehow can be attributed to the conversion rate improvement.

What we generally see is when we're very disciplined on the marketing side, acquire high-quality traffic from the right channels with the right customers. And when we're very strong in our CRM and campaign efforts and have a strong proposition from an assortment side, that's when we get to the best performance around conversion. In periods of weak consumer sentiment, conversion always goes down. So there's also just a macro perspective where people may continue to browse wish list add to cart, but may not check out or wait for discounts on products they would like, et cetera, and become more discerning in that way.

Last part of the question in terms of reasoning for keeping SEA and not just focusing on ANZ and Brazil. We're very committed to all of our regions. I think we highlighted also last year with full year results that while we are not happy with the performance in Southeast Asia, especially with the top line decline, we had a near breakeven cash flow situation there, and we'll obviously continue to be focused on managing the business with very limited cash investment. And so from that perspective, I think this is a worthwhile effort to turn around the performance, very confident that we're able to do that and put the business in a position where it is creating value not only for the customers and partners, but also for our shareholders.

We have a final question from [Julius Craig ]. The numbers have improved significantly, especially in terms of cost reduction and cost control, given this progress, why hasn't the guidance been adjusted? Are the next few quarters still back certain?

Thanks, Chris. So we're pleased with the strong start that we've made in Half 1 and are very much focused to continue that in the balance of the year. We're not changing our guidance at this time, especially given some of the sort of global market uncertainty that we face. And also our second half of the year is our biggest year, and there are a lot of seasonal events, which are highly competitive. So we need to remain or we want to remain cautious around those as we come into the second half.

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