Zalando Aktie

Ladies and gentlemen, welcome to the publication of the Q1 Results 2026 Conference Call. I am George, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Patrick Kofler, Director, Investor Relations. Please go ahead, sir.

Good morning, and welcome to our Q1 2026 earnings call. Today, I'm joined by our Co-CEO, Robert Gentz, and our CFO, Anna Dimitrova. Robert will kick off with a business update before handing over to Anna to walk you through the financial development of the quarter. Finally, Robert will discuss our outlook. Both will be available for questions afterwards.

As usual, during the Q&A session, we kindly ask you to limit your questions to 2, allowing for an efficient discussion. This call is being recorded and both the live webcast and a replay will be available on our Investor Relations web page later today.

Robert, over to you for the first slide.

Thank you, Patrick. Hello, and thank you for joining today's call. We've achieved significant milestones over the past year, and we continue to do so in Q1. We've successfully executed our strategy and met our financial goals, and we've made substantial progress again in the first 2 months of 2026. Progress across our team of apps to drive our platform's distribution, customer frequency and monetization depth. Progress as well with advancing our technology platform, which powers our B2C and B2B businesses. And progress with our AI capabilities to drive efficiency and growth for our business.

Our addressable market is huge with EUR 500 billion in European fashion. So we relentlessly work on our strategy execution to achieve a larger coverage of this. Our Q1 performance was strong. It confirms that we are well on track with our full year targets and is yet another step towards our midterm goals.

There are 5 key highlights that demonstrate our overall progress in Q1, which I will show you now on the next page. Number one, we've delivered a strong financial performance in Q1. At group level, we delivered strong double-digit growth. Reported GMV grew nearly 22% and group revenue is up nearly 24% compared to Q1 last year. And we increased adjusted EBIT by 39% year-on-year to EUR 65 million. That brings our adjusted EBIT margin to 2.2%.

Number two, as well in Q1, we have advanced our AI capabilities, bringing further traction to both our B2C and B2B business. We continue to be impressed by what benefits AI can bring to both efficiency and growth of our business. And I'll come back to some of our most exciting developments later in the call.

Number three, in B2C, we delivered strong growth in Q1 across our team of consumer apps. We had a strong start into the spring/summer season. And ABOUT YOU and Lounge achieved even double-digit growth rates of GMV. In our core Zalando, our loyalty program, Zalando Plus, is a central engine to drive growth. We now have more than 18.5 million members. We recently launched new exciting benefits by adding food delivery subscription, Wolt, a partner benefit for our members.

Number four, in B2B, we recorded continued strong double-digit growth. We have launched ZEOS with the first ZFS partner in Norway, and we added 2 new sales channels. This expansion means we now serve a total of 26 markets and 20 sales channels via ZEOS.

And number five, in summary, we are well on track to meet our full year targets. Despite the ongoing geopolitical instability and economic volatility in our markets, we confirm our 2026 guidance.

So overall, I'm very happy with the performance of our team in the quarter. Now I will first talk about the progress on the AI development before Anna dives into the financial performance. In March, during our full year update, we highlighted how our B2C and B2B segments are driven by shared data and infrastructure engine that is now supercharged by AI. And this engine is constantly getting better every day and every second. This continuous improvement is fueled by the growing engagement of consumers using our apps and as brands increasingly integrate with our ecosystem. We strategically drive the distribution and the usage frequency of our platforms across consumers and merchants.

And the result of this expanding scale is an accumulation of more high-quality data, which in turn continuously refined and improves our solutions. And AI is a powerful catalyst for both growth and efficiency, and we've successfully used data and algorithms to drive our business for over 15 years now. Yet in recent years and months, AI capabilities at scale and the positive impact on our business has been accelerating. Let me give you a few examples of what we saw now in the recent months. So firstly, we are making great progress to evolve our AI-based system from a chat tool into a true life cycle companion at the forefront of Agentic commerce.

A key recent milestone last quarter was the upgrade to provide advice beyond fashion. We now cover sports and very recently as well beauty advice. Zolando Assistant for highly specific advice, for example, for hydrating Korean skin care or running shoes overpronation the assistance can now point you into very helpful directions. Numbers-wise, an impressive 10 million customers last quarter have interacted with our AI assistant. And this is up from 6 million in the whole of 2025.

So secondly, we now see how AI enhances the efficiency of our logistics backbone. We're proceeding with the rollout of AI-powered robots across our European fulfillment network. And already today, 2 million items per months are being autonomously handled by our growing fleet of warehouse robots.

And now based on the early successes through optimization and model training, we are rolling this impressive technology out across our network. And this will improve throughput, scalability and efficiency of our entire fulfillment operations across Europe. And thirdly, we recently achieved impressive speed and quality increase in our partner [ article ] onboarding through AI. We introduced a computer vision solution that automatically detects incorrect image background of articles. We also correct about 6,000 article pictures daily and enrich missing material composition information through AI.

As a result, up to 85% of articles are now ready to go online in less than 3 days. It is an impressive accomplishment in both speed and quality, and it reduces organizational coordination costs between us and the partners. So another great win-win through AI. Those are just 3 examples which demonstrate our continuous traction of applying AI in our business, and I'm very much looking forward to sharing more -- many more of these examples with you in the future.

Now I'd like to hand over to Anna for the financial performance.

Thank you, Robert, and good morning, everyone. As Robert already highlighted, we delivered strong financial performance in Q1. The reported increases in GMV and revenue are driven by solid underlying growth in Zalando and the inclusion of ABOUT YOU. On a pro forma basis, we achieved strong GMV growth. GMV increased by 6% to EUR 4.3 billion. This growth was primarily driven by double-digit growth of our partner business of ABOUT YOU and Lounge by Zalando.

As we have told you for many years, we see GMV growth as the key top line KPI for our business, and it is defined as the value of all merchandise sold by Zalando and by our partners to our customers.

Revenue growth was a solid 3.4%, reaching EUR 3 billion, driven by both B2C and B2B. It was lower than the GMV growth because our partner business grew faster than Zalando Retail, and we don't account for those sales for our partner business, but only include the commissions we earn on these sales and revenues. Our focus on driving profitability is reflected in the increase of adjusted EBIT.

On a reported basis, adjusted EBIT reached EUR 65 million, up 39% year-on-year. We have already delivered synergies of EUR 10 million in Q1, which contributed to this result. We are firmly on track to achieve EUR 40 million in synergies this year.

In terms of profitability, group adjusted EBIT margin increased by 0.3 percentage points to 2.2% despite the dilution from the consolidation of ABOUT YOU. Zalando stand-alone adjusted EBIT margin improved year-on-year by 0.6 percentage points from 1.9% to 2.5%. ABOUT YOU generated positive adjusted EBIT after synergies, which is very significant progress. And the first time in its history, it generated positive adjusted EBIT in the first quarter.

Our Q1 results demonstrate continued progress towards accelerating our financial performance across our entire business. Let me first focus on the strong top line performance of our B2C business. GMV saw strong growth across all 3 consumer apps on a reported basis and on a pro forma basis. Just like in Q2 -- Q4, both ABOUT YOU and Lounge by Zalando, achieved double-digit growth rates. Growth in Zalando was driven by the acceleration of our partner business. Furthermore, we saw a successful start to the spring/summer season with particularly strong growth across several lifestyle categories like sports, kids and family and beauty.

Pro forma revenue saw a moderate 2.1% increase to EUR 2.7 billion, reflecting the strategic shift in our business mix. This was driven by partner growth significantly outperforming retail across both Zalando and ABOUT YOU, a result of existing partners deepening their platform presence through expanded product assortments. The partner business share, Zalando stand-alone, is 36.6%, up 2.2 percentage points. However, the inclusion of ABOUT YOU diluted the overall group share to 31.8%.

As we scale the partner business towards a target of 40% to 50% of total GMV by 2028, we expect GMV growth to consistently outpace revenue growth in B2C over the coming years. Additionally, significant growth in our high-margin retail media business across Zalando and ABOUT YOU contributed to the revenue growth in B2C. As a result, Retail Media revenues increased 1.7% of B2C GMV.

In summary, our B2C business continues to expand based on our multi-app approach and increasing distribution, frequency and debt. The strong top line performance of the B2C segment was supported by generally stronger customer metrics. The increase in GMV was driven by the combination of more active customers and higher customer spending. First, we saw strong growth in active customers. This was primarily driven by the inclusion of ABOUT YOU, but was supplemented by solid growth within the stand-alone customer bases of both Zalando and ABOUT YOU.

By the end of Q1, the number of active customers reached a new high of 62.3 million customers, an increase of close to 10 million customers year-on-year. As in previous quarters, close to 6 million customers currently use both Zalando and ABOUT YOU.

Moving to the right. At the same time, we continue to increase our share of wallet as existing customers are spending more on our platform. Average spend per customer rose by 2.9% to EUR 305. This increase was driven by a larger average basket size, while the average number of orders by active customer remained stable.

Overall, we continue to attract more customers to our consumer apps to increase our share fall. The top line growth contributed to an overall increase in gross profit of 22.5% to more than EUR 1.1 billion. This translated into a B2C gross margin of 41.5%, which is 0.6 percentage points lower than in Q1 2025. The development was driven by the consolidation of ABOUT YOU with lower gross margin and had a negative impact of 1.1 percentage points.

In Zalando B2C, we were able to grow the gross margin by 0.5 percentage points, mainly thanks to a very healthy and well-executed inventory clearing process. Through the strategic use of lounge and data-driven discounting, we were able to move all the stock at improved margins. This was a big win for the past 3 months. We told you last quarter that we had elevated inventory to clear. We delivered that clearance and in spite of that effort, reported a 0.5 percentage point increase in Zalando B2C gross margin.

B2C adjusted EBIT for the year -- for the quarter was EUR 38 million. This represents 0.5 percentage point margin drop from the previous year to 1.4%. This margin softening was mainly a result of dilution following the consolidation of ABOUT YOU.

Zalando B2C stand-alone adjusted EBIT margin remained broadly stable as the improved gross margin was offset by an increase in fulfillment costs driven by the consolidation of our network and ramp-up of our new logistics sites.

Moving to B2B. In B2B also, we continued to accelerate our financial performance. In the first quarter of 2026, we grew B2B revenues by nearly 24%. On a pro forma basis, the B2B business grew by 16.6% compared to the previous year, so well above group revenue growth. ZEOS Fulfillment, which includes both Zalando Fulfillment Solutions and multichannel fulfillment drove our B2B expansion. ZFS maintained in strong double-digit growth by successfully keeping pace with the scaling of the partner business. Multichannel fulfillment experienced a very strong acceleration in growth, particularly due to the key collaborations with partners like British retailer Next.

The inclusion of scale led to an increase of software revenues. This strong B2B revenue growth translated into higher profits and significant margin expansion. Our gross profit margin expanded by 5.8 percentage points to 18.2%. This very strong growth in B2B gross margin directly translated into adjusted EBIT increasing by more than 4x to EUR 26 million and the margin tripling to 8.6%. This improvement was driven by 3 factors. First, we realized efficiency gains and increased scale within ZEO Fulfillment as we bring on more and more large-scale merchants onto the platform. For example, we are now bringing on Marks & Spencer shortly without incremental investments in the platform. Second, the margin expanded, thanks to the inclusion of scale, which contributes higher-margin software revenues.

And thirdly, our margin benefited this quarter from a favorable one-off provision release of EUR 4 million. Without this release, the B2B margin would have been 7.4%. Our strong growth in the B2B business has enabled us to achieve a solid overall increase in the group's adjusted EBIT. Overall, our adjusted EBIT margin improved from 1.9% to 2.2% in Q1 '26 versus Q1 '25. This is mostly driven by a stable gross margin and operating efficiencies in admin costs. Gross margin on a group level remained stable. Fulfillment costs increased by 0.6 percentage points due to the consolidation of ABOUT YOU and temporary transition costs from consolidating our network and ramping up our new logistics sites.

While the majority of our long-term fulfillment savings will come from network optimization, we are complementing the structural moves with AI-powered automation. Marketing costs slightly rose by 1.1 -- 0.1 percentage points, driven by the consolidation of ABOUT YOU. Admin costs decreased by 0.8 percentage points, which reflects enhanced operational efficiency. Other operating expenses increased due to a EUR 97 million restructuring charge for the reshaping of our logistics network we announced in January this year as well as other restructuring measures to further boost operating leverage. Those one-off costs are, as usual, reported outside of adjusted EBIT.

In Q1 '26, EBIT total adjustments amounted to EUR 144.5 million. We anticipate the total adjustments for the 2026 financial year of approximately EUR 300 million as communicated during our full year call, with the remaining amount distributed relatively evenly over the next 3 quarters.

Let me now turn to our balance sheet and cash flow development. We continue to operate with negative working capital. At the end of Q1, we had negative working capital of EUR 240 million compared to negative working capital of EUR 670 million at the end of '25. As we guided you on the full year earnings call in March, we settled in Q1 high-volume partner payouts from peak season trading and our payables have returned to a more normalized level this quarter.

But the major win this quarter was the development of our inventory. Zalando stand-alone inventory growth slowed from 12% in Q4 '25 to 2% in Q1 '26. This reflects our effective efforts to clear the extra inventory accumulated during Q4. We have aligned our buying plans in retail with the significant growth momentum of the partner business and expect inventory to trend in line with B2C revenue growth going forward. On a reported basis, in Q1, the inclusion of ABOUT YOU drove 22.5% increase in our total inventory. Our cash and cash equivalents remained solid and ended the quarter at around EUR 1.3 billion. This level aligns well with our capital allocation framework to hold a liquidity buffer of 10% of last 12 months revenue.

This figure is about EUR 600 million lower than our cash flow position 3 months ago. As most of you know, Q1 typically sees a cash outflow, and this was slightly more elevated this year because of payables to our partners who experienced a great cyber increase in business. In terms of CapEx, we continue to invest in our data and infrastructure engine. CapEx spend in Q1 mainly relates to investments in the ramp-up of fulfillment centers in Germany, France and Sweden, decreasing spending on debt investments and the inclusion of ABOUT YOU.

Furthermore, our share buyback is progressing at pace, leading to a cash outflow of EUR 62 million. At the end of March, we still have around EUR 240 million remaining to complete the program. This concludes the financial update for Q1. Now let's move to the outlook on Page 14. And for that, I will hand it back to Robert.

Thank you, Anna. So overall, our business performed strongly in Q1, and we are proud of our team's achievements. We had a strong start of the spring/summer season and consumer demand persists despite a volatile geopolitical and subdued environment. And we have many times proven in the past our resilience and our ability to navigate these situations. So we reiterate our guidance for the financial year 2026 that we provided in March. And our focus is, as always, executing our strategy, investing into the immense opportunities ahead and delivering a strong financial performance in 2026.

So this concludes our presentation for today. And before we jump into Q&A, let me just wrap up with the key takeaways of today. We're happy with the team performance that we have delivered in Q1. We advanced our AI capabilities gaining traction in both our B2C and B2B segments. In B2C, we delivered strong growth across our team of consumer apps. And in B2B, we recorded continued strong double-digit growth, and we remain well on track to meet our full year targets.

Thank you. And now let's open up for the Q&A.

[Operator Instructions] Our first question comes from Monique Pollard from Citi.

The first question that I had was just on the performance costs. Just hoping you could help us to understand the time line of the ramp-up for the performance costs, so how long that would be expected to be a drag on Zalando kind of stand-alone EBIT margins for?

And the second question I had was on the B2B gross margin. So obviously, a very strong progression in the B2B gross margin this quarter year-on-year. Anna, you've called out obviously the benefit from scale. But just also trying to understand where the B2B gross margin could go in a steady state, please?

Monique, thank you for your questions. Let me start with the question on the fulfillment cost development. As we have told you in the past, we are running a program of consolidating our logistics network and utilizing the capacity. For this, we are renting up more modern centers and ramping down centers, which we have announced that we will close. So this reshuffling is planned to be executed in H1. So this is what you can expect.

And then obviously, this is a very big lever for us to achieve our midterm guidance in 2028 as we will see the benefits from this consolidation starting in 2027 and then in 2028 coming to the full impact.

So let me move to the second question on our B2B margin. And indeed, we are very pleased with the development of the B2B margin, and we have here 2 structural effects. One is the increasing scale and efficiency in our ZEOS business, where we saw an improvement in the margin. And secondly, as we grow our software business, they come with structurally a better margin as well supports the margin development. So the 18% -- 17%, 18%, which you have seen in Q1 is as well what we expect going forward.

The next question comes from Mia Strauss with BNP Paribas.

Just 2 for me. Maybe if you can maybe give a bit more color in terms of current trading and how you exited the quarter. I understand that you haven't really seen an impact from the Middle East, but just more broadly, I guess, how do you feel you're positioned now versus back in 2022, where we saw the higher inflation?

And then secondly, I just wanted to -- in the context of the gross margin, obviously, the Q1 was broadly stable. And I think you're still expecting Q2 some inventory clearance. How should we think about the gross margin for Q2 and then into the second half of the year?

Yes. Thank you, Mia. Let me start with the gross margin, and then Robert and myself will ask -- will answer the current trading and the differences to 2022. Yes, indeed, gross margin in the first quarter was stable, and you have seen the moving parts. The dilution of ABOUT YOU was fully offset by our B2B and B2C gross margin. And indeed, in B2C Zalando, we could improve the margin, which was on the higher end of our expectations, and this was driven by a very effective and very well-executed clearance of the stock.

As I told you in the March earnings call, we are focusing on healthy inventory management and clearing of the inventory during the first half of the year. So you can expect Q2 to be slightly below the previous year. And then in H2, we will improve the gross margin going forward. So I'm just reiterating what I said in the earnings call in March.

And now regarding current trading, indeed, consumer demand persists in today's environment. And as before, the European consumer continues to be price sensitive and to be cautious, but no more so since the start of the Middle East conflict. And we measure, and we have not seen any measurable impact. But that said, we continue to closely monitor the situation as the conflict evolves.

And Robert, maybe your memory from 2022.

Yes. I mean, as Anna said, like the consumer demand persists in today's environment. And I guess the difference, I think, that we see towards 2022, I think in 2022, there was actually like a big -- there was actually like observable big difference in how consumers actually reacted to the situation. And became actually from 1 day to the other, like much more price-sensitive and cost, and we saw that very much like to 2022 in our numbers. What we see now is actually like, as Anna said, just a continuation of the same price sensitivity and cautious behavior as we've seen like in the past. But yes, it persists, and there's kind of no to date kind of measurable bigger impact that we actually see.

The next question comes from Anne Critchlow with Berenberg.

I've got 2, please. The first is on inventory. So if we look at it in a sort of inventory to revenues way, it still looks quite high. So I wondered if you have a target figure in mind that one day you'd like to get to for inventories to revenues?

And then the second question is about Rest of Europe. I wondered if you could comment on profitability in Rest of Europe compared to the DACH region. And also on countries such as Spain, so whether you have a sense of when you might reach profitability in those types of countries?

On inventory, so I'm very pleased with the progress which we made in inventory. As you recall, we closed the year with an inventory of 12% year-over-year. And now we are down to 1.9%, which is much more healthy because it's much more aligned with the top line growth. And we have aligned our buying plans going forward with the growth of the partner business and respectively, with the development of the wholesale business. And you can expect that there will be in sync. We are looking at GMV here when we as well make our plans for inventory and not at revenue growth.

As you have noticed as well that the revenue growth is impacted by the strategic shift to a higher proportion of the partner business and of the partner business outgrowing the retail business. And this is why the right KPI to look here at is the GMV growth, and we are very well on track.

And in regards to your question on the Rest of Europe, as you know, we don't break down and we don't report countries and as well don't disclose the EBIT margin. But you can be assured that we are having plans for each country, and we are driving efficiencies in growth country by country, respecting as well the very specific demand situation, competitive situation and playing with our team of apps with ABOUT YOU, Zalando and Zalando Lounge.

The next question comes from Jurgen Kolb with Kepler Cheuvreux.

Two ones. First of all, coming back on the current trading. I was wondering if you could share maybe some thoughts on what you're seeing from your vendors in terms of prices. Obviously, spring is probably -- summer is obviously is done, but what are you seeing in terms of prices for fall/winter this year, but also then going into spring 2027? That's the first one.

And secondly, you talked about the AI capabilities and your strong performance there. With the new customers that you're gaining with your AI technology, maybe some thoughts on how they are trending? Is there a difference in terms of churn? Are they more loyal maybe? What are you seeing there in their activities? Maybe just more details on -- from that angle.

I'm taking the current trading question. So you're asking about the buying conditions and if we see input prices going up. As you rightly say, we already are stocked up for summer spring '26 and as well autumn/winter, we have negotiated and have preordered part of it. As you know, we do preorders and then reorders. And the season -- the buying season for spring/summer '27 is still ahead of us. And obviously, as always, is we have very strong relationship with our partners, and we will find here a solution, which is benefiting as well for the partners as for us. So yes, we will see. It's still early, but be assured that we are preparing as well so that we can mitigate some potential inflationary impacts on Zalando.

And the second question?

The second question, I mean, on more color on customer behaviors, like customer acquisition. So there is like in the newer cohorts of customer acquisitions, there's actually no significant difference in any kind of behaviors or patterns than to the cohorts that we've seen in the past. I think one interesting maybe observation to share you is in the Zalando app, I think one of the good, I think, traction that we see is actually that -- I mean, as we have driven like the AI-based feed that actually serves kind of like inspiring content that we as well see that this actually now brings, I think, a little bit more engagement into the app. So we see actually some good kind of tractions in terms of like more visits actually in the Zalando app, which is as well driven by some of the AI-driven investments in content inspiration.

Our next question comes from Georgina Johanan with JPMorgan.

I have 2 questions, please. The first one was, I understand that the Partner program and Lounge really outperformed and were up double digit. Presumably, that's on a pro forma basis. Just to understand, does that mean that the wholesale business is now actually going backwards? And if that's ex lounge, of course. And if that's the case, then does that have implications for your buying margin going forward?

Yes, just to understand that better, please. And then secondly, just coming back to the gross margin development, which I think was really impressive in the context of the elevated inventories. Are you saying that your drag on the gross margin year-on-year was actually lower from discounting, i.e., overall, you had lower discounting in Q1 than you did in Q1 '25. And just to understand, therefore, why we should expect the Q2 gross margin to be down. It just seems slightly counterintuitive.

So first, let me address the question on the partner business and the cohort of Lounge and wholesale in the Zalando app. And indeed, that the wholesale business in the Zalando app is flat. And as you know, we are optimizing for the group. We are optimizing for Zalando, and we are not optimizing wholesale or partner business. And this is completely in line with our strategy because we would like to expand our platform reach and to grow the partner business. Obviously, it has less risks with inventory, but as well, we can grow the engagement with our partners, which is not only using our marketplace, but as well increasing the retail media spend and as well using our logistic services. So exactly on strategy.

So now moving to the question, what could be the impact on our buying conditions? No, there is no impact. Two reasons for that. The wholesale business is still big, yes. So we are targeting 40%, 50% partner business, and we still have a big proportion, which is wholesale, which is great because then we have 2 legs to walk on. And as well, we have about 2, which as well, again, increases the volume, and we have already gone through the cycle of negotiation, which we already shared with you and which is visible in the synergies.

So now to the question on the gross margins, there were 2 parts of the question. The first one is what made it different compared to last year? Was it discounting driven? And the second is what could we expect in Q2 and you're saying that it feels counterintuitive. So we usually compare year-over-year the quarters rather than Q4 to Q1. As you know, Q4 is a quarter which is very promotional. We have a lot of campaigns. We have Single Day, we have cyber, we have Christmas. People are spending more, so -- and it's discounting heavy.

And as we told you in the last earnings call is that we optimize with our data-driven algorithms discounting, performance marketing and recently as well our loyalty program so that we get the best gross margin given not only the demand side, but as well the stock. So this is different in Q1. In Q1, we don't have that much promotional environment as in Q4. And as well is the start of the season where you see as well more black prices as we kick off.

So now moving to the second part -- the second question, why I am expecting the Q2 margin to go down again, we have here the dilution of ABOUT YOU. As you know, it lapsed in July. And we still are focusing on the inventory clearance. So we would really to have here a clean table. And as we are committing for the buying budget for spring/summer season '27, so that we have a good starting basis. And this is why my base assumption is that we will have a lower margin in Q2.

The next question comes from Yashraj Rajani with UBS.

I've got 2, please. The first one is just a follow-up on the current trading question. So obviously, I know you don't comment on months, but just given we have very different weather comps from last year, can you remind us that from May and June, do the comps actually get tougher? Or do they get easier? And just given we are halfway through Q2 already, can you confirm that -- based on your Middle East comments, can you confirm that there is no deterioration from the 5% to 6% GMV growth run rate that you're seeing so far? So that's the first question.

And as far as the second question is concerned, it's on marketing costs. So a very slight negative development year-on-year on an underlying basis. Can you tell us that -- is this a function of higher customer acquisition costs because of AI? And do you think that customer acquisition costs incrementally are getting tougher because of AI agents? Or do you think incrementally, they should get better and it should be favorable in the second half?

Yashraj, thank you for your questions on current trading. So as I told you, we see consumer demand persisting in today's environment. So I can't speak for May and June because it still needs to happen, and we are closely monitoring. But what we see today and without reflecting any potential, it was an impact of a prolonged crisis. we confirm our guidance. And in Q2, we expect pro forma GMV growth to remain in the mid-single-digit range.

On the marketing cost question, so the increase in marketing cost is driven by the inclusion of ABOUT YOU. So indeed, in Zalando, we spent less in performance marketing. As you know, we are well preparing for a very exciting event starting in June with football, yes, so -- but underlying, we didn't spend more for new customers. We really doubled down on clearing the inventory. So no deterioration of the metrics there.

The next question comes from Richard Chamberlain with RBC.

Maybe I could just ask a couple more on costs, if that's all right. Just looking at Page 10 of the presentation. You touched on marketing costs. Can you also just explain about the restructuring costs? I think it was close to EUR 100 million in the quarter. Are we done now on restructuring costs? So are you expecting more of those in Q2 and for the rest of the year? And then the other one is on the acquisition-related expenses, I guess, relating to ABOUT YOu. Can you give a bit more color on that and also your expectation on that line for the balance of the year as well.

Richard, So let me start with the adjustments and restructuring costs. So as I said, we are expecting EUR 300 million in total adjustments for the year, EUR 144 million we booked in Q1, of which the majority was tied to the restructuring of the logistics network and as well overhead restructuring, which we as well announced in June, for example, content studios. So we made big progress with AI. So this is how you see it as well in the overhead cost.

We stick to the number, and the numbers consist, as I shared with you as well, so we have share-based payments, which is a bit more than 1/3. And then we have the restructuring cost and then we have purchase price allocation which is customer relations brand equity from -- which is noncash. And then we have the integration cost. And I guided you as well that for the whole period, we have planned mid-digit million number for integration costs and the biggest proportion will be due this year, yes. So this is what you can expect. No new news. We just want to talk here.

Next question comes from Adam Cochrane with Deutsche Bank.

Two questions from me. On the first question is, in terms of the -- how you treated inventory and markdown and promotions differently in 1Q compared to 4Q. Am I right in understanding that most of the difference in that is because of different market conditions, so 4Q being a more promotional market across the industry, you just have to participate? Or is there any change in the way that you did things in 1Q?

And added to that, is there any element of the inventory that was written down or provided in Q4 so that you didn't have to do the same in 1Q? And then when you sell it on Zalando Lounge, it's already been written down, so you don't have the same impact in -- than you did in the fourth quarter.

And in terms of the Second question, it does appear like you're balancing sort of revenue growth and gross margin a bit more carefully in the first quarter. How are you thinking about the pro forma revenue growth? So the plus 2.1% in B2C, looking into sort of Q2 and the second half, based on your outlook, I'm assuming that you are expecting an acceleration of that as the year progresses. What exactly are you basing that on an improvement in consumer confidence, customer behavior? Or is it more Zalando-specific initiatives?

Thank you, Adam. Let me start with the inventory question and the consumer environment. So usually, as I said, Q4 is different than Q1 in terms of promotional activity because we have cyber and we have a lot of campaigns going on. And in Q1, you have the start of the spring and summer season. So this is what is different. This is the nature of the seasonality of our business. What we have done is we use more broadly Lounge in clearing the old stock. And indeed, as you say, if we have very old stock, which is written off. And obviously, when it is sold on Lounge, then you have a favorable impact. So exactly as you said.

On revenue growth in Q1 this year, we had 2.1% revenue growth in consumer, which was mainly driven by the partner business outgrowing the Zalando retail business. Last year, it was exactly the other way around. So the wholesale business was growing faster than the partner business. So this is what you're seeing as the impact. And ABOUT YOU has a much stronger retail business growth. Partner business is still a very small proportion. And going forward, we are sticking to our guidance, yes.

And this is actually indeed why we're giving you a range and the range is quite broad because we can see positives from the consumer environment, but we don't control it, yes. So what we double down is what we execute, how we execute and Robert was talking a lot about that, how we leverage AI as well to make -- to increase the customer experience to make our proposition more attractive, but as well to reduce return rates, which as well has an impact of the top line. So what I'm saying is that we stick to our guidance, and we don't reflect here any potential adverse impact of a prolonged conflict in the Middle East.

And our last question for today's call comes from Andreas Riemann with ODDO.

A few questions, actually on SCAYLE. So what's the underlying growth of the SCAYLE business at present? And as of when do you expect the levels to be included in your numbers? And a bit broader, did you already renew contracts of SCAYLE customers? And did the commissions change when you renewed those contracts? So a bit more insight on SCAYLE would be appreciated.

Yes. Andreas, happy to talk you to scale. We're very happy to have scale in our portfolio because this complements, obviously, our logistics and software offers. So we will -- at levels still not in the numbers. So we will come later on as we are onboarding. So it will be in H2. Then in terms of the take rates, no, the take rate is the same. So we haven't seen the reduction on the take rate. And as you know, we don't disclose revenue growth of SCAYLE But underlying the revenue growth is around 9% for the quarter.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to the management for any closing remarks.

Thanks, everyone, for joining today's earnings call session. If there are any further questions, don't hesitate to contact us, and handing over to Anna to wrap it up for today's message.

Thank you, everyone, for joining. It is important that you take away that we are progressing very well in the executing of our strategy and delivering on our financial performance. We have done so in 2025, and Q1 in 2026 is a further proof point that we deliver. And we are excited about the future and how we can leverage the power of AI, the power of our teams and the power of our tech platform and to create more value for our customers, for the partners and for the company.

Thank you very much and speak to you soon.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

Good morning. Welcome to Zalando's Annual Press Conference and Business Update. My name is Simon Thiel, and I'm heading Corporate Affairs. I wanted to say thank you for joining us today. We will be presenting our full year results 2025 and sharing our plans for the future, and we're delighted to have so many of you joining our broadcast today.

Good morning also from my side. My name is Patrick Kofler, and I'm heading the Investor Relations department. We have gathered the press, investors and analysts for today's event. It's a pleasure to have you all here.

We will start our conference with a prerecorded presentation by our co-CEOs, Robert Gentz and David Schroder. They will walk you through our progress as we're successfully executing our strategy. At 9:45 a.m. CET, following the presentation, we will open the virtual floor to a live Q&A session for our journalists with our co-CEOs, Robert and David and our new CFO, Anna Dimitrova.

For our investors and analysts, at 9:45 a.m. CET, our CFO, Anna Dimitrova, will walk you through the financial development of the last year and will discuss our outlook in more detail in a prerecorded financial deep dive presentation. After a short break, I'll be hosting a live Q&A session at 10:45 a.m. CET together with Robert, David and Anna. The Q&A system will open within the next few moments and you can begin. When you click on it, you can ask second ask Q&A via video. A recording of the co-CEO speech and the financial deep dive will be available later on the Investor Relations section of our website.

We now turn our attention to Zalando Live Studios, where we create inspiring content for our customers. David and Robert, the stage is yours.

A big hello from Berlin, and thank you for joining us today.

Good morning, and welcome, everyone.

We are very excited to share our 2025 achievements and walk you through our future ambitions and plans.

The last year has been a big one for Zalando. Crucially, we delivered on our strategy and our financial targets. We took massive strides to shape the future of our industry from expanding into new European markets to making the customer experience even better now with AI. We also fundamentally strengthened our business and long-term growth potential by successfully completing the strategic acquisition of ABOUT YOU.

And finally, we were thrilled to have Anna Dimitrova as our new Chief Financial Officer. And with over 2 decades of international experience and a proven track record of driving real transformation, her strategic mindset is exactly what we need to help execute our vision. And as we look ahead, we're incredibly energized about the opportunities that this year brings for Zalando, for our customers and for all our valued partners.

Robert and I will now walk you through our strategic and financial achievements in 2025. We'll discuss the strong progress in both our B2C and B2B businesses and how we are successfully leveraging AI to further enlarge our opportunity and accelerate our progress. And last but not least, we will share our perspective on the tremendous value creation opportunity ahead of us.

So Robert, let's get started.

For 17 years, we've built the European technology platform for fashion and lifestyle, connecting over 16 million customers with more than 7,000 global and local brands. And this platform is our absolute superpower. For our customers, we've created apps where discovering and buying from the favorite brands feel personal, inspiring and trustworthy. And because we have that deep connection with customers, we become essential to brands. And they partner with us not just to sell their products, but to tell their stories and use our tech to grow their entire business, both on Zalando and beyond.

The European fashion market is a EUR 500 billion opportunity, yet only 30% of purchases are made online today. And with roughly 70% of shoppers still conducting most of their shopping in physical stores and with digital shopping now growing at a 6% CAGR a year, the potential for us is huge. So we are the clear #1 in Europe, the fashion and lifestyle center of the entire world. As the European technology platform for fashion and lifestyle, we are perfectly positioned to lead the shift and serve customers and partners in the best possible way. By simplifying a highly complex market and driving real innovation, we're unlocking new value and growth for everyone.

So our business across B2C and B2B is powered by a shared data and infrastructure engine supercharged by AI. For B2C, this engine powers our multiple consumer apps designed to inspire lifestyle shopping and keep customers deeply engaged. And for B2B, the same engine serves as our operating system, enabling the e-commerce success of our partners by sharing our sophisticated infrastructure from software to logistics and connecting brands directly with customers. And this engine gets better every day, every second as more and more people use our apps and more and more brands get deeply involved with our ecosystem. And more scale means more data and more data means our solutions just keep getting better. And that makes us unique and so excited about our future. And I will discuss several real-world examples of how we leverage our huge data pool in the next section.

Over the past 17 years, we've built 4 unique platform capabilities that power both our B2C and our B2B businesses. First, our brand network. We've created an unparalleled brand network of more than 7,000 global and European brands with deep insights into their product development pipelines and supply chains. This provides us with unique and detailed data around assortment, content and products. Second, our logistics infrastructure. We've built Europe's leading fashion fulfillment network with 14 locations serving 29 European markets, enabling a fast, reliable, convenient and highly localized experience for customers while ensuring a high level of efficiency.

Third, our tech platform. We have attracted and grown an incredible team of around 3,000 tech specialists, allowing us to build a proprietary, highly scalable tech stack, which fuels our growth, drives our efficiency and accelerates our innovation. Fourth, our payment platform. We've built a powerful in-house payments platform, processing more than EUR 34 billion in transactions volume for customers and partners annually. They're off more than 60% leveraging our buy now pay later solutions. No one else has that set of capabilities. They form the core of our data and infrastructure platform, creating a lasting competitive advantage.

Since the launch of our updated strategy in March 2024, we've used this powerful engine to successfully execute on our strategy. On our B2C journey, we've focused on deepening customer engagement and inspiration. We've upgraded our loyalty program and launched an AI-powered discovery Feed. And we've successfully acquired ABOUT YOU, so that more than 60 million customers now discover and shop with us across 3 distinct apps. In B2B, we have significantly scaled our operating system by adding 12 new markets and 8 new channels. We've built advanced fulfillment features and are forming deep enterprise partnerships with leaders in retail like NEXT. The addition of the digital commerce platform scale further expands our ZEOS offering, enabling us to support our enterprise partners, not just with their marketplace business, but also with their own D2C business.

Now let's turn to our financials. Fueled by our strategy and the acquisition of ABOUT YOU, we significantly accelerated our financial performance in 2025. At the group level, we delivered strong double-digit growth with revenue up nearly 17% and adjusted EBIT climbing to EUR 591 million. In our B2C segment, Zalando and ABOUT YOU continued to grow, reaching over EUR 17.5 billion in GMV and over EUR 530 million in adjusted EBIT. In B2B, we strongly benefited from ZEOS fulfillment and the inclusion of scale. We recorded revenues of over EUR 1 billion, a 14.6% increase on the previous year and more than doubled our adjusted EBIT. Overall, the strong set of results demonstrates the strength of our business model. and marks another important step forward towards delivering our midterm financial targets with further acceleration expected this year.

As part of our strategy, we also aim to enable a more sustainable fashion and lifestyle industry at scale and have set ourselves a clear ambition. We want to get to net zero in our own operations and private labels by 2040 and across our entire value chain by 2050. In 2025, we reached important near-term milestones. We've reduced the absolute emissions of our own operations by 81%. We've also reduced the emission intensity from private labels by 37%. While this is good progress, more needs to be achieved by us and the industry. That's why we will stay focused on developing and scaling solutions that not only support businesses across the industry, but also drive positive change.

After highlighting our achievements in 2025, it is now time to look ahead and talk about a topic that is on everyone's mind at the moment, AI. I cannot describe how incredibly excited I am personally about how AI allows us to shape the future of Zalando and the future of the entire industry. For us at Zalando, AI is more than a tool. It's a powerful catalyst for innovation, driving growth and efficiency. And we've already proven that we successfully apply it for more than a decade. But before we get into the details, let's now look at a short video to highlight some of the many exciting things we are doing in tech and AI.

[Presentation]

Zalando was founded in 2008, we've always had one clear principle. What you cannot measure does not exist. It was tough and it was debated, but it always made sure we ground our business decisions in facts and in data. Data and then machine learning and AI have been at the core of how we create solutions and value from day 1. And we are proud of all the great products and services our teams have built by applying AI to solve problems for our customers and partners. You can find some of the great examples represented on this slide, but rest assured, there are many more.

Years of investment into data, machine learning and AI and the talent to build and improve the models have allowed us to build a strong foundation. And that's why with the rise of Gen AI and AI agents, we are even more excited about building on this great foundation to further enlarge our opportunity and to accelerate our progress. Our success on this journey will be fueled by our scale of distribution with customers and partners and our unique and deep data foundation.

Many companies out there state that they have data. But I can tell you that we are one of the very few ones, especially if you look here in Europe, that actually have unique and deep data at scale. And most importantly, we've built a data flywheel so that our data advantage grows and gets more valuable over time. Over the life of the company, we've collected an unparalleled amount of data, including customer behavior, assortment, size and fit, rich product content and supply chain data. That is unique data only Zalando has. And scale clearly matters. With more than 60 million customers and more than 7,000 brands and a strong bench of in-house AI talent, we can turn successful pilots into platform-wide services and continuously improve models and applications as we learn from millions of daily interactions. Every time we enrich a customer experience or a partner service with AI, we generate more signals that grow our data pool and enable us to improve our models further.

Let me highlight 2 specific examples. First, in size and fit. We help customers to find the right size the very first time. With real body measurements of over 1 million customers, we can provide better size advice than anyone else in the industry. And every single week, more than 20,000 customers scan and submit their body measurements to us. And second, let's take a look at logistics. For every customer order, we use live supply chain data and a virtual model of our network to optimize for fast, reliable delivery at affordable fulfillment cost. And every single year, we generate fulfillment data from almost 300 million customer orders, allowing us to optimize delivery down to postal code level across 29 markets in Europe. These 2 examples demonstrate AI deepens our competitive advantages as we are embedding it across Zalando's end-to-end value chain, driving both efficiency and growth across our B2C and B2B business.

Now back to you, Robert, to dive deeper into some of our most exciting AI applications and use cases, starting with a focus on efficiency.

The rates of change that we see across our business that are possible through AI are just incredible. So ideas that seemed impossible a few years ago, all of a sudden become not only imaginable, but a reality. And we see this all across our business now, how it changes the game with what can be done through efficiency and productivity. And here are some interesting examples across our supply chain to illustrate what we see here.

First, let's start in digital experience. So as of today, 90% of our product marketing content, which you see in our apps is purely made by AI, like the promotion material, the teasers, the product campaigns. And 1 year ago, this was close to 0. All of it was still shot with cameras and Photoshop, et cetera. This now allows us to move much quicker with campaigns, a process that used to take us 6 weeks from idea to life is now done in days. And on top, we could increase the campaign content by 70% without increasing our overall content investments. So you can really see how this now moves to a real-time and personal campaign world in the future. So some of you might already see your weekly edit in your feet on Zalando, where we leverage generative AI to recommend your products that we hope you might love every week. So it's pretty impressive.

So second, moving on to the physical experience. It's an incredibly complex problem to precisely forecast the delivery time of an order for the customer as an order needs to be consolidated across like different logistics centers and is dependent on carriers on traffic, et cetera. But it really is what customers appreciate. And in just 1 year, through the advancement of the AI models, we have been able to improve the precision of our real-time delivery promises by 22 percentage points. So 22 percentage points is huge. Thirdly, of course, our team of around 3,000 tech specialists, engineers and scientists are using AI coding tools. And even in our complex environment, we already see increases of over 20% more code changes. Increasingly, improving AI tools mean we are moving faster than ever. The impact is ding. There are places in our business where road maps that once took years are shrinking into quarters and quarters into weeks. These examples show how AI is changing the efficiency and productivity gain across everything that we do. And these gains are very exciting for us. And we know that in some cases, our advantage is temporary. Our commitment is we will always be the fastest, and we will always be the first.

The other big focus of ours is how we invest in AI for growth. So we're moving very fast. So let me ground this in reality. There are 3 concrete examples of how we are using our massive data advantage. Let's start with the basics, searching for fashion and lifestyle items. We developed our own foundational models over the last years that just focus on understanding and matching the right products to the customers and understanding context, product characteristics, g details and learning through our feedback loops with customers. So why did we do this? Because fashion is incredibly fragmented. And combine that with the fact that personal taste is intensely subjective and context dependent and matchmaking becomes a highly complex challenge. But one person finds it horable, another finds horrible. And the advancements we made through our models over the last years show truly impressive results. So for example, 13% more items are being added to bags and wishlist as a result of increasing precision in matchmaking. And they progress by the day, driven by our own unique data sets and focus on fashion and lifestyle.

Another exciting example is the size and fit challenge in fashion, the holy grail of fashion e-commerce. We're benefiting from the unique data sets we have grown and keep on growing every day, a knowledge graph of billions of items ordered over the last 10 years and size validated by our customers across a large part of the European population. And on top of that, we have 1 million people who enter body measurements in their size profile and 20,000 more people follow every single week. And based on these amazing data sets, we created our own AI models to recommend or visualize the right sizes for customers. And already now, these solutions reduced size-related returns by more than 8% as they help customers to pick the right sizes in advance. And these models are getting better every day.

As a last example, let's talk about our AI-driven Zalando Assistant. So what started as a conversational helper in the Zalando app is now turning into a true companion as we add more and more capabilities into it. So we recently launched shoppability, allowing customers to add to their bag, find items that complement the items in their bag and go to the checkout from within the assistant. We're currently testing new personalization and longer memory, so customers would experience an assistant that is more capable of learning their preference and making great recommendations. We now already have 6 million people who are engaging with it, so 4x more than last year.

So why are we so excited? Because it creates a completely new conversational way to shop with Zalando. With the customer's permission, the assistant will soon be able to tap into their purchase history, into the size profile and unique style preferences. It will evolve into a true personal lifestyle companion capable of shopping on their behalf within the Zalando app. In addition, we have partnered with one of the most ambitious AI labs in Europe, Q2 under the leadership of Peter Sale. And together with Q2, we are thrilled to work on the frontier of where fashion and lifestyle needs AI to make a lifestyle agent a reality. So a lot of exciting things are happening.

AI is not only exciting inside of our platform. There are also a lot of new opportunities that arise beyond that we are very keen on driving. So particularly the agentic commerce channel. The emerging opportunity for customers to purchase directly through AI chatbot, while it's not yet a reality in Europe today, it will become a reality soon. And there are some estimates that this might become 15% of the entire e-commerce market by 2030. So it's an exciting opportunity for us as we believe it will help to convert more of the 70% offline sales into online as it unlocks a new set of customer groups. So we will be the best at this channel and are pioneering and co-shaping the agentic commerce for Europe. So Zalando is one of the only 2 European companies that are part of the initial launch partners for Google's Universal Commerce protocol, which will basically set the standard for Argentic commerce here in Europe.

So being the pioneer ensures that we are the one that are first to learn and scale. And this is the best position to be in, and we're truly excited about what's here to come. So let me summarize a few key takeaways for you. First, AI is our catalyst to build the most leading end-to-end experience in fashion and lifestyle. And we use AI across the entire fashion and lifestyle journey from discovery to purchase to create a highly efficient and personalized experience. So we're eliminating all problems like sizing and discovery by using and building smart AI agents in commerce. So our massive scale in B2C with both consumers and brands gives us a constantly growing data pool. So crucially, 70% of our traffic is organic, which is the engine that fuels our AI data and allows us to deliver cutting-edge solutions back to customers and brands. Our decades of buildup trust and high satisfaction rates ensure that customers trust us with the data and with the AI solutions that we're rapidly building and scaling.

Second, the agentic commerce is the massive exciting opportunity of the future. So it is expected to hit 15% of online retail by 2030, and we're uniquely positioned to dominate this channel in Europe, already being the #1 referred fashion platform through chatbots today. So our work on the Lifestyle Assistant ensures we are ready for a world where our agents interact with others. We will shape European agentic commerce, and that will attract new customer groups for our platform. Thirdly, there are also great agentic opportunities in B2B. we said it many times, as it's so true. Europe is beautifully complex. And as a consequence, the European fashion sector is highly inefficient. And we harness that with our B2B offerings. For brands directly participating in agentic commerce offerings, we provide with ZEOS the multichannel solution that unlocks superior unit economics for them, giving a 25% cost advantage on average. And for chatbot AI seeking agentic Commerce, our B2B offerings enable a technical and logistical consolidation. And this reduces coordination efforts, gain speed and increases customer satisfaction. So we're positioned like Spider in the web in B2B for the agentic commerce channel. So looking at all these developments, we're truly excited about the future as we're unlocking the power of AI on our platform and beyond.

Okay. So let's move on and focus on our multi-app approach in B2C. So our North across Zalando B2C is to play a big role in people's everyday life. So ideally, creating a touch point every day. As we all ask ourselves each morning, what do I wear? And our consumer apps have inspirations and answers for you. So by now, we have a team of 3 large consumer apps, Zalando, Zalando Lounge and ABOUT YOU. And they enable us to play a broad scope of categories and experiences in fashion and lifestyle. They have different value propositions for customers yet work together as a team. The big Zalando being brand-led, ABOUT YOU and Lounge as a smaller but faster-growing teammates being trend and dealed. And together, this team of apps covers more than 60 million active customers across Europe, and each one engages its user base in a unique manner through content, gamification or daily deals. And while our apps have slightly different value propositions, all of our apps use the same foundational backbone, the same data and infrastructure and the e-commerce capabilities across logistics and payment. So what we strategically care about across our team of apps in B2C is pretty simple. We try to reach as many customers as possible, so our platform distribution.

We care that they come as often as possible of frequency and that they spend the highest share possible of their lifestyle spending through our platform, our depth. And our team of apps drives jointly to increase our platform's overall distribution frequency and depth. So looking into our distribution, we actually see that each of our apps has a significant share of unique customers. And increasingly, in our new customer acquisition, there's even less overlap between them. So each one of our apps has an important role to increase our overall reach as a platform. And when we look at our overall potential in Europe, there's still massive room to grow. And one we consider here is the population penetration. So what's the share of a country's population who are an active customer of our platform. In our core markets like the Nordics, Benelux and DACH market, we've already achieved a population penetration of more than 20%. So especially the more recent expansion in Central and Eastern Europe and the Southwest Europe still offer a lot of room for catch-up and scaling. And with our team of B2C apps, we see that we can more efficiently now leverage the app, which sees the most efficient path to further increase our distribution.

So a central engine to drive the active customer base at our core at Zalando continues to be the loyalty program Plus. And throughout 2025, we have pushed the cross-country rollout and take-up of the program. And as a result, we now have more than 16.8 million members of our loyalty program, and they have accounted for nearly half of Zalando's GMV in Q4. And I think that's a pretty impressive figure only 18 months after launch. So Plus effectively drives order frequency of customers through its mechanics. We've seen a steady incremental uplift in average order frequency from Plus members every single quarter compared to its control group. So we're very excited about the compounding effect that the loyalty program will have on our customer base going forward as we continue to grow it and optimize the mechanics.

Moving on to talk about frequency. And when we talk about frequency of usage of our platform, we don't only mean the frequency of orders. We as well mean the frequency of usage of engagement. So every single touch point with one of our apps is very valuable to us. So it's an opportunity to engage, to learn about preferences and as well an opportunity to market products and services. That's why next to our customer metrics, we increasingly started to drive the usage metrics of our platform. In our core app Zalando, the Feed and its underlying content platform is the major building block to increase the frequency of usage. And we've seen strong user adoption as evidenced by growth in critical engagement areas. So we launched at scale. Since the full launch in January, more than 25 million unique users have interacted with the Feed. And this is driving frequency of use. We now engage and entertain an audience of more than 9 million users on a weekly basis. And we're seeing early signs of this positioning Zalando as a destination for discovery with 5 million users engaging with the Feed daily. So this has led to a significant increase in engagement frequency already. And we're further elevating our content programming strategy to bring our world of inspiration entertainment to life. And with strong brand partner adoption and the scale we've unlocked through generative AI, we are excited to scale this to our entire user base in 2026.

As we talk about how to drive up the frequency, it's a good moment to report on the advertising monetization of our platform. Our Retail Media business, combining Zalando and ABOUT YOU grew much faster in 2025. The growth rate has jumped from 12% in '24 to an impressive 42% in '25, mainly driven by Zalando Marketing Services. Our Retail Media revenues are now 1.8% of GMV. And this acceleration comes from a smart strategic move. We shifted from just focusing on transactions to building a deeper, more engaging ecosystem. The key growth drivers were our self-service platform investments, more efficient campaign management and data access and using AI to optimize ad performance. And this hard work is paying off with a higher growth rate in '25. So looking ahead, our new feed and content platform is a massive opportunity. It lets us introduce innovative audience-based full funnel advertising formats for brands. The Feed is perfect for targeting the right customer and using rich content like video to tell a compelling brand story.

And the best part, the entire experience is seamlessly shoppable on Zalando, covering the full journey from brand building awareness to making the purchase. And this potential is truly exciting and unique in the market, as shown by our early success here with Jordan. With our team of consumer apps, we cover over EUR 300 GMV now per customer in yearly spend. And the biggest overall growth rates, and this is quite strategically important to us, we see in the lifestyle categories, so beyond fashion, like sports, family, beauty or designer. Here, we saw last year 13% growth of the group's GMV on a like-for-like basis. And this is important to us as we continuously move beyond being only the fashion destination and find our way into all the other segments of consumer spending. And particularly sports is a very exciting opportunity for us as it's a new way to engage consumers and move the perception of platform beyond fashion.

To see what this looks like in action, here is a glimpse into how we're energizing the sports experience on our platform.

[Presentation]

17 years of strong brand partnerships, combined with technological advancements have been a very crucial driver of our shared success. We started in 2019 strategically shifting our model from that of a retailer to retail enabler, aiming to accelerate our platform strategy. And this involves offering partner technology, content services and infrastructure to help them grow their brands. And we've achieved in 2025, a 32% share of partner business of our overall B2C GMV.

Our ambition is to increase the platform share of our B2C business to 40% and beyond by 2028. And we're committed to this ambition because we see that brands achieve superior dynamics when they fully utilize our comprehensive suite of platform services. So furthermore, these strong brand relationships can be leveraged beyond our B2C platform, extending to collaborations outside our own apps through our B2B offerings.

Over to David.

So let's now turn to B2B. Our B2B operating system is designed with a single purpose in mind, to allow merchants to focus on building their brand and digital business while we handle the complexity of their back end by leveraging our data and infrastructure engine. From physical logistics and mission-critical software to value-added services, we provide all the key components a merchant needs to run a successful online business.

ZEOS provides the infrastructure for smart logistics, enabling a seamless and highly localized delivery and return experience across Europe, regardless of whether merchants are selling on Zalando, theirbrand.com or other channels. SCAYLE offers a high-performance shop and marketplace software built to handle the rigorous demands of enterprise scale direct-to-consumer retail. Tradebyte serves as the integration and trading engine, connecting brands to more than 90 marketplaces around the world through one single integration. Merchants can start with a single product or adopt the fully integrated stack, always benefiting from the proven data and infrastructure engine, the best-in-class experiences as well as the constant innovation of Zalando.

So how do we leverage our B2B strategy to further accelerate the growth of our EUR 1 billion B2B business? First, we want to serve as many merchants as possible. We already serve more than 1,200 merchants with our B2B services and aim to leverage our brand network to bring more global brands into our ecosystem. Second, we unlock digital business growth for these merchants, both on and off the Zalando platform. We currently already enable around EUR 11 billion in GMV. There are 35% outside of the Zalando platform. And third, we expand our take rate by cross and upselling our B2B services across logistics, software and services with the potential to reach a total take rate of up to 40% once the merchant leverages our full operating system.

We are building our operating system to serve merchants across a vast range of verticals and markets, creating a multibillion euro growth opportunity for Zalando. Our current focus is clear. We aim to become the preferred partner for enterprise-level fashion and lifestyle brands and retailers across Europe. However, the modularity of our operating system and the flexibility of our software stack allow us to capture exciting growth opportunities that extend beyond these segments. First, we are moving beyond Europe. Our technology is no longer bound by European borders as evidenced by the new global partnership between SCAYLE and Levi's, which I will talk more about in a minute. Second, we are expanding into general merchandise. Partners like Netto demonstrate that our high-performance software is just as capable for general merchandise retail as it is for fashion.

And finally, we are opening up our stack for the small- and medium-sized business segment. Through integrations with platforms like Shopify, we are making Zalando's enterprise-grade backbone accessible to the next generation of entrepreneurs. To see the tremendous real-world business impact of our operating system, let's take a look at our landmark partnership with NEXT, one of the U.K.'s leading omnichannel retailers. As a strategic partner with GBP 7 billion in revenue, NEXT is utilizing our Continental European infrastructure to drive the international expansion. By consolidating NEXT Continental European inventory in our shared logistics backbone and serving customer orders across next.com, Zalando and other marketplaces from one single inventory pool, we've unlocked massive growth and efficiency in the international business.

The results speak for themselves. NEXT has achieved a 33% increase in international online sales while simultaneously seeing a 6.5% reduction in fulfillment costs. We are looking forward to bringing these exciting benefits to more merchants in the coming years. But B2B is not just a logistics story. It is also a software play. And that is why we are incredibly proud to announce an extended strategic partnership with Levi's today, representing a defining milestone in our journey towards becoming a global B2B solution provider. Levi's has selected SCAYLE to power their global direct-to-consumer business across Europe and North America, making them our first enterprise partner for the North American market.

Levi's is an iconic global brand, founded and headquartered in the U.S. Their decision to trust our software for their global direct-to-consumer business is the ultimate validation of our tech stack borderless capability. For us, this opens up an exciting new growth opportunity for our B2B software business as the U.S. is undoubtedly the largest software market in the world. But that's enough from us now.

Let's hear it directly from Levi's.

Over the past several years, we've been rewiring Levi's to operate as a best-in-class direct-to-consumer first retailer, and that starts with having a deep understanding of exactly how and where our fans want to engage with us. And so this partnership with scale and with Zalando will help us deliver for our fans and centers around 3 core areas. First, we need a trusted partner that combines best-in-class technology with a deep understanding of fashion and its unique nuances in fit, style and storytelling. And this technology is best suited to help us showcase and elevate a Dan lifestyle offering to our global fans.

Second, in this environment, speed and innovation are critical to our success. And with scale, we can build a modern e-com infrastructure that integrates advanced AI to deliver a seamless and differentiated fan experience across our global footprint. And lastly, this partnership builds on our long-standing partnership with Zalando, which has been going very well. And so by combining our iconic brand heritage with SCAYLE's cutting-edge e-commerce technology, we're entering a collaboration where we believe we can create a differentiated brand experience that only Levi's can deliver.

Following these detailed insights into our B2C and B2B businesses, let's now move on to our financial outlook.

Our financial performance in 2026 and beyond will be fueled by our scalable engine, a shared data and infrastructure platform. This platform with data at its core foundation supports both our B2C and B2B operations. Crucially, AI is the catalyst that supercharges this powerful engine. And you can clearly see this reflected in our financial guidance. We also want to highlight that while the world around us remains volatile, Zalando's engine has never been more finely tuned. We aren't just navigating the change, we are all in to win.

In 2026, we will focus on accelerating our financial performance and investing in future growth opportunities in line with our midterm guidance. For the 2026 fiscal year, we expect GMV and revenue growth of 12% to 17% year-over-year. We expect to achieve this growth through a combination of 3 factors: first, the full year inclusion of ABOUT YOU; second, through sustained growth of our active customer base and an increased share of wallet in B2C; and third, through further scaling of our B2B logistics and software businesses. Furthermore, we aim to significantly increase adjusted EBIT to a level between EUR 660 million and EUR 740 million. This includes EUR 40 million worth of synergies in 2026 from the ABOUT YOU transaction and further efficiencies across our OpEx lines. CapEx is expected in the range of EUR 240 million to EUR 300 million. Net working capital will remain in negative territory.

Now let me talk about our midterm targets for 2028, which we first shared with you back in 2024. We are on track and fully committed to deliver against these targets. Following our acquisition of ABOUT YOU, we are hereby reiterating and translating our targets into a midterm guidance for the combined group to match our reporting. The expected CAGR 2023 to 2028 for both GMV and revenue based on the reported figures is projected to be in the range of 8% to 13%. We continue to target an adjusted EBIT margin in the range of 6% to 8% in 2028, and we will deliver strong free cash flow throughout the period. Since our strategy update in 2024, we've consistently delivered every single year. In 2026, we are taking another big step towards our midterm targets. We have a clear plan, and we are delivering on that plan.

That's why today is exactly the right time to announce this capital allocation framework. This framework has 3 building blocks. First, we will maintain a strong balance sheet with robust liquidity equivalent to 10% of our last 12-month revenues to ensure operational flexibility, guarantee resilience and cover for seasonality. Second, we will continue to prioritize organic investment to deliver on our strategic ambitions. This may be complemented with selective M&A if our strict ROI hurdles are met. Third, we will return excess cash through share buybacks on an opportunistic basis and only when it maximizes value to shareholders. And to put this framework into action, we announced a share buyback program of up to EUR 300 million today.

Looking ahead, we remain laser-focused on long-term value creation, and that's why I hand it back to Robert now to talk about the huge opportunity ahead.

Let me add a couple of points about the long-term opportunity. We're absolutely confident to cover a larger than 15% share of the EUR 500 billion fashion market of Europe. The digital transition to higher online share is in full swing again, and we are perfectly positioned with our interplay of B2C and B2B. In B2C, we capture with our own team of B2C apps. And in B2B, we enable brands on all other channels that might emerge.

And we're more confident than ever before to reach our long-term target of 10% to 13%. Why? Because, one, now we see that the 6% to 8% margin target in 2028 is well within reach. We are controlling our costs very disciplined, and the platform transition is progressing very well. And second, AI is not only a catalyst for unique growth opportunities, but as well for great efficiency gains. And as a company with unique data, long-standing experience in AI and around 3,000 tech specialists, we will always have a lead against others in our industry in terms of productivity and efficiency. So we're closer than ever before to reach our long-term target of 10% to 13% margin.

So let's close this presentation with the key takeaways of today. So firstly, we accelerate our strategy execution. We delivered on our 2025 financial commitments, and we are on track with our 2028 targets, yielding significant cash generation.

And secondly, we build a unique data and infrastructure engine powering our B2C and B2B business and continue to develop our AI capabilities to unlock even more value for customers, for partners and for our business.

And last but not least, we remain laser-focused on long-term value creation and continue to invest into the immense opportunities ahead of us based on our capital allocation framework.

Good morning, everyone. Great to meet you all today. I'm Anna Dimitrova, and I'm thrilled to have joined as CFO of Zalando at the start of this year. I have spent the last 2 decades in the telecom sector, where my focus was navigating teams through periods of major strategic and operational transformation. Throughout my career as a CFO, I have prioritized an open and transparent dialogue with the financial community, and I'm truly looking forward to building that relationship with all of you. Okay. Let's get started.

We will begin with a look back at 2025 before turning our attention to 2026 and beyond. Our performance in 2025 was strong. We successfully executed on our strategy, and we delivered growth and profitability at the high end of the 2025 guidance. Our focus on execution continues to deliver strong results. This shows our ability to capture market share even in a market environment characterized by geopolitical instability and economic volatility. And on top of that, we have made exceptional progress in capturing synergies from the ABOUT YOU acquisition, which we successfully closed in July 2025. We exceeded our 2025 synergy targets and delivered EUR 10 million, which on a full year basis equals 20% of our EUR 100 million run rate. We now expect to realize the full EUR 100 million in synergies in 2028, a year early. On the back of this strong performance, we are announcing today the implementation of a capital allocation framework. We ended the year with strong cash position, which gives us choices in terms of shareholder value creation. At the same time, we're investing in our operations to drive future growth and margin expansion. Specifically, we are focused on capturing the 70% of the market that still shops offline through technologies like agentic commerce.

Simultaneously, we remain committed to a disciplined investment profile. As a result, we are now reducing our CapEx to revenue ratio from circa 3% of revenues to approximately 2% to 2028. We can do this by investing where it matters, and we will invest proportionally less in our logistic footprint and more in technology and AI. We will use some of the cash we have generated to buy back shares and are announcing a share buyback program of up to EUR 300 million, and we will be canceling all of the shares required to reduce the shares outstanding. This shows our commitment to returning excess capital and on our belief that our shares are currently trading below their intrinsic value.

In summary, the business is growing, profits are increasing and our capital allocation is laser-focused on long-term value creation. The strong performance of 2025 provides a solid basis for this. Overall, GMV, revenue and adjusted EBIT all improved significantly in 2025. And in doing so, we are reaching another milestone towards our midterm outlook. The reported increases are driven by solid underlying growth in Zalando and the inclusion of ABOUT YOU from mid-July onwards.

On a pro forma basis, as of 11th of July, assuming ABOUT YOU you had been part of the group in the prior year period, we saw healthy growth of 6.8% in GMV and 6.9% in revenue. This shows accelerated growth from Zalando on a stand-alone basis compared to the year 2024 with 4.6% growth in GMV and 4.2% in revenues. I will provide more detail on the performance of ABOUT YOU in a later slide. In summary, this growth reflects our strategy of combining organic growth with selective strategic M&A, and we were successful in turning the overall growth into higher profits. Adjusted EBIT grew 15.6%, reaching EUR 591 million for the year. The Zalando stand-alone adjusted EBIT margin improved year-on-year from 4.8% to 5.3%. And for the first time, ABOUT YOU was breakeven for the reported period after including the EUR 10 million in initial synergy capture.

Now let's shift our attention to B2C. We are outpacing the growth rate of the European e-commerce fashion segment. And this performance was supported by growth in both the retail and the partner businesses at Zalando and ABOUT YOU. Putting the market lens on. In 2025, the group grew in all our markets, and we expanded our footprint further by launching Zalando in Portugal and Greece, putting the categories lens on. The growth was fueled by lounge and our lifestyle categories, sports, kids and family and beauty. All of these grew above group average and above the online fashion market growth. Putting the customer lens on, we increased the number of Zalando Plus customers in Q4 by 25% to over 16 million across 17 markets. And this is a very positive development because Zalando Plus customers order more and spend more every single quarter compared to non-Plus customers.

Let me turn to our partner business, and I'm pleased to see the partner business growing faster than the retail business. This highlights the continued strong commitment of partners to our platform. While there was strong growth in absolute terms, on a relative basis, the share of partner business was 32.1% due to the lower share of ABOUT YOU partner business. The Zalando partner business actually increased to 34.5% with strong progress of 1.7 percentage points in the last quarter, and this is a good tailwind for our ambition in 2026. Going forward, ABOUT YOU partner share will expand as well.

We also saw strong growth in high-margin Retail Media business. Retail Media revenue as a percentage of B2C GMV rose to 1.8%, a 0.4 percentage point increase. In short, our B2C engine is expanding in size and diversifying its revenue mix, thanks to the strong growth of the non-retail business. In terms of customer traction, we aren't just reaching more people. We are becoming a more central part of their daily shopping habits and increasing our share of wallet. First of all, we increased our scale significantly through the acquisition of ABOUT YOU. In 2025, 62 million people across Europe ordered at least Zalando or ABOUT YOU package. This is 15% of the European population. At Zalando, we attracted more customers to our brand-led approach. And at ABOUT YOU, we attracted more customers by being trend-led. And approximately 6 million customers currently use both Zalando and ABOUT YOU. The high share of unique customers on both platforms supports our multi-app approach.

We are going to leverage the multi-app approach to drive growth and to cover an even larger share of the European market. Beyond growth in absolute numbers, we also increased our share of wallet with our customers. The average order per active customer remained roughly stable at EUR 4.8. But because the size of the basket increased, customers increased their spending with us. The average basket size increased by 3% to EUR 62.8 driven by a higher value per item, which is a result of higher quality orders, but also a reduction in cancellations and lower return rates. This led to GMV per active customer of around EUR 303, which is a 2.3% higher than last year. The success of our strategy is evident. One, our customers are spending more; two, with ABOUT YOU, we can tap into different customer segments and drive growth; and three, customers that utilize both platforms demonstrate even greater growth and higher spending power.

I will give you some more insights into our customer base with the cohort analysis. Overall, our customer base has become larger, more loyal and is characterized by not just higher spending, but also higher profitability. We can see the strength of our customer base in 3 KPIs. First, we have been very successful in acquiring new customers. This resulted in a year-on-year increase in spend of our new customer cohort. In fact, our new customer cohort generated significantly more GMV in 2025 versus 2024. Second, our focus on profitable growth continues to be reflected in the spending dynamics of our older customer cohorts. Third, as you can see, our focus on driving customer lifetime value shown in profit contribution per customer is paying off nicely with particular focus on younger cohorts. Thanks to this, we have further increased the profit contribution per customer over time. This is true for Zalando and about your cohorts. The improvement on all of these KPIs is the result of various initiatives like implementing cross-selling activities and active return management across markets to improve our economics and our focus on driving productivity and logistics.

The overall top line growth, stronger partner engagement and improved customer metrics also translated into solid B2C profit growth. Starting with gross profit. Gross profit increased by 13.6% to EUR 4.8 billion with 42.3% gross margin. This is a 1.2 percentage points decrease compared to 2024 despite the strong growth in absolute terms. There are 3 key drivers impacting the gross profit margin. First, the retail margin declined by 1.2 percentage points. This margin development was driven by the strong performance of Zalando Lounge, which operates on a structurally lower gross profit margin profile. Additionally, we deliberately decided to increase the offer for more price-conscious and value-seeking customers as a way to better create returns than in ROI-based marketing. Retail gross margin was also slightly impacted by the revenue deferrals associated with the expansion of our loyalty program. Secondly, we were able to offset some of the retail margin decline by strong growth in the higher-margin partner in Retail Media businesses. And thirdly, the margin was impacted by the acquisition of ABOUT YOU, which currently has a lower margin profile than the Zalando B2C business. This adversely impacted the group gross margin by 0.5 percentage points. The strong growth in gross margin in euro terms has also supported strong growth in adjusted EBIT. Adjusted EBIT grew by 9.6%, reaching EUR 536 million for the year. This corresponds to an adjusted EBIT margin of 4.8%. The Zalando B2C stand-alone margin improved year-over-year to 5.3%. We were able to offset much of the lower gross margin impact by reducing operating expenses from increased marketing efficiencies and operating leverage in admin expenses. As ABOUT YOU is new to the group and the transaction significantly impacts our reported financials, let me give you a bit more detail on the ABOUT YOU performance.

Overall, we are very pleased with the ABOUT YOU performance during the first half year of consolidation. We heard your request for more transparency after our Q3 results. So here is some detail on the GMV performance of ABOUT YOU since the acquisition. ABOUT YOU significantly accelerated growth and grew double digit the last 2 quarters. At the same time, Zalando stand-alone GMV growth accelerated in 2025 while growing at mid-single-digit percentage levels, growth was higher as the year before and at a 6x bigger GMV base compared to ABOUT YOU. We will continue to report the development through H1 2026, at which point we will have fully lapped the prior year comparison. I wanted to provide more clarity today as you can see that both ABOUT YOU and Zalando B2C are accelerating in line with our expectations. As we integrate ABOUT YOU into the group, the focus is on scaling their growth engine while rapidly capturing synergies.

The team achieved adjusted EBIT breakeven in the second half of 2025 when including initial synergies of EUR 10 million. This strong performance post closing is a great testament to the cultural and operational fit between our 2 organizations. We expect the total synergy capture to accelerate significantly in 2026 to deliver around EUR 40 million synergies. The main driver for this acceleration is the early and higher realization of commercial synergies, including, for example, improved trade terms, exchanging article photos and videos for overlapping assortment and procurement collaborations in transportation, marketing and media buying. And we have also laid the ground for synergies in logistics and payment, which will be more back-end loaded. This gives us very clear and accelerated trajectory towards our target of EUR 100 million in annual group adjusted EBIT 1 year earlier than planned by 2028. The speed of this integration gives us high confidence that ABOUT YOU will be adding to the group profits starting in 2026 in absolute terms.

Another key driver of revenue and profit growth is our B2B business. In B2B, in 2025, we saw a sustained double-digit revenue growth. On a pro forma basis, as of 11th of July, assuming ABOUT YOU had been part of the group in the prior year period, the segment also delivered strong double-digit growth of 11.7%, similar growth rates at Zalando B2B stand-alone. This performance was primarily fueled by ZEOS fulfillment, which includes our Zalando fulfillment solutions and our multichannel fulfillment offering. Last year, we served over 70 merchants across 18 different channels, and we have shipped 5x more items than we did in 2024. Soon, we will be also adding Marks & Spencer as another large enterprise customer to our B2B platform. The platform is ready to scale and bring on more and more of these large merchants over the time without requiring incremental investment.

Furthermore, SCAYLE, which has very attractive software gross margins, has provided a strategic boost to our revenue profile and achieved double-digit revenue growth in 2025, driven by increased subscriptions and country go-live fees from existing customers. Today, our B2B segment is mostly driven by Logistics as a Service business. ZEOS accounts for more than 90% of our revenue. At the same time, our Software division is growing very fast. This division includes both Tradebyte and SCAYLE. The software share of our B2B revenue grew from 5% in 2024 to 7% in 2025, including scale. This B2B revenue growth translated effectively into higher profits and significant margin expansion, making a greater contribution to the group profit than before.

Thanks to the double-digit revenue growth, our B2B gross profit margin expanded by 3.4 percentage points, rising from 11.6% to 15%. This translates into a strong increase in adjusted EBIT, which more than doubled to reach nearly EUR 54 million and also doubling the adjusted EBIT margin to 4.9%. The significant margin expansion was driven by 2 key factors: one, the increased efficiency and scale we are achieving within ZEOS fulfillment; and two, the contribution of high-margin software revenues from SCAYLE. As we scale our B2B operations, we're intentionally building a mix of high-volume logistics services and high-margin software solutions. The faster growth in software will support further margin expansion in B2B over time. Thanks to the strong growth in both B2C and B2B, we are able to deliver a solid overall growth in the group adjusted EBIT.

Starting at the bottom, we kept our adjusted EBIT margin stable compared to last year, in line with our guidance. We delivered this by becoming more efficient, so that OpEx savings could offset the slight decline in gross margins in 2025. In 2025, we delivered a group gross margin of 39.9%. Although this shows a decline of 0.8 percentage points year-on-year, the overall gross margin continues to hover around our 40% midterm target. The gross margin was impacted by 3 main factors: a 0.5 percentage points impact from Zalando B2C, a 0.2 percentage point impact from the inclusion of ABOUT YOU B2C business at group level and an 0.1 percentage point dilution due to the continued scaling of ZEOS fulfillment given its structurally lower gross margin. We were able to offset the margin development by driving operating expenses, especially in marketing and admin down.

Let me now turn to our balance sheet and cash flow development. Our business generally operates with negative working capital. At the end of Q4 2025, we had a total net working capital position of negative EUR 676 million. Strong Cyber Week trading and the inclusion of ABOUT YOU fueled a robust cash inflow at year-end. As we move into Q1 2026, we expect a corresponding normalization of cash levels as we process high-volume partner payouts from peak season. Our total inventories rose to EUR 2.1 billion, a 36% increase year-on-year, mainly as a result of the integration of ABOUT YOU into our reporting. Zalando B2C inventory grew 12% year-over-year, primarily driven by our lifestyle expansion into higher retail share categories like sports, kids and family alongside growth in lounge. We have seen stronger-than-expected partner business growth in Q4. As a consequence, we are in the process of clearing some extra inventory in H1, which will have an impact on our retail gross margin in H1, respectively. While inventories and payables are currently at elevated levels, we expect net working capital to normalize as payables are settled and we proactively reduce inventory levels.

As a result of our strong cash balance at the beginning of the year and the strong operating cash flow generated throughout the year, we were able to fund our organic and inorganic growth from our own cash flows. We started with an exceptionally strong position of EUR 2.6 billion in late 2024. Our operations were the primary engine of liquidity, generating an operating cash flow of EUR 1.1 billion. This was driven by solid operating income and the cash inflows from working capital management.

To conclude, we have successfully funded a major acquisition and paid down our convertible bond, all while maintaining a solid cash position that remains among the strongest in the industry. This makes us very well capitalized as we enter 2026, and we are poised to deliver another year of solid growth. This is reflected in our 2026 guidance. We are building strength as a group, which will result in continued growth in GMV, revenues and profit. You heard from Robert and David the targets we are committed to. Let me focus on our adjusted EBIT line.

We are targeting a further increase in adjusted EBIT, reaching a range of EUR 660 million to EUR 740 million. The overall growth in adjusted EBIT implies a margin expansion from 4.8% to 5.1%. Overall, this development will be driven by a combination of growth across our businesses and increased focus on efficiency improvements, the accelerated realization of synergies ahead of the initial plan and overall operating leverage of the enlarged group. For transparency, we expect both Zalando and ABOUT YOU to improve underlying stand-alone profitability. To support the growth, we project capital expenditure between EUR 240 million and EUR 300 million. This reflects our updated warehouse consolidation and automation plan alongside an accelerated investment in technology and AI. The amount projected is also in line with our capital allocation framework of CapEx in the range of 2%. Net working capital will be negative. Therefore, it will continue to be a source of funding for our growth in 2026 and beyond. Overall, we are on track to deliver our 2026 numbers, and I'm fully committed to delivering on these targets.

Let's now move to our midterm guidance. This year is about getting smarter and building strength. Next year is about unlocking value, and 2028 will be the year of full-scale growth. Our midterm targets are clear: one, top line growth; two, margin expansion; and three, strong cash generation. To better reflect the acquisition of ABOUT YOU and provide a clearer view of our growth trajectory on both a quarterly and yearly basis, we are reiterating and translating our midterm guidance to reflect the combined group approach. It is important to note that our original plan and commitment remain unchanged, and we are updating these targets to be more transparent with you. For both GMV and group revenues, we guide to a 5-year CAGR from 2023 to 2028 of 8% to 13% on a reported basis, which is the translation of a 5% to 10% CAGR and the contribution from ABOUT YOU.

For the adjusted EBIT margin, our guidance for 2028 remains 6% to 8% of revenues. We stick to this range in spite of the contribution of ABOUT YOU. that was dilutive to our EBIT margin on acquisition as previously reported. And we will deliver this with CapEx of around 2% of revenues, down from our previous 3% target. These factors will result in strong free cash flow generation throughout the guidance period, which will give us the flexibility to continue returning capital to our shareholders. We have a clear path to deliver on our targets.

Let me be transparent about what you can expect. In 2025, underlying margins improved solidly, driven by efficiencies, leveraging OpEx and faster synergy capture. The ABOUT YOU inclusion masks this at the group level, the positive trend is clear. We will build on this in 2026 with improved underlying profitability from lower OpEx and accelerated synergy realization. While the inclusion of ABOUT YOU will dilute group margins for another year, we expect reported margins to expand significantly next year and the year after to deliver on our 6% to 8% midterm corridor in 2028.

Over the coming years, we are maintaining our group-wide gross margin target of around 40%. First of all, we expect to grow gross margins in both B2C and B2B over the period. In B2C, we are focused on enhancing the retail gross margin by continuously addressing inventory management, COGS improvement and our efforts to increase full price sell-through, being aware of the current market environment and shifts in our business mix with ABOUT YOU and Lounge. At the same time, the B2C margins will benefit from the faster-growing partner and Retail Media business.

The partner business is expected to grow to 40% to 50% of GMV and the Retail Media business to 3% to 4% of GMV over the period. As these businesses have a higher gross margin, the increasing share in the mix will support structurally higher B2C gross margins. Within B2B, we expect a moderate gross margin increase coming from efficiency gains in ZEOS fulfillment and a bigger revenue share from our high gross margin software businesses, SCAYLE and Tradebyte. Therefore, the adjusted EBIT margin expansion will be driven by efficiencies and leverage across our 3 OpEx lines. One, fulfillment. We are targeting substantial cost improvements to increase capacity utilization, further automatization, improved order economics and the deeper integration of AI to drive efficiencies. Two, marketing. We expect to drive operating leverage in marketing with expenses trending downwards as a percentage of revenue in the medium term. And three, administration. As the group grows, we will continue to capture economies of scale and drive administrative efficiencies. The transition to platform and further AI efficiencies are key drivers of lower overhead expenses going forward.

We have undertaken the first initiatives with regards to OpEx savings. With the announced reshaping of our logistics footprint and the warehouse consolidation, we are able to drive incremental cost savings of a mid-double-digit million amount from 2028 onwards. Finally, the continued synergy capture from the ABOUT YOU transaction will consistently contribute to increasing our profitability. These synergies will contribute significantly each year, aiming for the full potential of EUR 100 million annually by 2028. 1 year earlier than we announced at the time of the deal. To conclude, we have a clear plan to reach our medium-term target margin corridor of 6% to 8%. As we become more efficient, we can deliver on our targets with structurally lower CapEx as a percentage of revenues. Overall, we will continue to invest in our platform at 2% of revenues, around the same level as we have seen over the last few years. So this is a prudent assumption going forward as well. At the same time, the mix of CapEx spending will change, and we will be spending more on technology and less on our logistics network.

Our 2025 capital expenditure was split with approximately 40% dedicated to logistics network and 60% allocated to technology investments supporting growth initiatives and essential capabilities like size and fit, AI and data science as well as personalization, recommendation, search and browse. On the logistics side, the reassessment of our logistic capacity network optimization is complete. We are now focusing on the completion of fulfillment centers in Paris and Frankfurt, the closure of 4 sites, maintenance and upgrades to the existing sites. As a result of more disciplined CapEx for the logistics network, we have increased our ability to invest more in technology and AI, which you heard from Robert and David earlier.

In conclusion, we keep investing into our data and infrastructure platform and integrate AI to support long-term profitable growth and efficiencies while keeping CapEx spend around 2% of revenues. This leads me to our capital allocation framework focused on long-term value creation. Robert and David also elaborated on it earlier today. So let me just briefly recap. There are 3 building blocks in how we intend to allocate our cash in the future. First, we want to maintain a strong balance sheet with robust liquidity equivalent to 10% of our last 12 months revenue to ensure operational flexibility, guarantee resilience and cover for seasonality. Second, we will continue to prioritize organic investments to deliver on our strategic ambition. This may be complemented with selective M&A if our strict ROI hurdles are met. Third, we will return excess cash to share buybacks on an opportunistic basis and only when it maximizes value to shareholders.

Consequently, we decided to buy back shares for up to EUR 300 million, commencing shortly after our publication. This underscores our commitment to returning excess capital and our confidence in the intrinsic value of our shares. Here are the 3 takeaways of today. One, we delivered at the high end of our 2025 guidance. Two, we will achieve our midterm adjusted EBIT margin target of 6% to 8%. We are unlocking further growth, driving efficiency across our various cost lines and realizing our EUR 100 million synergies from ABOUT YOU in 2028. And three, we announced our capital allocation framework and decided for a buyback of up to EUR 300 million.

With that, I conclude the presentation, and I look forward to answering your questions in the Q&A session shortly.

Welcome to our Q&A session. Thanks for joining, and welcome again to everyone. With me here in our studio in Berlin, I have our co-CEOs, Robert and David as well as our new CFO, Anna Dimitrova. We have approximately 45 minutes, and we will keep to try answer as many questions as possible. As usual, I for you also after that meeting and is able to answer any remaining questions. Now without further ado, let's get started. [Operator Instructions]

With that, let me start off with the first question. Agent gets in everyone's mind, Robert. I have a question from Andreas Riemann, ODDO BAF. Agentic commerce, you stated you are #1 on the referred brands via chatbot. Can you be more precise, please? You're #1 within the EU fashion category? What chatbots are included here? Linked to that, how has share of organic traffic developed over the last few quarters?

Yes. I mean we -- I mean there's a couple of external studies out there. That's what we are referring to. I think what you ultimately care for is when you have conversations with the most kind of relevant chatbots in the various countries that we're active in and you ask like why would you actually buy a certain brand, where you would buy fashion, where you buy sports? And what kind of picks does actually the various chatbot actually do. And when you actually do it by yourself, like in the most relevant markets that we're in, in most of the cries you can actually imagine Zalando is actually in the categories of fashion lifestyle Zalando is 1, 2, 3. Usually, it's the brand in the brand and then it's actually the leading platform, which in most of these countries, Zalando. And that's why I think in most of these countries were the most preferred chatbot as we optimize for these engines. And I mean the traffic, I mean, is growing a lot, but it's still like at a single -- at a very low single percentage points of organic traffic. So it's not yet very materially, but it's strongly growing, which is exciting.

Cool. Super. There's another question coming from Jurgen Kolb, Kepler Cheuvreux, also in terms of agentic commerce. What are your next plans, scaling in-house or teaming up with any or all large language model or both?

I think it has 3 layers. I think like the most exciting one is what we do actually when we combine our own source of data with agentic experience. So what we do actually on Zalando. So own sources of data, which is like the millions of -- the billions of transaction data, the behavioral data and how we really can create experiences, agentic experiences with the fantasy of our data and agentic kind of flow. We talked about that, that's what we do, for example, with the assistant now. We're actually building -- we build -- we're really doubling down on building a stronger bigger in-house team and as well partnering with one of the most ambitious AI labs for Europe. So we have integrated shopability now into the assistant. We have soon upon us consent as well allow that the assistant can access the purchase history, the history. And our goal is actually to build towards truly lifestyle AI that I think would be quite amazing achievement when we put that off. So that's in-house. That's this part. That's the most exciting one.

When it comes to the agentic channel, where kind of chatGPT and others kind of building towards more agentic interfaces, we see this as incremental channel. Because I mean, if you think about it like it's a very intuitive way of how they engage with users. So it's like we have users autonomic like all the people and so on. So we hope to get like the 70% offline share of fashion retail and the much towards online. So will you plan to be like the first and the best one. And we're the first -- as we've outlined, we are 1 of the only 2 companies actually have the unaware was on the UCP on the commerce protocol and with the best because of taking the retraces already the #1 and that's well, I think our game to be the first and the best and doesn't really capture the incremental growth comming from it.

And then the third aspect of it is to be the opportunity in. So some of the brands might want to integrate with the agentic commerce channel. So we help them through ZEOS, we help them through Tradebyte to integrate in order for them to actually get better unit economics. And we help as well, which is a big advantage help us with the large language models to have like a technical and logistics consolidation layer because otherwise, there's a lot of kind of coordination costs otherwise. So that's the third opportunity that we are very focused on.

Thanks a lot, Robert. In that regard, also, there's a lot of questions that already too are going into the direction of agentic commerce and how does it work with ZMS. So Adam as well as -- from Deutsche Bank as well as Mia from Exane is asking, we reconfirmed our 3% to 4% GMV target. But what is our view on do we expect brands to meaning fully shift their marketing budget to agentic commerce? And also then lastly, would this impact and also our midterm targets? Any light you can share here?

Yes. I mean ZMS has said, as we said, has a great run. So I think I mean the success of ZMS basically depends on 3 things. So one is the overall traffic of Zalando. So -- and the second one is like the penetration of the traffic, like what's actually the intensity of marketing in the traffic. And the third one is the overall attractiveness of Zalando as a platform towards brands. And I mean here, we actually invest so much now to actually with data insights for the brands.

And maybe starting with one like the traffic. So what we see the traffic of Zalando is stable, but actually, the quality is actually growing. So the locked end users, so the ones we actually really know a lot about like the audience. So that one is actually growing. In terms of the penetration of the traffic, if you calculate the advertising revenues divided by the GMV, we're at 1.8%. So we see actually industry benchmarks that you actually can get to like probably at 8%. So -- and we're talking about 3% to 4%. So we might not get to 8% because we might forego some of the tactics that you actually need to get to 8% but getting from 1.8% to 3% to 4%, even at the same traffic, I mean, it's for me like a no-brainer that we can actually get there.

And then in terms of the attractiveness of the platform, I mean the attractiveness of platform very much depends on what kind of insights the brand can actually get from platform. And I mean, here, we actually invest so much now to actually with data insights for the brands. We invest in, as I shared in the presentation, with a full final offering where they can actually build audience-based, an audio-based product where they can tell the brand story and do the transaction at the same time, which is pretty unique in the entire marketplace. So an attractiveness of platform actually goes up. So I mean bottom line 3% to 4% for me is actually no-brainer that we should be able to get to this.

Cool. Super. Now we're moving on to video. So Freddie, here you are. So thanks for dialing in via video. And yes, the floor is yours. Please limit yourself to 2 questions. And yes, with that, over to you. Can you hear me, Freddie?

First of all, congratulations on the results, and thank you for all the clarity you've given us over the AI impact on your business. So first of all, my question is you outlined many ways that AI is going to help you engage customers and grow your top line. Can we think about this as actually you think your market share gains within that e-commerce environment should be higher than they have historically been enabled by that data moat? Shall leave go to my second question as well?

Yes, go ahead with the second question as well.

Fantastic. When we think about your comments on the new capital allocation framework, obviously, M&A is still in there and you say you've got still very high ROI hurdle to get there. Does where the shares currently sit, the multiple the business currently sits on influence where you think the sort of return on investment you have to get from ANI from M&A versus doing another buyback?

Super. Let me start with the second question on the capital allocation framework. Anna, would you take that question? And then on the channels, I hand it over to Robert again.

Yes, sure. Frederick, nice meeting you. Thank you for the question. So we introduced today or updated our capital allocation framework to reflect as well that the business going forward will generate more cash. And with all decisions which we do around capital allocation, we always will, on a regular basis, apply this. So first, obviously, it's important to have a strong balance sheet where we very clearly outlined how we are going to do so in terms of the 10% cash threshold of our last 12 months revenue.

Second is the topic which you are asking for our decisions around organic growth and as well as selective M&A, where for both, we evaluate them on our very strict investor appraisal framework. And as you said, we are very strict as well that we exceed the cost of capital, and this is how we evaluate this to fuel growth, to fuel efficiencies as well to complement our strategy.

And then the return of cash to shareholders where we are very clear that we prefer share buybacks than other instruments. And I think the important point is that we are saying we will do share buyback opportunistically because this gives us more flexibility in terms of the timing, in terms of the size and the criteria how we decide upon it. Now we believe is the right thing to do because as well we are very confident in the future of the company and our share price is undervalued, but this gives us the flexibility as well when we have an opportunity even in inorganic spaces as M&A to go for it.

Super. Thanks. Over to you, Robert, the question on like do you think that agentic and the incremental channel will help the penetration towards online even to accelerate?

I think my view is that it will help. And I would argue that I chat interfaces or conversation interfaces are a very intuitive way of how to engage with consumers. So you have, I think people that can easily interact with these interfaces because they just use natural language. And I think the more you actually can create agentic experiences, commerce experiences in that, that will help to have people to as well adopt online. So that's, I think, my belief. And -- and I mean, like in Europe, we're still talking in fashion about like a 70% offline share and only 30% online share. So I think it will certainly help to convert more of these offline sales towards online.

And I think how it will happen, I think it will happen on the one hand, as an incremental channel with ChatGPT and Gemini and those ones adopting agentic flows with commerce. But it will happen as we leverage Zalando, Zalando's very unique data pool with own agentic experience and are able to create an end-to-end experience for fashion lifestyle that at the moment we cannot create. So we can actually have this conversational interface based on the very unique data trophy and really solve questions in another way that was not possible like 3, 4, 5 years ago. So I think this is probably really helping to actually drive online penetration in the future. So that's my personal belief, yes.

Cool. Thanks. Moving back to our slide of question, and thanks, Freddie, again for asking the questions. Moving on to David. There's a question again from Mia on capital utilization in our fulfillment network. Firstly, she wants to know what is it at the moment? And what level do you aim to reach here?

Yes. Maybe before I get started, I think it's important to understand that utilization is obviously a bit of a moving picture given that we are still in the process of ramping up our 2 newest sites, highly automated and with the latest robotics and AI technology in Paris and in Frankfurt. So that is adding new capacity. At the same time, and you've seen that beginning of this year, we've announced our plans to exit 4 sites, most of them smaller sites, but also larger site in Germany, more manual in nature. And so we are making sure that we have the right capacity for our growth plans going forward, and we elevate the efficiency of the entire network.

And now let me get back to the specific question. So on capacity utilization, given that we are still undergoing this ramp-up and the exits haven't happened yet. We are currently at a level between 60% and 70% utilization. Our target level of utilization is more 85%, 90%, which we think is allowing us to both provide great customer service, but also achieve a high level of cost efficiency, and that is also reflected in our midterm guidance of 6% to 8%, as Anna outlined in her financial details earlier today, OpEx contribution is significant to help us get to that target and a significant part is also coming from logistics.

Switching slightly the topic, but sticking with you, David, about you, Mia, again from Exane asking what have been the key changes to ABOUT YOU since the acquisition?

Yes. I mean, first of all, if we look at the stand-alone business of ABOUT YOU, I think what we can see also, thanks to Anna's deep dive, very transparent for you. The business has accelerated its growth rate, which is great, double-digit growth at ABOUT YOU, the business has also significantly improved profitability, reached breakeven in the second half of last year for the first time ever actually. And together, we also accelerated our synergy delivery, which now makes us very confident to reach our goal of EUR 100 million synergies per annum already 1 year earlier in 2028.

If you look at the underlying business, I think what's fueling the success of ABOUT YOU is that, yes, the model is really resonating well with consumers. They are continuing to roll out their marketplace model, bringing on even more brands and sellers to the platform. And they also launched their loyalty program ABOUT YOU coins,ich is showing some of the great results that we've shared earlier today for that Zalando platform.

Super. Just sticking to ABOUT YOU before we move into another video question. Jurgen Kolb is asking in terms of ABOUT YOU from your integration knowledge and customer behavior, are there any plans to potentially adjust ABOUT YOU strategy? Or is it a rather going concern and keep both proposition and positioning of Zalando and ABOUT YOU as independent and different as currently? So perhaps you can also quickly answer that.

Yes, sure. I mean, as Robert outlined in the keynote, we really think about this as a team of apps, right? The Zalando n app, the Zalando Lounge app and then the ABOUT YOU app. And we think together, these apps help us to attract even more customers and to serve these customers across many more occasions. That's also, by the way, why we see that the overlapping customers, i.e., those that shop with 2 or 3 of these apps, they actually show the highest GMV spend. and also typically the highest customer lifetime value.

And we think Zalando is well positioned to keep attracting customers and serving customers that are primarily looking for brands, the great assortment these brands bring, but also the great stories and content these brands bring with ABOUT YOU. We are primarily serving the latest trends and making sure that, that is well connected with an influencer-driven discovery and also gamification. And then with lounge, obviously, we have daily campaigns that really engage with customers because they want to see what's new on a daily basis. And yes, millions of people wake up every day checking that out at 7:00 a.m. in the morning. And I think that really shows the power this team of apps has for us.

Super. Thanks a lot. With that said, I would move over to Luke on the video.

Thanks for the detailed presentation and the extra detail and granularity that you've given today. I've got just 2 then. The first is on Retail Media. And I appreciate you've given some color around how AI is helping you produce more content with the brand, but your cost base hasn't seen the same uplift. So how should we think about that in terms of either EBIT or EBIT margin progression in Retail Media?

And then the second question was just more on your cohort chart that you indicated. I think if I read the chart correctly, it looked like existing cohorts you were seeing kind of orders naturally decline each year as you get some churn. And I'm just thinking, if I read that chart correctly, how we think about that new customers that come through the platform each year, where we are in terms of who is joining the platform and just the longevity of that?

Thanks, Luke. Perhaps starting on with Retail Media. Perhaps, Anna, you can give a bit of an idea on like especially EBIT development of Retail Media, and then I would give the cohort to David.

Luke, thank you for the question. So let me share with you how we think about Retail Media. We are very pleased that we see an acceleration in Retail Media in growth, both in Zalando and in ABOUT YOU and because Retail Media has a structurally higher margin obviously, then as well our gross margin benefits out of it. So AI is helping to increase the throughput and as well to increase the volume, which we can play on the platform. The gross margin or the EBIT contribution of Retail Media is very much a function how much is on-site and how much is off-site. So looking forward, we expect that Retail Media will keep contributing and structurally improving our margin.

Moving on to the cohort.

Yes. On the cohorts, I mean, just as a reminder, right, I mean, if we look at the B2C side of our business, obviously, the North Star metric is ultimately customer lifetime value, and that is driven by both the amount of spending customers have on the platform but also obviously, how we monetize that spending through and the engagement through profit contribution coming from either transactions or retail media, right?

And when you look at our cohort chart, I think what you see is we are able to develop the spending of customers. And especially in the last year, I think with further improvements in NPS with the rollout of the loyalty program, we've seen that especially our existing customer cohorts developed very nicely in spending. At the same time, we also kept an eye on profit contribution and leverage customer segmentation to make sure that also especially the profit contribution from these cohorts keeps increasing.

When we think about new customer acquisition, we still see what we saw in the past, right? So there is typically a dip, especially in the first year of acquisition. But then we are thereafter, especially in year 3, 4, able to meaningfully increase that spend again through the many levers that we have, including our loyalty efforts and also obviously, our lifestyle expansion.

Cool. Super. Thanks again, Luke, for the question. So moving back to slide and moving on to Anna. A recurring topic in our calls have been the gross margin. So Jurgen Kolb is asking a bit of an outlook. What are your thoughts, especially of the retail gross margin in 2026? And what are the building blocks? And as a side note, any indications about current trading effects?

Yes. Thank you, Jurgen, for the question. Let me share with you how I think about the B2C gross margin for 2026 and then zoom in the retail gross margin. So the B2C gross margin, we see some positive impacts for 2026 as we accelerate the partner business and accelerate the Retail Media business, we will -- which are high-margin businesses, we will structurally benefit in the B2C gross margin.

On the other side, we will have dilution by ABOUT YOU by the inclusion of ABOUT YOU and as well the current developments in the retail gross margin. So I'm zooming in now to the retail gross margin. Underlying, we see an improvement. Obviously, the retail gross margin is very much influenced by the business mix. Launch is very much appreciated by the customers and is growing double digit and has a structurally lower gross margin compared to Zalando Fashion store. And as I outlined in my keynote, we will now in H1, particularly see the impact on the gross margin for the reduction of the inventory levels, which we have built throughout last year. And this is the consequence of a very successful partner business. So now we will be working on it.

And looking into the future, what you can expect, obviously, you can expect that I and my team focus on the gross margin and as well on capturing efficiencies and synergies. But for the gross margin, in particular, we will reduce the inventory and especially as well adjust our buying budgets going forward so that we can see as well an underlying improvement of the retail gross margin.

So now as well covering the question about the current trading. Jurgen, we had a very solid start into the quarter. And particularly, we saw very good momentum as we moved into the spring and summer season 2026. And we haven't seen for now any impact on the demand and the business performance from the conflict in the Middle East.

Super. There's a quick follow-up from Mia on the gross margin. What gross margin impact should we expect for the loyalty program in 2026?

Marginal. So I don't think we should even talk about it. So it just washes out as we have communicated previously.

Cool. Super. There was another question on the inventory, but this was -- you already were able to answer in your question beforehand. So Adam, I think your question is here with answered. There's one another follow-up on the gross margin from Georgina. Especially in Q4, we talked about 170 basis bps decline in the gross margin. Can you give a bit of light and shed some light into that development as well, Adam?

Yes. Sure. Thank you, Georgina, for the question. We see it as well on the gross margin for the full year and then more pronounced in Q4. on the gross margin top line for the group, obviously, we have a small impact from the acceleration of in B2B. We have a dilutive impact from ABOUT YOU. And then we have on the B2C margin positive, again, contribution from partner business and ZMS and then a dilution from the retail gross margin zooming in into the retail gross margin and giving you here the building blocks, again, very successful launch performance with a structurally lower margin and as well a cautious decision to be promotional in Zalando fashion store. This was a constant decision to increase the promotional activity and not to increase performance marketing. As you know, that decisions at Zalando are taken very much with an ROI focus. So it was the better decision here to reduce performance marketing and increase the promotional activity.

Cool. Moving on, again, a bit to the agentic space. Robert, there's a follow-up question from Georgina. Is scale now agentic-ready? And for example, can it already support instant checkout in the U.S. should ChatGPT continue to pursue it?

I would probably pass...

Yes, as you heard from Robert before, I mean, we are ourselves partnering with Google to be one of their first partners in Europe, but also SAL is currently integrating with Google's Universal Commerce protocol to enable merchants, both in Europe and the U.S. So that is happening as we speak. And that same can obviously also apply to other protocols and agents. But as we understood, ChatPT has for now abandoned its checkout functionality. If that comes back, we obviously are ready to participate.

Okay. Super. One more thing before we move on to a video question again. Philip is asking a bit on -- can you elaborate a bit on the user behavior and economics of direct channel versus the CEO and the agentic commerce in first indication we are seeing. So any glimpse you are able to share, Robert?

Yes. I mean I think high level, what I can say, I mean the bulk of our -- of the traffic of Sand is direct traffic. So more than 70% of the traffic is direct. So that's like directly opening the app. I mean -- and within this traffic, I think you have probably like half of them that actually go into like a shopping mode. But already now, which I think we're very, very proud of, we actually see that half of this traffic is actually already engaging with the feed experience.

And as a result of the engagement, the Feed experience that we have, they engage with the content, they engage with inspiration. And as a result of them, we already see that there's a significant actually uplift now in frequency of usage. So this is actually the thing that we're actually doubling down on we invest a lot into AI to actually bring this frequency of traffic using these content platforms that are in the Feed actually upwards.

When it comes to the agentic Commerce referral traffic that we actually get, I mean, this is much more specific already because, I mean, as you can imagine, there has been done some research, I think, in the agentic Commerce interfaces and then they are referred to Zalando and then there's like a higher conversion likelihood in this. So it's a high-quality traffic, but a high-quality traffic in terms of conversion. It's not a high-quality traffic that we're actually that we actually then drive frequency afterwards, but like really high converting traffic.

Cool. With that, we would move over to the video. Joff, can you hear us?

Yes. I guess I want to discuss a little bit about the announcement you made with Levi's this morning and the scale. Can you please first comment on the current size of Levi's online sales? And in that context, can you seize the opportunity to remind us how the scale economics work for Zalando and therefore, how we should think about the Levi's contribution in 2026, but also over the next couple of years as we head into the end of the strategic plan? And obviously, as a follow-up, discussing about scale, can you talk about the pipeline of projects or deals that we could expect tentatively in 2026 or beyond?

Yes, sure. I mean we are super excited, obviously, about working together with Levi's for their global direct-to-consumer business. I think it's a testament to the great partnerships we built. It's a testament to the, yes, borderless reach of our technology platform that doesn't just work well in Europe, but also in the U.S. And I think it really also shows that we can tap into new large opportunities for our software business with the U.S. obviously being the largest software market in the world.

I hope you understand that I'm not able to comment on Levi's numbers here. That's what you would need to ask them about. We respect confidentiality, of course, with all our partners. But I'm happy to share that for scale, right, and therefore, also for Zalando, it's a multimillion euro business opportunity in terms of revenue and in terms of profit. The nice thing, as you know, with scale is that it operates at a very high gross margin, around 85%. And that obviously makes it a very attractive business for us to scale and to also contribute to our margin targets going forward. So it doesn't impact the group revenue so much because in a way, it's tiny, right, compared to the overall B2C business, especially, but it can have a meaningful impact on our profit going forward, and that's fully reflected in our midterm guidance, 6% to 8% for the future and also our guidance for this year.

And yes, overall, we are super glad to have the B2B segment now as a second growth engine for the business, double-digit growth, accelerating growth as well as we reported in Q4 and also, yes, doubling our margin year-over-year, which I think shows the power that this business can have for us. In terms of pipeline, we are working on a few more deals, both in Europe and in the U.S. And we'll, as always, as we've done in the past, announce them as they come. But yes, you can definitely expect more announcements to happen over the course of the year.

Cool. Super. Thanks a lot. And moving back and going back to Anna. Adam from Deutsche Bank wants to know how do we decide when shares are undervalued for a buyback? Is there a criteria we are willing to share?

Yes. Thank you, Adam, for the question. Yes, listen, so I think if we just look as well at what the sales size has and where we stand today. Obviously, we are -- you are saying as well that we are undervalued, but as well, we have a very strong confidence in our midterm plan in reaching our midterm targets. I did my due diligence as well, and I see that we have taken decisions, which will bring the top line growth and which will bring as well the efficiencies. So we are seeing as well the synergies flowing in. We as well executing on our logistic networks. I can maybe name more of them. So -- and with this share buyback, we sending a very strong message that we have a firm conviction in the future of the company.

And then we definitely mean that the shares are undervalued. And as what does this mean for the future and what criteria do we apply, we will, on a regular basis, evaluate our capital allocation and go to the very structured framework, which we have shared with you, decide upon the cash, which we need to operate the business and to navigate through seasonalities and volatility, decide what investments do we need organically and inorganically to grow the business and then on an opportunistic basis, decide on share buyback.

Cool. Super. Switching topic, but staying with finance free cash flow. We generated roughly EUR 700 million before M&A in 2025. What would be your average free cash flow until 2028 after leases is asked by Andreas from ODDO BHF.

Yes. Thank you, Andreas, for the question. So again, our expectation is based on our midterm guidance and our plan, which we are very much on the way of achieving and how you should think about the free cash flow is that we will be on a similar level as before the acquisition of ABOUT YOU.

Then a question a bit going into fulfillment cost line. Marco Barresi is asking in a scenario of persistent higher energy costs, what is the cost impact for Zalando and shipping and logistic costs? Perhaps, David, you are able to shed some light into it.

Yes. Well, I mean, our fulfillment cost line is and especially also logistics, right, is arguably one of the larger ones in the business, roughly speaking, more than EUR 2 billion in spend per year. And only a fraction of that is impacted by energy costs. So there, even in an adverse scenario, we are talking low double-digit million impact. And that tells you that overall, it's really not a big impact for us. And I think probably more interesting question is how will consumer demand develop. As we said, so far, we haven't seen any impact, rather the opposite, very strong trading, especially with our spring/summer season start. But that's probably where the uncertainty sits. It's not so much on the cost side.

Cool. I have one more question from Will on return rates, Robert. Will want to know, can you talk us a bit more about the return rates for Zalando and about you in terms of percentages? And do we have a target or where you wish to get this over the coming years? And any information on drop-through in return at group level. So any light you can shed on that one?

Yes. I mean maybe like first of all, general comments about return. So return rates, like the return proposition for us for Zalando was always as a group is always something where we think it's actually important for consumers actually to enable them that returns are easy because we actually see as well in data that easy returns is actually increasing the CIV because customers can really take a buying decision at home and don't take that digitally. So -- and that increased satisfaction, increases the CV, increase engagement loyalty, everything.

That being said, I think it is very clear that there's not one person on earth that actually we lost returns. So there's who loves to good. So we actually work very hard to help to prevent unnecessary returns. And the biggest lever of that is the rate returns. And with the size rate returns, we actually make significant progress with -- I mean, the size and fit. I mean I shared that 8% of the size rate returns are now have been prevented like statistically proven actually by better -- by actually the use of AI last year. So there's actually a significant improvement.

When it comes to our team of apps, we see similar rates of return rates across like and ABOUT YOU. But what we as well see on both of these apps is actually that return rates actually are reducing at the moment. So they're going slightly down. And I mean this is to a big extent as well the result of our work. We help with different processes to further prevent some unnecessary returns when we see actually high returning items and so on. And we do that in a way that on the one hand, it increases the customer lifetime value. But on the other hand, as well increases the profit pool for partners because this is what they care for in order to actually offer as well like a lot of selection on the platform because returns as well don't help them to actually have good profit growth. So that's why we're working on it. But we don't have like a very specific target in mind, but our target is to gradually improve decreased return rates over time by not destroying any customer value.

Wonderful. Thanks, Robert. We have another question from Monique Pollard from Citi. I can already see you. Can you hear me?

Yes. Yes, I can hear you.

Wonderful.

So it was just a question, if I can, on the gross margin and also the approach to sort of performance marketing versus the utilization of promotions. So you mentioned that in the 4Q, you did some promotions, and that was partly a decision to spend money there versus the performance marketing. So as I'm thinking into 2026, what I'm trying to understand is in the first half when you said you've got a bit of extra clearance, is part of that as well a decision to allocate money to promotions away from performance marketing? Or is that more about excess inventory? And if you've got excess inventory, what are the particular areas of the business that have this kind of over inventory problem that needs to be cleared during the first half, please?

Monique, thank you for the question. I will ask for help from David for Q4 because I wasn't there, so I think it's proper that he answers the question, and then I can talk about 2026, how we approach that.

Yes. Let me start with Q4. So I mean, first of all, as Anna said, right, we are taking a very much ROI-based approach to our commercial decisions. And we look at the different levers that we have to generate demand. One lever is marketing, one lever is discounts, promotional activities, campaigns. And I think another, by the way, new exciting lever is loyalty, right, where we can also engage with customers and also ideally not just generate quarterly sales, but also longer-lasting relationships and CVs. And so yes, we obviously try to optimize our investments in the full toolbox. And as it happened in Q4, I think we saw price-sensitive consumers, looking for deals, especially around the key commercial campaigns, Singles Day, Cyber Week and so on. That's what we obviously took advantage of.

Secondly, we saw that the ROI on these investments seem more favorable compared to spending more on performance marketing. That's why, we dialed performance marketing and discount rates slightly. And yes, to really achieve the best possible commercial result, both in terms of top line, but also in terms of bottom line. And that's something we will continue to do also in the future, right? It's not like a one-off. It's really how we operate in a very data-driven way to maximize the value of the business.

And maybe as one last point, it doesn't just take into account the elasticity of demand in terms of how does it react, how do consumers react to discounts or to marketing. It also obviously takes into account our stock position, right, with the question, how do we get the highest absolute gross profit from a given inventory position. And that's all being optimized in real time to yield the best results.

Yes. And exactly this we will continue doing in 2026 in terms of where do we see the inventory. So we see it in lounge, and we see it in Sports and Kids and Family. This is actually where we increased the inventory in order as well to derisk if you want to have it like this for the growth of the partner business. And we will now apply all the toolbox so that at the end, we can balance between reducing the inventory and improving the gross margin.

Can I ask one follow-up question if that's okay?

Because it's you. Go ahead.

It was just on restructuring costs, Anna, whether you could provide any guidance for us on any restructuring or onetime costs relating to about you and the logistics network for this year, please?

Sure. So last year, you have seen we had EUR 203 million of one-off adjustments and how you should think about 2026, we expect around EUR 300 million, so a step-up of EUR 100 million. And next to the 1/3 is share buybacks, then we have around EUR 100 million with the restructuring of the logistics or the optimization of the logistics network and then another EUR 100 million, which is stemming from purchase price allocation, yes, and from integration costs. So we guided that for integration costs for the whole period till 2028, we expect mid-double-digit million amount and 2026 will be the peak.

Cool. Super. thanks, Monique. So we have -- yes, we come to the end of our session. So thanks, everyone, for participating. I would now hand it over back to David, perhaps to summarize the 3 key takeaways of today before I give a small closing remarks. Over to you, David.

Yes, sure. So thanks for joining us today. I hope you enjoyed all the exciting news that we shared. I think for us, it's really important that you take away that we are making super strong progress on our strategy and our financial performance as showcased by our 2025 results, both in terms of financial achievements, but also strategic achievements. I think you heard that we are off to a good start in 2026 and have set our goal really on further accelerating our performance once again, both in terms of strategy and financials.

And then last but not least, you heard us very excited about the long-term future of the business, where we leverage, yes, the full power of our team, but also the power of AI technology and the unique data we have and the full technology platform that we've built to drive even more impact with customers and partners and more value for the business.

Super. Thanks David. Thanks, Anna. Thanks, Robert. That is it for now. Thank you so much for your interest today, and we hope to speak to all of you soon. We are on the road also over the next few weeks and available, obviously, also over the phone. So if there are any further questions, do not hesitate to reach out to the IR team and looking forward to seeing you all. With that said, thanks, everyone, and thanks from Berlin. Bye-bye.

Ladies and gentlemen, welcome to the Zalando publication of the Q3 Results 2025 Conference Call. I'm Vicky, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Patrick Kofler, Director of IR. Please go ahead, sir.

Good morning, and welcome to our Q3 2025 earnings call. Today, I'm joined by our co-CEO and Interim CFO, David Schroder. David will kick it off with a business update before he walks you through the financial development of the quarter. Finally, David will discuss our outlook and will be available for questions afterwards.

As usual, this call is being recorded. The live webcast as well as the replay of the call will be available on our Investor Relations web page later today.

I will now hand it over to David. The floor is yours.

Thanks, Patrick. Good morning, everyone, and thank you for joining today's call. We continue to execute on our ecosystem strategy at full force, and the third quarter demonstrates its effectiveness in capturing profitable growth across both of our B2C and B2B segments. Our strong Q3 results incorporate, for the first time, the fully consolidated financial results of ABOUT YOU effective July 11, the closing date of the transaction. Final step of the squeeze-out will -- which implies the delisting of ABOUT YOU will happen very soon. With our continued strong performance in the third quarter, we are well on track to achieve this year's combined guidance and to make further progress towards our midterm targets for 2028.

Let me now walk you through the 5 key highlights of the third quarter on Page 2. Number one, we are pleased to report strong financial performance in Q3 2025, demonstrating our resilience in what still is a dynamic geopolitical and macroeconomic landscape. We achieved 6.7% year-on-year pro forma GMV growth, with an even stronger pro forma revenue growth of 7.5%, on top of a strong prior year baseline. Our profitability also remained solid with adjusted EBIT reaching EUR 96 million, slightly surpassing last year's figures despite negative impact from the inclusion of ABOUT YOU.

Number two, in B2C, we continue to expand into lifestyle with a key focus on sports this year. Today, we announced an exciting new partnership with the German Football Federation, DFB. I'll come back to these very exciting developments in a moment.

Number three, our B2B segment continued its double-digit growth trajectory. We are pleased to highlight several successful large-scale client go-lives and extensions, along with enterprise merchant wins for both ZEOS and SCAYLE. Further details on this will follow shortly.

Number four, as already announced, we are equally excited to welcome Anna Dimitrova as new CFO to Zalando. She will officially start on January 1, 2026. Throughout her career, she's been responsible for all aspects of finance, including Capital Markets and Investor Relations. Her experience in fast-moving capital-intensive technology-driven sectors positions her perfectly to support Zalando's ecosystem strategy, and work with our teams to seize the exciting opportunities ahead.

And number five, on the back of our strong year-to-date performance, we are confirming our combined guidance for full year 2025, including ABOUT YOU from the 11 July 2025 closing date onwards.

Let me now elaborate on the progress of our B2C strategy as detailed on Slide 3. To briefly recap, with our ecosystem strategy, we are extending Zalando's reach and relevance beyond fashion into broader lifestyle areas, playing an even more important role in our customers' lives. This involves creating a distinct and engaging experience that positions us as the go-to destination for sports enthusiasts. Our strategy continues to yield positive results, demonstrated by sustained customer growth and double-digit GMV increases in our sports proposition last year and this year.

Furthermore, we are strengthening our commitment to authentically integrate Zalando into sports culture through strategic partnerships. I'm just very excited to announce a significant stride in these efforts today, an extensive partnership with the German Football Federation. Until 2030, Zalando will be a main partner for the men's, women's and youth national teams. The new sponsorship agreement presents an unparalleled opportunity to significantly elevate Zalando standing as a leading football destination.

Following the same playbook, we also made significant strides to boost Zalando's awareness and consideration as a running destination. We've entered partnerships with the Rotterdam Marathon, the Copenhagen Half Marathon, and Berlin Marathon, all with the aim of inspiring runners across Europe.

Let's now turn to the latest developments in our B2B business. With our B2B business, ZEOS, we are building the operating system for fashion and lifestyle e-commerce in Europe, unlocking and accelerating digital business opportunities for brands and retailers. Building on our unique infrastructure and technology capabilities, we are now scaling and enhancing our offering with a particular focus on logistics and software.

Regarding logistics, we already announced our large-scale strategic partnership with British retailer, NEXT, last November. This collaboration has successfully launched in September this year in 21 markets on next.com and additional European marketplace businesses.

We are pleased to announce that British retailer, Marks & Spencer, has expanded its collaboration with ZEOS as well. Having already utilized ZEOS for its marketplace business, the partnership now covers fulfillment for the brand's entire Continental European e-commerce business to take full advantage of one single stock pool.

With the acquisition of ABOUT YOU, we also complemented our software offering with SCAYLE, a leading enterprise digital commerce platform. This shop system allows us to better support the most important channel of our merchants with their own e-comm. After the initial go-live of the partnership, we are very thrilled to see the go-live of DEICHMANN on SCAYLE shop system in its key market, Germany. DEICHMANN is the market leader in European shoe retailing.

We are equally happy to celebrate another key merchant win, namely Netto Marken-Discount, the German discount grocer. This partnership is a great example that SCAYLE is the perfect shop system for implementing modern retail concepts in different verticals, efficiently and at scale. This concludes our key business updates.

Let's now take a look at our Q3 financials. In doing so, let me first focus on our group level figures on Page 5. All presented financial figures are as reported figures, including ABOUT YOU's results from the 11 July 2025, closing date onwards. Additionally, GMV and revenue growth are presented on a pro forma basis. For the corresponding prior year period, historical pro forma figures include ABOUT YOU's results from the 11th of July 2024 onward.

In Q3, we sustained our profitable growth trajectory. GMV saw a reported growth of 21.6%, while reported revenue grew by 26.5%. This increase was primarily due to the inclusion of ABOUT YOU. Pro forma GMV grew by 6.7% and pro forma revenue increased even more by 7.5%, supported by strong performance of Zalando Marketing Services, ZEOS Fulfillment and SCAYLE, all of which contribute revenues but are not included in our GMV figures.

Our focus on driving profitable growth is also reflected in our adjusted EBIT performance. On a reported basis, combined adjusted EBIT including ABOUT YOU, reached EUR 96 million, slightly surpassing last year's figure of EUR 93 million. On profitability, the inclusion of ABOUT YOU acted as a headwind and resulted in an adjusted EBIT margin of 3.2%, 0.7 percentage points below last year's level. Our combined Q3 results once again underscore our consistent progress in achieving profitable top line growth, while simultaneously facilitating investments that cultivate long-term value.

Now let's examine the performance of our B2C segment in more detail on Page 6. In Q3, revenue grew by 27.9%, exceeding the GMV growth rate. The strong reported growth was predominantly driven by the inclusion of ABOUT YOU commerce business. Additionally, growth in Zalando B2C was supported by strategic growth investments, such as the Zalando launch in Portugal and the rollout of our upgraded Zalando Plus program. Plus now serves more than 13 million customers.

Furthermore, we saw a successful start to the autumn/winter season and particularly strong growth in our lounge, sports and beauty categories. Continued strong growth in Zalando Marketing Services also contributed to B2C revenue growth. Adjusted EBIT declined to EUR 77 million, with the adjusted EBIT margin decreasing to 2.8% due to the inclusion of ABOUT YOU's Commerce business.

Before we move on to our customer metrics, I want to briefly highlight something I'm incredibly excited about, the unmatched scale of our total combined customer base following the ABOUT YOU transaction. As you can see on Slide 7, teaming up with ABOUT YOU is a clear testament to our strong position as one of the leading multi-brand fashion and lifestyle groups across Europe. Together, we now serve a combined active customer base of more than 60 million customers. This supreme scale does not only showcase our strong standing in Europe, but further broadens our market reach and provides us with the opportunity to actively influence and shape the European fashion and lifestyle industry hand-in-hand with our more than 7,000 partnering brands.

More than 5 million customers already take advantage of both the Zalando and ABOUT YOU platform. They exhibit a significantly higher spending compared to customers that only shop on either Zalando or ABOUT YOU. At the same time, the share of -- the high share of unique customers on both platforms is a clear testament to the appeal of our dual brand strategy, which we are going to leverage going forward to drive growth and to cover an even larger share of the EUR 450 billion European fashion and lifestyle market.

Let's now move on to Page 8 and look at the remaining customer metrics of the combined group. With the inclusion, spending per customer held steady at around EUR 300. This was due to the increased spending from customers using both platforms, which compensated for the lower average spend of customers who use the ABOUT YOU platform less frequently.

Let's now turn to Page 9 and take a closer look at our B2B segment performance. In Q3 2025, our B2B segment achieved combined revenues of EUR 277 million, marking a 15.6% increase year-over-year. The growth in our B2B segment was primarily fueled by ZEOS Fulfillment, which includes both Zalando Fulfillment Solutions and multichannel fulfillment. Additionally, the inclusion of SCAYLE supported revenue growth. Adjusted EBIT for the B2B segment reached EUR 20 million. The adjusted EBIT margin saw a strong increase of 4.3 percentage points, reaching 7.1%. This improvement was driven by efficiency gains in ZEOS Fulfillment and the inclusion of SCAYLE.

Let's now move on to the group P&L on Page 10 and focus on the Q3 performance on the right-hand side of the table. With the change in reporting scope to include ABOUT YOU, all cost lines and the adjusted EBIT margin have been impacted. Group gross margin decreased year-over-year by 1.1 percentage point to 39.6%. More details to follow on the next slide in a moment.

Fulfillment costs increased by 0.6 percentage points to 24.3% of revenue, and marketing costs rose to 9.3% of revenues, both primarily due to the consolidation of ABOUT YOU. Meanwhile, the consolidation positively affected admin costs, which improved by 0.6 percentage points. Overall, we delivered a lower adjusted EBIT margin of 3.2%.

Now let's examine the gross profit development in more detail on Page 11. Our Q3 group gross profit was impacted by 3 main factors: factor number one, Zalando B2C negatively impacted the group gross margin by 0.7 percentage points. We saw negative impacts from active customer participation in commercial events, strong growth in our lounge business coming with a structurally lower gross margin and the planned revenue deferrals from our updated loyalty scheme. At the same time, we benefited from positive contributions of our partner business, including Zalando Marketing Services.

Factor number two, the revenue contribution from ABOUT YOU's commerce business, which currently operates with lower gross margins and a lower partner business share, negatively impacted the group gross margin by 0.6 percentage points.

And factor number three, B2B revenues positively impacted group gross margin by 0.2 percentage points. This was due to efficiency gains in ZEOS Fulfillment and the inclusion of SCAYLE as a high gross margin software business, both of which positively affected B2B gross margins. Looking ahead, we remain fully committed to our midterm group level gross margin target of around 40% by 2028.

Turning now to Slide 12 for net working capital. Our net working capital continues to be negative in Q3 at minus EUR 141 million. Compared to last year, we see an increase of more than EUR 100 million. Inventories were higher, predominantly reflecting the inclusion of ABOUT YOU.

Let's now take a look at Slide 13. As of the close of the first 9 months of 2025, our cash and cash equivalents stood strong at EUR 1.3 billion. This figure represents a decrease of EUR 1.3 billion from the EUR 2.6 billion recorded at the end of last year, primarily due to the paydown of convertible bonds and the consideration transferred for the ABOUT YOU acquisition.

This concludes the financial performance review. Let's now move on to the outlook on Page 14. Today's strong Q3 results confirm that we are fully on track to achieve our combined guidance for the financial year 2025, as provided in August. Based on current trading and looking ahead at Cyber and Christmas peaks on the horizon, we anticipate a strong finish to the year, with mid-single-digit pro forma GMV growth in Q4. As a team, we are fully focused now on providing our customers with great experiences, and our partners with top-notch service during the upcoming peak season.

For the upcoming year, our ambition remains clear. We will continue to deliver on our ecosystem strategy, accelerate growth and increase profit across both our B2C and B2B segments, fully in line with our midterm guidance. This will be supported by both accelerated growth of our platform business in B2C and further scaling of B2B, delivery of cost synergies enabled through the combination of Zalando and ABOUT YOU as well as continued cost efficiency measures.

This concludes our presentation for today. Let's now open for Q&A.

[Operator Instructions] First question from Adam Cochrane, Deutsche Bank.

The first question I got is on the basket size that you've reported, you've got the combined number. How has the sort of basket size progressed over the period? I know that as you're gaining new customers, they generally come in at a slightly lower average basket size. Is it possible to give us any sort of view on how the existing customer base basket size is evolving? And then obviously, you've got the new customers coming in. And then you've got the acquisition of ABOUT YOU as well. It's quite hard to get a picture of what's going on within the basket size.

And then secondly, in terms of the B2B business, how is it evolving without the benefit of SCAYLE? And within SCAYLE, would you guys give any view on -- you've dropped in a few names there of clients. How much EBIT do these clients generate from the SCAYLE operation? Just so we get a flavor for talking about Netto as an example or DEICHMANN. I don't want them exactly, but how much EBIT do these clients generate for the group?

Adam, thanks for your questions. I mean, looking at basket size development, I think the most important thing to understand, and as we've explained when we released our strategy, is that our key goal is really to increase GMV spend per customer, right? So our key focus is on the wallet of customers rather than the basket size of each individual purchase because ultimately, that's what we need to drive to drive customer lifetime value and to also obviously drive value of the business.

That being said, obviously, we have taken measures over the past years, as you know, to improve our order economics also on individual orders, and that has led to an increase in average basket size actually both on Zalando and ABOUT YOU. And yes, that's also a trend that we actually expect to continue in the future. But as you know, what we are even more focused on at the moment, is to drive more frequency, frequency of engagement through our inspiration and entertainment efforts, but also frequency of shopping, especially through our loyalty program, Zalando Plus.

And then on your second question regarding developments in B2B. I think I'm happy to confirm that even without including SCAYLE, our B2B business looks very strong, continues its double-digit growth trajectory that we've also talked about earlier this year, predominantly driven by ZEOS Fulfillment. And as we've also commented already in the presentation, the margin also without SCAYLE is up year-over-year in that business. And SCAYLE is contributing obviously even more revenue growth due to the first time inclusion on an as reported basis and then also obviously supports the margin due to the strong software gross margins, which then also leads me to the second point that you asked for.

So if we look at SCAYLE specifically, obviously, it's a high gross margin software business, meaning that we -- if we add meaningful revenue which, in the case of large enterprise merchants can be right in the millions. There's also a strong drop-through of that revenue on to the bottom line.

The next question is from William Woods, Bernstein.

The first one is just on, obviously, you're engaging in kind of more sponsorships with the German Football Association, et cetera. Do you think that this will become a larger portion of the business? And do you think the marketing spend might have to come up over the next couple of years?

And the second one is similar to Adam's question, just on the active customer growth. Can you give some color on who you're acquiring either by gender, age category? And are you seeing similar retention rates? And then where do you think there's further room to go in terms of acquiring customers?

Sure. Yes. So maybe taking a step back on sports in general, right? I mean, as you know, we -- as one pillar of our B2C strategy, we are definitely keen on expanding more into lifestyle areas beyond fashion. We see this as a key way to drive share of wallet and GMV per customer, as I also just explained on Adam's question. And especially the sports business is appealing there, right? Because sports, in a way, very nicely brings together style, culture and obviously, also performance. And we see that there's generally a high interest from our customers in that category, and that's why we also enjoyed significantly double-digit growth last year and also seeing strong growth this year. And for us, the sponsorships are now really an opportunity to, yes, further step up our game in sports and further raise awareness and consideration with customers to continue to grow that category very strongly.

In terms of the implication that has on our marketing spend, I think what we rather see it as a reallocation of marketing spend within the marketing budget, so we don't intend to increase our marketing spend on a relative basis. I guess we've always said, over time, we rather aim to take it down in relative terms over time, and that is still very much true today. For us, it rather means, yes, we refocused some of our marketing spend on these big partnerships because we think they are an interesting new way to engage with customers, especially when it comes to these exciting new lifestyle propositions.

And we've seen it work very well with the running sponsorships that we've done this year. So as we talked about in the presentation, several partnerships with key marathon events. And in the running category, we've seen even higher growth rates than in sports overall. So I think we have strong proof points that exactly this strategy is working, and we're now using the same playbook for football. Also ahead, obviously, of the large-scale events coming up next year with the World Cup in the U.S., Canada and Mexico.

And then second question on active customer growth. I mean, we are very happy actually at both Zalando and ABOUT YOU to see this strong active customer growth continue. I think it shows us that we are far from reaching maturity levels anytime soon. I mean as we've talked about multiple times, the market is huge. Our market share, even combined, is still very small. And we continue to attract customers across all our markets, really, right? So even in more mature regions like DACH, still looking strong on new customer acquisition.

It's also broad-based across age groups, across also the different propositions, which also provide us with a new angle obviously, to attract customers, right? So some customers now are also coming to us because of beauty, because of sports, because of kids, right? And I think that is very much explaining the strong traction that we are seeing on the active customer side.

The next question from Georgina Johanan, JPMorgan.

I've got 2, please. The first one was just on the synergy guidance of EUR 100 million, I think. Just any updated thoughts on that from the early work that you've been able to do?

And then secondly, I think just following on from, I think, Adam's question on SCAYLE, I think I'm right in saying that ABOUT YOU's guidance historically was for about EUR 25 million or so of EBITDA for their fiscal '25 from that business. It would just be really helpful even if it was on a one-off basis to understand the sort of level of depreciation that was going through SCAYLE, just so we could get a sense of that EBIT contribution, please?

And then just sticking with SCAYLE, I know ABOUT YOU has talked about the potential for U.S. client wins. So just wanted to understand if that was something that you were still targeting under your ownership, please.

Sure, Georgina. So on synergy guidance, I think nothing has changed since the last update. If anything, I guess, we are becoming more and more confident with every day that we are working together, that we'll be able to deliver on the synergies that we promised and might even find new ones along the way.

I think one thing to still keep in mind, we already mentioned that several times in the past, is that the largest amount of synergies is obviously backloaded. So we'll mainly then hedge the outer years, 2028, 2029. But obviously, we are working hard to enable those synergies already with the actions that we are taking today and also next year. But yes, we'll be happy to provide further updates as we move along, most likely already then with our full year results in March next year.

On SCAYLE, I think I'm afraid that I can't help you out on the specific details. You asked for what I can confirm, however, is that the strong gross margin and also EBIT contribution that SCAYLE has talked about in the past. It's also something that is obviously now driving our B2B business forward. As you can imagine, we've now reporting on a combined basis, we are also taking the same approach to capitalization that we are taking for Zalando overall. So no difference here in the treatment going forward.

And with regards to the U.S. opportunity, indeed, this is potentially one of the biggest opportunities for additional SCAYLE momentum in the future. As you know and have seen, the momentum is very strong in Europe already. But obviously, the total addressable market could be significantly expanded if we gain a foothold in the U.S. And so it's a key priority for us as a group and for the SCAYLE team in particular. I'm definitely happy to report that there are several key discussions in, yes, what I would call close to final stages. So I would say, stay tuned for further updates to come in that regard.

The next question from Sarah Roberts, Barclays.

Two from me, please. Firstly, digging into the B2C Zalando gross margin moving parts a little bit more. Could you walk us through the key moving parts of the B2C gross margin? We know there's some impact from partner program and ZMS, some headwinds from loyalty, but can you quantify these? And then how much of the pressure on gross margins reflect a more price-sensitive or promotional consumer?

And then secondly, the M&S partnership for ZEOS looks like a strong win. Could you share a little bit more color on its potential contribution to B2B revenues? And give us a sense of when we might start to see those revenues coming through for B2B?

Yes. So on B2C gross margin, I mean, the overall impact is something that you see very transparently, I guess, in the bridge that we provided. In terms of the quantitative impact of the different factors influencing, especially the Zalando B2C gross margin, I think I'm definitely happy to tell you how they rank, right, in terms of how much they influence the picture. The biggest impact definitely comes from the commercial activations that were very successful across our destinations in Q3, considering also that, that is seasonally a quarter very much driven by commercial activations with end of season sales, for example.

Yes, second largest impact then came from the lounge business, showing very strong traction and I think also allowing us to have a strong offer for value-focused and value-conscious consumers in the current market environment. I think that's the key strength of the group that we can also cater to these needs, whereas our main destination, as you know, is more geared towards quality full price. And then the smallest impact, but that's one we already flagged to you same time last year, essentially came from the continued rollout -- successful rollout of the loyalty program, which saw a 30% increase in active memberships quarter-over-quarter. And then obviously, it's also reflected in our gross margin on the B2C level. These are the negative ones.

I guess, on the positive side, obviously, we did -- as we commented, we did benefit from the higher gross margin of our partner business, especially also the continued double-digit growth of our Zalando Marketing Services.

And yes, then coming to your question on the Marks & Spencer partnership, I mean, I'm personally super happy actually to see that after this landmark deal with NEXT, we are now seeing also strong interest from other brands and retailers to go for a similar setup, essentially trust us, not with just a part of their business, but go all in with the ZEOS solution, especially to leverage its full advantages across Continental Europe, where I would say our network is really one of a kind in fashion and lifestyle, and also is able to deliver superior performance in terms of customer service and cost efficiency at the same time.

I think the deal here is further testament to that. And as you can imagine, we are also talking to some other clients for similar moves. And yes, we'll see that impact come through next year. As usual, there's a bit of integration and onboarding work that needs to happen, has also happened with NEXT, but as you can imagine, the more we do these kinds of rollouts, the better we get, the faster we get and the faster we can also scale our B2B business going forward. And so we expect it to also contribute to our growth acceleration next year.

The next question from Frederick Wild, Jefferies.

I'm afraid, I've got 3. So first of all, could you give us a bit more detail about current trading? Particularly, was it consistent across October and any trends there?

Second, is the gross margin year-on-year move in Q3 a good guide for Q4? Because I was looking at the fact that ABOUT YOU seems to have structurally lower margins in Q3, so should we see some recovery in year-on-year gross margin in Q4?

And then finally, I'd like to understand, please, what the partner program GMV mix was in the quarter, both for the combined group and for Zalando stand-alone?

Sure. Yes. I mean on current trading, I think we see ourselves very much on track to hit our full year guidance. As we said, we expect, on a pro forma business -- basis, sorry, mid-single-digit growth in Q4. And that is very much supported by what we've seen so far. So we're not betting like on an acceleration in the -- what you could call second half of the quarter, but it's very much what we've also seen so far, and basically expecting that to continue throughout the remainder of the quarter.

Now gross margin-wise, I think Q3 definitely can serve as a good indication for Q4 in the sense of the effects that we just talked about, right? The impact from the inclusion of ABOUT YOU, the impact from commercial activations, impact of a fast-growing launch, impact of loyalty program, accounting effects. I think all these are very much going to persist in Q4. And that's why I think that gives you a good indication for what to expect also next quarter.

And then last but not least, I think looking at partner program performance in terms of GMV growth, we saw both retail and partner business grow almost equally strong in the third quarter. And so that also then implies that there's no bigger change in mix on the Zalando side. Keep in mind, obviously, that the partner share on the ABOUT YOU side is significantly smaller, but it's also accelerating as they are now driving the platform transition to a true marketplace model on the ABOUT YOU side.

The next question is from Yashraj Rajani, UBS.

I've got 2, please. So the first one is, how does your role as an aggregator change with the advent of Agentic AI, please? Like what are you doing to ensure that you are a beneficiary of AI traffic rather than being adversely impacted by agents directing customers to brand websites rather than your website? So that's the first one.

The second one is -- you made a comment that you are far from maturity and still growing. Appreciate it's still quite early to comment on next year, but does that comment mean that you can potentially accelerate GMV growth next year? Or do you think that at this point, it's better to be conservative and potentially a mid-single-digit GMV growth for next year is a reasonable place to be, which is where consensus is?

Sure, yes. Thanks for your questions. I mean, on agentic -- and I think that's very much in line with how you've seen Zalando act in the past, right? So when we see shifts in the industry, be it early on the shift from web to mobile, then later, obviously, also seeing other shifts in the industry towards more inspirational formats and so on, I think we've always had the ambition to lead that change and to also leverage these shifts as an opportunity to strengthen our business, to accelerate our growth and to, yes, obviously, also grow our share.

And we think the same way about agentic, and that's also why we decided to really act early. You've seen that happen for example, through our targeted efforts to develop our very own Zalando system, which is an agentic interface on our own premises. We've, yes, I think learned a lot. We've also managed to roll it out and scale it over time. And we're obviously, looking at other use cases as well, I think especially important to consider that, yes, the opportunity in the end is also huge on the B2B side of the business as many brands and retailers are asking themselves these questions, how to grow their business and continue to engage with customers in an agentic environment, and I think SCAYLE can also obviously play a key role in enabling them for that future.

And that's why, yes, we continue to embrace that opportunity and make sure that once again, similar to the shifts in the past, we come out strong and use it as a way to further strengthen our position in the industry without being naive, of course, right? So we also know there are potentially areas of this development that we need to have a careful eye on. But yes, I think the key focus is really on the opportunity that it creates for us.

Regarding next year, and as also stressed during my outlook presentation, I think, yes, indeed, we are aiming to accelerate growth further next year. And so I think that's something you should expect from us. We definitely expect it from us, going forward, in line with really the midterm guidance that we have provided to you a while ago.

The next question from Richard Chamberlain, RBC.

Two also for me, please. I just had, first of all, a question about inventory. How are you feeling about the composition of your inventory at the moment? How fresh is the inventory overall?

And then the second one is on the midterm gross margin target of 40%. Can you just remind me what the key drivers you think are for improvement to get to that level? Will that come from more buying and procurement? Or will that come more from improved full-price sales?

Sure. So on inventory, I think we feel very good about our inventory position. I think it has enabled us to also have the right offer for customers. It has enabled a strong season start already in September and now continued good trading in the months thereafter. I think it's really important to realize, I made that comment earlier that the quantitative impact you see us report is mainly due to the inclusion of ABOUT YOU, right? And so if you -- yes, if you would essentially consider that impact and the remaining increase on the Zalando side is comparatively small and hence, very much in line also with the growth rates that we are driving at the moment.

Now on the gross margin outlook. We are very much focused on gross margin, as you know, and we also are very committed to achieving the around 40% that we guided towards for 2028 as part of our midterm guidance. And the building blocks really remain the same, right? So on the B2C side, we see further opportunity to increase the retail margin, more full price sell-through. Also, obviously, thanks to economies of scale, better cost of goods and so on.

I think the other key part, obviously, is that as we continue to increase the platform part of our business or the partner business and especially also Zalando Marketing Services, we add a lot of high gross margin revenue, which will also contribute to an increasing B2C gross profit margin over time.

And then what obviously also contributes to the 40% outlook is the B2B business, which is growing strongly, but which comes with a structurally lower gross margin, though that obviously does not mean that it comes with a structurally lower adjusted EBIT margin, right? So on adjusted EBIT, as we've seen this quarter, actually B2B can be a very strong contributor and will definitely also be going forward. But yes, gross margin, especially on the logistics revenues, is obviously lower than on the retail side.

The next question from Clement Genelot, Stifel.

Only one from my side. So just as a follow-up on the agentic, as we have -- well I recently seen the multiplication of partnerships in the U.S. between OpenAI and online platforms. On your side, would you be open to the idea of striking similar partnership with OpenAI or other AI chatbots in Europe?

Yes, definitely. I mean, I think we've been successful in the past when driving innovation with a combination of in-house efforts and then also partnerships. I think our -- the very initial development, for example, of our Zalando Assistant, also came about by leveraging OpenAI technology.

But I think important for us as part of our strategy, and that's also what I meant earlier with we don't want to be naive, right, is that while we like these partnerships, we don't put all our eggs in one basket. So the approach we are generally taking is to be model agnostic. It's hard to say who will win in the end, right, and what model will be best for which use case. And therefore, we continue to experiment with different models, and we also build our tech stacks in a way that we can easily exchange models depending on who performs best at a given point in time. But I think, yes, this general approach of co-innovation with strong partners is one we will continue to leverage going forward.

Next question from Mia Strauss, BNP Paribas.

And maybe just -- I think you've talked about the commercial environment a bit. But how would you characterize the promotional environment at the moment before even heading into the key trading events?

And then just secondly, can you just remind us of what is your marketing strategy on social media? So I think the point was touched on about redirecting to brands websites, but how do you bridge the gap to be redirected to Zalando's platform?

Sure Mia. So in terms of the promotional environment, I think we've basically seen a continuation of what we already saw in the past quarters. No surprise, right, given the continued rather muted macro environment also in some of the key countries in Europe, for example, Germany consumers, in general, I would say, remain a bit more price conscious and value seeking. That's why we see strong responses to our commercial activations. That's also why, especially our lounge business is performing particularly well. And yes, obviously, we are taking that into account when we optimize our go-to-market strategies for the current environment.

But for me, that's more tactics, right, where, obviously, we need to make sure that we always stay relevant for consumers and fulfill their needs in pursuit of long-term customer value accumulation. What it does mean is that we change on our general strategic direction, right? So we continue to see our role in the industry as a role that supports brands that also drives quality and is not overly focused on price.

Now coming to your second question on engaging customers on social media. Obviously, we are very active on social channels, and it's also an important part of our content strategy, not just in terms of customer acquisition, but also -- yes, sometimes the first steps of an inspiration journey, obviously, start on social media. We do a lot on our own, but we also do joint campaigns with key partners through ZMS.

However, I think it's important to understand that our primary goal is really to engage customers on our own premises. And that's why we typically construct these campaigns in a way where, yes, you might see your first hook on a social media app, but then we aim to move customers into a funnel where they then continue their inspiration journey on Zalando. And I think that's especially where new innovations like our Zalando feed experience, which we talked about in our half year report, in which we've now rolled out to a number of countries successfully, where these innovations can also help us further drive user engagement because they allow a much more immersive, much more content-rich experience than what we were able to offer before. And I think it also really blurs the lines a bit between the inspiration you can get on social media and what you see on Zalando.

And yes, the first reactions from customers in terms of how much engagement they show in each visit, but also in terms of frequency of visits are very promising. And that's why we will continue on that path. So essentially considering ourselves our own best marketing platform, while obviously working also with social media outlets going forward.

The next question is from Anne Critchlow, Berenberg.

I've got 2 questions, please. The first one is in terms of the seasonal promotions and commercial activations. Just wondering if there's been any shift from Q4 into Q3 this year in terms of the weighting? And also whether you think there's been a shift to the start of the autumn/winter season, particularly in the DACH region from Q3 into Q4, maybe from a weather perspective?

And then the second one, please. Just in terms of the virtual fitting room, whether you're getting any different results, any developments there? Any other initiatives on size and fit? And also, if you could talk a little bit about the differences between the return rate between that Zalando and ABOUT YOU.

Sure. I mean in terms of seasonal development, I think everything that we've seen so far points to a very normal seasonal pattern. Had a good start to the season, but also then the usual, I would say, timing and also performance of mid-season sale. And that's also why we expect similar trends to continue throughout the upcoming peaks. So nothing unusual, I would say, very much in line with what we've seen in the past.

And then in terms of size and fit, it remains a key strategic topic for us, predominantly also because we think it differentiates us from other platforms to provide our customers with superior size and fit advice. We've seen very good responses in the past. And that's why we're doubling down on these investments.

Virtual fitting room, I think, is working well. I think the key task here for us is to scale it to more products over time because it's really, yes, much harder to scale in a way than the pure data-driven size advice that we already offer for the bulk of our products. You need much more information about each single product than you need if you just try to match a size with a customer, but we are confident that, that will unlock the next level of size advice to improve the customer experience and to also further reduce size-related returns.

When we look at return rates overall, and I think that's also to be expected given that we sell largely similar items on ABOUT YOU and Zalando. After all, if you look at same geo and similar items, I think the return rate is really not so different between the 2 platforms.

The last question comes from Vandita Sood, Citi.

I just have 2 quick ones. Firstly, could you give us an update on how the integration with ABOUT YOU is evolving and if you are expecting any sort of changes to the synergies that you guided to before, basically not being too significant this year? And also if there's any seasonality between the third quarter and the fourth quarter in that?

And then secondly, I saw that you're now buying back some shares just for the employee program. Just wondered how you think about the timing of when you do these and how we should model it?

Sure, Vandita. Thanks for your questions. I mean, on ABOUT YOU, as I said earlier, I think everything is working super well so far. Both teams are excited to team up. I think we've seen very good traction on now also executing against our ambitious plans to drive value strategically and financially, and so we are very confident to achieve the synergies we outlined to you in our half year call also with the ramp-up over the next few years. Obviously, much more impact to come in later years due to the nature of the synergies.

And yes, as I also said earlier, I definitely see an opportunity to also identify additional sources of value creation over time, be it in the stand-alone business ABOUT YOU or also through synergies between our activities in B2C and B2B. So no changes. I think just more certainty and confidence that we'll deliver on what we shared.

And then on the share buyback, I think that is really to be seen in light of what we also did in the past, right? So very regular procedure, a very similar amount as well, up to EUR 100 million to fund our existing share-based compensation programs. We expect these shares to be bought over the course of the fourth quarter. And as usual, you will also see the reporting of the share buyback on our website.

This was the last question. I would like to turn the conference back over to you, gentlemen, for any closing remarks.

Sure. Thank you very much. So yes, great questions, great discussion. Thanks for your interest, as always.

Let me take this opportunity to wrap up with the key takeaways of today. As you can see, our ecosystem strategy and the integration of ABOUT YOU are progressing very well. In the first 9 months of 2025, we delivered strong growth and increased profitability, and we are fully on track to deliver on our combined guidance for 2025 and also on our midterm guidance beyond.

So thanks, everyone, for joining today's call. Have a nice day.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

Ladies and gentlemen, welcome to the Zalando SE publication on the Q2 Results 2025 Conference Call. I am Sandra, the Chorus Call operator.

[Operator Instructions] The conference is being recorded. [Operator Instructions] The conference will not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Patrick Kofler, Head of Investor Relations. Please go ahead, sir.

Thank you, and good morning, and welcome to our Q2 2025 earnings call. Today, I'm joined by our core Co-CEO, Robert Gentz; and our Co-CEO, Interim CFO, David Schroder. Robert will kick us off with a business update before handing over to David to walk you through the financial developments of the quarter. Finally, Robert will discuss our outlook. Both will be available for questions afterwards. As usual, this call is being recorded, and the live webcast as well as the replay of the call will be available on our Investor Relations web page later today.

I will now hand it over to Robert. The floor is yours.

Thank you, Patrick. Hello, everyone, and thank you for joining today's call. So last year, we announced our new ecosystem strategy and started to execute against it and successfully delivered on our growth and profitability ambitions. This year, we continue on this great trajectory by further advancing our B2C and B2B growth factors in driving profitable growth. At the same time, we also keep investing in strategic growth opportunities, reflecting our ambition and conviction to serve an even larger share of the EUR 450 billion total European fashion market in the long term.

Our strong H1 performance confirms that we are well on track and marks another step towards our midterm goals. Let me now move on to the overview of the 5 highlights of our presentation on Page 2.

Number one, starting with our financial performance in the first half of 2025. We achieved a strong GMV growth of 6.2% and even stronger revenue growth of 7.6% year-on-year. This represents a significant accomplishment amidst a fast-changing geopolitical and macroeconomic environment.

Profitability-wise, our business also performed well. Our adjusted EBIT reached EUR 232 million, representing a margin of 4.4%, an improvement of 0.3 percentage points year-on-year. But not only financial at the same time, we're advancing steadily on our ecosystem strategy, creating value across both the consumer and the partner side of our business.

So number two, in B2C, starting this week actually, Zalando is launching a new AI-powered discovery feed replacing the traditional home screen in our main app. And the feed brings together some of Zalando's most powerful experiences, the curated lifestyle brands, the personalized product recommendations, the live stream shopping, inspiration campaign stories and high-quality editorial content from brands, creators and Zalando, all in one place. And I'll come back to some of our most exciting B2C developments later in this call.

Number three, our B2B business maintained its double-digit growth, driven by ZEOS fulfillment. We're excited to announce the launch of our ZEOS Shopify application. Alongside the collaboration with ABOUT YOU enterprise-grade e-commerce platform scale, this reflects our ongoing commitment to building our software ecosystem and strengthens our support for our merchants most strategic digital channel, their own e-commerce operations.

With the launch, we enabled ZEOS multichannel fulfillment to Shopify's massive small- and medium-sized merchant base in Europe. The integration connects Shopify stores directly to ZEOS fulfillment. Benefits for merchants include faster onboarding, reduced operational complexities and costs. And this marks another step for ZEOS towards a broader portfolio of ecosystem partnerships with leading e-commerce platforms.

Highlight #4. As already communicated on July 11, the successful completion of ABOUT YOU transaction represents another significant milestone in our journey to build the pan-European ecosystem for fashion and lifestyle e-commerce. We received merger control clearance from the European Commission and acquired a 91.5% stake in ABOUT YOU's share capital, excluding the treasury shares. As a next step, we now intend to complete squeeze out to acquire the remaining minority shares, therefore, obtaining 100% of the share capital. We are thrilled to finally start executing our value creation plans and delivering our ecosystem strategy together.

Highlight #5. Following the recent closing of the transaction, we provide the first outlook for the full year 2025 for the combined business. On a pro forma basis, capturing ABOUT YOU to allow for a like-for-like comparison as of July 11, we expect 4% to 7% GMV and revenue growth year-on-year. For the combined group, we expect an adjusted EBIT of EUR 550 million to EUR 600 million. And this represents an increase of EUR 15 million compared to Zalando's previous stand-alone guidance at the midpoint. And more details on this to follow later in this call.

So a lot of exciting highlights we have to share. Let me now touch on the progress of our B2C strategy in more detail on Slide 3. In early 2024, during our strategy update, we introduced the 3 strategic pillars that underpin our B2C growth ambitions: differentiation through quality, lifestyle expansion and inspiration and entertainment. And since the update, we have relentlessly made progress on all of these 3 pillars. And we've again made some exciting progress that we want to share today.

Let's start with the quality differentiation. One of the core initiatives, the rollout of the new loyalty program has now surpassed 10 million members as of the end of the second quarter. Recently, we launched the program in 4 additional markets, bringing the total now to 17. And ultimately, we aim to serve the majority of our customers through this program and thereby increasing the average order frequency and our share of their spending. And already today, the members contribute more than 1/3 of our GMV. Furthermore, we are on schedule now to expand our platform into some additional European markets. Portugal is nearing launch preparations and is expected to go live in August and followed by Greece later this year.

We're also making progress on our second pillar, becoming a more holistic lifestyle destination for our customers. In the first half of the year, we delivered strong growth in our sports, family and kids design and beauty propositions, all well above the B2C GMV growth rates. And we successfully launched our future proposition to Finland to Norway and to Spain. And additionally, our launch proposition went live in Croatia and Slovenia in Hungary and Estonia, and Latvia will follow next week and Norway soon after. So we continuously and successfully expand our role that we play in our customers' lives to serve many more aspects of their lifestyle.

Let's now move to our third strategic pillar in B2C, inspiration and entertainment. And we are happy with the performance of our advertising solutions, ZMS, which saw a revenue growth of 45% in H1, yet on a weak baseline in the prior year. Even more excited we are that brands increasingly now use ZMS as a full funnel solution leveraging as well our creative services. And this is a further great signal that Zalando is considered as a destination that helps to elevate brand equity.

I will now dive deeper into the consumer-facing progress of our inspiration and entertainment pillar. But first as a recap. Some of you may also recognize the slide as we shared it during our strategy update. We see the inspiration and entertainment actually coming through on our user engagement time spent on our platform and as well midterm on the advertising opportunities.

So Zalando's ambition is to continuously redefine fashion and lifestyle shopping, and so we do. Starting this week, Zalando is launching a new AI-driven discovery feed replacing the traditional home screen in the app. This feed service is what is personally relevant and newsworthy to you from our most powerful experiences curated about the personalized product recommendations, the live stream shopping, the inspiration campaigns and high-quality content from brands, creators in Zalando, all in one, easy to scroll, personal feed.

Our goal is to create the fashion and lifestyle gateway for European consumers. We want to offer them the most newsworthy and personally relevant access to fashion and lifestyle content brands and products. From the moment customers open the app, shopping becomes more immersive and entertaining. Fresh relevant content updates appear in the feeds, keeping customers engaged and coming back. At the same time, the feed creates new high-impact performance for partners to reach audiences through even more relevant organic and advertising placements.

The concept plans the convenience of e-commerce, the entertainment of social media, the connection of idea sharing platform and the inspiration of editorial content, all presented in a personalized dynamic feed, powered by AI at the depth to individual tastes, increases usage frequency and engagement. The feeds will go live in 6 markets with a gradual rollout to follow, so extending the customer journey well beyond to transactional. We are truly excited about the launch and the opportunities this new form of experience now creates to Zalando.

And now over to David for the financial performance.

Thank you, Robert, and good morning from my side as well. Let me focus on our Q2 financial results, starting with group level figures starting on Page 6.

In Q2, we continued on our profitable growth trajectory. GMV saw mid-single-digit growth of 5% year-on-year, reaching EUR 4.1 billion, driven by a healthy performance in both our retail and partner business. Revenues increased even more by 7.3%, totaling EUR 2.8 billion, primarily driven by a strong performance of Zalando Marketing Services and ZEOS fulfillment, both of which contribute revenues that are not included in our GMV figures. Our focus on driving profitable growth is also well reflected in our adjusted EBIT performance. Adjusted EBIT reached EUR 186 million, which is an increase of EUR 40 million year-over-year. This resulted in a flat adjusted EBIT margin of 6.5%.

Looking at H1, our financial performance translates into 6.2% GMV growth and 7.6% revenue growth. Partner business GMV remained stable at 34% in the first half of the year. While we see a continued strong momentum of brand partners on our platform, retailer volume was impacted negatively by our strategic decision to prioritize high-quality, high-equity brands.

Our brand partners also continue to increase usage of Zalando Marketing Services, our advertising business to increase their visibility on our platform and to drive more sales. The continued growth momentum is well reflected in an increase of ZMS revenues by 45% year-over-year with ZMS revenues reaching 1.7% of B2C GMV, a significant expansion of 0.4 percentage points year-on-year, also supported by a relatively weak prior year baseline.

Our adjusted EBIT came in at EUR 232 million, and the adjusted EBIT margin improved by 0.3 percentage points to 4.4%, despite the volatile market environment and major growth investments, establishing a strong base from which to make further progress towards our 2028 margin target of 6% to 8%. These results demonstrate again our continued progress in driving profitable top line growth while also enabling investments to create long-term value.

Let's now turn to Page 7 and take a closer look at our B2C segment performance. Starting with top line growth. In Q2, revenue grew by 6.8%, exceeding the GMV growth rate. Growth in B2C was supported by strategic growth investments, such as our upgraded loyalty program, as Robert mentioned before. Additionally, on the back of successful commercial events across markets and propositions, we delivered particularly strong growth in our lounge designer and beauty propositions.

And lastly, continued strong growth in Zalando Marketing Services drove revenue growth in B2C as well. In terms of bottom line development, adjusted EBIT increased to EUR 174 million, resulting in a flat adjusted EBIT margin. A lower marketing and admin cost ratio offset a slight decline in gross margin. Looking at the half year, we delivered GMV growth of 6.2% and strong revenue growth of 7.2%. Adjusted EBIT came in at EUR 215 million, improving adjusted EBIT margin by 0.3 percentage points to 4.5%. B2C gross margin remained flat at around 43% in the first half.

Let's now move on to Page 8 and dive deeper into the development of our B2C customer metrics. Starting on the left, GMV growth was once again primarily driven by an active customer growth of 6.1%. By end of Q2, the number of active customers reached a new high of 52.9 million, an increase of more than 3.1 million customers year-on-year. Overall spend per customer remained flat at around EUR 298 with order frequency and basket size developments offsetting each other. This development is a result of an increased share of new customers while the spend of existing customers continue to increase in the same period.

Let's now turn to Page 9 and take a closer look at our B2B segment performance. In the second quarter of 2025, we achieved B2B revenues of over EUR 260 million. That corresponds to an increase of 12.2% compared to the previous year and continues to trend significantly above group level. Our B2B segment achieved an adjusted EBIT of EUR 11 million.

Adjusted EBIT margin increased by 1.3 percentage points to 4.3%, driven by further efficiency gains. Growth in our B2B segment continued to be primarily driven by ZEOS fulfillment, encompassing both Zalando Fulfillment Solutions and multichannel fulfillment.

Regarding Zalando Fulfillment Solutions, since February, U.K.-based retailer, NEXT, has also been using our fulfillment infrastructure for its largest Continental European market in Germany, following its prior use of Zalando Fulfillment Solutions for the majority of its Zalando-based business. The launch is part of the partnership signed and communicated last year. In the second half of this year and as a result of the extended partnership, our collaboration will continue to expand and also include NEXT own web shop and additional European marketplace business.

Looking at the half year, we delivered strong revenue growth of 11.9%. Adjusted EBIT came in at EUR 17 million, improving adjusted EBIT margin by 0.6 percentage points to 3.4%. The improvement was driven by a higher gross margin, increasing by 1.5 percentage points to 13%.

Let's now move on to the group P&L on Page 10 and focus on the Q2 performance on the right-hand side of the table. Group gross margin decreased slightly year-over-year by 0.8 percentage points to 40.8%, as we lapped the exceptionally strong prior year sell-through of inventory from previous seasons in our retail business. Despite a generally rather muted consumer demand, our commercial events across markets and propositions were well received.

Additionally, business mix effects negatively impacted the gross margin. Fulfillment costs, with the cost ratio of 22.1% remains stable. Higher fixed costs in our distribution centers driven primarily by the ramp-up of our new Paris site were counterbalanced by a positive onetime impact from customs reimbursement in Norway.

Marketing costs saw a slight decrease to 8.7% of revenues. This reflects our ongoing deliberate investment in performance and brand marketing aimed at fostering active customer growth and building a loved brand. Admin costs improved by 0.3 percentage points, driven by increased operating leverage. Other operating expenses increased due to a EUR 50 million onetime effect. This is a direct result of organizational changes to our customer care and content production units to ensure high-quality service and production at lower costs through a combination of near-shoring and AI-based automation. These one-off costs are usually reported outside of adjusted EBIT. Overall, we delivered a flat Q2 adjusted EBIT margin of 6.5% as the decline in gross profit was counterbalanced by a reduction in marketing and administrative expenses.

Turning to Slide 11 now for net working capital. Our net working capital continues to be negative in Q2 at minus EUR 108 million. Compared to last year, we see an increase of more than EUR 350 million. Inventories were higher, reflecting our preparations for the upcoming autumn/winter season and a lower prior year baseline. Digging deeper, the inventory increase was primarily driven by our strategic expansion into other lifestyle areas with particularly strong growth in our lounge, sports, kids and family and beauty propositions.

In comparison to our fashion propositions, these propositions for now carry a relatively higher retail share, leading to a corresponding increase in inventory. Our ambition is to further expand our platform business, allowing us to reduce our reliance on inventory and strategically decouple business growth from inventory growth in the years to come as presented as part of our ecosystem strategy a year ago.

Let's go to Slide 12 now. At the close of the first half of 2025, our cash and cash equivalents remained strong at EUR 2.2 billion. This marks a EUR 400 million decrease compared to EUR 2.6 billion last year. The primary factor contributing to this change was the restricted cash linked to ABOUT YOU tender offer. Specifically, EUR 403 million were placed into an escrow account during the first quarter, reclassifying this amount from cash to other current financial assets. This amount represents nearly 40% of the EUR 1.03 billion consideration we transferred on July 11 for the acquisition of 91.5% of ABOUT YOU shares.

Talking about financial obligations. One of our two outstanding convertible bonds is maturing today. Because of our strong cash position, we decided to pay down the convertible with a remaining notional of EUR 400 million via cash. Including the consideration of the ABOUT YOU acquisition, this brings us to a still very comfortable pro forma cash position of EUR 1.2 billion.

This concludes the financial performance review. Let's now turn one more time to our acquisition of ABOUT YOU on Slide 13. we are very excited about teaming up with ABOUT YOU to lead the way in European fashion and lifestyle e-commerce. With the transaction finalized, we can now start to implement our plans and cultivate a shared focus on growth and long-term value creation.

As part of our B2C growth strategy, we are establishing a dual-brand approach. While both brands will maintain their distinct identities, they will collaborate effectively on logistics, payments and commercial operations. This strategic alignment aims to enhance the delivery of personalized and unique shopping experience addressing a wider range of customer needs and preferences.

On the B2B side, ABOUT YOU Scayle, the SaaS-based digital e-commerce platform, will perfectly complement Zalando's e-commerce operating system, ZEOS alongside ZEOS Fulfillment and Tradebyte. This pays into Zalando's B2B growth strategy to establish an operating system for fashion and lifestyle brands and retailers, offering a comprehensive suite of logistics, software and service solutions, unlocking digital growth opportunities. Beyond its clear strategic benefits, this transaction also offers significant value creation opportunities as both companies operate within the same industry.

Let's therefore have a more detailed look on the expected synergy potential on Slide 14. Following the joint value creation planning carried out by the Zalando and ABOUT YOU teams over the past 6 months, we are happy to confirm significant group EBIT synergies of around EUR 100 million per annum from 2029 onwards. To recap, we expect these synergies to materialize in the areas, logistics, payments, commercial collaboration and B2B by leveraging the combined strengths of both companies. A combined logistics network will enhance service quality, drive operational excellence and increased warehouse utilization.

Logistics will contribute roughly half of the total synergy opportunity with most of it stemming from optimization of the combined logistics network. Additionally, a unified payments infrastructure will reduce transaction costs, improve customer experience through better payment options and open up additional monetization opportunities on the partner side of the business.

Further value will be achieved through commercial collaboration in areas like buying and marketing. In buying, synergies will stem from unified purchasing strategy and volume aggregation. While in marketing, synergies arise from efficient campaigns, joint procurement and the optimization of our go-to-market strategies. This will allow us to leverage economies of scale and improve product and service offerings for both customers and partners alike. Integrating both companies more closely on the B2B software side unlocks cross-selling and upselling opportunities. Combining Tradebyte's marketplace expertise with tailored solutions for a merchant's own e-comm will allow us to attract more B2B customers and increase take rates through comprehensive e-commerce operating system offering.

While we expect that near-term synergies will be accompanied by front-loaded integration costs, we expect a more pronounced impact from synergies in the medium term. On the back of these synergies, we also reiterate our midterm margin targets for the combined group. We continue to expect an adjusted EBIT margin in 2028 in the corridor of 6% to 8%, primarily driven by underlying margin improvements in both stand-alone businesses and further supported by the impact from synergies. This yields a significant increase in absolute profit by creating a combined group at larger scale. Overall, we are truly excited about the opportunities which lie ahead of us. Both our teams are fired up and looking forward to collaborating and delivering on the significant strategic as well as financial opportunities.

Now let's move to the outlook page on Page 15. And for that, I'll hand it back to Robert.

Thank you, David. With the closing of the transaction, we will begin consolidating now ABOUT YOU. The initial consolidated P&L and balance sheet figures will be disclosed with our Q3 results on November 6, 2025. Before we present a combined outlook, let's recap the individual guidance provided by both publicly listed companies.

The initial stand-alone Zalando outlook guided for 49% on GMV and revenue growth, while ABOUT YOU forecasted revenue to grow moderately. On profitability, Zalando's adjusted EBIT range was expected between EUR 530 million and EUR 590 million. ABOUT YOU on the other hand guided for strong growth of adjusted EBITDA. While ABOUT YOU will continue to provide stand-alone guidance as long as the company remains publicly listed, we are providing you today with an updated combined guidance for the Zalando Group.

Moving to the next page. We will outline this full year 2025 outlook for the combined Zalando Group, which includes ABOUT YOU as of July 11. So we successfully delivered a strong performance in the first half of 2025. Our key priority remains the successful execution of our ecosystem strategy, effectively positioning the combined group to navigate any external developments in the fast-changing geopolitical and microeconomic environment. And despite operating in a volatile market, we are confident in delivering a strong H2 performance. Our H1 performance shows that even in the environment, there are pockets of growth and that we're able to find them also supported by continued growth in online retail demand across Europe.

Let's now take a look at our combined guidance 2025, including ABOUT YOU as of July 11, the closing date. On a reported basis, we expect GMV to grow between 12% to 15% year-on-year from Zalando's full year 2024 baseline to EUR 17.2 billion to EUR 17.6 billion of GMV in 2025. Revenue for the combined group is guided to EUR 12.1 billion to EUR 12.4 billion, a 14% to 17% increase as a result of ABOUT YOU inclusion. On a pro forma basis, capturing of ABOUT YOU from July 11 to allow for a like-for-like comparison, the combined guidance represents a 4% to 7% increase year-on-year. This growth is attributed to strong top line performance in the first half of the year and then expect a continued mid-single-digit top line growth for the combined business in the second half. And this also applies for Q3.

The combined company's adjusted EBIT is expected to be between EUR 550 million to EUR 600 million, exceeding Zalando's initial standalone guidance of EUR 530 million to EUR 590 million by EUR 15 million at the midpoint. And this increase is driven by our strong performance in the first half of the year and also reflects our expectations to benefit from further efficiencies in our OpEx lines as well as from early synergies in the second half of the year. It furthermore exemplifies our clear commitment to drive profitable growth at larger scales and demonstrate our ability to effectively manage trade-offs between growth and profitability with a clear objective to maximize company value in the longer term.

On cash-related items, CapEx investments for the combined group will amount to between EUR 200 million and EUR 280 million, mainly invested in our logistics infrastructure and internally developed software. Net working capital is expected to stay in negative territory.

So last, but not least, let me provide some guidance on the reporting logic going forward. The combined company will maintain its B2C and B2B segment reporting. ABOUT YOU's e-commerce segment will be included into B2C and its enterprise digital commerce platform, Scayle, into B2B. We continue to expect that our B2B segment significantly outperforms the B2C revenue growth rate on a pro forma basis. The new combined guidance reflect our continued focus on profitable growth and long-term value creation.

So this concludes our presentation for today. Before we jump into Q&A, let me just wrap up with the key takeaways of today. So number one, our ecosystem strategy is progressing very well. Number two, in the first half of 2025, we delivered strong growth and increased profitability. Number three, we continue to advance our strategy across both our B2C and B2B growth vectors. And number four, the successful completion of ABOUT YOU transaction represents another significant milestone in our journey to build the pan-European ecosystem for fashion and lifestyle e-commerce. And number five, the new combined guidance reflects our continued focus on profitable growth and long-term value creation.

Thank you very much. And now let's open up for Q&A.

[Operator Instructions] Our first question comes from Adam Cochrane from Deutsche Bank.

First question I've got is, can you just deconstruct slightly the implied EBIT contribution from ABOUT YOU within your adjusted EBIT guidance for the full year? I think we can work out the sales contribution, but I struggled slightly to work out what the EBIT contribution from or expectation from ABOUT YOU is in the numbers.

And then secondly, in terms of the gross margin movements in the second quarter, can you explain the drivers of those, maybe between promotions and mix benefit from ZMS within that? And maybe any impact from the revenue deferrals from Zalando Plus the impact on gross margin?

On your first question regarding EBIT contribution from ABOUT YOU, I think it's fair to assume as ABOUT YOU also guided themselves that they are on track to further improve their profitability this year. As you know, they reached breakeven on an EBITDA basis for the first time in their last calendar year, and they continue to further work on that trajectory. I think broadly speaking, if you take the standalone performance and the early synergies that we've accounted for, it's a rather neutral addition to the group absolute EBIT.

And then on your gross margin question, I think first of all, it's important to zoom out a bit and understand that we are operating a seasonal business, right, where our spring/summer season typically starts in March, so end of Q1, and then goes all the way into early Q3. So I think the best indicators that we typically look at for sell-through development and also gross margin development in our B2C business are on a seasonal business. When we look at H1 performance, I think you can see that our gross margin is very much flat year-over-year, both on group level and on B2C level, where we reported 43% gross margin.

When we look at Q2 in more detail, I think there are a few drivers that explain the slight decline year-over-year. The first one is definitely the exceptional sell-through that we've seen in the prior year as well as some shift in seasonality. So please keep in mind, this year, we had an exceptionally strong March, which definitely shifted some gross profit from Q2 into Q1. And that's, I guess, one effect.

The second is more the usual mix effects, positive contributions from partner business and ZMS, for sure, but then overcompensated by the strong growth in B2B and also particularly from the lounge, which have a structurally lower gross margin. And then last but not least, as we already messaged already last year, I think, in the Q3 call, we definitely also have the one-off impact from the loyalty rollout, which is proceeding very much as planned, as we've heard from Robert, and contributing to a healthy customer development and also top line performance, but negatively impacting gross margin in the short term.

The next question comes from Luke Holbrook from Morgan Stanley.

On the combined guidance, you're now guiding to 4% to 7% growth for this year, having lowered it slightly. But with the B2B business growing double digits, and I think consensus had ABOUT YOU up 7% year-on-year in revenues on Visible Alpha. I'm just trying to unpick what that could imply for the Zalando B2C business, particularly on your comments that there's muted consumer demand at the moment? So is it fair to assume that more like the low end of your guidance range you've now issued?

And then the second question is just on inventories. So you've ended Q2 with inventories up 15% year-on-year, but unwound a little bit Q-on-Q. Can you just indicate a little bit on the promotional environment that you've seen since the end of Q2 and whether CPC rates have risen perhaps since the launch of TikTok Shop in France and Germany in Q2?

Sure. So I mean, if you look at our combined guidance, 4% to 7%, I think, first of all, that obviously reflects the performance year-to-date. We reported 6.2% for the first half year. I think that's fairly close actually to the midpoint of the guidance that we had issued at the beginning of the year, and so we are very happy with the performance so far. As Robert indicated earlier, we expect Q3 as well as H2 very much on mid-single-digit level. So I would see that as a continuation of the current performance trends and that in the end, yes, leads us to the combined guidance of 4% to 7%.

I think it's also fair to say that if you look at the previous range of 4% to 9%, given the performance in the first half, the 9% would imply a more than 10% growth in the second half, and we just consider it less likely. And that's what you see reflected in our combined group guidance as well, of course.

Then on the inventory side, I think it's important to not just look at that year-over-year, especially given the exceptional sell-through last year, but also maybe have a look at the year over 2 years where we are actually down on inventory by about 4%. So I think we consider our inventory position very healthy and also the right one to enable the growth trajectory that we are working towards for the second half, and therefore, also for the full year.

In regards to the market environment, we definitely see continued price sensitivity of consumers. We can see that in the success of our key commercial events in Q2 and also the end of season sale at the beginning of Q3. We also don't anticipate that to change anytime soon. We also see it in the strong traction of the Zalando lounge, which offers customers great value for money offers. And so I think it's good to see that actually, our portfolio is able to cater to the current consumer demand in a very good way.

I think we are not seeing any impact from TikTok Shop in France and Germany. I think you've all probably heard by now that the volume there is still very low also compared to countries like the U.K. and U.S., so that's not really impacting the consumer and market landscape at the moment.

The next question comes from Sarah Roberts from Barclays.

Just two from me. Firstly, it seems as if the upgrading guidance despite the fact you're kind of absorbing some losses on an EBIT level from ABOUT YOU implies maybe a EUR 50 million upgrade to the underlying business at the midpoint. Just wanted to understand what are the key drivers of this margin expansion -- of this underlying profitability improvement are, particularly given you're expecting slightly lower growth for this year?

And then secondly, I just wanted to understand with the rise of AI-generated overviews in Google Search being more prominent, I just wanted to know whether you are seeing any impact on marketing efficiency either in paid or organic search?

So let me start with your question on the EBIT upgrade and then Robert can follow up with the question on gen AI. I think the way to think about the EBIT upgrade is that it's primarily driven by three factors. One is that we have delivered a very strong development in H1 with clear EBIT improvements on an absolute basis, both in Q1 and Q2. So that makes us confident that we are on the right track to also deliver a strong year in terms of absolute EBIT for the rest of the year.

Secondly, we expect further gains from OpEx improvements in H2. OpEx, meaning logistics, marketing overhead admin costs in our case. So there, we definitely see an opportunity to drive more efficiency and benefit from economies of scale. And then last, but not least, as we've mentioned also in our release, we also expect first benefits from the ABOUT YOU and Zalando team up, obviously, not to the long-term extent that we have just confirmed with the EUR 100 million, but I think, yes, for us, it's a good sign that even in the first few months, we are already able to generate quite a few efficiencies as well that help us in the overall picture to achieve this higher EBIT level.

And I think on the second question you had, which I understood, like if we see actually what we see as impact on the marketing side through advancement in AI how we work with partners such as Google and Meta. I mean, probably I think two things here to share. I think one thing would be, so I think in this collaboration, we actually have with our biggest marketing platforms as Google and Meta and the others is that, I mean, overall, we see like a good kind of traction of an ever kind of increasing as for good marketing ROI, which is as well reflected in the increase in the active customer base that we've been reporting.

So we're overall very happy with the progress, I think, that we make on both sides of how we drive even further efficiencies in the marketing spending. I think on a very smaller scale what it's interesting what we see is that we now see a bit of incoming actually traffic from a large language models that are actually deepening into our experience, so we see like especially from ChatGPT some referrals of -- that actually will drives volume, but this is still on a very, very small basis yet. So it's not yet very meaningful.

The next question comes from Monique Pollard from Citi.

I've got two, if I can. Just I understand your comments on the trading, the 3Q should look similar to 2Q, but just wondered if you could give us any further detail on how the current trading was, specifically for July and how that compares to, say, June, I imagine given the comments from last year that the comp for June would have been particularly tough?

And then the second question just has to do with the outlook for the gross margin as we go into the second half. So understand the impact of the loyalty scheme and the drag that that's going to place on the gross margin. But as we think about the B2C and the B2B gross margin, we're seeing good improvement in the B2B gross margin, which I guess is partly driven by that strong growth in ZMS. But the B2C, the comp, I imagine, well, is very tough there, particularly given the really strong sell-through we saw in the back half of the year. So how should we think about the kind of underlying gross margin as we go through to the second half, please?

Sure. So I mean on current trading, as Robert already shared in the presentation, we basically expect a continuation of what we've seen in Q2, mid-single-digit growth. The quarter has also started well for us. So that makes us confident that we will be definitely able to achieve that level. Yes, the market remains volatile, of course, but I think we showed that we can navigate and find these pockets of growth in the first half of the year, and that gives us the confidence that we'll be able to do the same in Q3 and also for the rest of the second half.

And yes, maybe as a last point, obviously, what always plays a role in Q3 is the season start in September. Last year, September was particularly strong. We already mentioned that when we presented our full year outlook in March. And so that's maybe the one factor you should keep in mind when you also look at the year-over-year performance because I personally feel a year-over-year mid-single-digit performance in Q3 is actually stronger even than what we achieved year-over-year in Q2 due to the strong baseline.

And then regarding gross margin outlook, I think I commented on the first half. And for me, the story is not so different on the second half. Broadly speaking, we expect a stable gross margin, excluding sort of the onetime loyalty effect and the business mix effect, particularly the lower gross margin from B2B. And that is, as you said, against the backdrop of a significant improvement in gross margin last year. So I would personally consider that a strong performance that we are aiming also for the rest of the year.

The next question comes from William Woods from Bernstein.

The first question is just on your midterm GMV guide. Obviously, all of your kind of recent growth has come from new customers. Do you think this is the main driver over the next few years? Or do you think you can actually see some improvement in kind of underlying buying trends?

And then the second one is, obviously, you saw strong ZMS growth. Why doesn't that translate into higher margins, both on kind of an operating leverage perspective and just a structural question on the margin there?

Let me answer your first question, then I think for the ZMS confusion on EBIT, I would hand over to David. So in the midterm, I think we actually said that the growth will come both from the active customer account, but as well from the expansion into more lifestyle proposition, so from the GMV per active customer. And I think if you just look at the current results, I think it's a little bit -- there's some underlying things that we need to unpack. Yes, the GMV per active customers stayed the same -- or stayed rather flattish while the active customer count increased by 6%. But this is actually a mix effect because typically, new customers, they spend less on GMV in the first year, while actually the retained customers actually spend more.

So what we see underlying is actually that the GMV per active customer in the -- from retained customers likely as well grew like-for-like. So therefore, there's a mix effect rather doesn't reflect, I think, the underlying trends that we see. We actually have good growth in both directions.

And the second area to focus on is actually what we had said, that we actually have seen in the new lifestyle proposition actually very strong growth or double-digit growth like in sports, in lounge, in beauty, which is a very good testament that we actually make very much progress on our journey to be a rather more complete lifestyle company for our customers. So in the midterm, we expect both of these dimensions, the active customer and as well the active customer spending, both to contribute strongly to the midterm growth.

On ZMS, I mean, let me start by saying again that we are very happy with the development that we are seeing there. As you know, ZMS is a key contributor to our margin, not just this year, but also will help us to reach our midterm margin of 6% to 8% in 2028 as well as our long-term margin target of 10% to 13%. It's just a very attractive revenue stream next to being a great product for our partners, of course.

That being said, especially when we look at Q2, the very positive ZMS impact was overcompensated by other mix effects, especially the strong growth that we've seen in B2B. Yes, gross margin in B2B has improved, but it's still only 13% compared to 43% in B2C, as you know. And also overcompensated by strategic growth investments reflected in our gross margin, particularly the one-off revenue deferral associated to our loyalty program. That being said, obviously, the strong performance of ZMS is one reason why we are also upgrading the EBIT target for the group for the full year. So it's not like we're not seeing that benefit, definitely supporting our profitability this year and for the years to come.

The next question comes from Frederick Wild from Jefferies.

My first question is really very exciting. So both on the synergy delivery, please. First of all, in the bridge you provided about the breakdown of the synergies, so the fulfillment cost, does this assume ABOUT YOU cost structures in line with Zalando group averages?

And then second of all, on the synergy delivery time line, obviously, it's back-end weighted because as you move some of those historic ABOUT YOU distribution contracts into Zalando. Is there any chance of some of these synergies being brought forward, maybe some deal to get those ABOUT YOU orders into the Zalando ecosystem earlier?

Sure. Thanks for your question. So on fulfillment costs, obviously, our goal ultimately is to create one stock pool for the combined group and also on logistics network to hold all that inventory and to connect it between brands and customers. Now just because we closed the transaction, obviously, that isn't true for now. We still have 2 separate networks for now that we need to integrate over the course of the next few years, both on an operational, technical and then also infrastructure level.

What will ultimately result from that is that, yes, both ABOUT YOU and Zalando will benefit from a very efficient and highly scaled fulfillment setup. So the input factor costs, if you want to put it this way, will be the same. But the actual cost rate in the P&L of both businesses will also obviously depend on other factors, like the specific convenience offering of the 2 platforms where we've told you in the past that Zalando offering will be more premium service, whereas the ABOUT YOU will be a bit more basic service and then also obviously affected by order economics and country mix effects that will continue to be different between the 2 platforms. So I think you cannot just say it's the same cost ratio, but you can definitely assume that they benefit from the same input costs.

On the synergy delivery time line, I think you're exactly on the right track there. The logistics cost synergies are more back-end loaded due to the fact that we obviously first need to unwind existing lease and 3PL contracts to really bring the two networks together, that takes a while. What you can definitely assume is that we are always looking for ways to further optimize and bring synergies forward. But what we've shown you here is our current best estimate of when we can deliver these synergies.

The next question comes from Richard Chamberlain from RBC.

Two questions for me, please. First of all, I wondered if you're assuming any improvement in the Germany consumer situation in the second half in order to maintain your expectation of mid-single-digit GMV trends? Because I guess looking at slightly lower marketing spend, by the sound of it, and obviously, we've got tougher comps, so I wondered if there's any improvement in your sort of top-down macro assumptions are unchanged?

So we don't assume any kind of improvements on the consumer trends. I think like the way of how we think about the drivers of our growth is actually like that we focus on the things that we actually can control and which we roll out, so we will continue to focus. On the roll-off loyalty program work, we will bring more payments and assets as well in some countries like we will continue to bring some more content innovation pipelines with regards to 3D assets and videos on the detailed pages slide.

So it's more of these kind of strategic initiatives that we actually have some confidence that actually will help the strategy with regards to our 3 pillars and as well will drive the overall baseline of our business, but we don't really have factored in any kind of very different chains of consumer sentiments.

The next question comes from Anne Critchlow from Berenberg.

I've got 2, please. The first one is on the Zalando Plus and thinking about future costs of this because I think customers have to gain points to eventually get pre-express and premium delivery. Is there a danger that when they get to a certain level of points, the cost of this program will go up perhaps more than you expect or do the points reset every year and they have to regain points to reach that level again?

And then the second question is on marketing. Just wondering how we should think about the marketing cost of sales ratio over time, given that you've got these engagement and loyalty initiatives coming through, in a sense, the marketing costs kind of switch into loyalty in that way?

Yes, happy to take your questions. On Zalando Plus, I think we don't share that concern because the way the program is set up, it's 12 months rolling point collection for all customers, meaning that they need to reearn their status essentially every 12 months. So there's always a clear incentive to continue being very active and engaged on the platform, and there's also no chance to just keep your status and enjoy benefits without continued spending and engagement.

And then on marketing, very consistent with what we've communicated in the past. We obviously target that in the medium to longer term, our marketing cost ratio will go down and also contribute to an increased overall EBIT margin for Zalando, first to 6% to 8% in 2028 and then the 10% to 13% in the longer term.

And yes, I think it's fair to say that by making the experience stronger, not just with loyalty, but also, for example, with everything that we continue to do on the offering on other customer experience elements like convenience, we are driving our growth more and more organically and become less and less dependent on marketing from our point of view. And that's also how we're excited about it because it makes the business stronger, more sustainable and more profitable over time.

The next question comes from Mia Strauss from BNP Paribas.

Maybe just another one on the loyalty program. What sort of frequency of shopping are you seeing in those new markets? I think a few of them have now been live for at least 7, 8 months?

And then can you maybe quantify what the deferral impact was in Q2? Because I think in Q1, you said it was about EUR 10 million. And then obviously, as the points get used through the year, when should we start seeing the revenue actually to start to get recognized? Is that like a Q4 sort of thing? And then maybe lastly, if you can just give a bit of color on how the regional markets performed across the group?

Sure. I might need to ask you to repeat one of your questions, but let me start with the three ones that I got, I think. So frequency developments in Plus markets, I think continue towards through what we said in the Q1 call. We see promising signs of increasing user engagement and also other frequency in the markets we are live in. Given how early we are, however, in the rollout, I think it does make sense to quantify it at the moment. And obviously, we also see differences between the markets. But so far, I think we can definitely confirm that the order frequency uplift is there and it's also building up over time.

On the revenue deferral, I think we said at the beginning of the year, there would be a mid-single -- mid double-digit million amount for the full year and that it would be more pronounced in the second half than in the first half due to the continued rollout and scaling of the loyalty program over the course of the year. So in Q2, I think it's fair to assume a low double-digit million amount in terms of impact on our gross margin.

Then I also, I think, got your last question on the market developments. I think similar to Q1, growth in Q2 was very broad-based. I think we only had one smaller market, out of our total 25 markets, that didn't contribute to our growth. So I think the market portfolio that we are looking at is very healthy and all markets are basically contributing to the growth that we are seeing.

Can you repeat your second question on the loyalty?

Sure. So it was mainly to say that obviously, the program has been live in some markets from the start of the year and those customers have been building up their points. So when should we start to see those points getting utilized, i.e., the revenue starting to be recognized? Would that be more Q4 or could we even see that in Q3?

Well, I mean, obviously, as you know, we have launched a market different times. First, Spain launched already in summer last year. So those points are already being utilized to a larger extent, and the same will hold true for other markets where the first customers enrolled in Q1 and obviously, are now advancing through the tiers and are able to enjoy the benefits of this program more and more.

Keep in mind, however, that as long as the member base grow so strongly, the effect of new essentially deferrals will outweigh the offset of existing ones. And therefore, for the second half, as we said, you should continue to expect more revenue deferrals coming in and hitting the P&L. But once we reach a more, let's say, steady state, obviously, those onetime effects will equalize and no longer impact our P&L. That's one that I also want to talk about it as well.

The next question comes from Andreas Riemann from ODDO BHF.

First one on cross-selling in B2B. I guess you know your ZEOS customers quite well. So how many ZEOS customers would you say could become potential scale customers going forward? Any insight here would be appreciated.

And then second one on B2B. The EBIT margin improved in B2B for the first time. Would you say we have seen the trough and ramping up this business is largely done, so that the margins should improve from now? That's my second question.

On your ZEOS cross-selling question, I think what we are definitely seeing lots of interest from existing Scayle and ZEOS customers to discuss the enlarged offering and to understand what it can do for them. I think in the current situation, actually, we need to also ask these merchants for some patience because we first need to do the technical integration work to enable all the benefits that we aim to create. But I think that is something we aim to achieve over the course of next year. And I think from then on, we definitely think we have a very strong offering that essentially can serve all the channels a brand wants to potentially sell in both marketplaces like Zalando, but then also the most strategic digital channel, i.e., their own e-comm.

In terms of the ultimate opportunity, I think the best way to think about it is given that scale is still quite small and that most of the brands and retailers out there still rather use legacy systems like Salesforce, Commerce Cloud or SAP Hybris, there's actually a huge potential to tap into this market and win over more customers for Scayle as one key component of our B2B operating system.

And then regarding your B2B margin question, I mean, we are obviously happy with the development that we are seeing, and we definitely think there's even more potential in the longer term to grow that gross margin, particularly as we further develop the software and service business within B2B. As you can imagine, the logistics component structurally comes with the lowest gross margin because that's essentially -- yes, based on all the fulfillment costs that we pass on with the margin to our margins. But on the software business, we obviously have structurally high gross margins in Scayle, in Tradebyte and also in other software solutions that we are in the process of building.

And that's, I think, what promises, from my perspective, the biggest gross margin potential going forward for B2B, and that's also the reason why we obviously stay committed to what we said when we unveiled the strategy, which is that we think for B2B long term 10% to 13% EBIT margins are just as achievable as they are for B2C.

The next question comes from Georgina Johanan from JPMorgan.

Just 3 quick clarification questions, please. Firstly, I think you referenced that there was some one-off customs benefit in the fulfillment cost line. If you wouldn't mind quantifying that, please, and just also clarifying that, that is included in the adjusted EBIT, that will be helpful?

Second question, on the longer-term guidance for the combined group, if I heard correctly, you reiterated the margin guidance, but not the top line guide. And I just wanted to check if you were sort of formally moving away from top line guide?

And then finally, just on the gross margin outlook, apologies if I misunderstood, but I just wanted to be clear. I think at the Q1 stage, you had guided to a pretty flat gross margin for the year. And if I understand correctly, you're now saying that once we're sort of taking all of the moving parts into account actually expecting the gross margin to be down for the year is a more sensible assumption. If I think about the loyalty program drag and some of those mix effects, are we sort of talking in the magnitude of around 50 basis points decline for the year? Any help on that would be great, please.

Sure. I mean on the one-off customs benefit, I think it's a low double-digit million amount that impacted Q2 positively, and yes, it contributes to our adjusted EBIT.

Second question, I did mention the top line midterm guidance, but that doesn't mean that we are moving away from it in any way. I was talking about synergies earlier, and that's why we wanted to help you understand how those synergies contribute to our midterm margin target, but obviously, we are just as committed to the top line ambition that we communicated as part of our midterm guidance. So I don't want that to be mistaken.

And then last, but not least, on the GM side. I think, yes, H1, we were flat year-over-year on group level. I think I told you that for the second half, we would also look at broadly flat, excluding some of these onetime and mix effects. So I think I would also then say for the full year, that means we would come in around the same level as last year, potentially slightly shy due to these one-off effects.

The last question comes from Yashraj Rajani from UBS.

I have two, please. So the first one is just a follow-up on the synergies. So can you just quantify what's the exact synergy benefit you're making for this year? Is it in the range of EUR 5 million to EUR 10 million? And if so, where is that coming from? And maybe related to that, I mean, if you're already getting the benefits of synergies this year, I mean, I understand your point on the unwinding of the leases, but what's holding you back from expecting probably EUR 80 million to EUR 90 million already in 2027, right? So that's the first question.

The second question is more so on the Shopify partnership. So that's obviously a very promising partnership. And maybe if we sort of dig into that a bit more medium term, I mean if you think about Shopify and TikTok Shop, both together, can this probably be, on a 3- to 5-year view, a EUR 0.5 billion to EUR 1 billion business? And if so, does it cannibalize your own GMV?

So on your synergies question, I mean, this year, I think we are seeing some early synergies. But yes, I think maybe the best way to think about it is to say single-digit million amount, right? So not material-material from our perspective. Most of these are like the typical early synergies that you would assume based on, yes, looking at the contracts that we both have with key providers, for example, and making sure that we get the same rates applied to the new volume that Zalando is already benefiting from, that can happen in the payments area, that can happen in IT areas like cloud, hosting and so on, and that's really where these very early ones are coming from because there we don't need to do any integration work, basically just need to make sure that ABOUT YOU can use the group framework agreements.

I mean, on your question, can we accelerate? As I said, we will try to accelerate as much as possible. But keep in mind that the bulk of synergies is coming from logistics. And keep in mind that those logistics synergies depend on combining our network. So if we can't move out of the site and ramp down operations and move the volume to the rest of the network, then there's also no way to get to the synergies. And that's why I think you should just take the picture on the page that we presented in terms of synergy ramp-up as our best estimate for how these synergies will be realized. And yes, obviously still means that we are, over time, building up to that considerable amount of EUR 100 million.

Then on the Shopify partnership, yes, we are obviously excited. We're excited because it shows that we really mean it when we say we provide brands with choice and also fully leverage the ecosystem approach. So we don't expect every brand and every retailer to use Scayle in the future, and it's also not a prerequisite to take advantage of our B2B offering. It's great. And the benefits might be even higher, but they can also benefit from our offering if they use Shopify, if they use other shop software providers, who we will, over time, all try to connect to our B2B offering to make it as easy and simple as possible to fully benefit from our suite of solutions.

Can that business scale to EUR 0.5 billion? Yes, it can. Will it? We don't know. I think that's the honest answer. But we definitely think that the ecosystem that Shopify has built and continues to build in terms of merchants and also, obviously, the potential that TikTok Shop holds, yes, can definitely fuel our B2B growth. And I think both are also great examples of how we can cover a larger share of the market with Zalando and play a role in even more transactions for customers and brands. We don't see it at all jeopardizing our plans in B2C. We rather see it as a means to increase our market coverage.

Ladies and gentlemen, this concludes today's question-and-answer session. I would now like to turn the conference back over to Patrick Kofler for any closing remarks.

Thanks, everyone, for joining today's quarterly earnings call. If you have any further questions, do not hesitate to contact us, and happy to see all of you probably after summer then on different occasions.

With that, happy Wednesday. Thanks, everyone. Bye-bye.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.