Westwing reports very strong Q2 2020 results based on accelerated shift to eCommerce; 91% revenue growth and generating EUR 23m Free Cash Flow

• Accelerated eCommerce shift resulted in significant growth across all customer cohorts (existing and new customers) and across all countries
• Strong Q2 financial results: Revenue growth of 91%, Adj EBITDA margin of 13.2%, and EUR 23m Free Cash Flow generation (last twelve months Free Cash Flow margin at 6%)
• Westwing to intensify investments into Marketing, Technology, Logistics, and Own & Private Label for long-term growth
• Growth July at 54% GMV growth year-over-year; still exceptional levels, but less elevated than in Q2

Munich, August 13, 2020 // Westwing, the leader in inspiration-based Home and Living eCommerce in Europe, today announced the results for the second quarter of 2020.

Based on an accelerated home & living eCommerce adaption during the COVID-19 situation, Westwing experienced significant growth across all customer cohorts (existing and new customers) throughout the Company's whole country portfolio. As a result, GMV soared by 97% in the second quarter of 2020 and the number of active customers having made at least one order in the last twelve months increased to 1.2m, growing by 30% year-over-year. Even during this period of rapid new customer growth, Westwing's customer loyalty remained very strong, with 80% of orders in the second quarter still coming from repeat customers. Moreover, new customers acquired during these times also indicate strong repeat purchasing behaviour, thus are likely to also contribute to future growth.

Driven by this positive customer and growth momentum, Westwing realized very strong financial results in the second quarter of 2020, proving its opportunity to build a scalable and highly cash-generating business. Revenue grew by 91% year-over-year to EUR 111m and Adj EBITDA margin improved by more than 20%pts to 13.2% (Q2 2019: -8.5%). The improvement in profitability was driven by all-time high gross margins resulting in very strong contribution margins and significant operating leverage on SG&A cost and Marketing investments. As a result of the strong profitability and partially supported by Westwing's negative Net Working Capital, Free Cash Flow for the second quarter improved by EUR 32m year-over-year to EUR 23m (Q2 2019: EUR -9m). Subsequently, the last twelve-months Free Cash Flow margin stands at 6% and the net cash position increased to EUR 86m as of June 30, 2020 (December 31, 2019: EUR 73m).

"The safety of our customers, team, and partners continues to be our number one priority in these unprecedented times", says Westwing CEO and Founder Stefan Smalla. "Yet, we are also proud of the incredible results achieved by our hard-working team in the second quarter and confident that we are in a strong position to leverage the accelerated shift of home & living demand to eCommerce. Therefore, we will continue to focus on the loyalty of our customers by investing even more into great customer experience and inspiration, which was the basis to our successful second quarter."

In light of these developments, Westwing ramped up its growth investments into Marketing, Technology, Logistics, and Own & Private Label to drive future growth in accordance with its long-term strategy. The marketing invests are especially focused on Westwing's successful organic marketing model, while the Technology invests are focused on improving our platforms and talent base. In addition, some invests are required to increase warehouse capacity for the seasonal stronger fourth quarter, yet those investments are small and have no substantial financial cost. Lastly, investments into supply chain and buying teams are essential to further increase the strategically important Own & Private Label share.

Westwing is expected to clearly benefit from the recent eCommerce acceleration short-term as well as long-term, with July still at exceptional levels of 54% GMV growth year-over-year, while not on the same level as in the second quarter of the year. The Company advises that, in light of low visibility for the coming months, current growth rates should not be extrapolated for the remainder of the year. Westwing's guidance reflects this currently high volatility in growth rates and uncertainty around economic outlook/consumer sentiment for the remainder of the year and expects 25-35% revenue growth at 3-5% Adj EBITDA margin for the full year 2020.

For further information, please visit Westwing's investor relations website at: ir.westwing.com

Note: All figures are unaudited.

About Westwing
Westwing is the leader in inspiration-based Home and Living eCommerce in Europe with EUR 267m of revenue in 2019. Through its 'shoppable magazine', Westwing inspires its loyal home enthusiast customers with a curated product selection and combines that with gorgeous content. With unparalleled loyalty, Westwing is generating more than 80% of sales from repeat customers. Westwing's mission is: To inspire and make every home a beautiful home. The company was founded in 2011 and is headquartered in Munich. Westwing went public on the Frankfurt Stock Exchange in October 2018 and is active in eleven European countries.

Disclaimer
Certain statements in this communication may constitute forward looking statements. These statements are based on assumptions that are believed to be reasonable at the time they are made, and are subject to significant risks and uncertainties. You should not rely on these forward-looking statements as predictions of future events and the Company undertakes no obligation to update or revise these statements. The Company's actual results may differ materially and adversely from any forward-looking statements discussed in this press release due to a number of factors, including without limitation, risks from macroeconomic developments, external fraud, inefficient processes at fulfilment centres, inaccurate personnel and capacity forecasts for fulfilment centres, hazardous material / conditions in production with regard to private labels, lack of innovation capabilities, inadequate data security, lack of market knowledge, risk of strike and changes in competition levels