The Marley Spoon AG (ASX: MMM) share price won’t be going anywhere on Friday after the subscription-based meal kit provider requested a trading halt following the release of its third quarter update.
What happened in the third quarter?
Marley Spoon’s positive form continued in the third quarter, with very strong growth being delivered across all geographic regions.
Management notes that it experienced continued strong demand for its meal-kits from new and existing customers, leading to positive growth momentum and favourable customer acquisition costs,
According to the release, for the three months ended 30 September, Marley Spoon achieved revenue of 69.3 million euros, up 109% on the prior corresponding period.
The company’s US operations were strongest, delivering revenue of 34.2 million euros, up 163% in constant currency terms. This was driven by strong growth in Martha & Marley Spoon and Dinnerly brands. It achieved third quarter earnings before interest, tax, depreciation and amortisation (EBITDA) of 0.7 million euros.
Growth was also very strong in Australia, with revenue rising 84% to 25.3 million euros. Operating EBITDA was 3.4 million euros for the quarter.
Finally, in Europe, the company recorded an 83% increase in revenue to 9.8 million euros. Though, unlike the US and Australia, these operations are not yet profitable and posted an EBITDA loss of 0.6 million euros.
Marley Spoon ended the quarter with 362,000 active customers, up 86% year on year. However, this is just a 3% increase quarter on quarter. Also, on average it generated 4.3 orders per customer in the quarter. While this was up from 3.9 orders per customer in the prior corresponding period, it was down from 4.4 in the second quarter.
Looking ahead, Marley Spoon has narrowed its FY 2020 revenue guidance range. It now expects growth of between 90% to 100% year on year, compared to 80% to 100% previously.
Why are Marley Spoon shares in a trading halt?
Marley Spoon requested a trading halt whilst it undertakes a A$56 million fully underwritten placement.
The company is raising the funds at $3.22 per share, which represents a 7.7% discount to its last close price.
Management commented: “Given the continued traction in online meal kit adoption and strong recent business performance, Marley Spoon considers it appropriate to improve its balance sheet and access additional growth capital. With additional balance sheet flexibility, Marley Spoon will be well positioned to accelerate its global growth strategy and capitalise on the opportunities available in its core markets.”
More reading
- Up 900% this year, can the Marley Spoon (ASX:MMM) share price continue to climb?
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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