Market leadership and technology
differentiation drives robust revenue growth, profit margins, and
cash flow
- Adjusted EBITDA guidance for the fiscal year ending March
2024 (FY23/24) of €145-165m (85-115% YoY growth), building on
strong proof points during the first months of FY23/24 on the back
of travel recovery and technology initiatives.
- Adjusted EBITDA guidance for fiscal year ending March 2025
(FY24/25) of more than €200m, benefiting from a continued recovery
in spend from Asian shoppers and further product
investments.
- Global Blue expects a normalization in growth starting in
FY25/26 and is targeting a long-term revenue growth of 8-12% and
‘Revenue-to-Adjusted EBITDA drop-through’ of more than 50%,
supporting a net leverage target of less than 2.5x Net Debt / LTM
Adjusted EBITDA.
Global Blue Group Holding AG (NYSE:GB and GB.WS) today announced
its new financial guidance and long-term targets.
Global Blue’s CEO, Jacques Stern, commented: “We recently
reported a strong start to our financial year, with 68% YoY growth
in Revenue and 300%+ YoY growth in Adjusted EBITDA in Q1 FY23/24.
We have positioned the business to outperform the ongoing
international travel recovery, thanks in particular to key
investments in digitalization and new products, as well as
continued cost management.
“As such, as the effects of Covid on our business wane and in
line with listed company practices, we are introducing financial
guidance. We expect to achieve Adjusted EBITDA for FY23/24 of
between €145-165m (85-115% YoY growth) and for FY24/25 of more than
€200m. Thereafter, we are targeting a normalized long-term revenue
growth of 8-12% and ‘Revenue-to-Adjusted EBITDA drop-through’(1) of
more than 50%.
“Our focus on continuing to digitalize and enhance the Tax Free
Shopping journey is driving a better experience for merchants,
international shoppers, and all other stakeholders in the
ecosystem; this is also delivering demonstrable financial benefits
to Global Blue and supporting new merchant wins, allowing us to
maintain our leadership position.
“We believe our investments in Added Value Payment Solutions and
Retail Tech Solutions are gaining traction, increasing our
relevance to retailers, merchant acquirers, and hoteliers as they
serve not only international travellers but also domestic
consumers. We are excited to announce the successful launch of
three new technology solutions in these areas: hospitality &
retail payments gateway, data analytics, and digital
marketing.”
Summary Financial
Outlook
Guidance (fiscal year
ending March 31)
Adjusted EBITDA(*) FY23/24
- €145-165m (versus €78m FY22/23 and €187m pre-Covid CY19)
Adjusted EBITDA(*) FY24/25
Capex (both years)
- €40-45m annually, of which ~80% is capitalized software
- D&A generally in-line with Capex
Long-term Targets
Revenue
Adjusted EBITDA(*)
- >50% ‘revenue-to- Adjusted EBITDA drop-through’(1)
Capex
- €40-45m annually, of which ~80% is capitalized software
- D&A generally in-line with Capex
Net Working Capital
- Approximately neutral on an annual basis
- Due to seasonality, NWC requires investment during peak season
(summer) and is a source of cash during winter; cash on hand and
revolving credit facility accommodate this seasonality
Effective Tax Rate(7)
Leverage
- Net Debt / LTM EBITDA <2.5x
- Organic cash flow generation expected to be prioritized towards
debt payment to achieve the target
(*) A reconciliation of the foregoing guidance for the non-IFRS
metric of Adjusted EBITDA to net income (loss) cannot be provided
without unreasonable effort because of the inherent difficulty of
accurately forecasting the occurrence and financial impact of the
various adjusting items necessary for such reconciliation that have
not yet occurred, are out of our control, or cannot be reasonably
predicted. For the same reasons, the Company is unable to assess
the probable significance of the unavailable information, which
could have a material impact on its future IFRS financial
results.
As this is the first time Global Blue is publicly providing its
financial outlook and long-term targets, the Company is providing
additional details and metrics below to aid investors, analysts and
other market participants in evaluating the Company’s guidance, and
the Company may not disclose such additional details and metrics in
future periods. In addition, Global Blue is providing guidance
through FY24/25 as the Company expects that its business will
continue to recover from the effects of the pandemic through
FY24/25, and it does not expect to provide multi-year guidance
thereafter.
Actual results may differ materially from the Company’s guidance
as a result of, among other things, the factors described under
“Forward-Looking Statements” below.
FY23/24 Guidance: Adjusted EBITDA of
€145-165m
Q1 FY23/24 results showed a significant increase in both growth
and profitability – 68% YoY on Revenue and 300%+ YoY on Adjusted
EBITDA – on the back of travel recovery, technology-driven
initiatives, and cost discipline.
Global Blue expects the travel recovery to be solid for the rest
of year, especially with the progressive return of Mainland Chinese
to Asian destinations first and Europe thereafter. Because the
Company’s revenues are based on the aggregate value of transactions
(as opposed to number of transactions), inflation continues to be a
tailwind for Global Blue, with luxury goods selling at a nominal
average price premium of 25% versus 2019 levels. Global Blue’s
technology investments have further supported its top-line
performance:
- Digitalization: Investment in
payments integration, allowing for eligibility detection and credit
card capture at point of sale, and other technologies have
supported a 4ppt step-up versus FY19/20 in the Issue Ratio(2) (64%
in FY22/23), especially for travellers coming from the United
States (+22ppt to 63% in FY22/23 vs. FY19/20).
- Commercial Gains: Net Retention
Rate(3) in the last 4 years (FY19/20-FY22/23) for Tax Free Shopping
Solutions of 103.0% (versus 100.3% in the 5 years before Covid,
FY14/15-FY18/19) and for Added Value Payment Solutions of 104.7%,
supported by a new data-driven account management approach.
Based on those assumptions, Global Blue is guiding to an
Adjusted EBITDA of between €145m and €165m for FY23/24, reflecting
a strong YoY growth of 85-115% when comparing to €78m Adjusted
EBITDA in FY22/23.
FY24/25 Guidance: Adjusted EBITDA of >€200M
Management believes Global Blue is well-positioned to continue
to benefit from the return of Asian shoppers in FY24/25 towards
2019 levels, in particular Mainland Chinese (Q1 FY23/24 revenue
from Mainland Chinese shoppers was still only 38% of 2019 levels),
driven by a clear willingness to travel, an increase in air
capacity, and an increase in average spend versus 2019.
In parallel, Global Blue expects the demand from non-Asian
travelers to normalize, with air capacity still expected to
improve, but “pent-up demand” triggered by the end of Covid period
expected to progressively fade. In addition, Global Blue expects to
see the continued benefit from its technology investments, in the
form of greater digitalization and further commercial gains.
Based on those assumptions, and consistent with the sensitivity
table provided during Q1 FY23/24 results showing Adjusted EBITDA
guidance for various recovery levels of Mainland Chinese shoppers
revenue, Global Blue expects to achieve an Adjusted EBITDA of more
than €200m in FY24/25.
Long-Term Targets:
Normalized Revenue growth of
8-12% and a ‘Revenue-to-Adjusted EBITDA drop-through’(1) of >50%
Long-Term Volume & Revenue Growth
Targets
Tax Free Shopping Solutions
In the long-term, Global Blue is targeting a yearly growth of
Tax Free Shopping Sales in Store (5) between 10% to 14% as a result
of the following five drivers, consisting of market drivers and
technology-driven management initiatives:
- Luxury Market: The Global Personal
Luxury Market is a large, resilient, and consistent compounder,
growing at a 6.7% CAGR during 2009-2019, and expected to grow
broadly in line at 5.5% to 6.5%(4) during 2022-2030.
- Overseas Luxury Market Premium: In
line with historical track-record, Global Blue expects the Overseas
Market growth to outpace that of the broader Luxury Market. Global
Blue is targeting a long-term CAGR of 6.0% to 8.0%(4) (vs. 10.0% in
2009-2019), adjusting for the potential effects of repatriation of
a portion of Chinese luxury spend back to China.
- New Countries Adopting Tax Free Shopping
Scheme: As the leading global Tax Free Shopping provider,
Global Blue has a track-record of opening in new countries, with 7
opened between 2009 and 2019 (contributing 2.4% in Sales in
Store(5) CAGR over that period) and 3 during Covid. Today, over 100
countries with VAT have not yet introduced a Tax Free Shopping
scheme for tourists. In that context, Global Blue is expecting to
open in at least 4 new countries over the medium-term, with a
target contribution of 1.5% to 2.0% to the CAGR.
- Digitalization: Digitalization
simplifies the Tax Free Shopping process, such that more
transactions are issued and refunded. This effect has contributed
2.0% to the 2009-2019 Sales in Store(5) CAGR. Global Blue is
targeting a similar contribution going forward of 2.0% to 2.5%,
expected to be driven by the increased take-up of Global Blue’s new
technology, e.g., eligibility detection, in-store or in-mobile
credit card capture, and Mobile Customer Care.
- Commercial Gains: Global Blue’s
first mover advantage in digitalization, combined with a new
data-driven account management approach, has enabled Global Blue to
deliver a Net Retention Ratio(3) of 103.0% in the last 4 years. In
the long-term, Global Blue is targeting market share gains that
would add 0.5% to 1.5% to the Sales in Store(5) CAGR, which would
imply a Net Retention Rate(3) of 100.5% to 101.5%.
Global Blue is targeting Tax Free Shopping Revenue growth over
the long-term of 7.0% to 11.0%. The growth differential between
Sales in Store and Revenue is attributable to pricing evolution
(inherent to a volume-based take-rate model) and mix effects
(country, merchant, and service). Global Blue is targeting pricing
evolution and mix effects to result in an impact of 125bps p.a. and
of 175bps p.a., respectively, or a total of 300 bps p.a.
differential between Sales in Store(5) and Revenue growth. From
2009-2019, this metric was 400 bps p.a.
Added Value Payment Solutions
Global Blue is targeting a long-term CAGR Sales in Store(5)
growth of its FX solution of 9.0% to 13.0%, as a result of the
following three drivers:
- Cross-border Digital Payments: The
cross-border digital payment market, of which FX Solutions is a
subset, is expected to grow between 5 to 7%.
- Commercial Gains: Global Blue
expects to continue to drive market share gain and is targeting a
long-term contribution of 3% to 5% to the Sales in Store(5) CAGR,
or a Net Retention Rate(3) of 103% to 105% compared to 104.7% in
the last 4 years.
- Digitalization & Penetration:
Enhanced technology at point of interaction and continued merchant
training are expected to drive more penetration of FX Solutions.
Global Blue is targeting a contribution of c.1% to the Sales in
Store(5) CAGR in the long-term, a conservative assumption compared
to the 3.8% contribution to the Sales in Store(5) CAGR delivered
between 2009 and 2019.
Based on the above Sales in Store(5) drivers, Global Blue is
targeting an FX Solutions Revenue growth between 9.0% to 13.0%.
In parallel, in the long-term, Global Blue is targeting a CAGR
Sales in Store(5) and Revenue growth of its acquiring business in
Australia to be in line with the Australian GDP.
Retail Tech Solutions
In 2021, Global Blue made the strategic decision to increase its
scope of technology services to retailers and introduce solutions
that extend to both domestic and e-commerce shoppers. Global Blue
invested ~$100M to acquire three companies specializing in
post-purchase solutions, two in the e-commerce space (ZigZag and
Ship-up) and one in-store (Yocuda)(6). Global Blue’s unique access
to its retail partners’ C-suite, driven by Tax Free Shopping
Solutions and Added Value Payment Solutions, provides the Company
with an efficient go-to-market for such solutions.
Retail Tech Solutions is targeting continued high Revenue growth
(at least 15%), as it is still in the scale-up phase and a clear
beneficiary of cross-sell within the Global Blue ecosystem. Global
Blue is targeting the Retail Tech Solutions segment to reach
Adjusted EBITDA breakeven in the next 2 or 3 fiscal years.
Additional Growth Drivers
In furtherance of the above strategic decision, in the past four
years, Global Blue has launched three products that were developed
in-house to unlock new growth opportunities. At this stage, the
contribution to growth has not been factored in the above
targets:
- Hospitality & Retail Payments
Gateway: The Hospitality and Retail sector is increasingly
shifting towards an omni-channel customer journey, with a focus on
the payment experience. As such, building on its deep payment
capabilities, Global Blue has recently developed an integrated
payment software for the Hospitality and Retail sector, which
Global Blue is cross-selling into its 50+ merchant acquirer
partners that are already using its FX Solutions technology.
- Data Analytics: More companies are
basing their strategy and action plan decisioning on data. Through
the Tax Free Shopping process, Global Blue collects an average of
50 data points per transaction, e.g., “who” through passport
information, “what” through SKU-level itemized collected, and
“where / when”. From this extensive dataset, Global Blue has built
a comprehensive data offering for retailers and non-retailers to
better understand and improve their performance.
- International Shoppers Digital
Marketing: While the Overseas Luxury Market accounts for
nearly one-third of the Luxury Market, Digital Marketing targeting
this segment of client is largely an unpenetrated market. Due to
Global Blue’s differentiated and proprietary database of 3m+
enrolled international shoppers and its 70% Tax Free Shopping
market share, Global Blue has successfully launched Digital
Marketing campaigns for its affiliated retailers to drive consumers
to their e-commerce websites when at home, or their store when they
shop abroad.
Profit & Cash Flow Targets
Group Adjusted EBITDA Margin
Global Blue is targeting ‘Revenue-to-Adjusted EBITDA
drop-through’(1) of more than 50% p.a., reflecting the revenue
dynamics described above and the cost structure articulated below
for reference.
Contribution margin (defined as revenue less variable costs for
any given period, divided by revenue for such period) by line of
business is:
- Tax Free Shopping Solutions: 80%
to 85% contribution margin; variable costs mainly relate to airport
refunding (airport and agent fees).
- Added Value Payment Solutions: 60%
to 65% contribution margin; variable costs mainly relate to payment
network fees and interchange.
- Retail Tech Solutions: 60% to 65%
contribution margin; variable costs mainly relate to logistics
carriers costs at ZigZag.
Fixed costs represent 65% of the total costs today, with the
benefit of a long-term savings plan implemented during the
Covid-impacted period in 2020-2021, during which Global Blue
reduced its fixed costs by ~20%, or ~€35 million. Global Blue is
targeting fixed costs to increase at a rate of approximately 1pt
above inflation, due to ongoing investments in Opex to support its
growth drivers.
Conclusion
Global Blue is pleased to introduce guidance and long-term
targets that reflect the ongoing international travel recovery, as
well as technology-driven initiatives that are helping to drive
growth, profitability, and cash flow generation.
Global Blue expects Adjusted EBITDA of €145-165m in FY23/24 and
more than €200m in FY24/25. As the environment normalizes
thereafter, in the long-term, Global Blue is targeting for 8-12%
revenue growth, >50% ‘Revenue-to-Adjusted EBITDA
drop-through’(1), and <2.5x net leverage, with further upside
from newly-introduced technology solutions including hospitality
& retail payments gateway, data analytics, and digital
marketing.
(1) Revenue-to-Adjusted EBITDA drop-through refers to the
portion of Revenue growth that drops through to the Adjusted EBITDA
line and compares the change in Adjusted EBITDA for any given
period to the change in Revenue for the same period, expressed as a
percentage. It is calculated, with respect to any given period, by
dividing (a) the change in Adjusted EBITDA for such period as
compared to the prior period, divided by (b) the change in Revenue
for such period, as compared to the prior period. (2) Issue ratio
represents the number of Tax Free Shopping forms that have been
issued, as a percentage of all Tax Free Shopping forms that were
eligible to be issued. (3) Net Retention Rate for a given year is a
percentage calculated as: 1 + the Sales in Store gained from new
accounts and store openings in the given year, net of lost accounts
and store closures, divided by the total Sales in Store for the
given year. Net Retention Rate does not adjust for luxury inflation
through the period. (4) Luxury market forecast based on the
following public reports: Bain & Co / Altagamma Luxury Goods
Worldwide Market Study (January 2023). (5) Sales in Store, as used
with respect to the TFS business, refers to the value (including
VAT) of the goods purchased by the international shopper. Sales in
Store, as used with respect to the Added Value Payment Solutions
business, refers to the value (including VAT) of the payments made
by the international shopper. (6) ZigZag is an e-commerce returns
specialist; Ship-up is a post online check-out consumer engagement
specialist; Yocuda is a digital receipts specialist and post
offline check-out consumer engagement. (7) Effective tax rate
target assumes cost of debt based on the current senior facility
and interest rates (6-months Euribor + 2.75% spread).
NON-IFRS FINANCIAL MEASURES This press release contains
certain Non-IFRS Financial Measures. Specifically, we refer to the
non-IFRS financial measure “Adjusted EBITDA.” These non-IFRS
measures should be considered in addition to results prepared in
accordance with IFRS, but should not be considered a substitute for
or superior to IFRS results. In the opinion of management, a
discussion of these measures provides investors, financial
analysts, rating agencies and other financial statement users with
a better understanding of the significant factors that comprise the
Company’s periodic results of operations and how management
evaluates the Company’s financial performance. These non-IFRS
measures may not be indicative of Global Blue’s historical
operating results nor are such measures meant to be predictive of
Global Blue’s future results. Not all companies calculate non-IFRS
measures in the same manner or on a consistent basis. As a result,
these measures and ratios may not be comparable to measures used by
other companies under the same or similar names. Accordingly, undue
reliance should not be placed on the non-IFRS measures presented in
this press release.
FORWARD-LOOKING STATEMENTS This press release contains
certain “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995, Section 27A of
the Securities Act and Section 21E of the Securities Exchange Act
of 1934, as amended, including statements regarding Global Blue or
its management’s expectations, hopes, beliefs, intentions or
strategies regarding the future. The words “target,” “anticipate,”
“believe”, “continue”, “could”, “estimate”, “expect”, “intends”,
“may”, “might”, “plan”, “possible”, “potential”, “predict”,
“project”, “should”, “would” and similar expressions may identify
forward-looking statements, but the absence of these words does not
mean that a statement is not forward-looking. These forward-looking
statements are based on Global Blue’s current expectations and
beliefs concerning future developments and their potential effects
on Global Blue. There can be no assurance that the future
developments affecting Global Blue will be those that we have
anticipated. These forward-looking statements involve a number of
risks, uncertainties (some of which are beyond Global Blue’s
control) or other assumptions that may cause actual results or
performance to be materially different from those expressed or
implied by these forward-looking statements. Among the key factors
that could cause actual results to differ materially from those
projected in the forward-looking statements are the following:
currency exchange rate risk in the conduct of business; high
dependence on international travel; dependence on the overall level
of consumer spending, which is affected by general economic
conditions and spending patterns; sensitivity of net working
capital to short-term, month-to-month volume growth, and any rapid
volume growth and short-term, temporary surge of its net working
capital; decrease in Value-Added Tax rates or changes in VAT or VAT
refund policies; changes in the regulatory environment, licensing
requirements and government agreements; adaptation and enhancement
of our existing technology offerings and ensuring continued
resilience and uptime of our underlying technology platform; loss
of merchant accounts to our competitors due to the competitive
market; disintermediation of third-party serviced Tax-Free Shopping
processes; price harmonization or convergence between destination
markets and home markets; taxation in multiple jurisdictions, which
is complex and often requires making subjective determinations
subject to scrutiny by, and disagreements with, tax regulators;
adverse competition law rulings; integrity, reliability and
efficiency of our compliance systems and framework; dependence of
TFS business on airport concessions and agreements with agents;
risks associated with operating in emerging markets; risks
associated with the ongoing conflict between Russia and Ukraine;
risks associated with strategic arrangements or investments in
joint ventures with third parties; failure to identify external
business opportunities or realize the expected benefits from our
strategic acquisitions; loss through physical disaster, data
security breach, computer malfunction or sabotage; reliance of AVPS
business on relationships with acquirers and involvement of card
schemes; counterparty risk and credit risk; losses from fraud,
theft and employee error; inability to attract, integrate, manage
and retain qualified personnel or key employees; complex and
stringent data protection and privacy laws and regulations;
anti-money laundering, sanctions and anti-bribery laws and
regulation and related compliance costs and third-party risks;
risks relating to intellectual property; litigation or
investigations involving us, and resulting material settlements,
fines or penalties; event of default resulting from failure to
comply with covenants or other obligations contained our Facilities
Agreement; reliance on our operating subsidiaries to provide funds
necessary to meet our financial obligations, and the constraint on
our ability to pay dividends; restrictions imposed on our business
by our indebtedness, and the risk that a significant increase in
our indebtedness could result in changes to the terms on which
credit is extended to us; inability to execute strategic plans due
to inability to generate sufficient cash flow; interest rate risks;
currency translation and transaction risk; impairment of intangible
assets; the control by Silver Lake over us, and potential
differences in the interests pursued by Silver Lake from the
interests of our other securityholders; inability to remediate
material weaknesses in internal control over financial reporting
and failure to maintain an effective system of internal controls,
and the inability to accurately or timely report our financial
condition or results of operations and other factors described
under “Risk Factors” in Global Blue’s Annual Report on Form 20-F
for the fiscal year ended March 31, 2023 filed with the Securities
and Exchange Commission (the “SEC”), and in other reports we file
from time to time with the SEC, all of which are difficult to
predict and are beyond Global Blue’s control. Except as required by
law, Global Blue is not undertaking any obligation to update or
revise any forward-looking statements whether as a result of new
information, future events or otherwise.
ABOUT GLOBAL BLUE Global Blue offers innovative solutions
in three different fields:
- Tax Free Shopping: Helping retailers at over 300,000 points of
sale to efficiently manage 35 million Tax Free Shopping
transactions a year, thanks to its fully integrated in-house
technology platform. Meanwhile, its industry-leading digital Tax
Free shopper solutions create a better, more seamless customer
experience
- Payments services: Providing a full suite of foreign exchange
and Payments technology solutions that allow acquirers, hotels and
retailers to offer value-added services and improve the customer
experience during 31 million payment transactions a year at 130,000
points of interaction
- RetailTech: Offering new technology solutions to retailers,
including digital receipts and eCommerce returns, which can be
easily integrated with their core systems and allow them to
optimise and digitalise their processes throughout the omni-channel
customer journey, both in-store and online
In addition, our data and advisory services offer a strategic
advisory to help retailers identify opportunities for growth, while
our shopper experience and engagement solutions provide data-driven
solutions to increase footfall, convert footfall to Revenue and
enhance performance.
Pre-pandemic figures FY 19/20.
Source: Global Blue
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version on businesswire.com: https://www.businesswire.com/news/home/20230925569875/en/
FOR FURTHER INFORMATION Frances Gibbons, Head of Investor
Relations +44 (0) 7815 034 212 fgibbons@globalblue.com
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