Marley Spoon financially is actually a pretty easy company to analyse. There are 3 key metrics that drive the business:
- Active Subscribers - These are not active customers. The difference is that subscribers have an active subscription (i.e., ordered or skipped a delivery) and not include one-time trial customers.
- The number of orders - How many meals kits is delivered to customers. Higher the number the greater the utility of the service.
- Orders per subscriber - Which is the result of dividing the number of orders by Active subscribers. It measures customer loyalty and whether existing customers are buying more on average.
Also, I found the average (€ per order) for each region is surprisingly consistent for the past 3 years.
- Australia ~ €46 per order
- Europe ~ €40 per order
- USA ~ €45 per order
Playing around the variables using those metrics above can allow you to forecast topline revenue growth.
For the bottom line, the financial metric to keep in mind is the contribution margin. Not their operating contribution margin (OCM). Marley Spoon report OCM to show that if they did not spend on marketing vouchers or pay rent for manufacturing centres, the contribution margin would be higher. This is absurd in my perspective, like why would you make the investment in the first place? I feel the rent, in particular, is a necessary cost to run the business. I will use CM, literally every business use CM when presenting the strategy.
There are 3 brands in Marley Spoon Group: Martha Stewart (which is an interesting partnership up for revision on 31 December 2022. In exchange for these branding rights, Marley Spoon pays royalties, based on a percentage of ‘Martha & Marley Spoon’ sales to Martha Stewart). Martha Stewart is paid a decent royalty and it has soo far paid off for both parties with US sales growing rapidly. I wonder what the revised royalty percentage fee is? The other 2 brands are Marley Spoon and Dinnerly. Dinnerly has been popular in Germany but we do not know the penetration as of today.
The online meal delivery market is massive and post-covid, I am not expecting habits would change. Instead, more people will start cooking instead of buying fast food all the time. Customer acquisition is key during the pandemic, and they need to win more. The active subscribers started to plateau and are now looking at 25-30% revenue growth in 2021.
Hello Fresh is the market leader and I will need to do more on them. My sister is using Hello Fresh in Europe, and she enjoys the meal kits. Recently, she decided to stop using the meal kits and start making her own recipes. She told me that the recipes were getting repetitive and now confident to have a go herself. Ironically, users gaining the confidence to cook for themselves could result in churn. Hence lifetime customer does not = forever.
The sector is extremely interesting from a financial analyst perspective. All competitors are fighting for customer acquisition and retaining their existing customers.
Here are some of the links for you to do more research I just covered the tip of the iceberg :)
Prospectus -https://newswire.iguana2.com/af5f4d73c1a54a33/mmm.asx/2A1089433/MMM_Prospectus
Updated Martha Stewart agreement- https://newswire.iguana2.com/af5f4d73c1a54a33/mmm.asx/2A1092559/MMM_Agreement_Extended_with_Martha_Stewart_Living_Omnimedia
Latest quarterly report- https://newswire.iguana2.com/af5f4d73c1a54a33/mmm.asx/2A1277026/MMM_Market_Update_Q4_2020_Presentation
