tonies accelerates growth and drives profitability in H1, paving the way for a strong 2024

tonies accelerates growth and drives profitability in H1, paving the way for a strong 2024

• Group revenue in H1 increased by 29.8% (Q2: 42.6%) to EUR 146.8m driven by international expansion
• Revenue in North America rose substantially in H1 by 63.3% to EUR 55.2m (Q2: 85.1%) fueled by successful wholesale expansion and direct-to-consumer sales
• Adjusted EBITDA margin rose to 2.6% from 1.8% (H1 2023 included non-recurring effects of EUR 3.4m), driven by higher gross margin and operating leverage; EBITDA margin of 2.0% (H1 2023: -2.4%)
• Free cash flow increased year-over-year from EUR -39.0m to EUR -32.0m on the back of higher profitability and more efficient working capital management
• Multi-territory and multi-year contracts signed with Disney Consumer Products and Paramount

LUXEMBOURG, 22 August 2024 // tonies SE ("tonies"), the leading international digital audio platform for children with the award-winning Toniebox, has released its results for H1 2024, ended on 30 June 2024.

Tobias Wann, CEO of tonies says: “After my first six months as CEO, I know that at tonies we have a strong product, a strong business and a strong team. Together, we have built the largest interactive audio experience platform for children in the world. And this is still just the beginning.
In the first half of 2024, we have not only continued to grow profitably, but we have also set the stage to shift into the next gear: we have signed multi-year, multi-territory deals with top licensing partners like Disney and Paramount. These licenses are a key to further internationalizing tonies. And this is exactly what we are doing right now with our successful market entries in Australia and New Zealand.”

Jan Middelhoff, CFO of tonies, adds: “We are well on track to meet our full year targets. The DACH region is highly profitable and shows the potential of our platform. It is a great blueprint for our international expansion as we turn tonies into a global brand. We continue to see strong growth in the US which will become our largest single market this year. And in Australia and New Zealand, where we have just completed our launch with the largest portfolio to date, we are using the experience gained to capture a new core market.”

Group revenue amounted to EUR 146.8 million in the first six months of 2024, representing a year-over-year growth of 29.8% (Q2: 42.6% to EUR 68.4 million), with an increase in revenue in all regions and all product categories. tonies made significant strides in its global expansion, with revenue from regions outside the DACH area rising sharply from 41% in H1 2023 to 51%, underscoring tonies' success in expanding its international presence.

North America achieved a year-over-year revenue growth of 63.3% amounting to EUR 55.2 million (Q2: 85.1% to EUR 27.4 million) and is fully on track to achieve the guided growth rate of above 42% for full-year 2024. Revenue growth was fueled by strong performance in both the direct-to-consumer and wholesale channels, with the latter seeing significant gains due to expanded shelf space and an increased number of points of sale at major retailers like Target and Walmart.

In the DACH region, revenue increased notably by 8.6% YoY to EUR 71.9 million (Q2: 17.4% to EUR 31.7 million) with the highest growth being achieved with key wholesale partners and tonies´ own web shop. On the product side, growth was supported by the successful launch of tonies´ new format “Clever Tonies”. In its important home market, tonies has further strengthened its position as the category creator and market leader, achieving an impressive 85% aided brand awareness amongst parents with kids in its target group.

In the Rest of World, revenue grew by 49.9% YoY to EUR 19.7 million (Q2: 51.6% to EUR 9.4 million) driven by the UK and particularly strong growth in France. tonies sees strong progress in both countries. In the UK, tonies sees a considerably higher uptake among wholesale partners in 2024, as the number of point of sales will increase from 1,550 at the end of 2023 to around 2,200 at the end of this year. In France, tonies maintained its momentum across all distribution channels in the first half of the year after revenue more than tripled in 2023, led by increasing expansion in wholesale.

On the product side, Tonieboxes revenue was up by 32.5% YoY to EUR 33.0 million (Q2: 56.1% to EUR 17.8 million). By selling more than 7.3 million Tonieboxes, the company´s anchor product, since the product launch in Q4 2016, tonies has built a strong platform with a powerful competitive shield based on user experience, product proficiency, intellectual property, seasonal build-up, financial strength, and patents.

Revenue of Tonies figurines increased by 29.9% YoY to EUR 106.9 million (Q2: 47.9% to EUR 50.0 million) driven by both licensed third-party Tonies including Paw Patrol and Disney figurines as well as an increasing share of Tonies with in-house produced content and own design such as tonies´ first own license brand “Sleepy Friends”. After a strong launch in the US in Q4 2023, tonies new format “Clever Tonies” was also successfully introduced to the DACH market. “Clever Tonies” clearly contribute to tonies value levers as they provide a higher margin, shorter go-to market time, target group extension (kids 5+ years) and more sustainable materials (50% bio-circular material). tonies also secured major licensing deals with Disney Consumer Products (50+ new Tonies) and Paramount (10+ new Tonies), strengthening its IP pipeline for the coming years. These strategic partnerships are pivotal in accelerating tonies' international expansion and reflect the strong confidence that leading licensors have in tonies' future success.

In Accessories & Digital, revenue grew by 16.9% YoY to EUR 6.9 million (Q2: -78.6% to EUR 0.6 million) mainly led by sales of Night Light Tonies, electronics (mainly headphones and chargers) and transport solutions. Revenue in Q2 was down year-over year due to a technical revenue reclassification, which increased Tonieboxes & Tonies revenue while decreasing Accessories & Digital revenue. On a like-for-like basis revenue in Accessories and Digital would have been up by 2.5%.

Adjusted EBITDA margin improved, driven by a higher gross margin and operating leverage, to 2.6% of revenue in H1 2024 (EUR 3.9 million) compared to 1.8% in the first six months of 2023 (EUR 2.1 million), which was notably affected by a non-recurring effect of EUR 3.4 million as a result of the release of licensing provisions. EBITDA margin rose significantly from -2.4% to 2.0%, marking its first positive result during the typically weaker first half of the year since IPO. The DACH region contributed an EBITDA margin of 18.2%, clearly demonstrating tonies´ high profitability potential in mature markets. The gap between adjusted EBITDA and EBITDA narrowed considerably as adjustments only included costs for share-based compensation, which declined significantly with the expiry of a program granted to the two founders. The increase in profitability was particularly attributable to a substantially higher gross margin, which increased from 65.8% in H1 2023 to 67.2% in H1 2024. The increase was driven by reduced purchase prices and lower inbound logistics costs, despite early-year supply chain disruptions, with additional support from a weaker USD against the EUR. Contribution margin declined from 41.1% in H1 2023 to 37.4% in H1 2024. The decline was mainly due to the expected higher licensing costs as a percentage of revenue compared to the previous year period, which was positively impacted by the one-off effects of EUR 3.4 million described above as well as channel and country mix effects.

Free cash flow in H1 2024 was above the previous year level at EUR -32.0 million (H1 2023: EUR -39.0 million). Cash flow from operating activities was at EUR -26.2 million (H1 2023: EUR -34.0 million) due to an early inventory build-up to avoid stock-outs, minimize airfreight costs and to facilitate further international expansion. Cash flow from investing activities, including investments in manufacturing tools for Tonies figurines and own content production and software, was at EUR -5.8 million (H1 2023: EUR -4.9 million).

Guidance for full-year 2024

After a very strong first half of 2024, tonies confirms its guidance and is fully on track to achieve its ambitious targets with group revenue of above EUR 480 million and revenue from North America of above EUR 200 million, based on an assumed EUR/USD exchange rate of USD 1.07. This implies a year-over-year revenue growth for the group of more than 33% and for North America of more than 42%. tonies expects the adjusted EBITDA margin in the 6.0 to 8.0 percent range, compared to 4.0% in 2023, while free cash flow is expected to turn positive in 2024 and come in above EUR 10 million (FY 2023: EUR -5 million). The forecast is based on the assumption that there will be no further material deterioration of consumer sentiment in 2024.

tonies SE will hold a presentation on its H1 2024 results today, Wednesday, 22 August at 4 pm CET. All details can be found under https://ir.tonies.com/financial-calendar/. All publication documents are available on tonies’ Investor Relations Website under https://ir.tonies.com/publications/.

Figures at a glance¹

Revenue

Adjusted P&L

¹Changes made to H1 2023 numbers: historically, currency losses were predominantly associated with tonies procurement activities, specifically purchases of raw materials and consumables in foreign currencies. Consequently, these losses were reported under the category of cost of materials in previous years. As tonies global footprint expands and the business diversifies, tonies is increasingly engaging in a broader range of international transactions. As a result, foreign currency gains and losses are now arising from a wider spectrum of business activities beyond just procurement. In the interest of consistency and comparability, adjustments have been made to the previous year’s financial figures to reflect this reclassification accurately and were already implemented for the FY 2023 results. For further information please refer to tonies half-year financial report 2024.

Operating segments*

*NA = North America, Operational segments shown in local GAAP; Adjustments on EBITDA only on group level (share-based payments), Reclasses include transfer prices, IFRS effects, group provisions

About tonies

tonies® is the world’s largest interactive audio platform for children with around 7 million Tonieboxes and more than 90 million Tonies sold. The intuitive and award-winning audio system has changed the way young children play and learn independently with its child-safe, wireless, and screen-free approach. Tonieboxes have been activated in over 100 countries, the content portfolio includes more than 1,100 Tonies figurines in several languages.

 Investor Relations Contact

Manuel Bösing

Head of Investor Relations

Phone: +4915157846012

Mail: ir@tonies.com

This document contains forward-looking statements

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Disclaimer

By their nature, forward-looking statements involve several risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described in this document. These forward-looking statements speak only as of the date of this announcement. Except as required by any applicable mandatory law or regulation, the tonies SE expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this document to reflect any change in the tonies SE's expectations with regard thereto or any change in events, conditions, or circumstances on which any such forward-looking statements are based. Neither tonies SE nor any other person accepts any responsibility for the accuracy of the opinions expressed in this document or the underlying assumptions.