Global Blue has reported a robust first-quarter performance, with a 25% increase in revenue, reaching €180 million. The growth was predominantly fueled by its tax-free shopping solutions. The company's adjusted EBITDA also saw a significant rise of 55%, amounting to €43 million, which indicates efficient cost management and high operating leverage. Additionally, Global Blue confirmed its full-year guidance with an adjusted EBITDA forecast of €200 million and announced a €10 million share repurchase program.
Key Takeaways
- Global Blue's revenue increased by 25% to €180 million in Q1.
- Adjusted EBITDA grew by 55% to €43 million with a margin improvement to 37%.
- Tax Free Shopping Solutions segment saw a 33% growth, contributing 78% of group revenue.
- Payments segment revenue grew by 8%, while Post Purchase Solutions experienced an 11% decline.
- The company confirmed a full-year adjusted EBITDA guidance of €200 million.
- A €10 million share repurchase program was announced.
Company Outlook
- Global Blue anticipates a long-term revenue growth rate of 8-12%.
- The company aims for a 50% drop-through of revenue to EBITDA.
- The firm's high-net-worth customer base positions it well against inflation and potential recession.
Bearish Highlights
- The Post Purchase Solutions segment saw a revenue decline of 11% to €6 million.
Bullish Highlights
- The Tax Free Shopping Solutions segment delivered strong growth across various regions, with Continental Europe and Asia Pacific leading the way.
- The Payments segment benefited from foreign exchange gains and margin increases.
Misses
- Despite overall growth, there was a pre-tax unlevered free cash flow outflow of €10 million.
Q&A Highlights
- CEO Jacques Stern (AS:PBHP) highlighted the resilience of their high-net-worth customer base amidst economic uncertainties.
- CFO Roxanne Dufour expressed satisfaction with the company's strong start to the year.
Cash Flow and Debt
- Global Blue's pre-tax unlevered free cash flow showed improvement, with an outflow reduced from €31 million to €10 million.
- Net financial debt stands at €566 million, with a leverage ratio maintained at 3.4x, and a goal to reduce it below 2.5x.
In summary, Global Blue (ticker: GB), with its strong Q1 performance and strategic financial management, remains optimistic about its growth prospects and resilience in the face of macroeconomic challenges. The company's focus on tax-free shopping solutions continues to yield positive results, contributing significantly to its revenue growth.
Full transcript - Global Blue Group Holding Ltd (GB) Q1 2025:
Jacques Stern, CEO, Global Blue: Good morning. Good afternoon. I am Jacques Stern, CEO of Global Blue. Today, Roxanne Dufault will be with me to present to you the Q1 figure. Let's start by an executive summary of the presentation.
So first and foremost, on the back of the strong Q1 performance and also a good July, we are confirming today our guidance of €200,000,000 of adjusted EBITDA for the fiscal year 2024, 25. Roxanne will enter into the detail of Q1, but let me already highlight several key figures. First of all, in terms of revenue, you will see that we have delivered a growth of 25 percent for this Q1, which is somewhat in contrast versus the overall mix performance reported by a luxury company for the same period, which is a good news. 2nd, we are also delivering an adjusted EBITDA of 55%, a drop through of 65% and an adjusted EBITDA margin of 37%, which is an improvement of 7 point. This is really reflecting on one hand our high operating leverage profile, as you know, but also our constant focus on cost base.
Last but not least, we are seeing an acceleration of the annualized adjusted EBITDA to €205,000,000 compared to previous quarter at €164,000,000 So with that in mind, and also in the light of the fact that our operational performance and our robust cash flow generation is still not reflected in the share price. We are today announcing a €10,000,000 share repurchase programme, which has been voted by the Board basically yesterday on August 27. I will come back on that. So a lot on our plate to discuss today and we will start by the Q1 figures and for that, Oksan, I'll leave you the floor.
Roxanne Dufour, CFO, Global Blue: Thank you, Jacques. Good morning, everyone. Good afternoon. I'm Roxanne Dufour, the CFO of Global Blue. And I will take you through the financial performance for this Q1 ending on June 30, 2024.
Again, a reminder that our financial year runs from April to March. And here this is our Q1 announcements and you will find all the reconciliation to the nearest IFRS metrics in the appendix. Let's move to slide 7 for the adjusted P and L. We are very pleased to report a solid start to the year with significant progress across the business when comparing performance versus the same period last year. Tax free shopping solution and payments reported sales installed increased by €1,900,000,000 which is an increase of 33%.
As mentioned by Jack, we achieved a group revenue of €180,000,000 which is an increase of 25%, driven by a particularly strong performance in tax free shopping solution and I will come back on that. In terms of contribution, which is revenue minus variable cost, here we achieved a 29% increase with significant growth in post purchase solutions. Turning to adjusted EBITDA, there are significant improvement here with an increase of 55% to €43,000,000 reflecting the high operating leverage profile of the business together with the ongoing focus on the cost base. This resulted in a 7 point increase in the adjusted EBITDA margin to 36.5% with a 65% drop through. Finally, we recorded an adjusted net income for the group of €6,000,000 versus €2,000,000 last year.
Let's turn now to slide 8 to go into the divisional performance. Starting first with Tax Free Shopping Solutions, which accounted for 78% of group revenue in the quarter. The division delivered a strong performance with an increase of sales in store of 42% and an increase in revenue of 33 percent to €91,000,000 Jags will cover this in more detail later, but looking at sales in store, there is a strong improvement in both Continental Europe and Asia Pacific. The 20% growth in Continental Europe can be attributed to strong year on year progression across all nationalities with GCC plus 43%, Mainline China plus 31% and US plus 17%. The 91% year on year performance in Asia Pacific reflects a solid acceleration in the recovery with Mainland China plus 224%, Northeast Asia plus 146% and Hong Kong and Taiwan plus 69%.
You can see here the difference in Sys growth of 42% versus revenue growth of 33%, which is mainly due to Continental mix. This is because Asia Pacifics is growing during this quarter, grow much faster than Europe with sales in store at 42% versus 31% last year and the VAT rate in Asia is much lower at around 10% versus 20% anymore. But this will normalize when the growth of both continents is similar. What is also important to highlight here, you can see that overall pricing impact is now flat. Moreover, the usual impact that we had previously from merchant mix, where we had an increased level of business with larger merchants with whom we shared a higher rate of commission, is now positive.
Then if we look at contribution, here we delivered a 34% increase to €77,000,000 with strong improvement in both continent, meaning Europe and Asia Pacific. CFS has a strong contribution margin of 84%, with the variable cost mainly related to airport refunding cost, which is airport and agent fees. Turning now to payments. Payments accounted for 17% of group revenue in the quarter. Here we delivered another solid performance with sales growth of 5% and revenue growth of 8% to €20,000,000 You can see the key driver for the increase in revenue versus Sys growth is an increase in margin on both trade or regain and acquirers and also a positive impact from FX gain and others.
Then if we look at the contribution level of €11,000,000 €10,000,000 is from FX solution with an increase of 2% and €1,000,000 is from acquiring a gateway which is an increase of 15%. It's important to note here the difference in contribution margin with FX solution at 96% and acquiring a gateway at 13%, acquiring being a pass through model incurring payment of interchange and network fees to financial institutions. Turning now to post purchase solutions. Post purchase solution accounted for 5% of group revenue in the quarter. The division reported a revenue decline of 11% to €6,000,000 in the quarter.
But as previously disclosed, revenue continues to be impacted by our decision to move away from carrier sales to some of the Zig Zag clients, which is a service that generates revenue but with a lower contribution. So the end of this service has a positive impact on contribution and the contribution growth here was strong at plus 14% with a contribution margin of now 61% and here variable costs are mainly related to the logistic carrier cost of Zig Zag. Turning now to detail on adjusted EBITDA. As I said earlier, the significant improvement in revenue together with high operating leverage profile of the business and the ongoing focus on the cost base led to a 55% increase in adjusted EBITDA in the quarter with a 65% drop through. We begin with our adjusted EBITDA of last year, which was €28,000,000 Then with the additional contribution of €21,000,000 related to the business and the fixed cost and foreign exchange impacted of €6,000,000 the group delivered an adjusted EBITDA of €43,000,000 with an increase in adjusted EBITDA margin of 7 points to 36.5%.
Turning now to slide 12 for the D and A depreciation and amortization. You can see here the breakdown of the D and A. They have increased by €2,000,000 in the period to €11,000,000 This is due to €1,000,000 increase in the capitalized software amortization, which reflects the increase in CapEx related to software over the last 2 years. Following the ramp up of the investments in software CapEx, annual software CapEx amortization should converge in the coming years with the annual software CapEx spend per year. Turning now to net finance costs, Here we are showing an increase of €4,000,000 in net finance costs versus the same period last year.
This is mainly due to the increase in interest rates on the senior debt, which is over 8% in this quarter versus 5.6% in Q1 last year. Looking to 2024, the expected senior debt cost is €45,300,000 which includes €3,000,000 from a swap on a rebar for half of the senior debt. Turning now to detail on the annualized adjusted EBITDA. So here we are showing the annualized adjusted EBITDA for the group based on the quarterly performance. You can see here a steady and consistent improvement in the annualized quarterly adjusted EBITDA and a strong acceleration in this quarter.
We are now at €205,000,000 versus €164,000,000 in the previous quarter, with a significant improvement in margin of about 2 points. On the €41,000,000 improvements in the annualized adjusted EBITDA, three points to consider here. 1st, Europe that has reached 100% revenue recovery in Q1 versus 82% in the previous quarter, driven by the strong increase of CYS from US and GCC. 2nd, we have APAC that is now at 159% revenue recovery in Q1 this year versus 124 percent in the previous quarter, driven by a strong increase of Sys from mainline China. Finally, the level of fixed costs are quite comparable with 2019, despite higher inflation over the last 3 years and the rehiring of talents to support the business increase.
Now let's have a look on our cash flow statement. After an adjusted EBITDA of €43,000,000 and the level of CapEx at €10,000,000 in the period, this is here essentially related to technology development. So we have a significant improvement in adjusted EBITDA less CapEx at €33,000,000 versus €20,000,000 last year. You can see here working capital needs outflow of €39,000,000 and I will cover that in more detail in the next slide. So after CapEx, working cap and lease payments, there is a pre tax unlevered free cash flow outflow of €10,000,000 versus an outflow of €31,000,000 in the previous period.
So we have ended the period with a solid improvement in cash flow, with an overall outflow of €34,000,000 versus €53,000,000 last year. Finally, there is an increase of net debt of €43,000,000 and again I will cover that in more detail later. Let's turn to the working capital explanation. So here we are showing the working capital variation on a quarterly basis. As a reminder, our working capital is driven by the timing of the refunds that we make to international travelers and the timing of the VAT payment that we receive from merchants and tax authorities.
We typically refund travelers on average 30 to 45 days before we are paid by the merchant or authorities. As a result, there is a cash flow seasonality throughout the year with a larger networking capital need during this spring summer when international travelers are traveling much more frequently and during the winter this is followed by a working capital unwind during those months. So you can see the same trend here with a higher outflow of €39,000,000 in the Q1, which will reverse during the winter season and which also is in line with our guidance of neutral working capital on an annual basis. Turning now on an analysis related to our net debt position. At the end of June 24, our net financial debt amounted to €566,000,000 up from €523,000,000 at the end of March, but with a leverage ratio that is maintained at 3.4x.
Net debt has increased in the quarter because of the working capital seasonality. And as I explained on the previous slide, this will reverse unwind in the winter season, which will positively impact the net leverage ratio and we reaffirm the objective of being below 2.5x. Turning now to the key takeaways. Here are the main highlights for the period. 1st, we are very pleased to report a very strong start to the year with a significant increase in revenue of 25% to €180,000,000 2nd, thanks to the strong revenue growth, significant operating leverage and ongoing management of the cost base, we are pleased to report a strong improvement adjusted EBITDA to €43,000,000 which is an increase of 55% of that reported last year with a 65% growth through.
On that basis, if we annualized the adjusted EBITDA based on the quarterly performance of the group, there is an acceleration to €205,000,000 And finally, we delivered a strong improvement in the net leverage ratio to 3.4x versus 5.7x in the same period last year and we reiterate our objective of being below 2.5x. So this concludes the financial section and I will now hand over to Jacques to present the latest trends and the long term growth driver for Global Group.
Jacques Stern, CEO, Global Blue: [SPEAKER JEAN PIERRE CLAMADIEU:] Thank you, Roxanne. So, latest trend, which means July for tax free shopping. So, for the first time, we are now reporting on year over year versus recovery. Having said that, you will find in the appendix all the detail for the recovery if you want to continue to follow these metrics. But we thought now with the normalization of mainland China, it's a good time to move to year on year.
Let's forget 2019. So if we go to the slide 20, which gives you the main element worldwide basis. You see that Europe has in July performed slightly lower than Q1, 12% versus 19%, I will come back on that. And also in APAC, with a growth of 64% versus 109%, I will come back on that. And you see what is interesting on the right side in terms of nationality that basically we have very strong performance of China, even though we are now coming to the period of normalization with a reopening, which is more than 12 months.
But we see in particular very strong performance of countries like U. S, which is now recovered for more than 2 to 3 years. So it's a very good momentum. Let's go now a little bit more in detail in Europe. You can see that the main element in Europe in July versus Q1 was the weak performance of France at -2% versus 10% growth in Q1, which is really explained by the pre Olympics negative impact in Paris.
Basically for almost 10 days, Paris was totally empty before Olympics. Clearly, the Olympics has been positive, but we will see this impact in August. The rest of the country has been more or less in line with Q1, namely Italy, Spain or a slight acceleration in Germany. If we move to the nationality, I was mentioning the very strong performance of the U. S.
Despite the weak one in France. You see 15%, which is really good and also mainland China, where we had a positive plus 33% versus last year. So overall, I would say incontinental Europe, if we strip out the pre Olympics momentum, which has been more or less the same than Q1. If we move to APAC now, clearly we have seen a kind of EBIT growth for now a couple of quarters. And in July, we have seen a certain slowdown of this EBIT growth.
Still, we had 64% growth versus last year. But particularly in Japan, we have seen a kind of slowdown of this HIPAA growth at brackets only 103% versus 172% in previous quarters. All nationality are, I would say, contributing to this phenomenal level of growth, but probably to mention that the recent softness or strengthening of the Japanese yen have mechanically, with the elasticity of the business, created a kind of slowdown of this hypergrowth in Japan. Last slide on the later strain, which I think is interesting for you to understand what happened with China, is a slide which shows you that because of this weakness of the yen versus the RMB or the euro, all currency, around 30% to 35% if you compare to 2019. And because in our business we have a very strong elasticity, in particular for Chinese, so three times, which means that when we have a move of currency of 30%, it means that it's an impact, positive or negative, it has been positive of 90%, so 3 times the currency variation.
Because of that, clearly Japan has been the place to attract consumer, Chinese consumer during Q1. You can see that on the left, where in 2019 33% of the overall spend of Chinese abroad was done in Japan, where during the same period of Q1 in 2024 it has been 61%. And so it's not by surprise that we see a recovery for mainland China of 62% in Europe and a very strong recovery in Japan and in APAC in general at almost 200%. So I think what you have to keep in mind is Chinese recovery, it was 122% in Q1. And clearly, we are seeing because of the weakness of the yen, a pool of attraction in Japan, which distorts a little bit where the recovery happened, I.
E. More in Japan, less in Europe. But clearly, with what I've just said, which is a softening or strengthening of the yen after the weak point of the yen that we have seen in July. Clearly, we can expect that in couple of months, we can see a more moderate growth in Japan and probably better growth in Europe with this change in the currency in Japan. That was really the latest trends and to conclude, let's say that July has been quite good and in line, I would say, with our expectation.
With that in mind, and as I was mentioning before, Q1 being very strong, July being, I would say, very strong also. We have reiterated our financial guidance of CHF 200,000,000 as mentioned by Roxanne. But despite that, we see no rerating of the Glogold Blueshares. And so with that in mind, again, strong operation performance, financial guidance reaffirm and happy deleveraging and no impact on the share price. The Board of Directors have decided yesterday to launch a 10,000,000 share buyback program, a program which will be for 6 months and where the main shareholders, Silverlake and Partners Group, will not participate.
This program translates really the confidence of the Company and the management on, I would say, our operational performance from today but also for the year. And also the strong delivery of cash flow, which help us to deliver the business. So it's a good transition for me to talk about guidance and long term target. Here we, as mentioned, reiterate 20 four-twenty five with this 200,000,000 EBITDA target. But equally important for the year onwards, after 2024-twenty five, we are also confirming our long term target.
In terms of revenue, 8% to 12% revenue growth. In terms of drop through, with a 50% objective of revenue to drop through into EBITDA, but also in terms of CapEx with €40,000,000 to €45,000,000 CapEx, of which 80% capitalized software. We are also reiterating what was mentioned by Roxane a few minutes ago that we continue to be in a business where we are expecting a neutral working capital, a tax rate of around 24% to 26% and this objective of being below 2.5% in terms of leverage ratio. Couple of slides to remind you what are the key elements which are helping us to confirm those mid term guidance. First of all, a growth expected of 10% to 14% in terms of long term Sys growth, which has 2 components: 1, which is really the market.
Here we're not talking about the luxury market, we are talking about the overseas luxury market with an expectation of growth of 6% to 8%. And basically on top of that, 4 to 6 points of growth which are coming from management initiative, digitalization, gain of new clients and also opening of new countries. So a kind of balance growth between market and company initiative and very much in line with what was delivered pre COVID, which was 14%, which is the graph on the left. In terms of translation into this Sys sales in store into revenue, we are expecting 7% to 11% revenue growth with 2 elements which are negatively impacting the sales growth, which is pricing evolution, even though we have seen in the presentation of Oksan that it was 0 for this quarter, but we maintain a prudent approach of an impact of 130 basis points per year. And secondly, negative mixed effect coming from merchant, all countries, all continent.
You have seen also in Q1 that if we strip out the mixed effect between APAC and Europe, which we call continental effect, the rest of the effects were positive, I. E. We are seeing a normalization of those impacts. From that point of view, also the Q1 was very reassuring in our capacity to reach those figures for next year. Also guidance in terms of payment, which is 9% to 13%, both in terms of sales in store and revenue.
And there also a good combination of macro growth coming from the markets, 5% to 7% and the rest, which is 4% to 6% coming from management initiative and there also a guidance which is very in line with what has been delivered pre 2019. Last but not least, I remind you that Global Blue is well hedged against 1, the inflation. We have seen it in the last 2 years. It has boosted the sales in store recovery for Global Blue as the luxury brands have increased their price at a higher speed than the inflation. But also we are, which is probably more important today, hedge again the recession.
You have here figures of the last European large recession in 2008, 2010, where you see that tax free shopping was basically posting flat year on year growth versus domestic market for luxury, which was negative by 8%. And there also, you understand why, you know why it's clearly because our customer base is, I would say, less sensitive to recession. 70% of the consumer are what we call high network individual affluent and therefore they are more resilient and less subject to recession. Just to have that in mind. And obviously to conclude this presentation, you have heard already those figures, so I will not come back to the detail.
But just to reaffirm that the good quarter won in terms of revenue and EBITDA, but also the good figures in July that help us to confirm our guidance of CHF200 1,000,000 of EBITDA and also have given us the confidence to announce a share buyback of CHF10 1,000,000 which has been approved by the Board yesterday. With that in mind, Roxanne and myself will remain at your disposal for any one and one. Thank you for that and let's meet again for Q2.
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