Earnings call transcript: Rugvista Q2 2025 sees revenue growth, stock rises

RugVista Group AB reported a strong second quarter for 2025, with net revenue reaching SEK 150.5 million, a 17.2% increase year-over-year, driven by a significant rise in orders and new customer acquisitions. The company’s stock price responded positively, climbing 4.75% in pre-market trading. Despite a slight dip in gross margin, the overall performance exceeded expectations, as reflected in the market’s reaction.

Key Takeaways

• RugVista’s net revenue increased by 17.2% YoY, reaching SEK 150.5 million.
• The company recorded a 26% increase in both orders and new customers.
• Stock price rose by 4.75% in pre-market trading following the earnings release.
• Gross margin slightly decreased by 0.5 percentage points to 62.5%.
• EBIT margin significantly improved to 7.1% from 2.4% last year.

Company Performance

RugVista demonstrated robust performance in the second quarter, with organic growth reaching 22.3%. The company’s strategic focus on value-for-money and a shift towards handmade rugs appear to be paying off, as evidenced by the increase in customer numbers and order volume. Despite challenges in consumer confidence across key markets, RugVista managed to expand its presence, particularly in the Nordics and DACH regions.

Financial Highlights

• Revenue: SEK 150.5 million, up 17.2% YoY
• Orders: 74,000, a 26% increase YoY
• New customers: 52,000, a 26% increase YoY
• Gross margin: 62.5%, down 0.5 percentage points
• EBIT margin: 7.1%, up from 2.4% last year

Market Reaction

The positive earnings report and the strategic initiatives outlined by RugVista led to a 4.75% increase in its stock price, closing at 71.6 SEK. This movement places the stock closer to its 52-week high of 77 SEK, indicating strong investor confidence in the company’s trajectory.

Outlook & Guidance

Looking forward, RugVista is gearing up for the Q4 peak season with increased stock and a focus on personalization and brand building. With a market capitalization of $156.12 million and a P/E ratio of 21.25, the company demonstrates solid fundamentals. The company is also monitoring AI developments that could impact search and marketing strategies, aiming to leverage these technologies for enhanced customer engagement. For a deeper understanding of RugVista’s valuation and growth prospects, investors can access comprehensive analysis through InvestingPro’s detailed research reports, available for over 1,400 stocks.

Executive Commentary

CEO Eva Jungerud emphasized the company’s commitment to helping customers create homes they love, highlighting the strategic shift towards quality and brand building. She also noted the potential for AI to transform marketing efforts, positioning RugVista to adapt swiftly to technological changes.

Risks and Challenges

• Consumer confidence remains low in key markets such as Sweden and Germany, which could impact future sales.
• The competitive digital marketing landscape requires continuous adaptation to maintain visibility and customer engagement.
• Supply chain disruptions could affect inventory levels, especially during peak seasons.
• The impact of AI on search and marketing remains uncertain, posing both opportunities and challenges.

Q&A

During the earnings call, analysts inquired about the impact of clearance sales on overall revenue, to which the company responded that there was no significant effect. Questions also focused on the company’s strategic shift in marketing and the role of AI, with RugVista expressing confidence in its current approach and future potential.

The earnings call highlighted RugVista’s strategic initiatives and robust performance, positioning the company for continued growth amidst market challenges.

Full transcript - Rugvista Group AB (RUG) Q2 2025:

Conference Moderator: Welcome to the RugVista Q2 twenty twenty five Conference Call. Now I will hand the conference over to the speakers, CEO, Eba Lungerid and CFO, Joakim Tuvner. Please go ahead.

Eva Jungerud, CEO, RugVista: Hi, everyone, and good morning. Welcome to this second quarter earnings call. My name is Eva Jungerud, and I am CEO. And I have Joakim Tuvner, who is our CFO with us. Good morning.

The structure will be as we normally do it. So I will start with the business update a bit more high level, and then Joakim will dive into the numbers. And last, of course, we will have a q and a for any questions. I would also like to point out that the images you’ll see in this presentation comes from a campaign that we just kicked off in our rustic collection. It’s a bit more autumn y in the look and feel, a lot of coziness and lit candles even though this is probably the warmest day we’ve had in in Stockholm for a long time.

But we’re we are slowly move moving into the fall, so we have already kicked off the fall campaigns. And the and this campaign actually has a lot of a mix of designs, both new designs for the season, including this rug you see here, and also some of our previous top sellers that we have made new versions of for this for this season. Anyway, so start with the business update. We had a very good quarter, we think, and we’re very proud of that. Our net revenue landed on a 150,500,000.0, which is a growth of 17.2%.

And organically, if we take in exchange exchange rates, it’s actually 22.3%. And by some margin, this is for a long time our best q two actually in in almost all of the KPIs. It was a pretty even quarter when it comes to top line. It started off a bit slower because Easter was in the April, and the year before it was in March. But otherwise, it’s been a fairly even quarter.

If we look at the orders, they are up from 59 k to 74 k. And if we look here, you see the quarterly development. So it’s a 26% increase compared to 2024. And then if you look at the rolling the the bottom chart there is the rolling twelve month quarter development. And there you see that it does continue to grow over time even when you look at it in this manner.

When we talk about customers, we had 52,000 new customers compared to fifth 41,000 last year. So that’s a 26% increase, which is again an all time high for the quarter. And if we look at the AOV, the average order value, that was down a little bit this quarter. It’s it declined by 7%, which in part I’ll move over to the next slide so you can see the quarterly development here. In part, it’s driven by that we and I think we mentioned this already in the q one report that we have been driving a lot of sales in the quarter due to our warehouse move, but there’s also some FX effect in this.

So if you if you remove the FX effect, it is not quite flat, but it’s I think it’s down around 2% if you if you include that. This is an area that I think we need to continue to work with. I I think and I believe that the average order value, we have more work to do. It’s not a silver bullet. It’s a lot of small changes, and we do it all the time.

We work a lot with how we plan our campaigns. We work a lot with how we make the algorithms for the site, etcetera, etcetera. So this work will continue, and we don’t want it to keep on declining. So I think that’s very worth pointing out. And, of course, it fluctuates quarter over quarter, so it’s not gonna be a consistent move, but it’s still it’s important for us.

Moving over to the profitability. The gross margin landed on 62.5% compared to 63% from last year. This is actually almost solely driven by the clearance sale where the product cost percentage was a little bit higher than before. Our our freight costs are still looking really good and were down just as they’ve been for the past couple of quarters. And if we look at the first six months for the of this year, so January to June, the gross margin actually increased from to 63.4% compared to 62.2 last year.

Marketing spend, this is a big investment for us, and it decreased by 0.6%. And I think it’s it’s just worth pointing out that we, even with this increase, managed to grow organically by 22%. So so that’s that’s a trajectory that we’re very happy with. We have done this shift trying to catch customers earlier in in their buying process, and and we do see that it continues to look good for us. The volumes in branded search are increasing as well quite quite substantially.

Substantially. So, basically, when you search for the name RagVista rather than a product. And and one one of the sort of side effects of being earlier in the in the process for the customer and being more visual in the ads is that we want to build the awareness of the brand, excuse me, over time. And and through the increase in in organic search, we we believe that we are succeeding in that as well. I would, again like to point out that this fluctuates a lot quarter to by quarter since we are spending lot with the search engines.

It depends a bit on how the our competitors are doing and how much keywords are, etcetera. So this is not a clear downward trend, but it’s it’s something that we want to make sure that over time, we are always in control of this. Looking at sessions. Again, to a large extent based on the fact that we have switched in our our marketing mix, we have a large increase in sessions, 49% from almost 6,000,000 to almost 9,000,000. And just as previous quarters, this does affect the conversion rates.

But when we look at the total economics for the marketing investment, we see that it’s actually very worth it. Looking then at EBIT, we landed on 7.1% compared to 2.4 last quarter, almost three times better than the last year. The margin ended at 4.7, and this includes one off moving costs of just north of 4,000,000. So so we have a chunk there that that we’ve also been quite clear on work to a large extent coming in q two. And then if we look at the market climate, we do see that consumer sentiment continues to fluctuate a lot.

And if we go into this slide, we can look at some of our bigger markets. Even though we’ve had a strong quarter, you see here that Sweden is the top one, quite low on consumer confidence. Germany is a tiny bit better, and France is also actually quite low. It doesn’t always reflect in our results. I don’t think you can draw too many conclusions, but, of course, it’s important for us to know how the total market is doing.

And and for us, this really means that we need to optimize our spend for return on investment even more, and we must be good at growing in smaller markets to balance when the bigger markets aren’t performing as well as they’ve had previously. And I I think it’s worth pointing out. I I actually see this as a strength for us that since we have our total market share in any given market is quite small, that also gives us opportunity to move and and be a bit more nimble than if we were very dependent on just a few markets. And then if we look a little bit at the fall head, of course, a very, very big thing for us in q two has been to move our warehouse, and it has, I’m happy to say, gone really well. Amazing work by all our teams there.

Even though the the the move itself is coming to an end quite soon, we will continue to optimize, and this we see as a, like, really a continuous area for improvement in our company. We will continue to build on automation, and we will fine tune. And and, of course, we have peak coming up in a couple of months. And ahead of that, we wanna make sure that our processes are really, really strong. We are also building buffer stock at the moment, basically building up for for peak and and for later seasons.

And for that reason, we’ve actually decided to keep one of our old warehouses to make sure that we we have the the space we need for this. So and then the assortment, our rugs. Here, we are also developing a lot for the fall. I already mentioned the the rustic collection that you see here. But most of our news will actually come a little bit later.

They will be in the more classic collection and also modern collection. Classic is looks much more as the oriental rugs and modern are as the name implies, modern in their design. All actually, quite a lot of color this fall coming, so we see a lot of color in all the interior trends. We do all of our design in house, so that design process has already happened, and now all of the news are actually coming into the warehouse, which is very exciting to see. If we look at the assortment overall, we are slowly trying to shift a little bit away from some of the very cheap drugs and and find the sweet spot in value for money and and having quality no matter what price range we’re in.

We are in many different price ranges, so it’s it’s just about being qualitative in that price range. And and we also see that outdoor has performed very well in q two and actually q one, but now it’s calming down a little bit, which is normal for for fall and winter. And that also leads for us, it leads so that we can push a little bit more handmade rugs. Outdoor tend to be machine made. And handmade rugs tend to be somewhat more expensive, which we hope will also help us a little bit with our average order value.

One thing you’ve heard me talk a lot about that we continue to work on during the fall is the personalized customer journey. Because of that, we have such a wide assortment within the rug vertical. It is important that the customers find what they want on-site. So there’s a lot of things that are happening during the fall around this, and this this will continue to be a big focus area for us. And then I would also, of course, like to just brag a little bit about our trust pilot score.

We are super proud that we managed to keep this high score 40 4.73 in q two. And this is including the move, which even though it’s been very, very smooth, there have been a couple of customers where there’s been hiccups in the deliveries. So we’re we’re very proud of this. And I think it’s our our purpose for the company as a whole is we help people to a home they love. And I think that’s very important to remember in this context that it’s for the whole company and for anyone who invested in us as well.

Yes. And with that, I hand over to you Joakim.

Joakim Tuvner, CFO, RugVista: Thanks a lot, Eva. So starting to the left in this slide, Ebba has already been through that our net revenue growth was 17%. And after adjusting for the negative currency effect, we grew organically by 22%. And as you said, Ebba, that was 26% order growth and minus 7% in average order value, of which 5% then was the currency impact, the negative currency impact. But we’re happy to see that all regions are driving the growth.

If we start with DACH, grew by 18%, of which Germany, which is the biggest market in that region, grew by 10%. The Nordics grew by 32%. And there, we’ve seen Sweden for the last couple of quarters being the driver of that region. But now Sweden grew less than the region, so it grew by 19%. And we see the same pattern in the Rest of World, which is then mainly the rest of Europe.

We see that there are two main markets, U. K. And France, were actually in decline, smaller declines, but the region grew still by 11%. So all in all, you can say that we saw bigger fluctuations between the markets than usual, but still with a good growth in all regions. So I move on to the cost ratios and the EBIT margin.

And we already touched that product expenses are down or we lose 1.4 percentage points. The cost is up by 1.4 percentage points. And this is driven by the stock clearance that we had planned in order to facilitate the move to a new warehouse. So a little bit higher discounts is driving that. Shipping and other selling expenses, which is then our shipping cost to our customers, that continues to improve versus last year, although somewhat higher than in quarter one.

So this is then due to lower freight cost and also due to some internal efficiency that we have been driving. So that sums up to gross margin drop of 0.4%. You see that it doesn’t sum up or add up 100%. But as we note at the bottom of this slide, there are some rounding differences in this slide as well. So moving on to other external expenses.

As Eber mentioned here, we have moving costs of 4,200,000.0 in this line, and that is equivalent to 2.8 percentage points. So that is explaining the slight increase we have there. And this line also, the big cost here is the marketing costs, which, as you saw earlier, went down from 29.8% to 29.2%. So there is a 0.6 percentage point reduction that I think you have to see in light of that 22% growth. On to personnel expenses.

These are down by 2.8 percentage points. And there in last year, we had some one offs. We had SEK 2,500,000.0 in one offs. And we have six fewer FTEs in this quarter compared to the quarter last year. And we also have some economies of scale that drive down the percentage as we grow the top line.

Other operating expenses is the FX effect from revaluing assets and liabilities that we carry in foreign currency. And last year, that was a minus. This year, it was a plus. So it’s a 1.9 gain versus last year. Depreciation and amortization then has increased, and that’s primarily due to the start of amortizing our webshop.

We stopped capitalizing expenses on our webshop in June, then start to write it off or amortize it. And that’s the main explanation, but it’s also that we have higher cost for our leased properties. And as of June 1, we have added then the new office and warehouse building. And when that is then adjusted in IFRS 16, it comes in this line and in the interest line. So all in all, we see an EBIT margin increase of 2.9 percentage points despite the moving costs of 2.8 percentage points.

So let’s take a look at the inventory. So you see here to the left that during the course of this year, we have decreased our inventory with SEK 6,000,000. This was a planned decrease. And also, if we compare to prior year, we have decreased the inventory by 19%. If we look to the right in the picture here, we are actually below now our targeted range, which is 17.5 to 22.5 of the last twelve months of net revenue.

And we are at 17.3%. And we have already had quite some number of deliveries in July, and now we’re beefing up the inventory to prepare for the high season in quarter four and not let the quarter four drain our inventory into quarter one. So last but not least, improved cash flow. So we have changed this graph here to not only include the quarter, but the year to date, the quarter is quite a short period to analyze cash flow. You can see here that starting upper left that the operating cash flow increased by SEK 15,000,000, and that is driven by the increased EBITDA.

In the left bottom corner, you’ll see the cash flow from investing activities, whereas we, in prior year, had very few tangible investments, and we were investing EUR 4,000,000 in our webshop, whereas we, in quarter two of this year, have EUR 31,000,000 going out for the investments to mostly equipment to the new warehouse. And as I earlier said, we have stopped capitalizing on our balance sheet, capitalizing development costs for our webshop as June. So we have no intangible investments during this quarter. So the cash position then. We are roughly at the same cash position as we were about a year ago despite the investments we have paid the dividend during this quarter.

We have a drop of SEK 62,000,000 since the year end. And you can say that generally, our year end cash position is artificially high. I mean, of course, we have a very good cash flow in quarter four. It’s high season, but we have also, most of the time, decreased our stock levels, and we also have quite a big payable of VAT that we have gathered up during the quarter four that is paid in quarter one. So it’s artificially high, I think, you can say, in end of quarter four.

So €158,000,000 And with that, I think we have a strong balance sheet to finance this inventory buildup that is coming up, the final fixed assets purchases that we have to pay in quarter three. And I think we stand strong going forward. So, Eva, with that, I’ll hand it back to you.

Eva Jungerud, CEO, RugVista: Thank you. And just to sum up, we’re proud to present our q two numbers with strong top line growth and also a quite decent EBIT even including the moving costs. The full assortment is starting to come in. We’re very excited about this. We have lots of news coming, and we hope to see strong sales.

The move is coming to an end, but as I said before, we will continue to work automation and improving our processes now when we have better, really, conditions to be able to do that going forward. And our personalization projects are gonna continue to be focus areas during the fall. So with that, I think it’s time for a q and a. So

Conference Moderator: If you wish to ask a question, please dial pound key

Wiktor, Analyst, DNB Carnegie: morning, Eber and Joachim. Wiktor here from DNB Carnegie. A couple of questions from my side. First one, are there any positive sales effects here in Q2 that from perhaps more aggressive marketing or discounting them compared to normal and maybe related to your clearance sales? That will not be material going forward.

Or would you say that your Q2 performance is representative of your underlying performance and thus sustainable?

Eva Jungerud, CEO, RugVista: I would say that there isn’t any major impact by specific marketing drivers or the the big sale that we had. It’s also true that we do sales every quarter, so so it’s not it it was a little bit bigger in in q two because we wanted to clear out some of the stock before the move. But but in general, So, yeah, long long way of saying no. Do do you agree, Joakim?

Joakim Tuvner, CFO, RugVista: I totally agree. I mean, the the the total volumes that went out in that clearance sale were mostly focused on slow moving products when where we had only few SKUs of each, and hence, there wasn’t a big volume going out. So this was more like any other normal strong campaign, we can say.

Wiktor, Analyst, DNB Carnegie: Perfect. Very, very interesting. And then on your high web traffic growth, I’m curious here. How do you want to improve conversion going forward to catch all these new visitors that are finding Logista?

Eva Jungerud, CEO, RugVista: I think the personalization is very important here that to make sure that of course, I I think it’s normal to see lower conversions when you drive a lot more traffic, but we really want to make sure that people find what they want. And even though I love our website, I still see room for improvement, if I put it that way. And and it’s not again, this is not something that we do very quickly. It’s more slow changes and a lot of AB testing over time and and finding out what works. But but I I see that that is where we need to put a lot of effort going forward.

Wiktor, Analyst, DNB Carnegie: Yep. And then some other questions on marketing. I’m curious what you are seeing here in the European market post the minimis changes and tariffs in The U. S. You mentioned your Chinese competitors and others before.

So I’m curious here what you are seeing in terms of competition on ad spend and marketing in your market.

Eva Jungerud, CEO, RugVista: Yes. Joachim, do you want

Joakim Tuvner, CFO, RugVista: to Yes. I think the tariffs doesn’t affect us directly so much. It’s more like creating these uncertainties and the consumer sentiment. We saw there was in the consumer sentiment went down quite a lot in April, and that was when there was a lot of tariff discussions going on. So I think it’s the tariffs affect us more in terms of the whole how the whole economy moves.

And we know that when consumer sentiment is down, what normally is hit the worst is then discretionary goods. So I think that is the impact we see from the tariffs.

Wiktor, Analyst, DNB Carnegie: Okay. But what about my question was more about competition on on digital marketing from from large international players moving to Europe Yeah. Away from The US.

Eva Jungerud, CEO, RugVista: Yeah. It’s competition is always very fierce for us. And and then you could argue that it fluctuates and it’s higher in q four than in in q two, which is true. But we haven’t seen any major shifts. Some some keywords go up a lot.

We have seen a couple of new competitors that we haven’t had before that are coming in, but but it does it does fluctuate all the time. So while, yes, we know that some competitors have moved a lot of marketing spend to Europe from The US, it’s it hasn’t affected us majorly. And I think you see that in that we managed to keep the marketing spend under control even in this quarter with that type of uncertainty.

Wiktor, Analyst, DNB Carnegie: Okay. Perfect. A final question from my side, and it’s also on marketing. So you spend roughly 29%, 30% of sales on marketing, a little bit lower in the lower end this quarter, and you’ve invested in your new website to drive more organic traffic. But what I’m curious about here is what do you expect the impact on your traffic from AI operators that are reshaping search engine optimization?

What are your thoughts here for the future?

Eva Jungerud, CEO, RugVista: Very important shift, I would say. And that’s something that we are both already doing a lot of work in that area and also keeping a very close track. We don’t know exactly what the shift will be, but we are sure that there will be a shift. So for us, it’s important to to keep track of what’s going on and what’s moving where and and how people how our customers search and where our customers come from. So so without saying that we see a clear direction to going to this platform or that platform, we are convinced that there is a shift that is happening.

So it’s more about keeping track and and being very nimble and also very attentive and not take things for granted.

Wiktor, Analyst, DNB Carnegie: Perfect. Yeah. It’s gonna be interesting to to

Benjamin Wallstadt, Analyst, ABGSC: follow-up. Right.

Wiktor, Analyst, DNB Carnegie: Yeah. Thank thank you very much for those answers. That’s all for me.

Eva Jungerud, CEO, RugVista: Thank you. Thank you, Nico.

Conference Moderator: The next question comes from Benjamin Wallstadt from ABGSC. Please go ahead.

Benjamin Wallstadt, Analyst, ABGSC: Good morning. Well done on a strong quarter. Want to speak some more on the warehouse clearance. I was also wondering on the impact on the AOV from the warehouse clearance. Is it positive because you’re selling mostly slow runners, large items, unique rugs?

Or is it negative, please?

Eva Jungerud, CEO, RugVista: It is even though you’re right that it is bigger, slow moving rugs that tend to be a little bit more expensive than we’ve been selling. It still has a little bit of a negative effect on the AOV because of that that type of stock, otherwise, brings up the AOV. But it’s it’s I I wouldn’t say that it’s a huge impact, but it it’s it it it tends more downwards than upwards with small movements.

Joakim Tuvner, CFO, RugVista: Yeah.

Benjamin Wallstadt, Analyst, ABGSC: Alright. Thank you. I was also wondering about q You have been making some changes to your assortment when it comes to Q3, especially thinking of, for example, outdoor rugs here, which makes judging underlying comparable growth figures a bit more tricky. I was wondering if you could say anything about how you judge the comparable figures in Q3 versus Q2, please?

Joakim Tuvner, CFO, RugVista: Yes. I think we had quite a poor quarter in quarter two of last year and the same in quarter three. So I think they are somewhat comparable in that sense. Yes.

Benjamin Wallstadt, Analyst, ABGSC: All right. So somewhat comparable underlying in Q3. Perfect.

Wiktor, Analyst, DNB Carnegie: And

Benjamin Wallstadt, Analyst, ABGSC: then finally from me, I was wondering if you could say anything about what moving costs, if any, you expect in Q3, please?

Eva Jungerud, CEO, RugVista: We are definitely expecting some moving costs in Q3.

Joakim Tuvner, CFO, RugVista: Yes. And having said that, I think the big chunk we have taken in quarter two. We have some in quarter one. But we will have some moving costs in quarter three. But we are shipping the majority already July.

We’re shipping the big majority, 90% plus from our new facility. And we have moved most of the goods. So most of the costs for the move is taken when we end quarter two, but there will be some in quarter three.

Benjamin Wallstadt, Analyst, ABGSC: All right. But below the level seen in Q2 then, I take it. It.

Conference Moderator: The next question comes from Emmanuel Jansen from Danske Bank.

Emmanuel Jansen, Analyst, Danske Bank: Yes. Good morning, Benoit. Hope you can hear me.

Eva Jungerud, CEO, RugVista: Yes. Morning.

Emmanuel Jansen, Analyst, Danske Bank: Great. Good morning. Wonder if you can perhaps start with describing how the quarter in itself has developed throughout the the month regarding sales momentum.

Eva Jungerud, CEO, RugVista: Yeah. So it started a little bit slow mainly due to the fact that Easter, which is not a holiday when people buy a lot of rugs, was in the April. And last year was in the beginning in the March. But but then, actually, it’s been fairly even throughout the throughout the quarter A little bit of a drop in June is fair to say. June, like, the warmer and more summery, the the lower the sales, but but not huge fluctuations.

Emmanuel Jansen, Analyst, Danske Bank: Okay. Great. And looking also, correct me if I’m wrong here, but looking a bit on your marketing strategy the last couple of quarters. It’s at least my impression that you have been trying at least to reach out to a broader customer group, if I’m correct?

Eva Jungerud, CEO, RugVista: Yes, you are.

Emmanuel Jansen, Analyst, Danske Bank: Would you say that, that has been one of the key drivers behind this volume growth that we have seen in terms of order growth? Or is it anything or is that the primary growth drivers you would say? Or is it the customer experience on the on on the website or the or the updated assortments?

Eva Jungerud, CEO, RugVista: So it’s a combination of all, I would say. The marketing, I think, helps, and we see that in the growing numbers of of visits that come in even with the lower conversion. But it’s also a fact that we are today, we’re working in a very different way with CRM. We’re working in a very different way with how we present on-site. We’re also clustering in a different way on-site.

So so it’s it’s hard to pinpoint one specific thing, but it the marketing is definitely helping. And I think long term, what what I’m very interested in is how can we and this has to do with the previous questions around AI as well. How can we be better at building our brand in a cost efficient way long term? Because since we aren’t that big in any market, it’s hard for us to do very big above the line campaigns. So we want to make sure that we build our brand in pretty much any communication that we do with the customer.

And and there, we think that the reason we see a a very big increase in in branded search on on the search engines has to do with the fact that we are higher up in the funnels. Our ads are more visual, more appealing to, let’s say, a more a more brand aware consumer than someone who is looking for a very specific type of rug. So so that is our continued strategy to to try to continue to build on that.

Emmanuel Jansen, Analyst, Danske Bank: Yeah. Okay. Great. That’s that’s very helpful. And can you perhaps maybe when when did this start, you would say, with kind of

Benjamin Wallstadt, Analyst, ABGSC: marketing strategy going up We we higher up in

Emmanuel Jansen, Analyst, Danske Bank: the in the funnel.

Eva Jungerud, CEO, RugVista: I would say we started in q three last year a little bit, and then it’s been growing quite a lot since, yes, Q4.

Emmanuel Jansen, Analyst, Danske Bank: Yes. Okay. Great. And also perhaps maybe a final question from my side. We’re talking about the average order value, and you were mentioning that you hope to see maybe a bit more take through from handmade rugs in the second half year.

Why should we expect that to happen now? Do you have any different tools now that you didn’t have one year ago? And can you also perhaps give us some colorings on the gross margin profile, etcetera, on handmade drugs compared to the signed drugs?

Eva Jungerud, CEO, RugVista: So I I think there are two factors that are relevant. First, the one is that we are changing in what we actually produce in our assortment and that we have let go of some of the, let’s say, lower quality rugs and and try to push and and, again, it’s not about being super premium and everything, but it’s about good value for money no matter what sort of price range you are in. We we want to be qualitative in the in the relevant price range, so to speak. And then the shift that I mentioned is that outdoors, which is machine made, tends to be stronger in the summer months. And then it’s up to us what we push and how we plan our marketing and and how we populate our sites and and what we communicate in our campaigns and in our our emails, etcetera, what type of rugs we push.

I I don’t think we disclose gross margin on on product type level. But so it it’s it’s more on a on a it’s more on a trying for us trying to control the assortment a little bit more from from our end.

Wiktor, Analyst, DNB Carnegie: Yeah.

Emmanuel Jansen, Analyst, Danske Bank: And would you say also that they have less moving parts now compared to a year ago so you can put more effort and focus on on selling these kind of products now than versus a year ago versus a year ago?

Eva Jungerud, CEO, RugVista: Actually, we have a lot more versions of products today than we did a year ago. You know, it’s it’s a slow moving product. So what we designed a year ago is being was released in in the spring, but but I think we are better at making more conscious choices today. Having said that, I think this just to add one thing, I this is again, this is, like, this is what the the business is, I think, that it is about everyday making choices. That we’re both a design company and a trading company.

We need to look at this on a daily basis, basically.

Emmanuel Jansen, Analyst, Danske Bank: Yeah. Great. Well, I think that was all my questions for now. So thank you, Eba and Joaquin.

Eva Jungerud, CEO, RugVista: Thank you. You. Thank

Emmanuel Jansen, Analyst, Danske Bank: you.

Conference Moderator: The next question comes from Johan Fred from SEB. Please go ahead.

Johan Fred, Analyst, SEB: Yes. Hi, good morning guys. Thanks for taking my question. I just have a quick follow-up question on the gross margin development. I note in the conference call here that you highlight that the product margin fell by 1.4% year over year due to what you quote as higher discount.

Is this is there any kind of mix effect here looking at the underlying comparables? As you mentioned, outdoor rugs sales have been strong during Q2 this year. So my question is essentially, is there a mix effect here as well? Or is this 1.4% decrease solely due to the higher campaign activity?

Joakim Tuvner, CFO, RugVista: 100%, the latter part. I mean it’s driven by the clearance that was driving the average. Our average discount went up, and that 100% explains or 100%, but that explains most of this increase in product cost. So it’s not the outdoor. No.

Johan Fred, Analyst, SEB: You. Very, very clear. Thank you so much for taking my questions.

Eva Jungerud, CEO, RugVista: Thank you.

Joakim Tuvner, CFO, RugVista: Thank you. And we have a written question here that Wick tor Hasen has added in. Your Trust pilot score remains high, but it seems like you have stopped reporting your Net Promoter Score NPS this year. Is there any reason for this? Thanks.

Eva Jungerud, CEO, RugVista: Yes. We talked about this last quarter, I believe. We decided to go to because what we do is we split some customers get sent to one type of or we what we did, I should say, get sent to one type of question and some get sent to another type of question. And we decided to focus on one of these tools to just to have more data really in the tool, and And we decided to go with Trustpilot, and we made the switch January 1, I believe.

Joakim Tuvner, CFO, RugVista: Yeah. And then I think that, you know, the average person has much easier to relate to the Trustpilot score, whereas the NPS value, not everyone knows it started as at minus 100. So some people think it’s from zero to 100, etcetera. It’s maybe a poor reason for not reporting it. But I think it’s easier to understand the Trustpilot score, which is also the important score for us that we know drive conversion when consumers feel confidence that other consumers have experienced a good experience on buying from us.

So that was the only written question we got in, Eva.

Eva Jungerud, CEO, RugVista: Thank you very much, everyone, for listening in. Hope you have a nice day in the sun, and we will be back with q three on the November 6. Right?

Joakim Tuvner, CFO, RugVista: Yes.

Eva Jungerud, CEO, RugVista: Yep. Thanks a lot, everyone.

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