Earnings call transcript: Viva Wine Q3 2025 sees strong growth, stock climbs 3.7%

Viva Wine Group AB reported robust financial performance for the third quarter of 2025, with net sales increasing by 49% to SEK 489 million. The company also achieved organic growth of 2.8% across its B2B and B2C segments. Following the earnings announcement, Viva Wine's stock price rose by 3.7%, reflecting investor optimism about the company's strategic initiatives and market position.

Key Takeaways

• Net sales surged by 49% to SEK 489 million.
• Stock price increased by 3.7% post-earnings announcement.
• Strong performance in e-commerce expected to drive future growth.
• New financial targets include an 8-10% adjusted EBITDA and net debt/EBITDA below 2.5.

Company Performance

Viva Wine Group's significant growth in net sales highlights its strong market position and effective strategic initiatives. The acquisition of Delta Wines has expanded its European presence, now operating in seven markets through twelve companies. The company is also a market leader in the Nordic wine monopoly markets, holding a 22.4% market share.

Financial Highlights

• Revenue: SEK 489 million, up 49% year-over-year.
• Organic growth: 2.8% across B2B and B2C segments.
• Adjusted EBITDA: Increased year-on-year.
• Net debt to EBITDA: Reduced from 4.1 to 3.6.

Market Reaction

Following the earnings release, Viva Wine's stock price rose by 3.7%, reflecting positive investor sentiment. The stock's performance is notable as it approaches its 52-week high of 43.9, with the last close at 35.1. This movement aligns with the company's strong financial results and optimistic outlook for the coming quarters.

Outlook & Guidance

Viva Wine Group has set ambitious financial targets, including organic sales growth exceeding market growth and an adjusted EBITDA target of 8-10%. The company aims to reduce its net debt/EBITDA to below 2.5 and maintain a dividend policy of 50-70%. The outlook for Q4 is positive, particularly for the e-commerce segment, with expectations of stable costs and minimal price increases in 2024.

Executive Commentary

CEO Emil Sallnäs emphasized the company's commitment to organic growth and competitive performance, stating, "We are a company that is built on organic growth and beating the competition." He also noted the positive outlook for e-commerce, adding, "We have a positive view on the growth of the e-com."

Risks and Challenges

• Decline in wine market volumes by 1-2%.
• Weak consumer sentiment across markets.
• Potential challenges in integrating Delta Wines.
• Market saturation in certain regions.
• Macroeconomic pressures affecting consumer spending.

Q&A

During the earnings call, analysts inquired about market growth expectations and the integration of Delta Wines. The company clarified its strategy for improving gross margins and discussed potential mergers and acquisitions to bolster growth.

This comprehensive performance report and strategic outlook have positioned Viva Wine Group as a strong contender in the wine industry, with promising growth prospects in the e-commerce segment and beyond.

Full transcript - Viva Wine Group AB (VIVA) Q3 2025:

Conference Operator: For the first part of the conference call, the participants will be in listen-only mode. During the Q&A session, participants are able to ask questions by dialing #5 on their telephone keypad. Now, I will hand the conference over to CEO Emil Sallnäs and CFO Linn Gäfvert. Please go ahead.

Emil Sallnäs, CEO, Viva Wine Group: Good morning, everyone, and welcome to our Q3 2025 presentation. My name is Emil Sallnäs, and I will, together with our CFO Linn Gäfvert, present today. This is the agenda for today, and before we go into the quarterly update and financials, I want to start by giving you a short introduction to Viva Wine Group. Today, almost 90% of our business is in our B2B segment, which includes the Nordic monopoly markets, as well as retailers and restaurants in both the Nordics and Europe. With the acquisition of Delta Wines, our B2B business is now present in seven markets and operates through 12 companies. In the Nordic monopoly market, we are the market leader in wine. With the acquisition of Delta Wines, we also entered the open market in Europe, and we are the leading wine distributor in the Netherlands.

Just over 10% of our sales is in the B2C segment, which consists of our profitable e-commerce business based in Germany. We operate via our three platforms: VICAMPO, WEINFÜRST, and WINE IN BLACK, selling to 11 markets in Europe. We are one of the leading online wine retailers in Europe. Now let's move on to the Q3 update and our performance summary. When summarizing the quarter, I'm very pleased to report that we delivered a strong third quarter. Net sales increased significantly by 49%, mainly driven by the acquisition of Delta Wines. Organic growth was positive at 2.8%, with growth in both segments, B2B and segment B2C. Adjusted EBITDA increased year-on-year as an effect of the consolidation of Delta Wines, while the adjusted EBITDA margin was lower, which is a reflection of the lower margin profile of Delta.

Since our last quarterly call, we have communicated that we are in the process of moving to the main list. For us, this is the next step in our growth journey and a natural progression after the IPO in 2021. Moving to the main market is a quality stamp and makes the share more attractive to investors. To align with the shareholder profile of mid-cap companies and to broaden the investor base, we also, in the end of the quarter, issued a limited distribution of shares. The issue was oversubscribed, and we welcomed 3,500 new shareholders. We expect the change of listing venue to be finalized in the near future. Now, let's look in more detail at the financial performance. I will hand over the word to Linn.

Linn Gäfvert, CFO, Viva Wine Group: Thank you, Emil. We have a strong net sales growth of 49% in the quarter, mainly driven by the acquisition of Delta Wines. Organic growth was positive at 2.8%, with growth in both segments, which reflects that we continue to have a solid underlying business. In our B2B segment, Delta Wines' performance and integration are going according to plan. The underlying Nordic business was also performing well and was slightly up in the quarter. B2C reported positive organic growth for the third quarter in a row and also continued to grow its customer base. Looking at the profitability, adjusted EBITDA increased versus previous year, mainly as an effect of the consolidation of Delta Wines, but also excluding Delta Wines, adjusted EBITDA increased versus prior year. The lower adjusted EBITDA margin is a result of the lower GM percentage in Delta Wines.

The adjusted EBITDA margin for the underlying business exceeded previous year's level with improved gross margins. Over to the net working capital. Net working capital is, according to plan, and the ratio of net working capital to net sales is down to 12.9% from 14.5% in the last quarter. A high-level simulation, including net sales for 12 months, shows that the ratio is slightly below numbers pre-acquisitions. Our net debt to EBITDA is also developing according to plan and is down from 4.1 in Q2 to 3.6. We expect to continue to deleverage as the EBITDA is consolidated month by month. A high-level simulation of adding 12 months of EBITDA reduced the number from 3.6 to approximately 3. We expect to continue to deleverage and reach our financial targets of 2.5 during next year. Cash flow.

We have a very strong cash flow from operating activities in the quarter, supported by an improvement in working capital. We have cash flow from investing activities that includes the business combination of Vingårdian Nordic, with a cash flow effect of SEK 8 million. Cash flow from our financing activities includes repayments of term loans, according to plan, and change in overdrafts. The cash flow from the previously mentioned distribution issue of shares will be reported in the cash flow in Q4.

Emil Sallnäs, CEO, Viva Wine Group: Thank you, Linn. Now over to the performance by segments. First out is our B2B segment. In the Nordic monopolies, we remain the clear market leader, and we increased market shares in all markets. We continue to see weak consumer sentiment and sales volumes in the Nordic monopolies, which decreased by 2.9% compared to last year, while our sales volume decreased by 1.9%. Please note that these numbers relate to volume, and as you can see in the quarterly report, the organic growth for the B2B segments, which excludes Delta Wines, is 2.0%. For the Nordic markets combined, Viva Wine Group reported a market share of 22.4% for Q3, which is a slight increase from last year. Our B2B business in Europe is estimated to have performed well in relation to the market.

Linn Gäfvert, CFO, Viva Wine Group: Looking at the net sales in segment B2B, it increased significantly by 57.4% in the quarter, with an organic growth of 2%, as Emil mentioned. The increase versus last year is driven by Delta Wines. This is the first quarter where Delta numbers are consolidated the entire quarter in the numbers. Adjusted EBITDA increased versus last year, while the adjusted EBITDA margin in the quarter decreased and ended at 8.7% versus 10.4% last year. Main reason for the lower adjusted EBITDA margin percentage is explained by the lower gross margin percentage in Delta Wines. The gross margin percentage in the Nordic business increased in the quarter, mainly driven by price increases. Both adjusted EBITDA and the adjusted EBITDA margin were above prior year's level for the Nordic B2B business.

Emil Sallnäs, CEO, Viva Wine Group: Segment B2C, which consists of our e-com business, had a very strong quarter, and for the third consecutive quarter, it showed growth. In Q3, the organic growth was 7.9%. Despite a slow overall market, we have seen a positive trend shift in our active customers due to strong customer acquisition. Our estimate is that we, thanks to this strong performance, now outperform the market not only in profitability but also in growth.

Linn Gäfvert, CFO, Viva Wine Group: In the B2C segment, our net sales were up versus previous year with 4.8%, and we have continued positive organic growth, reaching 7.9% in the quarter. The gross margin increased slightly due to positive product mix. Adjusted EBITDA margin in Q3 was lower than prior year, driven by our investments in marketing.

Emil Sallnäs, CEO, Viva Wine Group: Now some final comments. As we communicated yesterday, our board has adopted new financial targets. Our previous targets have served us well, but our recent acquisition of Delta Wines and our change of segments was a natural trigger to evaluate the financial targets. After careful consideration, the board decided on the following targets: two updated and two unchanged. For growth, the new target is organic sales growth exceeding market growth. The growth target is now the same for the whole group and is a reflection of our wider footprint as a company, where we now have a business in many more different countries than when the old targets were formulated. We are a company that is built on organic growth and beating the competition. This updated target shows that it is our intention to continue on that track. In addition, the company intends to grow through acquisitions.

For profitability, the new target is 8-10% adjusted EBITDA. The profitability target has been adjusted due to the different margin profile of the Delta Wines business in comparison with our historic business. The capital structure and dividend policy remain the same, but to repeat, capital structure, net debt over EBITDA below 2.5%, and dividend policy of 50-70% of the annual net profits. To summarize, with Delta fully integrated in the quarter, we are a significantly larger company with a strong footprint in Europe. Sales increased with SEK 489 million, mostly due to Delta Wines. Adjusted EBITDA was also significantly higher. We had a strong third quarter with growth in both segments. Especially pleasing is to see our B2C is back on the growth track with positive organic growth for the third quarter in a row.

With regards to M&A, we do see an increased activity and steady deal flow in that area. Finally, we are in the last stages of the process of changing list venue and expect to change venue in the near future. With that, it's now time for the Q&A session.

Conference Operator: If you wish to ask a question, please dial #5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial #6 on your telephone keypad. The next question comes from Johan Fred from SEB. Please go ahead.

Emil Sallnäs, CEO, Viva Wine Group: Yes, good morning, guys. Thank you for taking my questions. A first one on your updated sales target. You target growth above market or above market growth. In your sort of models and calculation, what do you expect the underlying market growth to be coming period?

I think in general, we do see, and also, I mean, even at the IPO, we did not communicate that we thought that this is a growing market in terms of volume. So we do expect volumes to go down slightly in the near future in all our markets. However, we do expect sales value to be flat or slightly growing if you extend the time period a little bit more than in the coming year.

That also includes the e-com market, which you previously assumed or targeted a growth of between 10% and 15%. I suppose that is driven by increased online penetration, et cetera. You also expect the online market to grow at a significantly lower pace than previously?

Actually not. I wouldn't say that, but we do still see a low consumer sentiment. We do have a positive outlook on our growth. In terms of the market, we don't expect it to grow significantly in the near future. If you extend the period over the midterm, which is where our financial targets are set, we do expect the e-com or the B2C segment to outperform the B2B segment. They will be on the upper part of, they will grow more than the other segments in general. It all depends on the market growth as well. I mean, the more the market grows, now we are beating the market quite significantly because the market is going the other way, as we see it, and we are increasing. If the market starts growing, our growth will be higher as well. You're right.

It's not the same for the two different segments. That's correct.

Okay, cool. Got it. Speaking of the B2C segment, 8% organic growth in the quarter, despite, as you stated, a weak consumer sentiment, that's quite the sequential step up from Q2. Could you elaborate on what drove the growth and if you've done something differently in this quarter in terms of marketing, et cetera?

No, I think this is an effect of many smaller adjustments of the marketing that we do and the customer acquisition. I think we did a year ago or so talk about changing a little bit the way we're working. Now that change of way of working has also been coming out in the growth figures. I would say it's many different small things. There is not one recipe, but a lot of hard work from the teams, but especially that we organized our marketing teams differently than we had before.

Cool. Do you expect this trend to continue, or is there anything during Q3 to start off, but Q4 that might impact the current growth trajectory?

We have a positive view on Q4. Of course, for any e-com business, the Black Week will be very, very important. Of course, that is yet to come. We are positive for Q4. For the slightly longer future, we are very, very careful that, of course, with this market going up and down and the consumer sentiment, especially Germany, our main market, also going up and down a lot, it might vary a little bit. Overall, we do have a positive view on the growth of the e-com.

Cool. A final one, if I may, before I jump back in the queue. Any chance that you could break out the OPEX contribution from Delta Wines in the quarter?

Linn Gäfvert, CFO, Viva Wine Group: We don't do breakout of the segment. That's OPEX total that we present to the market.

Emil Sallnäs, CEO, Viva Wine Group: Okay, fair enough. Those were all my questions for now. Thank you so much.

Thank you.

Conference Operator: The next question comes from Nicholas Elmhammer from Carlsquare. Please go ahead.

Yes, good morning. Thank you for taking my questions. Sorry if you already comment on this, but is it possible to say something regarding the markets in Q4 so far?

Emil Sallnäs, CEO, Viva Wine Group: No, what I just mentioned is that we have a positive view on the e-com or business-to-consumer segment in Q4. There is no guidance for the rest of the B2B segment, the rest of the business.

Okay, fair enough. Regarding the gross margin, it looks like a notable improvement in the Nordics. Do you have any guidance going forward for the end of the year for the gross margin?

Linn Gäfvert, CFO, Viva Wine Group: Yes. High-level estimate is that we will strengthen the gross margin a bit more in Q4 versus Q3. A slight improvement to Q4 is expected for the Nordic markets, but also for the European markets. That will mean that we expect it to increase for the overall Viva Wine Group as well, where we see the B2C segment is stable and has been over the last year around 40%, but we see small increases quarter by quarter in the B2B segments that will make total level of a small increase also in Q4 from Q3.

Okay, yeah, got it. Regarding Delta Wines, is it possible to comment on the sort of underlying growth there? You mentioned a weak market in the Dutch market.

We don't have, as you know, the organic growth for Delta Wines. It was reported differently. What we can say is that the market is weak, but according to our estimates, we are outperforming the market in the Netherlands, and it is going according to plan. According to plan is pretty much what we communicated when we bought the company.

Okay. Regarding profitability, if I'm calculating correctly, it's quite a bit lower than the Nordics, which is a bit expected, but is the profitability somewhat more depressed in the quarter? Is there something related to costs? Do you expect the margin gap to narrow to the rest of the B2B in Q4?

No. I mean, this is the first quarter where we have Delta fully integrated, so it's a good reflection. However, we have seasonality effects as we also have in our existing business. For Delta Wines, we expect an improvement of gross margin in Q4 versus Q3. We have previously communicated that we expect the gross margins for this acquisition to be around 14%, and that is for a full year. The highest is, of course, in Q4.

Okay, thank you very much.

Conference Operator: The next question comes from Rowley Juva from Inderes. Please go ahead.

Yeah, hi, Rowley from Inderes. Two questions for me. First of all, looking to next year, what kind of cost inflation or cost pressures do you see? On the other side, what kind of pricing development do you see? I guess you have pretty good visibility already to the first half of the year.

Linn Gäfvert, CFO, Viva Wine Group: I mean, in general, we do not expect next year to be big price increases to the consumer or from our costs either. We assume it will be a pretty stable year in costs, both coming in and no major price increases expected for the market.

Emil Sallnäs, CEO, Viva Wine Group: Okay, clear. Regarding your margin target, the range is kind of, is that range related in any way to kind of market circumstances that in a weak market, we should expect that you are towards the lower end of the range? Or is the range dependent on something else?

No, I mean, the change in that respect has only to do with Delta Wines. In fact, we have in the last two, three, four quarters actually increased the margins in the Nordic business, while the e-com business has been.

Yeah, yeah, not very similar. Yeah, yeah, not the change, but the range you have from 8-10 now is kind of the lower end versus the higher end. Is that a function of the market conditions or rather something else?

Of course, always when you have a range, there is some relation to market conditions, obviously. It has more to do with the different margin profiles of the different businesses that some will drive up the average and others will dilute.

Yeah, yeah, right. Okay. Great. Thank you for all.

Conference Operator: There are no more questions at this time. I hand the conference back to the speakers for any written questions and closing comments.

Emil Sallnäs, CEO, Viva Wine Group: Great. We have quite a few questions online. Alexander sent the first one, which is related to Delta. Can you elaborate on the seasonality effects in Delta?

Linn Gäfvert, CFO, Viva Wine Group: Yes. Delta Wines, I would say, have the same seasonality effects as our B2B historic business. That was the Nordic segment. We have sales the highest in Q2 and Q4, and also the profitability highest in Q4. For the Nordic segment, to repeat, we also have quite good margin in Q3 historically.

Emil Sallnäs, CEO, Viva Wine Group: The next question from Alexander. Gross margin, expectations for gross margins in the Nordics in Q4.

Linn Gäfvert, CFO, Viva Wine Group: Yes. As I said, we expect to see an increase versus Q3 for the Nordic market also in Q4. A small increase is what we expect.

Emil Sallnäs, CEO, Viva Wine Group: He follows up with 2026. Any more gross margins?

Linn Gäfvert, CFO, Viva Wine Group: The gross margins for 2026, we foresee them to be fairly stable looking compared to this year.

Emil Sallnäs, CEO, Viva Wine Group: There is an ethics question, how the current currency exposure has changed after the acquisition of Delta Wines.

Linn Gäfvert, CFO, Viva Wine Group: Yes, the currency exposure, of course, this gives us a bit more hedging that we have more coming in from EUR to our result. However, I would not say it significantly changes the hedge effect.

Emil Sallnäs, CEO, Viva Wine Group: With regards to capital allocation, with a normalized gearing net debt to EBITDA, what is the board view on buybacks with current valuation after the uplisting to Nasdaq? There is no current view from the board on buybacks. However, it was one of the considerations that was in the decision to change to the Nasdaq market. The board sees positively that they have that option in the future. A couple of more questions from Alexander. Also, current market growth in volume as well as price in Delta Wines regions.

Linn Gäfvert, CFO, Viva Wine Group: Yes, I would say that it's fairly similar compared to the Nordic market. I mean, the European view, where we include the Nordic, is that the volumes will not grow. I think that the volumes perhaps somewhere around down 1-2 percentage points, but we foresee the sales to be a bit more stable than the volume.

Emil Sallnäs, CEO, Viva Wine Group: A question on the B2C. Average order value was down year on year, 8%, 6%, 8, whatever, was down year on year. Do you expect that average order value is continuing down or stabilize?

Linn Gäfvert, CFO, Viva Wine Group: We expect it to be fairly stabilized in average order value. We have increased number of campaigns, of course, since we have these new marketing channels that we have seen good effects on that also have given us more customers. We are investing in that and seeing results.

Emil Sallnäs, CEO, Viva Wine Group: Yeah, and putting it in a different way. When acquiring new customers, the order value tends to be lower. So the more new customers we get, which is positive, the order value will go down a little bit. A last question from Anders Persson. Congrats, blah, blah, blah. Nice. Thank you. I should not say blah, blah, blah. Will the dividend policy and acquisition activities be put on hold until you have reached the debt target? Any particular market that you will target for M&A activities moving forward? I think when it comes to M&A, we will, of course, be careful and always consider our debt profile. However, with targets that are profitable, they do contribute to these targets and the net debt to EBITDA figures. There is no hold on M&A, but with careful consideration.

With regards to specific markets, I think we can't really say that we are looking at any specific markets. We have ongoing targets in all segments and also all different regions. Not saying that they are active. I'm saying that we're looking at things all over our area. That concludes the questions. Thank you from our part and see you next time.

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