What HelloFresh (HFG) Said on Its Q3 Earnings Call

Key Points

• Q3 revenue fell 9.8% to €1.4 billion as HelloFresh cut marketing spending 24% to protect profitability; adjusted EBITDA rose to €54.4 million from €40.3 million a year earlier.
• Menu expansion drove higher procurement and cooking costs, weighing on contribution margins. HelloFresh has scaled back its U.S. menu pilot and is focusing on cost reductions, with executives expecting further margin improvement in Q4.
• HelloFresh reaffirmed its full-year outlook for a 9%–11% constant-currency revenue decline and adjusted EBITDA of €350 million–€370 million. It expects free cash flow near or at break-even for the year, but said it is too early to forecast when revenue will stabilize.

HelloFresh ETR: HFG reported a 9.8% decline in third-quarter revenue as the meal delivery company cut marketing spending to protect profitability while addressing higher costs associated with a rapid expansion of its menus.

Revenue fell to €1.4 billion, or 11.3% on a constant-currency basis. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose to €54.4 million from €40.3 million a year earlier, while the company’s Ready-to-Eat business reached adjusted EBITDA break-even for the quarter.

CEO Dominik Richter said HelloFresh reduced marketing budgets after the costs of expanding its product range remained higher than anticipated. The company is now working to improve its contribution margin and prepare for the January peak season, but executives declined to predict when group revenue would stabilize.

Menu expansion pressures margins

Richter said HelloFresh had expanded its average weekly menu from roughly 50 recipes to about 100 over the year. A U.S. pilot reached 500 recipes per week, creating more forecasting and manufacturing volatility than the company had expected.

New products initially cost more to source before volumes increase, while new cuisines can take time to meet customer expectations, Richter said. HelloFresh has since reduced the U.S. pilot menu to more than 150 meals and is not increasing its menus further while it focuses on lowering procurement and cooking costs.

“We exited Q3 with a better contribution margin than what was Q3 average,” Richter said, adding that the company expects further progress in the fourth quarter after beginning adjustments in August.

Group contribution margin was 23.3% in the quarter, down 1.3 percentage points from a year earlier. Procurement and cooking costs rose to 40.9% of revenue, while fulfillment costs improved to 36.2%. The Meal Kits contribution margin was flat at 26.6%; Ready-to-Eat fell 2.3 percentage points to 19.7%.

CFO Fabien Simon said the Ready-to-Eat decline also reflected expansion into markets that were not yet operating as efficiently as the company’s core geographies.

Marketing cuts weigh on revenue

HelloFresh reduced group marketing spending by 24%, or €76.6 million, from a year earlier. The reduction limited the number of new customers acquired and former customers reactivated during the back-to-school period, Simon said.

On a constant-currency basis, Meal Kits revenue declined 13.1% and Ready-to-Eat revenue fell 11.1%. Revenue in the company’s other segment, which includes newer ventures, grew 36%.

Average order value rose 7.5% in constant currency to €70.50, helped by selective price increases and purchases of add-ons and premium recipes. Simon said revenue from customers who had stayed with HelloFresh for more than 12 months remained positive year over year at the end of the quarter.

Richter said HelloFresh is rolling out digital features that personalize meal recommendations and highlight premium recipes and add-ons. He said the company expects those features to continue supporting average order value as they reach more markets.

Meal Kits generated a 10.8% adjusted EBITDA margin, while Ready-to-Eat reached break-even despite costs associated with ramping up a new European site. For the first nine months, Ready-to-Eat’s adjusted EBITDA loss narrowed to €17.9 million from €47.9 million in constant currency.

Outlook and cash flow

HelloFresh reaffirmed the full-year guidance it issued in September, calling for a constant-currency revenue decline of 9% to 11% from €6.76 billion in 2025. It expects adjusted EBITDA of €350 million to €370 million in constant currency, compared with €423 million last year.

Simon said full-year revenue was trending toward the middle of the forecast range. He added that market consensus for adjusted EBITDA was in the lower half of the company’s range, which he considered reasonable given current information. The final result will depend on the pace of profitability improvements and marketing decisions, he said.

Quarterly free cash flow was negative €5.7 million, compared with negative €80.7 million a year earlier. For the first nine months, free cash flow was positive €43.8 million, down from €75.7 million. Simon said HelloFresh continues to expect full-year free cash flow near or at break-even.

The company also completed steps to extend its debt maturities, including a €350 million bond issued in July and a €375 million revolving credit facility maturing in 2030. Simon said refinancing would add an estimated €8 million to €10 million in annual interest expense.

Retail expansion

Richter said HelloFresh launched its U.S. ready-meal retail line across hundreds of stores in September following a successful pilot. The company plans to work on expanding its retail presence, primarily in North America, during 2027.

Simon said retail currently offers more favorable incremental economics than direct-to-consumer sales in both the U.S. and Australia. Retail represents about 30% of HelloFresh’s Youfoodz business in Australia, he said.

Asked when group revenue might stabilize, Simon said it was too early to provide a view. The company plans to update the market when it has better visibility into unit economics and January peak-season performance.

About HelloFresh (ETR:HFG)

HelloFresh SE, together with its subsidiaries, operates as meal kit provider for home industry. The company offers premium meals, protein swaps, double portions, and extra recipes, as well as add-ons, such as soups, snacks, fruit boxes, desserts, ready-to-eat meals, and seasonal boxes. It has operations in the United States, Canada, Australia, Austria, Belgium, Germany, Denmark, France, Luxembourg, the Netherlands, New Zealand, Switzerland, Sweden, Spain, Norway, Italy, and the United Kingdom. The company operates under the HelloFresh brand; and owns the Chefs Plate, Good Chop, The Pets Table, EveryPlate, Factor, Green Chef, and YouFoodz brand names.

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