Global Blue Delivers a Strong Q3 FY23/24 Financial Performance, With Continued Double-digit Growth, Healthy Profitability, and Active de-Leveraging

Rhea-AI Summary

Global Blue Group Holding AG (NYSE:GB) reports strong financial results for Q3 FY23/24 and 9M FY23/24, with a significant YoY growth in Adjusted EBITDA and Revenue. The company reiterates its financial guidance and long-term targets, showcasing a robust performance and strategic initiatives to strengthen its balance sheet.

Positive

• Significant YoY growth in Adjusted EBITDA of 65.2% to €39.8m in Q3 FY23/24 and 102.3% to €114.7m in 9M FY23/24.
• Annualized Adjusted EBITDA improved to €159m in Q3 FY23/24 vs. €142m in Q2 FY23/24, supporting a strong performance.
• Strengthened balance sheet with net leverage ratio improvement to 3.6x and debt refinancing with maturity extension to 2030.
• Financial guidance reiterated with FY23/24 Adjusted EBITDA expected to be €145-165m.
• Strategic steps taken towards improving capital structure, including Tencent's $100m equity investment and debt refinancing.
• Continued recovery in Tax Free Shopping trends, with Mainland China driving Revenue improvement in Asia Pacific and Europe.
• Positive impact of China reopening on Global Blue's profitability and future growth potential.
• Long-term targets set for Revenue growth, Revenue-to-Adjusted EBITDA drop-through, and net leverage ratio.
• Webcast information available for further insights into the financial results.
• Disclaimer regarding Non-IFRS Financial Measures highlighted in the press release.

Negative

• None.

Financial Analyst

The reported YoY growth in Adjusted EBITDA by Global Blue Group Holding AG is a robust indicator of the company's operational efficiency and profitability. With a 65.2% increase in Q3 and an even more impressive 102.3% in the 9-month period, these figures suggest a strong command over cost management and an ability to scale revenue effectively. The Adjusted EBITDA margin of 36.2% stands out as a particularly healthy profitability metric, indicating the company's earnings before interest, taxes, depreciation and amortization are a substantial portion of revenue. This is considerably higher than the average EBITDA margins seen in various sectors, which typically range from 10% to 25%.

Global Blue's strategic steps, including Tencent's $100m equity investment and the refinancing of debt, are indicative of a strengthened balance sheet and improved investor confidence. The net leverage ratio improvement from 6.5x to 3.6x is a significant deleveraging move, reducing financial risk and potentially increasing attractiveness to investors. However, the increase in net finance costs, up by €9.0m, may raise some concerns about the cost of borrowing and its impact on future net income.

Looking at the long-term net leverage objective of <2.5x, it is clear that the company is aiming for a more conservative capital structure. This could be favorable for sustainability but may also limit aggressive expansion strategies. It is also worth noting the reaffirmation of the FY23/24 Adjusted EBITDA guidance of €145-165m, providing a clear expectation for stakeholders and potentially stabilizing stock performance.

Market Research Analyst

The Tax Free Shopping Solutions segment's performance, with significant like-for-like (LfL) YoY increases in both Continental Europe and Asia Pacific, suggests a robust recovery in consumer spending in these regions, particularly with the reopening of Chinese borders. The Mainland China recovery is a key driver, as it represented approximately 36% of Tax Free Shopping Sales in Store in 2019. The current recovery rates, reaching 125% in Continental Europe and 161% in Asia Pacific, are a positive sign for future revenue growth.

Global Blue's focus on strategic acquisitions, like ShipUp, indicates an expansion into complementary services, which may diversify revenue streams and reduce dependence on any single market. The Retail Tech Solutions' revenue growth, albeit moderate, points to potential in this segment. The strong LfL contribution growth of 80.0% after carrier costs is particularly noteworthy, as it implies a high margin on incremental revenue.

The potential for Adjusted EBITDA to exceed €200m, based on annualization of Q3 FY23/24 results and full recovery of Mainland China Revenue, paints an optimistic picture for the company's performance. However, this is contingent on external factors such as travel trends and consumer behavior, which could introduce volatility and uncertainty into projections.

Economist

The reported financial results reflect broader economic trends, such as the recovery of international travel and consumer spending post-pandemic. The acceleration in Mainland China's recovery, with increased air capacity and visa issuance, is a microcosm of the global economic rebound. This has significant implications for sectors reliant on international tourism and luxury retail, which are likely to experience continued growth as travel restrictions ease and consumer confidence returns.

However, it is essential to consider the potential impact of macroeconomic factors such as inflation, exchange rate fluctuations and geopolitical tensions on Global Blue's financial performance. The increase in net finance costs could be a reflection of rising interest rates globally, which may affect borrowing costs and investment strategies going forward. Additionally, the company's reliance on the Chinese market for recovery could pose risks should there be any adverse changes in China's travel policies or economic conditions.

The long-term targets of 8-12% revenue growth and >50% Revenue-to-Adjusted EBITDA drop-through indicate an optimistic outlook and confidence in the company's business model. However, achieving these targets will require careful navigation of the economic landscape and a continued focus on strategic initiatives that drive both top-line growth and bottom-line efficiency.

• Strong YoY growth in Adjusted EBITDA of 65.2% to €39.8m in Q3 FY23/24 and 102.3% to €114.7m in 9M FY23/24, with 9M Adjusted EBITDA margin of 36.2%
• Continued improvement in the Group’s Annualized Adjusted EBITDA⁽¹⁾ to €159m in Q3 FY23/24 vs. €142m in Q2 FY23/24
• Strengthened balance sheet, with a strong improvement in LTM net leverage ratio⁽²⁾ to 3.6x
• Financial guidance reiterated — FY23/24 Adjusted EBITDA of €145-165m

SIGNY, Switzerland--(BUSINESS WIRE)-- Global Blue Group Holding AG (NYSE:GB and GB.WS) today announces its financial results for the third quarter and nine month period ended December 31, 2023.

Global Blue’s CEO, Jacques Stern, commented:

“We are pleased to report another strong performance for the Group, with continued progress across the business through the third quarter and first nine months of the year.

“We delivered a 26.2% YoY increase in Revenue and a 65.2% YoY increase in Adjusted EBITDA in Q3 FY23/24, supporting an annualized quarterly Adjusted EBITDA⁽¹⁾ of €159m and giving us increased confidence in our FY23/24 Adjusted EBITDA guidance of €145-165m.

“Towards the latter part of the quarter, as previously communicated, we took two strategic steps towards improving our capital structure; we welcomed Tencent as a shareholder following their $100m strategic equity investment and opportunistically refinanced all our debt, extending maturity to 2030.

“We have meaningfully deleveraged the Group, with a net leverage ratio⁽²⁾ at 3.6x at the end of the quarter vs. 6.5x at the end of March 2023, and confirm our long-term net leverage objective of <2.5x”.

EXECUTIVE SUMMARY

Q3 and 9M FY23/24 financial results showed a strong increase in both growth and profitability.

The Group delivered a 26.2% YoY increase in Revenue to €109.4m and an 65.2% YoY increase in Adjusted EBITDA to €39.8m in Q3 FY23/24, resulting, for 9M FY23/24, in a 41.1% YoY increase in Revenue to €317.1m and a 102.3% YoY increase in Adjusted EBITDA to €114.7m, taking the Adjusted EBITDA margin to 36.2%. This drove a continued improvement of the Group’s annualized quarterly Adjusted EBITDA⁽¹⁾ to €159m in Q3 FY23/24, from €142m in Q2 FY23/24 and €134m in Q1 FY23/24.

Furthermore, as announced previously, the Group completed two significant capital structure transactions in the latter part of the period. First, Tencent agreed to invest $100m in Global Blue common equity, validating Global Blue’s leadership, reflecting confidence in the ongoing travel recovery, and supporting the stated de-leveraging target. Second, to further strengthen the balance sheet, the Group refinanced its debt with a senior term loan of €610.0m and a revolving credit facility of €97.5m, extending maturity to 2030.

In January 2024, Tax Free Shopping like-for-like (“LfL”⁾) Issued Sales in Store⁽³⁾ recovery reached 125% in Continental Europe and 161% in Asia Pacific. The recovery of Mainland Chinese continues to accelerate benefitting from a strong willingness to travel and shop abroad, air capacity improvement and visa issuance reduced lead time. In that context, the Mainland China recovery in Asia Pacific reached 127% in January vs. 105% in Q3 FY23/24, while Mainland China recovery in Continental Europe reached 80% in January vs. 58% in Q3 FY23/24.

All this considered, Global Blue could achieve Adjusted EBITDA in excess of €200m⁽⁴⁾, based on annualization of Q3 FY23/24 results and assuming Mainland China Revenue recovery reaches 100%⁽⁵⁾ vs. a Mainland China Revenue recovery at 52% in Q3 FY23/24.

In conclusion, the Group reiterates the financial guidance and long-term targets issued on September 25, 2023, with FY23/24 Adjusted EBITDA of €145-165m.

FINANCIAL PERFORMANCE

Q3 FY23/24 Financial Performance

€M	Q3 FY21/22	Q3 FY22/23	Q3 FY23/24	Q3 FY23/24 vs. Q3 FY22/23 (%)
Revenue Tax Free Shopping Solutions Added Value Payment Solutions Retail Tech Solutions	29.4 5.9 3.6	64.4 16.2 6.1	80.3 22.3 6.8
Group Revenue	38.9	86.7	109.4	26.2%
Adjusted Operating Expenses	(35.6)	(62.6)	(69.6)
Adjusted EBITDA Adjusted EBITDA Margin(%)	3.3 8.4%	24.1 27.8%	39.8 36.3%	65.2%
Adjusted Depreciation & Amortisation	(10.1)	(9.2)	(9.7)
Net Finance Costs	(6.2)	(3.7)	(12.0)
Adjusted Profit before Tax	(13.0)	11.1	18.1
Adjusted Income Tax Expense	(0.4)	(3.7)	(7.0)
Non-Controlling Interests	(0.3)	(0.8)	(1.9)
Adjusted Net Income Group Share	(13.8)	6.6	9.1

Revenue
The Group delivered Revenue of €109.4m in Q3 FY23/24, a 26.2% YoY increase, reflecting a strong performance across all business lines.

Tax Free Shopping Solutions delivered Revenue of €80.3m in Q3 FY23/24, a 24.8% YoY increase. Revenue in Continental Europe reached €68.1m, a 17.7% LfL YoY increase, while Revenue in Asia Pacific reached €12.2m, an 83.5% LfL YoY increase. This strong performance reflects the ongoing recovery across all origin nationalities with the acceleration of the Mainland China recovery being the key driver of the Revenue improvement in both Asia Pacific and Europe.

Added Value Payment Solutions delivered Revenue of €22.3m in Q3 FY23/24, a 37.4% YoY increase, reflecting a strong performance across both business segments. Revenue in FX Solutions reached €10.6m, a 64.2% LfL YoY increase, while Revenue in the Acquiring business reached €11.7m, a 26.2% LfL YoY increase.

Retail Tech Solutions delivered Revenue of €6.8m in Q3 FY23/24, an 11.6% YoY increase, reflecting organic growth of 3.9% (€0.2m), with the remainder related to the consolidation of ShipUp, acquired on November 1, 2022. Whilst LfL Revenue growth was moderate at 3.9%, as a result of the cessation of sale of carriage to ZigZag clients (revenue with a low contribution), the LfL contribution growth of the segment (i.e., after carrier costs) was very strong at 80.0%.

Adjusted EBITDA
The Group delivered Adjusted EBITDA of €39.8m in Q3 FY23/24, a 65.2% YoY increase, reflecting the significant improvement in Revenue together with the ongoing focus on the cost base. This implied an improvement in margin of 8.5pts to 36.3% and a Revenue drop-through⁽⁶⁾ to Adjusted EBITDA of 69.2%.

Furthermore, annualized Adjusted EBITDA⁽¹⁾ has shown a consistent improvement to €159m in Q3 FY23/24, from €35m in Q1 FY22/23, €84m in Q2 FY22/23, €98m in Q3 FY22/23, €115m in Q4 FY22/23, €134m in Q1 FY23/24 and €142m in Q2 FY23/24.

9M FY23/24 Financial Performance

€M	9M FY21/22	9M FY22/23	9M FY23/24	9M FY23/24 vs. 9M FY22/23 (%)
Revenue Tax Free Shopping Solutions Added Value Payment Solutions Retail Tech Solutions	61.5 16.0 9.3	166.4 44.1 14.1	235.2 61.3 20.6
Group Revenue	86.8	224.7	317.1	41.1%
Adjusted Operating Expenses	(94.6)	(168.0)	(202.4)
Adjusted EBITDA Adjusted EBITDA Margin(%)	(7.8) (9.0%)	56.7 25.2%	114.7 36.2%	102.3%
Adjusted Depreciation & Amortisation	(30.3)	(27.0)	(27.6)
Net Finance Costs	(18.7)	(27.6)	(36.6)
Adjusted Profit before Tax	(56.9)	2.1	50.5
Adjusted Income Tax Expense	4.4	(7.5)	(19.6)
Non-Controlling Interests	(0.7)	(1.7)	(5.6)
Adjusted Net Income Group Share	(53.2)	(7.1)	25.3

Revenue
The Group delivered Revenue of €317.1m in 9M FY23/24, a 41.1% YoY increase reflecting a strong performance across all business lines.

Tax Free Shopping Solutions delivered Revenue of €235.2m in 9M FY23/24, a 41.3% YoY increase. Revenue in Continental Europe reached €202.1m, a 32.7% LfL YoY increase; while Revenue in Asia Pacific reached €33.1m, a 125.0% LfL YoY increase, reflecting the ongoing recovery across all origin nationalities with the reopening of Chinese borders in January 2023 being the key driver of the Revenue improvement in both Asia Pacific and Europe.

Added Value Payment Solutions delivered Revenue of €61.3m in 9M FY23/24, a 38.9% YoY increase, reflecting a strong performance across both business segments. Revenue in FX Solutions reached €31.0m, a 54.6% LfL YoY increase; while Revenue in the Acquiring business reached €30.3m, a 36.2% LfL YoY increase.

Retail Tech Solutions delivered Revenue of €20.6m in 9M FY23/24, a 45.7% YoY increase, reflecting strong organic growth of 22.3% (€3.7m), and the remainder from the consolidation of ShipUp, acquired on 1 November 2022.

Adjusted EBITDA
The Group delivered Adjusted EBITDA of €114.7m in 9M FY23/24, a 102.3% YoY increase reflecting the significant improvement in Revenue together with the ongoing focus on the cost base. This implied an improvement in margin of 11ppts to 36.2% and a Revenue drop-through⁽⁶⁾ to Adjusted EBITDA of 62.8%.

Adjusted Profit before Tax
The Group delivered Adjusted Profit Before Tax of €50.5m in 9M FY23/24, a €48.4m YoY increase, mainly reflecting the significant increase in Adjusted EBITDA partially offset by an increase of €9.0m in net finance costs, related to higher interest costs in the period.

Balance Sheet and Net Debt
As at December 31, 2023, Group Net Debt reached €508.6m, consisting of Gross Financial Debt of €610.0m and Cash & Cash Equivalents of €101.4m, resulting in a net leverage ratio⁽²⁾ of 3.6x.

LATEST TAX FREE SHOPPING TRENDS

% Recovery Issued Sales in Store* Tax Free Shopping	Q1 FY23/24	Q2 FY23/24	Q3 FY23/24	January 2024	January 2024 vs. Q3 FY23/24
Continental Europe LfL	121%	119%	118%	125%	+7ppts
(excluding UK; same merchant)
APAC LfL	111%	134%	150%	161%	+11ppts
(same merchant)
Group LfL	118%	123%	127%	135%	+8ppts
(excluding UK; same merchant)
Group reported (including UK; non-same merchant)	103%	102%	106%	110%	+4ppts

*Refers to the issued Sales in Store (spend) compared to Calendar Year 2019.

In January 2024, the recovery in Tax Free Shopping Group reported LfL Issued Sales in Store⁽³⁾ increased to 110% vs. 106% in Q3 FY23/24 (+4ppts) on the back of a solid performance in both Continental Europe and Asia Pacific.

In January 2024, excluding Mainland China and Russia, Continental Europe recovery reached 156% vs. 153% in Q3 FY23/24, whilst recovery in Asia Pacific reached 194% in January 2024 vs. 197% in Q3 FY23/24.

The recovery in Continental Europe reached 125% in January 2024 vs. 118% in Q3 FY23/24 (+7ppts). US, GCC and regional European shoppers continued to drive the recovery in Continental Europe in January, with recovery at 290%, 273% and 209% respectively. The US sustained a strong level of recovery which was again driven by High Net Worth Individuals and Very Important Clients who have significantly increased their spend vs. 2019. Meanwhile, the recovery in Mainland China continued to accelerate, at 80% in January 2024 vs. 58% in Q3 FY23/24 (+22ppts) as a result of an increase in air capacity and higher visa issuance.

The recovery in Asia Pacific reached 161% in January 2024 vs. 150% in Q3 FY23/24 (+11ppts). Hong Kong/Taiwan and North East Asia shoppers drove the strong recovery in Asia Pacific in January 2024, with recovery at 426% and 242% respectively. Meanwhile, Mainland China’s recovery continued to strengthen, at 127% in January 2024 vs. 105% in Q3 FY23/24 (+22ppts), with Very Important Clients, High Net Worth Individuals and affluent shoppers driving the recovery, with average spend more than doubling vs. 2019.

Impact of China reopening on Global Blue’s profitability

With Mainland China representing approximately 36% of Tax Free Shopping Sales in Store in 2019, the return of Chinese shoppers is an important contributor to the ongoing recovery.

The willingness to travel of Chinese shoppers, based on Global Blue’s proprietary survey, remained strong, reaching 76% in January 2024. The air capacity recovery from China continues to trend upwards, reaching 82% in Continental Europe and 83% in Asia Pacific in January 2024. Finally, as for most nationalities, a strong average spend progression per Chinese shopper is noticeable, reaching 115% in Asia Pacific and 63% in Continental Europe in January 2024 vs. 2019.

In conclusion, Global Blue should be well placed to benefit from the progressive reopening of Mainland Chinese international travel. Based on an annualization of Q3 FY23/24 results, and assuming Mainland China Revenue recovery reaches 100%⁽⁵⁾ vs. a Mainland China Revenue recovery at 52% in Q3 FY23/24.

FINANCIAL GUIDANCE AND LONG-TERM TARGETS

In September 2023, the Group issued guidance and long-term targets as it continues to benefit from the strong growth drivers of the business; Global Blue Group Holding AG - Global Blue Introduces Financial Guidance and Long-term Targets.

In summary, Global Blue expects Adjusted EBITDA of €145-165m in FY23/24 and more than €200m in FY24/25. As the environment normalizes thereafter, in the long-term, Global Blue is targeting 8-12% Revenue growth, >50% Revenue-to-Adjusted EBITDA drop-through⁽⁶⁾, and a net leverage ratio⁽²⁾ <2.5x.

¹Annualized extrapolation includes Tax Free Shopping Solutions, Added Value Payment Solutions and Retail Tech Solutions performance in Q1, Q2, Q3 and Q4 FY22/23, and Q1, Q2 and Q3 FY23/24, applied to the year.
²Net Leverage refers to Net Debt divided by the last 12 months Adjusted EBITDA excluding Retail Tech Adjusted EBITDA losses.
³ Refers to the Issued Sales-In-Store (Spend), like-for-like (at constant merchant scope and exchange rates).
⁴Simulation based on illustrative assumptions and should not be relied upon as being indicative of future results. This is not a forecast. This is forward-looking information – see Disclaimer. Yearly extrapolation includes Tax Free Shopping Solutions/ Added Value Payment Solutions performance in Q3 FY23/24 applied to the year.
⁵100% Mainland China Revenue recovery would require Chinese LfL Issued Sales in Store to reach around 127%.
⁶Refers to the portion of Revenue growth that drops through to the Adjusted EBITDA line.

WEBCAST INFORMATION

An audio recording of commentary on the results, along with supplemental financial information, can be accessed via the Investor Relations section of the company’s website at Global Blue Group Holding AG - Investor Relations.

NON-IFRS FINANCIAL MEASURES
This press release contains certain Non-IFRS Financial Measures. These non-IFRS measures may not be indicative of Global Blue’s historical operating results nor are such measures meant to be predictive of Global Blue’s future results. Not all companies calculate non-IFRS measures in the same manner or on a consistent basis. As a result, these measures and ratios may not be comparable to measures used by other companies under the same or similar names. Accordingly, undue reliance should not be placed on the non-IFRS measures presented in this press release.

FORWARD-LOOKING STATEMENTS
This press release contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding Global Blue or its management’s expectations, hopes, beliefs, intentions, or strategies regarding the future. The words “anticipate,” “believe”, “continue”, “could”, “estimate”, “expect”, “intends”, “may”, “might”, “plan”, “possible”, “potential”, “predict”, “project”, “should”, “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements are based on Global Blue’s current expectations and beliefs concerning future developments and their potential effects on Global Blue. There can be no assurance that the future developments affecting Global Blue will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond Global Blue’s control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These include commercial expectations and other external factors, including political, legal, fiscal, market and economic conditions and factors affecting travel and traveller shopping, including the global COVID-19 pandemic and applicable legislation, regulations and rules (including, but not limited to, accounting policies and accounting treatments), movements in foreign exchange rates, inflation and other factors described under “Risk Factors” in Global Blue’s Annual Report on Form 20-F/A for the fiscal year ended March 31, 2023 filed with the Securities and Exchange Commission (the “SEC”), and in other reports we file from time to time with the SEC, all of which are difficult to predict and are beyond Global Blue’s control. Except as required by law, Global Blue is not undertaking any obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

ABOUT GLOBAL BLUE

Global Blue offers innovative solutions in three different fields:

• Tax Free Shopping: Helping retailers at over 300,000 points of sale to efficiently manage 35 million Tax Free Shopping transactions a year, thanks to its fully integrated in-house technology platform. Meanwhile, its industry-leading digital Tax Free shopper solutions create a better, more seamless customer experience
• Payments services: Providing a full suite of foreign exchange and Payments technology solutions that allow acquirers, hotels, and retailers to offer value-added services and improve the customer experience during 31 million payment transactions a year at 130,000 points of interaction
• RetailTech: Offering new technology solutions to retailers, including digital receipts and eCommerce returns, which can be easily integrated with their core systems and allow them to optimise and digitalise their processes throughout the omni-channel customer journey, both in-store and online

In addition, our data and advisory services offer a strategic advisory to help retailers identify opportunities for growth, while our shopper experience and engagement solutions provide data-driven solutions to increase footfall, convert footfall to Revenue and enhance performance.

Pre-pandemic figures FY 19/20. Source: Global Blue

View source version on businesswire.com: https://www.businesswire.com/news/home/20240223778116/en/

FOR FURTHER INFORMATION

Frances Gibbons, Head of Investor Relations

+44 (0) 7815 034 212

fgibbons@globalblue.com

Source: Global Blue

What was the YoY growth in Adjusted EBITDA for Global Blue in Q3 FY23/24?

Global Blue reported a significant YoY growth in Adjusted EBITDA of 65.2% to €39.8m in Q3 FY23/24.

What is the net leverage ratio of Global Blue as of December 31, 2023?

As of December 31, 2023, Global Blue's net leverage ratio improved to 3.6x.

What is the financial guidance for Global Blue's Adjusted EBITDA in FY23/24?

Global Blue reiterated its financial guidance for FY23/24 with an expected Adjusted EBITDA of €145-165m.

What strategic steps did Global Blue take to improve its capital structure?

Global Blue took strategic steps including Tencent's $100m equity investment and debt refinancing with maturity extension to 2030 to strengthen its capital structure.

How did Mainland China impact Global Blue's Revenue in Asia Pacific and Europe?

Mainland China drove Revenue improvement in Asia Pacific and Europe for Global Blue, reflecting ongoing recovery trends.