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Good morning. I hope everybody is doing well today. We are happy that everybody is joining us to listen in to our earnings call for the first quarter of 2023. I'd like to start off by giving some highlights on the first quarter. I think the most important thing is that we continue to deliver good profitability despite the somewhat challenging market environment. And I'm also very pleased to see that we're -- that we have been making significant progress on our strategic initiatives. With the profitability topic, we actually managed to deliver about 14.2% EBIT margin, which almost -- which represents almost a 3 percentage point increase versus last year. And we grew the EBIT by about 19% versus last year. The challenging market, of course, is affecting growth. We did, however, end up at about SEK 180 million in total in net revenues, which about a 3% decline and organically, we declined about 8% versus Q1 last year. Consumer confidence has been stable, but is at a level which in most markets are at historical lows.
And in this environment, of course, we've been in navigating our cost base carefully, both from -- both in terms of the elements affecting the gross margin. But in particular, our marketing investments, and we saw a significant improvement there, a bit over 3 percentage points versus last year due to our continued focus on making sure our marketing spend is as efficient as possible.
And with all of this said, we have a very -- we continue to have a very strong financial position. Net cash of about SEK 116 million and over SEK 140 million cash on hand. And then I think, finally, I want to highlight again the assortment enhancements we've done during the quarter in addition to reaching several milestones in the development of the e-comm platform to an extent where we -- about a week or 2 weeks ago launched the full marketing activities to our Austrian domain.
So moving forward with some highlights. The -- like I mentioned, the growth-related strategic KPIs are a bit -- continues to be on a downward trend, both in terms of orders and customer acquisition. But the decline is at least on the diminishing, so to speak. The -- what we are -- well, we continue to be very happy about and also very proud is the extremely high customer satisfaction values that we continue to maintain. So our NPS during the quarter was 68, which was stable versus last year, and our Trustpilot rating remains at 4.8. And just looking at some of our key markets, again in terms of how consumer confidence has developed. Here, we're looking at about a 15-month perspective. And what we can see in all of the 3 markets on the slide here is that the -- during Q1, it was stable or improved slightly, but is at very low levels historically.
If looking at some of the achievements during the quarter, number one, I want to highlight the enhancements and additions we've done to the -- to our assortment. Number 1 is that we introduced a new subcategory, bathmats. And the second major initiative released during the quarter was essentially doubling or more than doubling our selection within the outdoor subcategory. And both of these rug types represents what I would argue are somewhat untapped or incremental opportunities for us as an organization. And this kind of shows just an overview in terms of some of the items that we released within the bathmat assortment, priced relatively well compared to alternatives in the market, and all of it has been designed -- in-house designed, so quite unique, or they are unique to us. And also supported by much enhanced creative assets, which also has been a focus area for us over the past year. And within the outdoor assortment, same thing, great creative assets, which are being used to capture attention and traffic in various channels in addition to a significant enhancement to the selection that we offer within rugs suitable for both outdoor, but also indoor as well if people want to use it in that manner.
So with that said, I hand it over to Joakim, who will take us through the financials.
Thank you, Michael. And as you've heard Michael say, we start with sales. And as you heard Michael say a couple of quarters now, we've had a focus on profitability, and that is affecting the growth. Our net revenue of SEK 180 million was a decrease of 3.1% and a decrease of 8.1 percentage points, organically, if we then put back the 5 percentage points, that is the currency impact.
Looking at the different segments. MPO is decreasing 25%. And there, again, a focus on profitability. If you look in the report, the segment margin is going up -- after marketing is going up 4 percentage points. B2B had a good growth of almost 22%, somewhat easy comparables in the prior year for the trade partners area. And then we go into B2C, where we lost 5%. You can take a look to the right side there in the picture how this is distributed geographically. So if we start at DACH, it was minus 11%. The Nordics are minus 7.7%, but bear in mind there that the Swedish market is not helped by any currency effect, of course. And the Rest of World, which is mainly the Rest of [ Euros ] because the margin of sales we have outside of Europe is very small. And this region accounts for 60% of B2C, and there we had a better performance with minus 1.5%. So moving into gross margins. We are improving gross margins with 0.3 percentage points to 62.6%, although you have many effects going in different directions. So the increase in margin is driven by the overall price increase that we made in quarter 3 of last year. And then we have a negative effect by the mainly higher shipping costs, and we also have a minor increase of discounts.
If you look at the gross margins for the different segments to the right. So again, MPO has a drop in margins. But as I said, the focus there has been on profitability. We have been in lower price points to stay relevant in that segment, and we are improving the segment margin with 4 percentage points if you look at the segment margin after marketing costs. B2B, the drop in margin there is due to customer mix, whereas one customer group that has higher discounts had low comparables in quarter 1 last year. And B2C increased prices in quarter 1, as I said earlier, is increasing the margin, and it's partly neutralized through higher freight costs and only a slightly higher average discount rate.
So if we then look at our P&L from a cost ratio perspective. Cost of goods for resale, as you know, include our freight costs. And as I mentioned earlier, again, the price increase in quarter 3 is on the positive side. So the cost of goods is down 1.6 percentage points and freight is up 1.4 percentage points. Personnel costs, we have a combination of equal parts, negative scale effect, the wage increases from prior year, and we also have some one-offs for recruitment costs. Other operating expenses is our currency effects on transaction and revaluation of assets and liabilities in foreign currency and it's square against prior year. Depreciation and amortization is driven by the rental increase due to the indexing of our rental agreements, the lease agreements we have for the 2 sites in Malmo. So then bottom line, we're up 2.6 percentage points, arriving at a healthy 14.2%, an increase, which is a result, as you can see, for the focus on profitability and the lower marketing cost ratio that delivered this increase of 2.6 percentage point increase in the operating margin.
So if we look at the balance sheet and the biggest item after the goodwill here is the inventory. The inventory is down SEK 9 million from year-end. And due to the time lag from the slowdown earlier in quarter 1 last year and the lead times in supply, we have an increase of SEK 17 million versus prior year. And if you then look at the right side, you see the ratios that we steer our inventory towards. And we are at 26 percentage points compared to the last 12 months of net sales, and that is an improvement of 1.3 percentage points. So we are still outside this span, where we want to be, which is 17.5% to 22.5 percentage points over the last 12 months of sales. Next. So finally, I look at the cash position. So quarter 1 is a period where taxes is settled, and the 2021 income, when we had a record year, is declared in 2022 and the final settlement of taxes is done in March of 2023. Working capital decreased and that is explained by what I just mentioned, the SEK 9 million in inventory, which is a big part of this working capital decrease. Cash flow from investing activities at the bottom left is mainly the activation of expenses for developing our new e-com platform.
So this sums up to a net cash position of SEK 116 million. We have SEK 142 million in cash. We have no interest-bearing debt. But here, we deduct the leasing agreements that are the IFRS 16 reclassification of our leasing agreements, assets and debt. And then we get to the net cash of SEK 116 million. So with that, I hand over back to you, Michael.
Thank you. So to summarize and also give a bit of perspective for the rest of the year. We feel that we're quite well positioned to continue navigating the outlook for 2023, that remains uncertain. We have a very solid financial performance, considering the market conditions, where we are handling our top line quite well, balancing that with the focus on profitability. Gross margins are stable. We are improving our EBIT margin, primarily driven by the focus on costs, but especially within the marketing spend line item. And that is, of course, gives us a fair amount of stability to be able to deliver the level of profitability despite the fact that we are experiencing a slight decline in the net revenues. The financial position continues to be strong and somewhat also strengthened with a very strong healthy net cash position and also, of course, cash. Inventory is a bit elevated, but also gives us a bit of flexibility in terms of ensuring that we have tools and levers to use in order to be ready when we need to drive sales or when demand picks up. And also considering the -- as we mentioned in the report and also last quarter, the earthquake in Turkey and that, of course, was quite shocking. And then we had many of our business partners were affected. Luckily, the -- no major issues in terms of our actual business partners being [ inured ] and also their facilities were actually quite unaffected by the earthquake, which actually resulted in us only having a minor impact in terms of deliveries. And then, of course, the Board proposes a dividend of SEK 1.5 per share, totaling about SEK 31 million at the AGM, and that is also a testament to the strong financial position that we have. And if we look towards the rest of the year, we have a well-adapted fixed cost base. We are continuing to be very focused on marginal cost efficiency, especially within the marketing spend area. And we maintain a very strong financial position overall. And in regards to the strategic initiatives we've been working on, we're showing progress there with both assortment enhancements and the release of the site in the Austrian domain, which now is at a level of maturity where we feel comfortable to activate the full marketing machinery. And this, of course, will be -- the platform will be rolled out to additional markets moving forward, and we're really looking forward to seeing how that will impact, of course, sales, but most importantly, the overall shopping experience for our customers. So with that being said, I also wanted to conclude by inviting everybody again to our Capital Markets Day, which will be held on May 25 in Malmo, both in person as well as digitally if you cannot attend in person, and that is also the same day that we will be hosting our annual -- our AGM for the shareholders.
Thank you, and we'll open up for questions at this point in time.
[Operator Instructions] The next question comes from Benjamin Wahlstedt from ABG Sundal Collier.
3 quarters in a row now where you beat [ consensus estimates ], I believe, most significantly due to perhaps more efficient marketing than expected. Could you perhaps talk a bit about the development here going forward, please?
Absolutely. I mean I think like we've mentioned, the focus is on ensuring that our marketing funds are invested with the highest possible ROI that we can find, of course, balancing that with top line and the efforts to continue in terms of investing in different marketing channels as well as in different regions or markets and redoing -- rebalancing those investments on a day-to-day, week-to-week basis is paying off, and that is something we will continue to do in order to grow as profitably as possible.
You mentioned in the report as well that the marketing intensity seems to be lower this year than last year. Could you quantify this in any way or perhaps comment on your view of the rest of the year here, please?
Yes. The -- we won't quantify, of course, because that's proprietary information. In terms of the view, I think the -- what we mentioned or have mentioned in terms of how the various players behaved during Q1 last year was that I think everybody going out of, let's say, here in '21, we're quite optimistic. And then the slowdown in the economy due to various reasons, started to happen during Q1 of '22. And the willingness to adjust aggressiveness. I think there was a lag in that, which, of course, made Q1 of last year a tad bit overaggressive overall, but that has not necessarily been the effect during Q1 this year.
Perfect. I also note that your conversion rate keeps growing. Could you perhaps talk a bit about what you see as a mature conversion rate for you given that the home improvement vertical in general tends to see lower conversion rates compared to [ fashion ], for example?
Sorry, I couldn't understand the middle. There was a word I couldn't hear, sorry.
No worries. The question is basically, could you talk a bit about what you see as a mature conversion rate for you given the recent growth in conversion rate?
It's a little bit too early to give that outlook as conversion rate is affected by so many different parameters where price, of course, price perception is one important lever. The on-site buying experience is an important factor. And of course, the type of traffic that you buy is another sort of those, I would argue, are kind of the 3 major factors affecting conversion rate. And we're working on all 3 in terms of buying right now very high probability to convert traffic, of course, since the focus is on profitability. We have been getting -- reaching milestones in the development in the new e-comm platform and 1 major objective with the platform rebuild is, of course, to be able to serve more use cases or user types in a better way, which, of course, has the overall long-term intent to improve conversion rates. And then over time, we also expect the -- we expect a higher share of what we internally would call earned traffic and that type of traffic have a tendency of being slightly -- at a slightly higher conversion rate versus more paid upper-funnel traffic.
Loud and clear. One final question, perhaps. If we talk a bit about the development by market during Q1, Nordics was better than DACH for the first time in 5 or 6 quarters. Could you perhaps talk a bit more about this, what is driving this trend shift, so to speak?
I think like what you can mention there in terms of the FX effect is one portion. And then, of course, the one thing is how we've been optimizing our marketing investments where we have seen in certain of the -- during periods in the DACH region that competitiveness in the market has remained quite high. And then, of course, we've elected to divert some of those funds to markets and channels, which, in the short term, have proven more efficient. And then there's also been a little bit of an extra focus, of course, in terms of getting the big Nordic markets back on track.
The next question comes from Carl Deijenberg from Carnegie.
Two questions from my side. Maybe first, following up on the last one here on the geographical development. Just wanted to ask you on the Rest of World, obviously, performing a bit better here than DACH and the Nordics. And I understand it's a bit of currency impacting that as well. But do you see any particular region within the Rest of World region that sort of stands out positively here and maybe where we have passed the trough and then where you have sort of confidence of early signs of improvements? Anything standing out here in the Rest of the World geography?
Yes. The -- we won't go down to specific markets, but of course, Rest of World, and as Joakim mentioned, it's mostly rest of Europe and the big European markets that are not part of the Nordics and DACH are driving the performance in Rest of World to a large extent. And then we -- so that includes, of course, France, Italy, U.K. And then some of the Eastern European markets have also performed quite well.
Okay. Fair enough. And then I had -- my second question is related to the balance sheet, continues to strengthen here for every quarter. And I know you have the dividend to be paid out as well. But could you say anything on sort of what you're looking to utilize the balance sheet in any other way? Are you looking at smaller acquisitions or anything on that topic would be very interested there as well.
Yes. I mean I think the -- I can maybe start off with the acquisition topic and then maybe Joakim can do a little bit about the sort of [indiscernible] state. The -- I mean, we -- our focus is still organic growth. But as we've mentioned, if there are opportunities out there, and we feel would be a good strategic fit, we will continue to look at it. And of course, our cash position would, in most cases, enable us to execute such a transaction without sort of getting additional funding, so to speak.
And just to continue on that, as we see during our Capital Markets Day, we have a lot of internal focus on improvements that we can make within the company without buying another company. And we have a lot of focus on that. For instance, the new platform that Michael spoke about. On the balance sheet movements going forward, the things we don't project that, but what we have mentioned is that we are above our targets in inventory, and we are working towards bringing that down, not in an immediate fashion because it's not needed and it would cost money. But over time, we will bring inventory down to our target to be between 17.5 and 22.5 percentage points of our last 12 months of sales.
[Operator Instructions] The next question comes from Emanuel Jansson from Danske Bank.
Yes, a couple of questions from my side here. We've already touched upon it, but the sales growth in the quarter, it was negative 8%, mainly due to the hamper growth in the B2C segment in the DACH region and the Nordic region. Can you give us some flavor on how your market shares are developing in this quarter? Are you more or less flat or gaining or decreasing the market shares?
As mentioned, the sort of getting an accurate picture of the total European market is difficult. Of course, we have indications in terms of the main advertising platforms that we operate on in terms of how our position on those platforms are developing over time. With -- we're quite comfortable where we're at considering the total market and the focus on efficiency and cost efficiency that we currently have. And I think overall, in some markets, of course, one could probably argue that we've lost a little bit. But in other markets, we're definitely gaining. So overall, we feel quite comfortable where we're trending compared to the others.
Okay. Perfect. That's clear. And the second one here. Entering -- already entered the Q2 period, could you give us some explanations to what we should expect in Q2 in terms of sales growth and also looking back a year back in terms of comparables, what should we expect in Q2?
I think the outlook for the rest of the year remains uncertain. There's some macro indicators that are pointing towards a bit of a recovery in certain markets and then other markets are still sort of at a place where one could argue they're still -- they haven't seen the worst of it yet. So what we are focusing on is trying to manage our own business, have a high degree of focus on cost efficiency. We've already adapted a lot of our fixed cost elements to the new reality, and we continue to invest in our strategic initiatives, which, of course, mid to long term will improve our competitiveness. And once the overall market turns, we feel that we're well positioned to capture that demand. And then I think just looking to how last year developed, there was, of course, a gradual worsening of the consumer sentiment with, of course, the war in Ukraine being the main trigger point. So the rest of the year comparables, one potentially could argue are a tad bit easier versus how they looked like last year when comparing to '21.
There are no more phone questions at this time. So I hand the conference back to the speakers for any written questions.
We had -- we thought one written question, but I guess it got deleted. So no more questions then. So again, thank you, everybody, for listening. And again, I want to invite everybody to our Capital Markets Day on May 25 as well as our AGM if you are a shareholder. Thank you, and have a great day.