RVRC Holding AB

STO:RVRC

Q1-2026 Earnings Call

[Operator]

Welcome to the RevolutionRace Q1 presentation. [Operator Instructions]

Now I will hand the conference over to the CEO, Paul Fischbein; and CFO, Jesper Alm. Please go ahead.

[Paul Fischbein, executive]

Thank you, operator, and good morning, everyone, and welcome to this conference call where we will address the report for the first quarter of the fiscal year 2025, 2026. Our financial year starts 1st of July and ends the 30th of June. So Q1 means the period July 1 to September 30.

My name is Paul Fischbein, and I am the CEO of RevolutionRace. And joining me today for today's conference call, I have the company's CFO, Jesper Alm.

Before we jump into any numbers, for those of you who are new to the RevolutionRace story, I will start by giving you a brief intro to the company. RevolutionRace is an international outdoor brand, offering a wide range of outdoor products, mainly clothing, but also shoes, bags and other outdoor-related products. Everything started with pants and that product category is still the largest product category.

We operate with a D2C business model, meaning that we skip the middlemen and sell our products directly to our customers. We do this mainly via our own website, but also through marketplaces such as Amazon.

With our D2C business model, we can secure our competitive offering and at the same time, maintain industry-leading margins. We are a digital-first company, but we have recently also taken our first steps into physical retail. In April, we opened our first outlet store outside Stockholm in Sweden. And at the end of September, we also opened our brand store in Central Stockholm.

Historically, our brand was very much built with our community on social media platforms. And today, we have more than 2 million followers and over 740,000 reviews on our site.

RevolutionRace was founded in 2013 and launched in 2014, and we have been listed on NASDAQ Stockholm since 2021. Our headquarter is located in Sweden, and we have approximately 130 employees.

We move on. And this picture I think, illustrates our international presence very well. We have customers in around 40 countries. We have 18 localized webshops and now also 2 physical stores, as I mentioned. We are fulfilling orders at 2 main logistics hubs with partners in Germany and Sweden and with a smaller location also in the U.S. We design all our products in-house and work together with more than 25 suppliers for production in Asia.

Now let's take a look at our performance and net sales development. And we started the financial year with a strong quarter. Net sales amounted to SEK 392 million. That corresponds to a sales growth of 15%, 1-5% in local currencies compared to the same quarter last year.

We believe that we are gaining market share in several markets as the overall market environment is described to remain challenging. The recent strengthening of the Swedish krona had a negative currency effect on our reported revenue since we report in Swedish krona, but the majority of our revenue is generated in other currencies.

We delivered growth across all regions during the quarter. In the Nordics, sales growth increased by 19% in local currencies. In the DACH region, growth was 18% and in the Rest of the World region, 2%.

Switzerland was the market with the strongest growth during the quarter, followed by Austria. And together with growth of 14% in our largest market, Germany, this resulted in a solid overall performance in the important DACH region.

In our most mature market, Sweden, we recorded growth of 18%. In the Rest of the World region, we are strengthening our position in several markets, including Poland and U.K. In the U.S., we saw a sales decline due to higher tariffs which impacted or contributed to lower growth for the Rest of the World region as a whole.

Now let's continue to look closer at the performance during the quarter, and we are also happy to report that we continue to deliver strong margins and remain one of the most profitable companies in our industry.

Our numbers demonstrate our ability to combine growth with profitability, despite an unfavorable currency impact from a stronger Swedish krona. And this impacts both top line, as I mentioned, but also gross margin and EBIT.

During the first quarter, EBIT amounted to SEK 75 million, corresponding to an EBIT margin of 19% and the gross margin for the quarter was 69.6%. We maintain a solid financial position with a net cash position of SEK 163 million at the end of the first quarter and on top of that also an undrawn credit facility.

Ahead of the second quarter, we have carried out a planned inventory buildup, and we are now well prepared for the seasonally strongest period of the year. Inventory is more or less in line with last year, and we expect that inventory levels will gradually decrease over the course of the financial year.

On operational level, we have strengthened our management team with a new Chief Product Officer and the new Chief Technology Officer. And these additions strengthen both our product development and technological capabilities, which will support the next phase of our journey.

During the quarter, we continued our share repurchase program in line with the mandate from the Annual General Meeting, repurchasing shares for a total amount of SEK 32 million. Since the AGM in 2024, we have now repurchased shares amounting to SEK 168 million in total, and the Board's proposal to the upcoming AGM in November is to cancel all repurchased shares.

During the quarter, we have carried out several successful product launches. Our shell products sold well compared to last year. One could note that it was challenging selling shell products during the first quarter last year due to the late start of the fall. So good to bear in mind.

Looking ahead, I also want to mention that we are excited to follow the launch of the new Ultra Series, our most technically advanced collection to date, which was introduced now in early October, a few weeks ago. The collection is using carefully selected materials designed to perform in tough conditions.

And with that news, I would like to hand over to the company's Chief Financial Officer, Jesper Alm, who will present and walk through the financial performance. With that, Jesper, please go ahead.

[Jesper Alm, executive]

Thank you, Paul, and good morning, everyone. I will briefly cover the financial performance during the first quarter of the new financial year.

Gross profit amounted to SEK 273 million for the quarter compared to SEK 245 million a year ago, and this equals a gross margin of 69.6% compared to the 70% flat last year. The slight decrease in gross margin is mainly attributable to currency effects on net sales and goods for resale.

We note that the personnel expenses in absolute terms are slightly higher compared to the same quarter last year, while the number of full-time equivalents remained at just above 130. Personnel expenses as a share of net sales were basically in line with those of last year, the first quarter.

Other external expenses were SEK 169 million compared to SEK 158 million a year ago. And this as a share of net sales was approximately 43%, and that is lower than last year.

EBIT, as Paul mentioned, EBIT and adjusted EBIT for the quarter amounted to SEK 75 million compared to SEK 57 million a year ago, and this translates to an EBIT margin of 19% compared to 16.3% last year.

The non-favorable currency effect affecting reported revenue and the gross margin had a corresponding impact on the operating profit. And the primary contributor to the strong margin was good efficiency in marketing. Last 12 months' adjusted EBIT now is in excess of SEK 400 million.

The balance sheet remains stable with changes in line with seasonality. Net working capital decreased slightly to SEK 296 million compared to SEK 318 million a year ago. And changes in net working capital is primarily driven by slightly higher inventory levels and an increase in current liabilities.

The inventory amounts to SEK 586 million, of which SEK 500 million was sellable or goods in warehouse compared to a total of SEK 447 million a year ago. And goods in transit has decreased from SEK 118 million last year to SEK 66 million at the end of the first quarter.

And ahead of the second quarter, we completed the planned inventory buildup to prepare for the peak season that we're now entering into. And reminding that inventory levels are expected to decline gradually over the financial year.

Our financial position is strong, and we had a cash position of SEK 181 million at quarter end or net cash of SEK 163 million when adjusting for lease liabilities. The credit facility of SEK 600 million remains available and undrawn. Cash flow from operating activities came in at SEK 27 million in Q1.

So in conclusion, we have a strong financial position and are well prepared for the upcoming dividend payment. Our aim is to distribute 40% to 60% of net profit annually, which is in accordance with the dividend policy. And as a result of our continued growth and strong financial position, the Board has proposed a dividend of SEK 1.35 per share, which represents a dividend growth of 13% compared to the SEK 1.20 paid out per share last year. And the proposed dividend in total amounts to SEK 144 million, representing a payout ratio of 50%.

In addition to dividends being paid or proposed in this case as the AGM is coming up soon, during the quarter, we continued repurchasing shares in line with the AGM mandate of last year, acquiring shares for a total of SEK 32 million. And since the AGM in November '24, we have repurchased 3.8 million shares out of the 109.6 million that we had outstanding a year ago for a total consideration of SEK 168 million.

And with that, it's over for me, Paul.

[Paul Fischbein, executive]

Thank you, Jesper. So to sum up, the market environment is still described by many as challenging, but we are well positioned ahead of the peak season that we have in front of us. Our strong customer offering, our leading margins and our high customer satisfaction gives us a solid position when we now continue our journey.

With the autumn and winter approaching, we hope for a cold and snowy season that provides great opportunities for outdoor activities and experience also in nature. And as I mentioned, we are now entering the most important season of the year. The second quarter has just started, and the real peak season lies ahead. But having said that, we can report continued sales growth at the beginning of the second quarter as well.

And that concludes our comments on the results. Before we finish, I'd like to take this opportunity to thank everyone who has contributed to a strong start of the new financial year, our employees, customers, partners and other stakeholders.

And with that, we are now happy to answer questions. So operator, do we have any questions?

[Operator]

[Operator Instructions] The next question comes from Emanuel Jansson from Danske Bank.

The next question comes from Benjamin Wahlstedt from ABGSC.

[Benjamin Wahlstedt, analyst]

A few questions from my end. So first of all, continued growth, you say, in the report. Historically, continued growth without a magnitude has meant growth around 5%, if I'm not mistaken. I was wondering if you could elaborate or give some additional color on the magnitude of growth.

[Paul Fischbein, executive]

Benjamin, so we are only a couple of weeks into the historically most important quarter. It has only been 3 weeks. And we know that the higher volumes, they lie sort of in front of us in November and in December. So we -- as always, we choose not to provide a guidance for what we think about this quarter. So what we say is that we have seen continued growth when we compare the first 3 weeks of October compared to the first 3 weeks of October last year, but we have -- we don't specify it more than that. We think it's not relevant since the higher volumes will lies ahead.

[Benjamin Wahlstedt, analyst]

Fair enough. Another or a slightly different topic, FX. While I understand the translation impact on EBIT is negative in the quarter, could you say anything on the impact of the gross margin in Q1 from FX, please?

[Paul Fischbein, executive]

I think I'll hand over to Jesper.

[Jesper Alm, executive]

Thank you for that one. So the -- we're still at the point where the weaker euro has had a bigger impact than the weaker USD. That goes for the first quarter. And as we state in the report, we expect the benefits of the weaker U.S. dollar to become more visible going forward.

[Benjamin Wahlstedt, analyst]

Perfect. And the reason why I'm asking is your gross margin has been lower in Q1 versus the preceding Q4 in all but one case historically. If not driven by FX, what drove the Q-on-Q improvement in the gross margin in this quarter? Is it just strong sales of shell products?

[Paul Fischbein, executive]

Yes, it is. I mean, gross margin is a combination of FX, product mix, market mix. And so yes, it's a combination of many, many components. And also, to some extent, the competitive landscape, we see that it is still challenging. So that has had an impact as well.

[Benjamin Wahlstedt, analyst]

All right. I was wondering as well if you could say anything about any sort of changes made to the Alpine Collection in terms of order sizes, et cetera, compared to last year? I assume we should not expect 200% growth this year as well.

[Paul Fischbein, executive]

No. But I mean, we launched our Alpine or ski collection 2 seasons ago. That year we had sales of, if I recall right, around SEK 30 million. Last year, last year's season, we saw sales within that category north of SEK 100 million. And of course, we expect growth to continue. We don't provide any -- we don't disclose exactly how much we have bought for, but we definitely expect the good momentum within Alpine category to continue to grow. And to facilitate that, we have, of course, placed orders so that that can be realized.

[Benjamin Wahlstedt, analyst]

Perfect. And then I have 2 more. First of all, strong marketing efficiency in the quarter. What is the reason? And/or what can you say about that?

[Paul Fischbein, executive]

That's a good question. It sort of boils down to hard work, a lot of focus and a lot of tactical decisions and actions. So a very well performance by the team. So there is no sort of silver bullet or a magic hand that lies behind this. It's more -- it more boil down to hard work, and we're happy to see the impact of that hard work also paying off.

[Benjamin Wahlstedt, analyst]

Do you think they can repeat that hard work, so to speak?

[Paul Fischbein, executive]

Well, I mean, our job is to sort of go to our office every day, more or less do the same thing and try to improve everything we do on a daily basis. And I think that is something that we have seen now. And hopefully, we will continue to do that. That is the plan.

[Benjamin Wahlstedt, analyst]

So it's not any sort of external factors such as Google, pricing, or anything like that in terms of like…

[Paul Fischbein, executive]

No.

[Benjamin Wahlstedt, analyst]

All right.

[Paul Fischbein, executive]

That was smarter decisions. We have added some new colleagues to the team who have also brought in some new knowledge that has also been an important contributor to the marketing efficiency that we now see. So extremely happy to see that, of course.

[Benjamin Wahlstedt, analyst]

Perfect. Finally, for me then. You note that U.S. sales are slow due to tariffs. Could you remind us what the share of sales to the U.S. is approximately?

[Paul Fischbein, executive]

So approximately before we -- before the tariffs, it was at around 3% in total. Now that has declined heavily due to underlying -- it's due to the new tariff situation that we have. So we are not so exposed to that as a company in general, but that decline has an impact on the growth in the Rest of the World region. I think that is also important to bear in mind. We are talking about 3, 4 percentage points impact in that region. So we saw growth in Rest of the World of 2% in local currencies in the quarter. So you can sort of -- if you exclude the U.S. development, you can add 3, 4 percentage points to that growth in that region.

[Benjamin Wahlstedt, analyst]

It sounds like a slow U.S. is not really that big of an issue.

[Operator]

The next question comes from Andreas Lundberg from SEB.

[Andreas Lundberg, analyst]

Andreas Lundberg with SEB. If I start with market development, you talked about continued challenging markets. Why you think you are growing so nicely despite of that? And also, why you think you grow so nicely across the board if we exclude perhaps the U.S. market?

[Paul Fischbein, executive]

Yes, I think it sort of boils down to what I just mentioned. We have improved our operational efficiency within marketing, but also, I think we have a very strong customer offering that has been strengthened over and over again. I think also bearing in mind that last year we had a more challenging situation. We had, for example, a decline of sales of shell products due to a bit warmer and hotter -- a bit -- yes, a drier summer and late entry of the fall. I think that is something also to sort of note, which obviously impacts the comparison numbers.

[Andreas Lundberg, analyst]

And back to your marketing question. I think you said last time that you were more cautious on putting on marketing given the weak demand. How would you characterize that in the first quarter?

[Paul Fischbein, executive]

Well, we haven't really -- we report quite early in this quarter compared to the industry. We haven't really seen so much market data yet. I used to refer to reports such as spot index in Sweden, and we haven't seen any industry colleagues reporting yet. So it's a bit hard to say. We -- what we do see is that the Swedish market is a bit better. But on a high-level basis, I can't really see that, for example, Germany has improved in terms of customer -- consumer demand compared to a year ago. It seems to be remain a bit challenging still in Germany.

[Andreas Lundberg, analyst]

Okay. I was more looking into the marketing as such. I think you said you were cautious putting on marketing costs when the demand was so weak or weaker in recent quarters. Have you still been cautious on marketing in Rest of the World? I guess, that's my question.

[Paul Fischbein, executive]

Yes. That's a very good question. I mean, we -- our policy is that -- I mean, we have this -- we have a financial target that we want to aim -- we want -- our aim is to grow at 20%. We are not there yet. But at the same time, we want to maintain an EBIT margin of 20% as well on a full year basis.

Now this is the smallest -- seasonally smallest quarter of the year, we report 19%. So I mean, it's -- we want to balance growth and EBIT. And to some point that, yes, puts a limit sort of on how much you could actually spend on, yes, marketing, for example, and other costs. So, yes.

[Andreas Lundberg, analyst]

Sounds wise. Maybe one for Jesper. You talk about gradually lower inventory from here. Is that more seasonal effect? Or is it anything else?

[Jesper Alm, executive]

No, we see a structural effect. We have -- obviously, the seasonal pattern is roughly the same as every year, but we aim to structurally decrease the inventory share of net sales throughout the year. As we've talked about the previous quarter, we were slightly high on inventory levels due to slightly lower sales growth in that period than expected. And we've taken measures to reduce the inventory levels over time. So we think we're in a good place, and we're going to improve that over the year. That's the plan.

[Andreas Lundberg, analyst]

And lastly, on your recent store opening in downtown Stockholm, what's the learnings, what do you take with you from the start?

[Paul Fischbein, executive]

I mean it's a bit early to say too much. We haven't been open for a month yet. But we are satisfied with the start. We, obviously, can monitor the number of visitors and the interest it has generated. And it's a bit early to draw any big conclusions. But we definitely feel that this is a very good strategic complement to the e-commerce business. And we are evaluating opening up more stores.

However, as you may know, we are a bit careful. We are very selective, and we do it with a step-by-step approach. So sales-wise, I mean, it's a very small share of our total sales. But strategically and brand-wise, we feel that this can really, I'd say, support our journey of building a brand.

[Operator]

The next question comes from Emanuel Jansson from Danske Bank.

[Emanuel Jansson, analyst]

I hope you can hear me now. Sorry, I had some trouble with the technical equipment. I think a lot of the questions have already been answered at this point. But obviously, impressive growth in the quarter with Germany rebounding significantly. What would you say are the main drivers in this quarter in that region? Is it, as you mentioned, on the comparable base of shell products or new products or more stable market overall in Germany?

[Paul Fischbein, executive]

Emanuel, we can hear you now. I think as always, this boils down to a combination of a couple of components. I think, as I mentioned in conjunction with an earlier question, it boils down to better performance when it comes to acquiring customers and marketing. I think that we have been very well in terms of execution when it comes to, call it, campaign planning or merchandising on site.

And I think there's also a component of weather. We -- I try always to avoid speaking about weather. But in this first quarter, weather is sometimes is more or less -- is a component because we see a higher -- we simply see higher sales when fall enters. So -- and fall will always enter. It's more a question of when it enters. Last year, it came very late. This year, it came a bit earlier. And obviously, that has an impact on, for example, rain clothes or shell products.

So I think a combination of some external factors such as that I just mentioned, but also internally improving the operational efficiency, especially within marketing. And as always, I think we have a strong competitive offering. We developed new products. We have adjusted many details in our fleece assortment for -- just to lift one example, we have launched new products. And so continuously improving the customer proposition is also an important factor. So no like clear answer more than a combination of many things.

[Emanuel Jansson, analyst]

And this rhymes well with the Swedish market as well, right, or maybe a little bit slightly more stable market here versus DACH and Germany.

[Paul Fischbein, executive]

I mean, we have seen that the Swedish market has bounced back over the last couple of quarters. In the last quarter, I think we had access to spot index. They report -- spot index is a report from the Swedish trade association reporting quarterly. We haven't seen any number from the calendar Q3 yet.

But calendar Q2, it was reported that we saw growth for the first time after 13 quarters or something. So that is definitely a sign of -- that the market has bounced back slightly. The only data point we've really seen so far related to the calendar Q3 is some numbers from payment providers actually showing that the market is -- continues to be slightly better in Sweden, but we can't really see that happening in Germany yet. But bear in mind this is not a big amount of data points that I'm based that on.

[Emanuel Jansson, analyst]

Yes. And do you think that the 18% organic growth that we saw in Sweden, is that extraordinary high or given that this is considered as a relatively mature market for you? What should we expect going forward, I mean?

[Paul Fischbein, executive]

Good question. I think -- I mean, 18% is a good performance. Again, bear in mind that it's compared with a pretty weak quarter. We were disappointed when we stood here a year ago. That's also important to bear in mind. But on top of that, no real questions on what to expect on the Swedish market. But it's definitely an outperformance compared to the market in general. We are very comfortable to say that we are gaining market share in Sweden and in also many other markets, which is important, of course, and promising.

[Emanuel Jansson, analyst]

Okay. And looking into this current quarter then, have you seen -- you're stating that you still see growth -- can you maybe elaborate on if you see continued growth across all 3 regions in terms of organic growth still?

[Paul Fischbein, executive]

I mean, as I mentioned earlier, I think we should be a bit careful saying too much about the quarter we are in. Now it's only been 3 full weeks. And it's the beginning of the quarter and the big volumes are ahead of us. So it's more or less the smallest weeks. We expect those weeks that we have behind us, the smallest weeks, in the quarter. So we don't want to guide or disclose more than saying that we do see continued growth in the first quarter -- first weeks of October compared to the exact same date last year.

[Emanuel Jansson, analyst]

Okay. Fair enough. And on this new Ultra Series, I know it just recently was launched, but have you seen any signs of good receivings yet? And how will the rollout compared to the Alpine Collection be?

[Paul Fischbein, executive]

Interest has been very high. So -- and as you mentioned, it's only been, I think, 10 days, and the collection is very much sort of geared towards ski and Alpine. So we are not really in that season yet. But sales has started in a, yes, good way, and we see a lot of interest. We obviously, know how much we have bought, so you can more view this as a way of sort of lifting the status of the brand in general more than expect extreme volumes. And we -- without disclosing too much, we don't expect Ultra Series to be at the same levels as sort of the base Alpine assortment, the Atlas and the AccXel products that we have as is in our ordinary sort of Alpine Collection.

[Emanuel Jansson, analyst]

And can you maybe elaborate or give us some more color on what kind of customer you want to acquire from that type of products category…

[Paul Fischbein, executive]

Yes. The idea is actually to target our existing customers more than -- obviously, we always want to get new customers. But we think that we have a very loyal customer base, and this is a way of offering products in a slightly more premium segment than we used to have. So you can view this as a premium collection to our customer base.

And so, I mean, we have our concept of or we used to speak about the unmatched value. And the Ultra Series -- the aim of the Ultra Series is to remain with an unmatched value. So if you compare these new products and the functionalities and the technical specifications and the material, it should be a very competitive offering if you compare this with the competitive brands and competitive products. So the idea is to target our existing customer base. But obviously, we also hope to attract some attention from new customers as well.

[Emanuel Jansson, analyst]

Really interesting. And maybe last question from my side then and perhaps something in for the longer term here. But can you provide any overview or development of your strategy and development in the Asian market? Because my impression is at least that you have brought in at least some expertise through personnel with knowledge of this region. Is that correct? And yes, can you maybe provide us some updates on your thoughts about that region and the market?

[Paul Fischbein, executive]

Asia for us is today -- when it comes to Asia, it's a part of the world where the production is taking place. We have a small sourcing partner in Vietnam that we are working with, but that's 100% focused on production and the product development. We have, as you know, a year ago, we opened up the site in Japan and South Korea, but it's not a focus market for us.

[Operator]

The next question comes from [ Peter Hermanrud from First Partners Holding. ]

[Unknown Analyst]

Congratulations. You see continued sales growth in October and Benjamin indicates that, that has historically been more like 5%. But when I look at the heading of your quarterly report, and it says continued sales growth, and you had 15% in the third quarter. So should we maybe think that what you're saying for the start of this quarter is basically saying it's not a catastrophe. It could be just acceptable, or it could be great, but you don't want to indicate anything more.

[Paul Fischbein, executive]

I think you should not over-interpret it. I think you should -- I mean, we should definitely believe that it's higher -- the sales during the first 3 weeks this year is higher than the first 3 weeks in October last year. We choose not to disclose more than that at this point because it doesn't really matter how strong the performance is in these initial weeks, because we expect much, much, much higher volumes in November and December. And so the peak lies in front of us, and we want to be a bit careful in disclosing more than we actually know and don't specify too much because it won't -- we don't expect that to have a big impact. The impact will come later in the quarter.

[Operator]

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

[Paul Fischbein, executive]

Thank you, operator, and thank you all for all the questions. Before we wrap up, let's see if we have received any questions online. I will -- I look at Jesper and then ask him to maybe read the question if there are any.

[Jesper Alm, executive]

Yes, we have received a couple of questions. One of them is partly answered already, but I'll read it out anyway.

So the new Ultra Series seems to be priced in line with the established outdoor brands. And wasn't your strategy as a D2C company to be cheaper?

[Paul Fischbein, executive]

Yes, that is our strategy. Our strategy is to maintain our unmatched value. If you compare this Ultra Series, you can call that our premium line with other brands' premium line, we see that we are, in many cases, at half the price level as many of the competing brands. So there's no change in strategy. And we have already in the past had 2 sort of segments in our range strategy. We've had our base assortment and the pro assortment, and now we have also launched a statement assortment, which is consisting of this Ultra Series. So you have to compare it with other brands' premium lines, and then we are at a competitive level.

[Jesper Alm, executive]

Which leads into the next question.

With several ranges across different price points, how are you planning to structure your offering in order not to confuse customers?

[Paul Fischbein, executive]

I think it boils down to continue to be disciplined, offer quality products with our design element consisting of slightly more colorful products, tighter fit and good price points compared to similar products in the market. And I think that is important to bear in mind. We have not chosen to enter the cheapest segment in the market. I think it's always important to compare with products that are on par in terms of technical specifications, materials and so on.

[Jesper Alm, executive]

And those were the online questions received.

[Paul Fischbein, executive]

Thank you. So may I then say with that last comment, thank you all for joining us today in this call and for your interest in our journey. And may I also remind you that the report for our second quarter will be announced on January 29. So hope to see you then. And with that, thank you, and goodbye.