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Why the Marley Spoon share price rocketed 24% higher today

James Mickleboro
Marley Spoon share price

One of the best performers on the Australian share market on Thursday has been the Marley Spoon AG (ASX: MMM) share price.

In afternoon trade the Woolworths Group Ltd (ASX: WOW)-backed subscription-based meal kit provider has seen its shares race a massive 22% higher to 30.5 cents.

At one stage they were up as much as 24% to 31 cents.

Why is the Marley Spoon share price rocketing higher today?

Investors have been fighting to get hold of Marley Spoon’s shares on Thursday following the release of its fourth quarter update.

According to the release, during the fourth quarter the company delivered a 23% increase in revenue to €35.2 million. This was achieved with lower acquisition costs and continued improved marketing efficiency.

Marketing expenses as percentage of revenue represented 17% of sales in the quarter, compared to 26% in the prior corresponding period. As a result, its operating EBITDA loss decreased to €2.4 million compared to a loss of €8.6 million in the prior corresponding period.

This strong finish to the year led to Marley Spoon smashing its full year revenue guidance with a 41% increase to €129.6 million.

Also increasing during the fourth quarter was the company’s Global Contribution Margin (CM) to 28%, up 7 pts year on year.

Marley Spoon’s CEO, Fabian Siegel, was pleased with the company’s finish to the financial year.

He said: “We are pleased to deliver a strong Q4 2019 performance with all our businesses making a positive contribution. Our Australian business continues to progress with 50% revenue growth in Q4 and a further rise in the CM to 36%. Following the appointment of a new CEO to lead our US business and operational improvements implemented in both our US and EU segments, we expect to build scale as well as continue to expand margins in these large markets.”

Outlook.

Management is confident that its strong growth can continue in FY 2020 and that positive operating EBITDA is on the horizon.

Mr Siegel advised: “With the structural switch to online grocery sales very much still in its infancy we expect to deliver continued revenue growth and positive operating EBITDA at the end of 2020.”

The post Why the Marley Spoon share price rocketed 24% higher today appeared first on Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020