Adore Beauty : Half Year Results - Investor Presentation

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RESULTS PRESENTATION | H1 FY22

15 February 2022

DELIVERING STRONG REVENUE GROWTH

RECORD REVENUE DRIVEN BY VALUABLE RETURNING CUSTOMERS

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$113.1M	33.1%
REVENUE	GROSS PROFIT
+18% ON PCP	MARGIN
+47% 2-YEAR CAGR	+0.6 PPTs ON PCP

$3.8M	$25.1M
EBITDA1	CASH2
-27% ON PCP	-14% ON PCP
+44% 2-YEAR CAGR

876k	+56%
ACTIVE	RETURNING
CUSTOMERS3	CUSTOMERS4
+13% ON PCP
+43% 2-YEAR CAGR

Market leader5

in fast-growing

$1.3b online

beauty &

personal care

category

Online destination

of choice for

brand partners

and loyal returning customers who increase in value each year

Strong start to

FY22 with multiple

record trading

days & strong AOV

growth

Re-investing in

strategic

initiatives to drive sustainable, long- term growth

1.

2.

3.

4.

5.

Historical proforma adjustments are detailed in the appendix. EBITDA margin in line with guidance provided in FY21 results media release on 30th August 2021 "Adore Beauty expects to maintain a 2-4% EBITDA margin in the short to medium term while reinvesting to drive above market growth". Balance as 31 December 2021 compared to 30 June 2021.

Active customers refer to customers who have ordered in the last 12 months; comparison of CY21 to CY20.

Returning customers are customers who have previously placed an order on the Adore Beauty website; comparison of CY21 to CY20. Adore Beauty is the leading pureplay online beauty retailer in Australia, based on management estimates.

Results Presentation | H1 FY22

2

MORE RETURNING CUSTOMERS, SPENDING MORE

EXPANDING SHARE OF WALLET

only	REVENUE ($A MILLION)			ACTIVE CUSTOMERS1 ('000)
							113						777	+43% CAGR
									+47% CAGR
									+18%												+13%
																						876
use
		96		33
																439
				36											497
											427
		52
		19	61		80			251
ersonal																	436
33												176	280
		H1 FY20			H1 FY21		H1 FY22			CY19			CY20			CY21
																				Returning			New
						Returning			New
		Returning customers driving strong revenue	Sustainably growing active customer base, driven by
growth, accounting for 71% of revenues (up from	56% growth in returning customers, who become
						64% in H1 FY21)		increasingly valuable over time

1. Active customers refer to customers who have ordered in the last 12 months, comparison of CY21 to CY20.

ANNUAL REVENUE PER ACTIVE

CUSTOMER1

+3.3% CAGR

+5.3%

$224

$210 $213

CY19

CY20

CY21

Higher annual revenue per active customer reflecting larger proportion of returning customers and strong

Average Order Value (AOV) growth

Results Presentation | H1 FY22

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SUBSCRIPTION-LIKE RETENTION RATES AFTER YEAR 2

CREATING MORE LOYAL RETURNING CUSTOMERS

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COVID lockdowns accelerated new customer acquisition and returning customer repurchase

Transition out of lockdown seeing return to more sustainable growth rates off elevated base

Returning customer growth of 56% on PCP (2-year CAGR of 58%), offset 12% decline in new customers

CY21 aggregated retention1 of 56.2%, down 9.3ppts on PCP and up 2ppts on CY19, reflects cycling of larger proportion of new customers acquired during COVID

Strategic initiatives to reduce year-one churn and improve retention, including Mobile App and Loyalty

# CUSTOMERS ('000)

350

300

250

200

150

100

NUMBER OF CUSTOMERS

New Returning

ersonal

50

COVID

COVID

LOCKDOWN

LOCKDOWN

SUPERIOR LOYALTY METRICS OVER TIME2

71%

~3x

SPIKE

SPIKE

0

FY19

FY19

FY19

FY19

FY20

FY20

FY20

FY20

FY21

FY21

FY21

FY21

FY22

FY22

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

of revenue from returning

per year

customers who order

from us on average

1. Aggregated active customer retention rate = (Active Customers as at the end of the relevant year - Active Customers acquired during the relevant year)

divided by Active Customers as at the commencement of the relevant year.

Results Presentation | H1 FY22

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2. Returning customer period of H1 FY22; Average order frequency period of CY18-CY21.

CUSTOMER LIFETIME VALUE IS STRONG & GROWING

CONTENT AND LOYALTY STRATEGY SUPPORTING RETENTION, REDUCING RELIANCE ON PAID CHANNELS

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Key ratio to measure customer acquisition and engagement is LTV (Lifetime Value) / CAC (Customer Acquisition Cost)1

Strong unit economics

• CY18-CY21average LTV/CAC continues to recover investment in just under one year (CY21 LTV/CAC was 0.9)
• Return on investment continues to grow over time, with year four LTV more than five times acquisition cost

Investing in a disciplined, data-driven way to acquire and retain customers; working with brand partners to scale brand funded marketing

Content engagement strategy and loyalty-focused strategic initiatives (Loyalty program and Mobile app) supporting engagement, retention and LTV growth

• Investing in "owned" channels with media and content that supports discovery and fulfilment, driving higher customer loyalty and growth in returning customers
• Reduces reliance on competitive paid channels, which are showing price volatility at present

CY18 - CY21 AVERAGE LTV/CAC1 BY YEAR

5.5x

3.8x

2.4x

1.3x

Y1

Y2

Y3

Y4

1.

LTV (Lifetime Value) is calculated as the cumulative contribution margin (where contribution margin is gross profit margin less bank and merchant fees) generated from the relevant customer
cohort, net of customer churn for that cohort . CAC (Customer Acquisition Cost) represents the total advertising expense (this is a fully loaded advertising cost, including cost related to acquiring
new and retargeting returning customers, and also includes brand awareness above the line (ATL) spend) over a period of time per new customer acquired during that period).	Results Presentation | H1 FY22	5