THG : Q3 2021 Ingenuity Commerce Update

I N G E N U I T Y C O M M E R C E Q 3 2 0 2 1 U P D A T E

Ingenuity Commerce Q3 2021 Update

I N G E N U I T Y C O M M E R C E O U T L O O K

Annual revenue run-rate, recurring revenue, and site order book provides strong visibility on FY22

£50m

Annual Revenue Run-rate(1)

£40m

£30m

£20m

£10m

£0m
Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3
18	19	19	19	19	20	20	20	20	21	21	21

£14m			Recurring Revenue(2)
£12m
£10m
£8m
£6m
£4m
£2m
£0m
Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3
18	19	19	19	19	20	20	20	20	21	21	21
	Non Recurring Revenue	Recurring Revenue

>£53m PF 21

59% RR

Q3 21

• Highly recurring revenue: 59% of Q321 Ingenuity Commerce revenues are recurring. The remaining 41% is classified as non-recurring as these are one-off costs for clients (such as site build fees), however, these costs recur each time a new client on-boards so are recurring in nature for THG.
• Annual Revenue Run-rate "ARR" of £44m(1) at the end of the third quarter; increasing to £53m inclusive of sites scheduled to go live in Q4.
• Visibility on Q4 FY22 ARR of £112m assuming 400 live sites at the end of FY22 with consistent recurring revenue per site and recurring revenue of 60%.
• SoftBank option illustration: assuming 60% recurring sales mix from 600 sites live by the end of 2023 (£170,000 revenue/site) and a 4% revenue-share on £2.5bn GMV from Beauty & Nutrition, then Ingenuity Commerce revenues annualise at £270m in FY23 vs £4.5bn option price.
• Average 12 week to go-liveschedule.
• Ingenuity is now delivering for 3rd parties what it has delivered for THG Beauty & Nutrition for over a decade:

£1.4bn	THG Beauty & Nutrition Net Revenue
£1.2bn
£1.0bn
£0.8bn
£0.6bn
£0.4bn
£0.2bn
£0.0bn
2011	2012	2013	2014	2015	2016	2017	2018	2019	2020

W E B S I T E S (3)

>450	140 clients

163

Q3 2021 Live	Total confirmed
Sites (3rd party	site orderbook
client sites only,	(including live)
excl. THG sites)

		(1) Annual revenue run-rate comprises quarterly recurring revenue and trailing 12 month non-recurring
THG Beauty	THG Nutrition	revenue.
(2) Recurring revenue: Platform licence fee, GMV linked service fees, managed service fees, revenue share,
		content retainers and partnership marketing campaigns. Non Recurring revenue (incurred within a
		Commerce contract): Site Build Fees, Partnership Integration Fees, Translation Fees and Content Fees.	// 2
		(3) Websites relate to bundled digital services relating to the launch, trading, marketing and fulfilment and

support of websites.

R E - P L A T F O R M I N G A M A J O R U K B E A U T Y R E T A I L E R

Why clients are choosing Ingenuity is demonstrated by Lookfantastic's best-in-class NPS, conversion ratios & UX (as reported by a leading global management consultancy)

Lookfantastic (1)

Best competitor

Median competitor

Net Promoter Score

Aware : Purchase(2)

Purchase : Favourite

87%	85%	89%	82%	73%	87%	81%	75%	81%	79%	69%	80%	77%	68%
	71%
1		1			1			1			1
Simplicity of usage	Breadth of products	Website and payment	Delivery speed	Having an account to
		& brands available		security					see and track orders

48

32

33

18

76%		51%		60%		29%
50%		24%		24%		21%
				Best competitor	Median competitor

Best-in-class beauty platform

• Global consumer survey conducted by a top ranked global management consultant practice
• Best in class NPS at 48 vs 33 nearest competitor
• 50% purchase-to-favourite ratio, double that of the next competitor in UK
• Category-leadinguser experience, across simplicity, availability, payment, delivery and orders

Cult Beauty's re-platform to Ingenuity In October 2021 has

delivered immediate benefits

• October 2021 conversion +31% YoY
• Average Order Value +6% YoY
• 36% improvement in page load times vs pre migration
• Cult Beauty advent calendar launch generated £1m gross revenue within 19 minutes
• 11 new currencies added to the site
• Expanded international payment options
• Cult Beauty mobile app launched
• 1. Question: "How does [banner] perform against these criteria?" % rating "Good" or "Excellent"
  2. Questions: "Which of the following online platforms are you a) aware of b) have purchased from c). is your favourite?"

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A B U S I N E S S I N A B O X

THG Ingenuity Model Overview

Ingenuity division revenue of £136.9m YTD, consisting of:

Ingenuity Commerce: £30.0m

• End-to-endtechnology services charged to 3rd party clients for digital commerce solutions
• Multi-yearcontracts (3-10 years), highly profitable and cash generative
• Serving enterprise scale brand owners and retailers across the broadest cross-section of consumer categories, across all major developed and developing geographies
• The majority of the top 20 clients were re-platformed from existing technology platforms
• All the top 20 clients are powered by Ingenuity in one or more major market (UK, US, China, Japan, Germany), with an average of 3 website locales per client
• 100% external client revenues. No THG own-brand or Infrastructure Services revenues are recognised in this division

Ingenuity Infrastructure services: £106.9m

• Critical infrastructure in the Ingenuity stack, underpinning the Ingenuity Commerce offering
• 3rd party revenues ensure that the division is a profit centre not a cost centre, delivering key services to THG own brands (not charged) and Ingenuity clients at scale and with best-in-classknow-how
• Differentiated from Commerce as charged to 3rd parties as a single service or short term contracts, rather than bundled with multiple elements of the Ingenuity stack on long term contracts. Any infrastructure services charged as part of a bundled multi-service,long-term contract are recognised in Commerce only
• Services charged as a single service to 3rd parties: Hosting; Translation; Manufacturing; THG (eco) (e.g. recycling)
• Certain infrastructure services (e.g. postage) can be delivered free of charges to the client, when bundled in a Commerce contract in order to ensure compelling pricing. Where costs are passed through to clients at nil THG margin the pass-through revenues are captured in this division. As the Ingenuity pricing model matures all costs will be charged with a margin so reducing the growth of this pass through at nil margin revenue
• 100% external client revenues. No THG own-brand or Commerce revenues are recognised in this division

DIGITAL				ECOMMERCE
CONSULTANCY				PLATFORM
MARKETING				MERCHANDISING
TECHNIQUES					TOOLS
TRADING	£136.9m	TRANSLATION	MARKETING
THG COMMERCE	Net Revenue	TECH
NIL MARGIN RECHARGES	THG FLUENTLY	THG SOCIETY
		(YTD21)
DATA					ORDER
(eco)					MANAGEMENT
SUSTAINABILITY				GLOBAL DATA
THG ECO				CENTRES
					THG HOSTING
CONTENT
PRODUCTION					FRAUD
THG STUDIOS					SCREENING -
						THG DETECT
			PRODUCT
			INNOVATION/
		MANUFACTURE
			THG LABS
GLOBAL CS -				CHECKOUT/
THG ORBIT				PAYMENT
GLOBAL				AUTOMATED/
DELIVERY -				MANUAL
THG DELIVERED				WAREHOUSING
		PERSONALISATION/	FIR/ST & VOYAGER

POD

Notes: Top 20 clients based on YTD revenue as at 30 September 2021.

Each client contract is subject to varying commercial terms

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D I S C L A I M E R

IMPORTANT NOTICE: THIS PRESENTATION IS NOT AN OFFER OR THE SOLICITATION OF AN OFFER TO SUBSCRIBE FOR OR PURCHASE ANY SECURITIES.

This presentation may include "forward-lookingstatements" in respect of the operations, performance, prospects and/or financial condition of THG PLC (the "Company"). Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such words and words of similar meaning as "anticipates", "aims", "due", "could", "may", "will", "should", "expects", "believes", "intends", "plans", "potential", "targets", "goal" or "estimates". By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions and actual results or events may differ materially from those expressed or implied by those statements. Factors which may cause future outcomes to differ from those foreseen in forward-looking statements include, but are not limited to, those identified in the "Risk Management" section of the Company's 2020 Annual Report. Accordingly, no assurance can be given that any particular expectation will be met and reliance should not be placed on any forward-looking statement. Additionally, forward looking statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future.

Except as required by any law or regulation, no responsibility or obligation is accepted to update or revise any forward-looking statement resulting from new information, future events or otherwise. Past performance cannot be relied upon as a guide to future performance and persons needing advice should consult an independent financial adviser. Nothing in this presentation should be construed as a profit forecast.

This presentation does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase any shares or other securities in the Company nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any contract or commitment or investment decisions relating thereto, nor does it constitute a recommendation regarding the shares or other securities of the Company. Statements in this presentation reflect the knowledge and information available at the time of its preparation.

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