Tonies : Annual financial and audit reports Annual Report 2023

tonies SE

Annual Report 2023

2 tonies SE | Annual Report 2023

tonies SE - at a glance

		2023	2022
Sales
Revenue (in EUR m)	360.9		258.3
Revenue growth in % YoY	39.7 %	37.4 %
Tonieboxes sold (in m units)	1.9		1.4
Tonies sold (in m units)	23.4		17.9
Online revenue share (in % of gross revenue)	45 %	37 %
Results of operations (adjusted)
Gross margin (in % of revenue)	61.6 %	53.9 %
Gross margin after licensing costs (in % of revenue)	51.6 %	41.7 %
Contribution margin (in % of revenue)	35.3 %	27.2 %
Adjusted EBITDA margin (in % of revenue)	4.0 %	- 2.4 %
EBITDA margin (in % of revenue)	2.4 %	- 13.5 %
Financial position & Assets and liabilities
Cash (in EUR m)	59.3	54.9
Free cash flow (in EUR m)	- 4.8	- 87.9
Team
People employed group-wide (as of reporting date)	508		431

tonies SE

Annual Report 2023

One sustainability milestone in 2023:

Change to water-based colors for Tonies figurines

4 tonies SE | Annual Report 2023

Interview with the tonies Management Board

"We've turned tonies into a profitable international growth company"

Jan, you were appointed CFO of tonies in May 2023. You are now presenting your first annual report. What is your conclusion?

JM: 2023 has been a great year for tonies. We didn't just meet our revenue and profitability targets, we exceeded them again, despite challenging global conditions such as high inflation and geopolitical conflicts. In these unpredictable circumstances, companies need much more resilience to execute their plans. The dedication of our team has propelled us forward and solidified our position in the growing category we created. This success is a testament to the hard work of every tonies employee, and these strong results underscore the popularity of ou products around the world. Our accomplishments in 2023 are something we should all be proud of.

What does that mean in numbers?

JM: tonies had a very strong year, with revenue growth in all regions and all product categories. Group revenue increased by + 40 %, or more than 100 million euros compared to the previous year and reached 361 million euros - exceeding our guidance of EUR 354 million for the full year 2023. This performance was strongly driven by North America, where revenue more than doubled compared to 2022 to 140 million euros.

Did you achieve the target of a positive adjusted EBITDA margin?

JM: Absolutely, we did. And that's a significant accomplishment for us. We've turned tonies into a profitable international growth company. Our adjusted EBITDA margin reached 4.0 % at the end of the year, marking a significant milestone in our journey. But also on an EBITDA level this company is profitable with 2.4 %. After three years of focused investment in international expansion, it's rewarding to see our pre-IPO plan materialize, confirming the health and predictability of our business model. It's been very important for us as a company to increase transparency around the drivers of our profita- bility, and we've therefore introduced segment reporting as of FY 2023 to provide greater insight into our main operating segments: DACH, North America and Rest of World. We're rolling out our successful DACH model internationally and now for the first time, we are able to show how profitable this blueprint is.

What were the levers for profitability?

JM: These outstanding results were made possible by prudent financial management, operational efficiency, and our relentless focus on customer satisfaction. The increase in profitability was particularly attributable to a substantially higher gross margin, lower marketing costs and lower licensing costs. The fact that we are profitable at group level despite our ambitious international expansion is a strong signal that our business model is working as promised!

Interview with the tonies Management Board

5

Jan Middelhoff (CFO)

Tobias Wann (CEO)

Almost half of the annual revenues are generated in the fourth quarter. How do you feel about this?

JM: It may seem staggering at first, and around 169 million euros in Q4 is an incredible amount, but it's something we're used to and excel at. At tonies, we consistently demonstrate our ability to perform and deliver during the most critical commercial periods of the year. This requires sound demand planning and inventory management, trusted relationships with our retail partners, compelling marketing, and a willingness to go the extra mile to fulfill children's

greatest Christmas wish. Around the world, children love to find a Toniebox or new Tonie figures under their Christmas tree - and we delivered.

However, the children's wish list is

always determined by the parents' budget. And that's certainly lower in tough economic times, isn't it?

JM: That may be true for the overall budget. But we also know from our own surveys that families are more likely to save money elsewhere than on gifts for their children. Our Q4 results confirm this impression: it was a fantastic quarter. It is great to see the joy we have brought to so many children this holiday season. It was thanks to this strong finish that we have once again overachieved our revenue and profitability targets for the full year.

Tobias, you've been on board as the new CEO since January 1, 2024. How do you see tonies?

TW: tonies is a fantastic company with an extremely competent and motivated team. Taking on the role of CEO and succeeding the founders, Patric and Marcus, is both an honor and a challenge given their remarkable accomplishments in building this successful company from the ground up. However, having navigated similar transitions in the past, I'm excited and confident to lead tonies into its next phase of growth. The foundation is so promising: It is very impressive to see how tonies has managed to create a category of its own, and to see its global popu- larity, with Tonieboxes already activated in more than 100 countries. Jan has just explained the results for 2023 - they are proof enough of how strong tonies is. At the same time, I see significant untapped potential. Our focus remains on accelerating our international expansion.

In addition, increasing the efficiency and auto­ mation of our operations is paramount. Many promising initiatives, such as the integration of fully-owned content into our product line, are just beginning to unfold. I am delighted to be on board as the new CEO of tonies and look forward to continuing this successful development.

What are your first impressions?

TW: It's truly mind-blowing. This applies to both inspiring products and to the great people at tonies, many of whom I have already met and whose expertise and passion for our products I appreciate. Every Toniebox sold is a promise of future Tonies sales - 2023 was another great year in that regard, expanding our customer base. Now it's up to us to inspire them with great new Tonies and generate more sales.

What will be your priorities,

will there be a change in strategy?

TW: The strong results not only from 2023 but also from previous years and the clear growth path underline that business model and strategy are working and paying off. tonies is undoubtedly on the right track. I will use my experience in internationalization and scaling to lead tonies to new heights in terms of growth and profitability. Priorities will be to foster innovation in product development for next generation products, to automate processes where possible and

to develop "market-in-a-box" launch plans for efficiency in our internationalization.

Interview with the tonies Management Board

7

What is important here?

TW: I see two aspects. First: People - both the Tonies and our current and future customers, as well as the many partners we have around the world in many different fields. That's why it was so important for me to meet as many of them as possible in my first weeks with tonies: I visited all our offices in Germany, I was with our teams in the markets, in London, in Paris, in the US. I went to the London Toy Fair and the even bigger Nuremberg Toy Fair. I spent a lot of time with employees, suppliers, retailers, license partners, shareholders, and investors - and I felt even better after experiencing their enthusiasm in person.

And the second aspect?

TW: Innovation. I firmly believe that innovation is not just a buzzword, but a strategic imperative to maintain our position as a category leader. Whether it's developing technologies like our AI story generator, which we tested in the DACH and UK regions in 2023, or entering untapped markets as we did in 2023 and plan for 2024, innovation creates new revenue streams and expands our market reach. Innovation isn't just limited to product development: By adopting technologies and processes, we streamline operations, increase efficiency, and reduce costs. With an innovation mindset, we ensure sustainable growth for years to come.

8 tonies SE | Annual Report 2023

How was the handover from the two previous CEOs, the tonies founders Patric Faßbender and Marcus Stahl, to you as the new CEO?

TW: Constructive and pleasant. I had my first onboarding meetings with them back in 2023 and we are still in close contact. It is the third time in my career that I have taken over from founders. Based on these experiences, I know what a significant change a CEO transition can be for a company when the founders leave. I see this as a great responsibility, and I want to emphasize that I am well aware of the change this represents for the company and for many employees personally. I want to ensure con­ tinuity through the CEO transition, combined with a fresh start in areas where we can improve and grow.

Jan, what was the CEO change like for you as the other Management Board member?

JM: In terms of our day-to-day operations, the recent leadership transition feels seamless. As we have a functioning, successful and growing business, continuity is important. We initiated a joint and close onboarding for Tobias and me already towards the end of 2023 - today it already feels as a team with him. And although the CEO changes, our established leadership team, which has consistently delivered stellar results, remains on board. I've had the privilege of working closely with Patric and Marcus for years, witnessing their remarkable achievements and what they have created firsthand.

Now, with Tobias at the helm, we benefit from his fresh perspective and expertise in scaling and internationalizing growth companies. What I am particularly pleased about, and what is already clear after just a few weeks: Tobias is not only an outstanding business leader, but also someone who understands our vision, shares our values, and understands the importance of the tonies culture.

What are tonies' priorities for 2024 and beyond?

TW: The priorities remain the same: we want to further increase our international revenue share and improve our profitability. I want to use my extensive experience in scaling growth companies to lead tonies into the next phase of its success story. Central to this endeavor is maintaining a strong focus on our objectives. We must capitalize on existing opportunities by standardizing our processes to enhance efficiency and streamline operations. Addition- ally, we need to strategically drive our international expansion efforts, ensuring a smart and efficient approach that maximizes our impact in new markets. By prioritizing focus, standard- ization, and strategic internationalization, I am confident that we can navigate tonies towards continued growth and increased profitability.

These ambitious plans require robust financing to fuel the growth.

JM: Indeed, and we are well-positioned here. In 2023, we further developed our financial structure to capture growth opportunities by successfully closing a new EUR 30 million syndicated loan facility, which replaced previous bilateral credit facilities with a total amount of EUR 26 million. This loan, which was structured in close cooperation with highly regarded banks Commerzbank, Deutsche Bank, DZ Bank and KfW, will help tonies to safeguard seasonal working capital needs for growth. Furthermore, the credit line has a top-up option of another EUR 10 million. The successful raising underlines the confidence of tonies' financing partners in its prospects.

How is the international expansion going?

JM: Excellent, our strategy is working, the results are there. As Tobias said, Tonieboxes are now activated in over 100 countries. The year 2023 marks a milestone in tonies' international expansion, as it is the first year with higher international revenues than in the company's home market DACH: 54 % of revenues were generated outside the DACH region, compared to 39 % in 2022. This clearly shows that our products are enthusiastically used by children all over the world. In 2023, we added more countries to the EU Webshop and launched an official offering in Canada.

In 2024, we will enter the fourth continent with Australia and New Zealand. However, the focus will remain on our US business, where we want to continue to capitalize on the growth momentum and bring our products to even more children's rooms in North America.