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The luxury e-commerce website maintained its guidance, anticipating a stronger performance in the second half of fiscal 2024 and citing strong Q1 sales and a small adjusted EBITDA loss.

Mytheresa, the Munich-based luxury website, on Tuesday reported that strong sales from top spending, high income customers, especially in the U.S., were offset by margin pressures and a slowdown in shopping by aspirational customers, leading to a loss in its fiscal first quarter.

The net loss deepened to 11 million euros in the quarter ended Sept. 30, from a net loss of 3.8 million euros in the year-ago period. However, on an adjusted earnings before interest, taxes, depreciation and amortization basis, the company only lost 800,000 euros, compared to a profit of 12.7 million euros in the year-ago period.

Net sales gained 6.8 percent to 187.8 million euros in the latest fiscal quarter, from 175.9 million euros in the year-ago period. On a constant currency basis, net sales grew 12 percent. Gross merchandise value rose 3.1 percent to 204.1 million euros last quarter from 197.9 million euros. GMV grew 8 percent on a constant currency basis.

For the full fiscal year, which ends June 30, 2024, Mytheresa confirmed its guidance for GMV and net sales growth in the range of 8 to 13 percent, gross profit from 8 to 13 percent, and adjusted EBITDA margin in the range of 3 to 5 percent.

Between the sales gain and the guidance, Wall Street was impressed, lifting Mytheresa’s stock price nearly 3 percent in pre-market trading to $3.07.

The nearly 7 percent sales gain last quarter, chief executive officer Michael Kliger told WWD, “puts us in a really good spot, considering that most of our peers are reporting negatives and shrinking top line. So a plus-seven is very good. We also reported 25 percent growth in the U.S., our best performing market, where we see great progress. And this is an even better number considering some of the numbers we hear coming out of the U.S. This is fueled by our focus on the big spenders. So in terms of numbers, our top customers, our highest tier spenders have grown by plus 19 percent, globally, and in the U.S., our top customer numbers grew by 56 percent. So it is really this focus which helps us navigate a time where there is a slowdown in the market. The slowdown is of course very much caused by the aspirational customer, the occasional spender. And so we are mitigating this trend, which is evident in our numbers.”

Kliger said that for the last 12 months, “a 3.8 percent share of the customer base, our top customers, accounted for 39.4 percent of Mytheresa’s gross merchandise value, or total business.”

Kliger said Mytheresa’s top customers average close to six digits in annual spend on the website. “If you hit that number, you are a top customer…We don’t publish the exact numbers.” He added that there are customers who spent far beyond that.

“We are very happy with the top line globally, particularly in the U.S., Kliger said, adding, “What is true is that we are seeing margin pressure. There is a promotional intensity in the market. Winter sales started in October so we have seen ongoing promotions. The product margin has dropped significantly.”

Still, there were several advancements and innovations during the quarter, among them the opening of a second distribution center, which is in Leipzig, Germany; exclusive capsule collections and pre-launches with Brunello Cucinelli, Loro Piana, Manolo Blahnik, Loewe and The Row, among others, and some activations supporting the exclusive capsules, including a four-week pop up experience last summer in East Hampton, N.Y., and another being staged in Los Angeles. Mytheresa also had an exclusive launch of Bucherer Fine Jewelry as part of an overall partnership with the brand and a strategic expansion of the fine jewelry assortment with 30 new brands being added in the coming months.

“We do believe that as a digital player, you also need these moments where you meet clients. That’s why we had this four week pop up in East Hampton in the summer. And we will actually open next week our Holiday House in Los Angeles for three weeks. With activations and collaborations we will continue on that track with a particular focus on the U.S. Our growth in the U.S is tremendous.”

Asked if those activations would be a prelude to permanent stores, Kleiger replied, “No, at the moment, we believe being at the right place for a short time is the right approach.”

Addressing market conditions, Kliger cited a slowdown among “aspirational customers, the occasional customer,” whereas the more affluent at the high end, “wardrobe builders” as he said, are not yet affected. “There is a tale of two customer segments, and that drives what sells and what doesn’t,” Kliger said.

The big spenders, the CEO explained, are much more focused on the highest quality, higher price brands that have a strong DNA and ready to wear. “So that’s why Loro Piana, Brunello Cucinelli, Tom Ford, The Row, they all the favorites at the moment. The high-end customers continue to spend for let’s call it the ‘epicenter’ of the market, much more in these quiet luxury brands.”

He summed up his company’s fiscal first quarter performance around zero profitability on an adjusted EBITDA basis which “in relative terms is excellent,” a good top-line performance particularly in the U.S., margin pressure evident, and a continued story of focusing on top customers, the U.S. and on innovations.

“We are still expecting a profit for this fiscal year. But we feel very comfortable without any debt to have a slight loss in a market where we see big red numbers at the moment. So we we know that in relative terms, this is pretty good and we believe in the first six months of next year the market will improve and therefore we still guide for for profitability for fiscal year 2024 which ends next June.”

In his prepared statement, Kliger said, “We are pleased with our results in a very difficult macro environment. With our positive revenue growth and a small adjusted EBITDA loss, we demonstrated the fundamental strength of our business model compared to peers. As expected, we saw a continued slowdown in demand with aspirational customers across all geographies and a high promotional intensity in the market.

“We achieved strong double-digit revenue growth in the United States, grew again our business with our global top customers over-proportionally and managed to mitigate significant margin pressures with cost reductions. With our resilient business model and our focus on the high-spending, wardrobe building customers, we will be best positioned to benefit and accelerate when market conditions improve.”

Twilio CEO Jeff Lawson might have breathed a sigh of relief when the leader of tech investing at Legion Partners, an activist hedge fund that had agitated for change at Lawson’s software company, left for another fund.

But the investor picked up where he left off, leading his new employer, Anson Funds, to buy a stake in Twilio. Now Anson is urging the company to sell itself or divest its data and applications business, according to a letter Anson sent to Twilio’s board of directors that The Information viewed.

THE TAKEAWAY

• Anson Funds has built a $50 million stake in Twilio

• Anson is seeking a sale of the company or a divestiture of its data and applications business

• Anson’s investment comes after Sagar Gupta, who had been a key part of Legion’s activist campaign against Twilio, moved to Anson

The stake is worth about $50 million, and the activist met with members of Twilio’s board earlier this month, according to the letter, which was sent Nov. 20. The hedge fund also hinted it could launch a proxy fight if Twilio didn’t act.

A Twilio spokesperson didn't immediately have a comment.

Toronto-based Anson, which has $1.7 billion in assets under management, recently hired tech-focused investor Sagar Gupta from Legion. Including his work for Legion and now Anson, Gupta has met with Twilio’s board and management team nine times in the past year, the letter said.

The Information reported in May that Legion, which has a position of about $40 million in Twilio, according to the latest public disclosures, had urged the company to consider board changes and divestitures. Gupta was key in that process, according to people familiar with the matter.

Once a hot initial public offering with rapid revenue growth, Twilio has been punished on the public markets over the past couple of years as investors have shied away from loss-making companies. Twilio’s stock trades in the low $60s today, far off its highs of more than $435 in early 2021. (Still, the stock has rebounded 25% this year.) Twilio posted a $650 million net loss in the first nine months of this year, compared with a $1.03 billion loss during the same period a year earlier. Over that same period, its year-over-year revenue growth slowed to 9.9% from 40%.

The push also comes after Twilio, a communication software company with an $11.4 billion market capitalization, lost the protection of its supervoting shares earlier this year. Until June, CEO Lawson’s 3.7% ownership stake at the time had voting power of nearly 22%, which insulated the company against the threat of an activist lobbying enough votes to oust directors. But that supervoting power recently expired as the share classes collapsed into one.

Twilio, meanwhile, has been remaking itself. To cut costs, it sold off two business lines and cut 1,500 jobs earlier this year, a second round of layoffs after it made initial cuts in 2022. The company also said it would buy back $1 billion worth of shares. (In the same month, Twilio ended its employee sabbatical program, introduced just a year before, plus its book purchase and wellness allowances for employees.) The company has started to generate free cash flow in the past two quarters, but that has come with slowing revenue growth.

Anson is urging Twilio to sell its data and applications business, which makes up about 12% of its revenue and helps Twilio’s users better know their customers. Anson wants it to use the proceeds to repurchase stock or buy other communications platforms, like publicly traded Sinch or Vonage, according to the letter. (Sinch and Vonage didn’t immediately respond to requests for comment.)

A big part of an activist investor's typical playbook is to buy up shares in a company and push it to sell itself at a premium. Given a sluggish merger market, though, activists have instead had to lean more toward pushing companies to sell off pieces of themselves or return cash to shareholders, according to activist defense advisers and investors.

In private meetings with the company’s management, representatives from Anson have said a change in Twilio’s leadership may be necessary, according to a person familiar with the matter.

When asked whether Lawson’s diminished voting share left him exposed to activist investors in an August interview with Bloomberg television, he said, “Without dual class shares, we are in the category of nearly every public company that exists, so I don’t think it’s really a newsworthy story.” He also said the company’s management has been “active participants” with investors and has “taken the company from really focused on growth and never making a substantive profit to a company that’s now throwing off more than 10% non–[generally accepted accounting principles] operating margins in just the course of six months.”

Three board members at Twilio are up for reelection at its coming annual meeting, typically held in June, including Lawson.

Twilio develops programming tools for creating and receiving communications like phone calls and text messages. If a business sends a text to a customer about the delivery of an order or an advertising campaign, for example, chances are Twilio’s software is powering that message.

Founded in 2008, Twilio drew investments from Silicon Valley venture capitalists Bessemer Venture Partners, Redpoint Ventures and DFJ before going public seven years later. Its rapid growth excited investors, but appetite for the company’s stock has waned as growth has slowed and profit hasn’t materialized.

In February, Twilio reorganized itself into two pieces: communications, which develops software for businesses to communicate with their customers through messaging, voice or email, and a smaller data and analytics arm, which helps clients analyze customer data.

In addition to making job cuts and promising stock buybacks, Twilio divested assets that weren’t central to its core communications business. This year it sold off its Internet of Things business, which builds software connecting everyday items, and its India-based ValueFirst arm, which it bought two years earlier in 2021. Twilio sold its IoT business for $15 million and its India business for $45 million, according to securities filings.

In November, Elena Donio, president of the data and applications arm, which Anson wants Twilio to divest, said she would resign. Twilio has said Lawson will run the unit until it finds her replacement.

On an earnings call earlier this month, Lawson said he expected the business to grow, partially due to its new artificial intelligence tools, which analyze customer data.

"While this is a very small portion of our business today, only 12% of our revenue in Q3, we believe [the data and analytics business] overall and the foundations for AI in particular are key assets for our future."

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GM to cut spending on self-driving unit Cruise after accident

Carmaker will use investor day to outline scale of investment reductions

General Motors is to scale back ambitions for its self-driving unit Cruise following a pedestrian injury last month, which led it to suspend testing. 

The carmaker behind Chevrolet and Buick will outline on Wednesday the extent to which it is slashing planned spending on self-driving technology that was once at the forefront of its pitch to investors. 

For years the carmaker has traded under the strapline “zero crashes, zero emissions, zero congestion”, a testament to its bet on a future of cars that are both electric and self-driving. 

While it is not expected to drop the slogan officially, the company will spend less on the unit in the future, owing in part to an expected slower rate of testing, according to two people briefed on the plan. GM’s quarterly investments in Cruise run to about $700mn. Its driverless vehicles have been operating in certain US cities including San Francisco as a taxi service.

GM, which did not immediately respond to a request for comment, previously said it remained committed to Cruise, and that its “strategy is to relaunch in one city and prove our performance there, before expanding . . .[once] . . . we have taken steps to improve our safety culture and rebuild trust”.

Pushing back any timelines for Cruise will also impact GM’s long-term revenue targets previously put at $80bn by 2030, driven by new areas such as self-driving income and software.

Cruise suspended all self-driving operations in October, days after California regulators banned the vehicles from the state’s roads. The decision followed a highly publicised accident in San Francisco, where a female pedestrian was thrown by another vehicle into the path of one of Cruise’s self-driving cars and then dragged for 20ft underneath it.

The California Department of Motor Vehicles said the cars were “not safe” and accused Cruise of having “misrepresented” the details of the incident. Cruise maintained it “proactively” shared information with the relevant authorities.

Cruise has since brought in law firm Quinn Emanuel — one of the law firms that sued Volkswagen over the 2015 diesel scandal — to investigate its response to the accident.

GM’s decisions on Cruise spending are not tied to the timings of the law firm’s investigation. But the company will probably face questions over whether its long-term ambitions are realistic, according to analysts.

“The big question is to what extent ‘Zero Zero Zero’ also hinged on zero rates,” said Barclays auto analyst Dan Levy, adding that investors had become less tolerant of projects without returns. 

“This has been a big theme this year in auto; everyone has had to step back from the euphoria”.

In the wake of the accident, Cruise’s approach to testing, which critics said amounted to a race to be first, came under closer scrutiny. 

A letter signed by 26 transportation labour organisations to the US Department of Transportation and National Highway Traffic Safety Administration outlined their “grave safety concerns about the expanded testing and operation of automated driving system-equipped vehicles” and called on the departments to “take action” to better regulate autonomous vehicles.

“The public are also recognising that being unwitting guinea pigs to unproven tech that’s desperately underregulated is not what anybody has signed up for,” said Matthew Colvin, chief of staff of the Transportation Trades Department and one of the letter’s co-authors.

GM has sunk billions into Cruise, including buying out Softbank’s minority stake for $2.1bn last year. It now owns about 80 per cent of the business. Other investors include Honda and Microsoft.

But GM’s own investors have grown more cautious about Cruise in the wake of the accident.

“The problem for Cruise as a business is GM is dependent on it for all the software [revenue] targets the company has set,” said one. “We don’t see a path to profit, but we do see they will burn a lot of cash trying. GM would be better placed winding back its bet, and returning the money to shareholders.”

Cutting spending “as much as possible” from Cruise on Wednesday would be an “easy win”, the investor added. 

Cruise lost $1.9bn in the first nine months of the year, and had $1.5bn of cash at the end of September. In the third quarter, Cruise burned through about $500mn of cash, meaning its current reserves will last until the middle of next year if it receives no additional funding. The business, however, does have a deal with GM’s financial arm that would allow it to borrow up to $4.3bn to buy self-driving cars from GM or for other expenses. 

Bank wary of uncertainty created by US-China tensions, chief executive David Solomon tells FT’s Global Banking Summit

Goldman Sachs chief executive David Solomon warned that tensions between Washington and Beijing could take years to resolve and that the Wall Street bank has moved away from a “growth at all costs” strategy towards the world’s second-largest economy.  

Goldman, which has had an office in Hong Kong for 40 years and opened its first office in China in 1994, has cultivated deep corporate ties there and is one of the most closely followed US companies in the country.

Speaking with the Financial Times at the Global Banking Summit, Solomon said he was encouraged by recent dialogue between the US and Chinese governments but cautioned that the differences between the two sides were deep-rooted.

“I think this is something that’s going to take years to resolve because there are real differences,” Solomon added. “I think the best path to resolution is one for the US and China itself to talk actively.”

Solomon said five years ago Goldman was executing a strategy that was more “growth at all costs in China”.

“Today it’s a more conservative approach [in China] and we’ve probably pared back some of our financial resources there, simply because there’s more uncertainty,” he added.

This month, US President Joe Biden and his Chinese counterpart Xi Jinping agreed to resume military communications while Xi courted US business leaders.