Haypp Group Q2 Earnings Review
Bullseye, Haypp inflecting
I just finished ingesting Haypp's Q2. It was much like what I expected from my revenue estimate post. I will begin by recapping the earnings and then share my commentary on different aspects.
The Numbers
Net sales came in at 1 176,7 MSEK, up 27,7% reported and 27,1% at constant currency. That is the fastest growth since the IPO five years ago. Volume grew 28% and nicotine pouch volume grew 45%, the fastest NP growth in the history of the group. NP is now 71% of total volume. Active consumers hit an all time high of 667 thousand, up 24,4%.
Gross profit was 229,2 MSEK, up 29,2%, at a gross margin of 19,5%. That is the highest margin Haypp has ever reported. Media & Insights added 0,9 percentage points to that margin, but reported margin only improved 0,2 points; the rest was reinvested into targeted pricing. M&I is now just over 10% of group revenue.
Profitability went the other way, by design. Adjusted EBITDA was 55,4 MSEK at 4,7% against 6,5%. Adjusted EBIT was 28,6 MSEK at 2,4% against 4,2%. Net profit was 0,0 MSEK. Overheads rose to 14,8% of sales from 12,7%, split as marketing 1,8%, fulfilment 1,6% and G&A 11,3%. Marketing spend inside other external costs went from 3,5 MSEK to 21,0 MSEK, roughly six times higher, concentrated in the US and UK.
Core did 825,3 MSEK, up 18,2% reported and 15,8% organic, an acceleration from 14,0% in Q1. Gross margin rose 2,1 points to 19,7% on Media & Insights, and EBITDA grew 33% to 87,9 MSEK at a 10,7% margin, an all time high for the segment. NP volume up 19%. The snus decline kept moderating, and Haypp is now taking share in traditional snus, which management describes as a side effect of building a better household offer rather than a strategic goal.
Growth did 351,4 MSEK, up 57,3% reported and 62,4% organic, now 30% of group sales. Active consumers up 74,2%, orders up 72,3%, total volume up 80% and NP volume up 91%. US volume up 125% in a market growing 15% to 20%; UK volume up 113%. Gross margin fell 5,5 points to 18,9% and EBITDA was -32,5 MSEK against -5,6 MSEK. AOV fell 8% to 785 SEK, which management puts down to new consumers starting with small trial orders.
The gap between 80% volume growth and 57% sales growth matters: it is manufacturer-financed price reductions in the US, which management says are margin-neutral with an offset in COGS.
Balance sheet is the soft spot. Net debt rose to 221,6 MSEK from 40,1 MSEK at end of March, and cash fell to 16,4 MSEK from 127,1 MSEK. Leverage went from 0,2 to 1,0 times. The driver is working capital, mainly opportunistic inventory builds and the new Swiss warehouse, plus lease commitments. Six month operating cash flow was 54,9 MSEK against 137,1 MSEK. After quarter end Haypp signed a 400 MSEK committed facility with its house bank.
Other items. Saudi Arabia launched in July, which management calculates as the second largest NP market in the world. Austria was exited on 1 July, having contributed under 9 MSEK in Q2. The UK warehouse was automated and a Swiss warehouse opened. The FDA’s May enforcement discretion is expected to roughly double US SKU count over the next year. In the UK, the ultra strong segment is expected to be banned, removing an assortment disadvantage.
Guidance. EBIT margin stays around current levels for the rest of 2026, G&A intensity does not rise further in H2, and margin expansion resumes in 2027 and 2028. The 2028 targets are unchanged and management says they are on track.