EQS Group-News: CHRONEXT AG / Key word(s): IPO
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CHRONEXT AG plans IPO and listing on SIX Swiss Exchange
- CHRONEXT is creating the next-generation luxury watch ecosystem in a multi-billion largely untapped market with significant growth potential
- CHRONEXT's unique hybrid business model allows the digital platform to offer first party (1P) and third-party inventory (3P), new and certified pre-owned watches and connects the best of online and offline with its currently 11 lounges across the globe
- CHRONEXT's leading digital platform connected about 11 million watch enthusiasts who visited its website in the twelve months to 30 June 2021 with over 1,480 suppliers globally
- A digital partner supporting customers through all stages of luxury watch ownership, CHRONEXT offers 49 brands and has served over 100,000 customers. CHRONEXT shipped to 62 countries in 2020
- The number one player in the DACH region by revenues; CHRONEXT has what it believes to be an industry-leading repeat purchase rate of about 30% within 36 months while being profitable on the first order on fully loaded unit economics
- Having grown its revenues by a compound annual growth rate of about 104% since inception and 47% since 2018, including growth of 18% in 2020 versus a drop of 36% in the wider European luxury market, CHRONEXT's revenues exceeded €100m for the first time in 2020
- For the year ending 31 December 2021, the Company is targeting revenue growth of about 40%. Building on these expectations, revenue growth is projected to almost double in the short term, while stabilising at just above 40% with an adjusted EBITDA margin reaching mid-single digits in the medium term
- As the partner of choice for luxury watch retailers, consumers and brands, CHRONEXT is well positioned to conquer the multi-billion opportunity in the online luxury watch market
- The Offering is expected to include a primary component of approximately CHF 250 million to drive organic and inorganic growth, as well as a secondary component from certain existing shareholders
- The planned IPO on SIX Swiss Exchange is a natural next step in CHRONEXT's development, intended to enhance its brand visibility, trust and global profile
Zug, 10 September 2021 - CHRONEXT AG ("CHRONEXT" or the "Company"), a leading and fast-growing digital platform for buying and selling new and pre-owned luxury watches offering an exclusive on- and offline customer experience, announces its intention to launch an initial public offering ("IPO") and list its shares on SIX Swiss Exchange (in the International Reporting Standard). The IPO is likely to include new shares from a capital increase as well as secondary shares from certain existing shareholders. Shares will be offered to private and institutional investors in Switzerland and institutional investors in certain other countries. The IPO is targeted to be completed in the fourth quarter of 2021, subject to market conditions.
Philipp Man, CEO and Co-Founder of CHRONEXT: "Today is a very exciting day for the CHRONEXT team. Having grown very fast since we founded the Company in 2013, our goal is to now list CHRONEXT to give ourselves the financial flexibility to capitalise on unprecedented change in the luxury watch sector, and to conquer further growth in the structurally underpenetrated online market. We are pleased that our story has already generated strong interest among many top-tier institutional investors."
Jacob Fonnesbech Aqraou, Chairman of CHRONEXT's Board of Directors: "The stock listing represents a natural next step in CHRONEXT's development. Apart from the funding of the growth strategy by increasing the Company's brand visibility, credibility and profile, we think the IPO will allow CHRONEXT to take further share of the rapidly growing and highly profitable hard luxury online market."
Outline of the intended IPO, use of proceeds
In light of CHRONEXT's rapid growth to date, the Company and the selling shareholders also believe that an IPO represents the natural next step in the Company's development. CHRONEXT intends to use a portion of the net proceeds from the IPO to drive organic growth, grow the product offering and expand into new geographies. Net proceeds are also expected to be used to expand the Group's lounge network and to invest further in its technology, in particular in respect of increasing integration with retailers and brands, continuing development of a mobile application, and building the technology required to introduce additional products and services. The Company intends to also invest in non-organic growth, especially in core geographies, as well as the United States and Asia, and in net working capital expansion and debt repayment.
CHRONEXT is creating the next-generation luxury watch ecosystem in a largely untapped multi-billion market with significant growth potential
CHRONEXT is the leading digital platform for buying and selling new and pre-owned watches in the DACH region by revenues. A digital partner supporting customers through all stages of luxury watch ownership, CHRONEXT sells 49 brands and has served over 100,000 customers since 2013 and shipped across 62 countries in 2020. As the number one player in the DACH region by revenue, CHRONEXT has what it believes to be an industry-leading repeat purchase rate of about 30% within 36 months while being profitable on the first order on fully loaded unit economics, and surpassed revenues of €100m for the first time in 2020.
CHRONEXT operates in a largely untapped market with significant growth potential. The premium, luxury and ultra-luxury market was valued at €55bn in 2019 and is expected to grow to €69-73bn by 2025. CHRONEXT's proprietary modelling predicts an even greater market growth, reaching €65-90bn by 2025. The luxury watch market is on the cusp of transformation into a digital environment, with McKinsey predicting a rapid transformation to an online environment from 12% of premium and luxury watch sales taking place online in 2019 to 23% in 2025. This growth is expected to be fuelled especially by the sale of pre-owned luxury watches, which tend to appreciate in value over time and are inherently suited to online sales from trusted marketplaces like CHRONEXT, given the authentication processes required. The pre-owned premium and luxury watch segment is expected to grow to €24-26bn by 2025 from €15bn in 2020 with the estimation that the share of pre-owned premium, luxury and ultra-luxury watches sold online will rise from 30% in 2019 to 45% by 2025, making online a key channel for purchasing pre-owned premium, luxury and ultra-luxury watches.
CHRONEXT has built a sophisticated data-driven digital platform for luxury watches, leveraging a unique 1P/3P model underpinned by a robust technology backbone
The CHRONEXT platform connected about 11 million watch enthusiasts who visited its website in the twelve months to 30 June 2021 with 1,480 active suppliers globally. Combining convenience, quality, authenticity and liquidity, the platform offers customers a seamless user experience, a simple interface, a premium brand environment and rigorous quality control.
CHRONEXT's intrinsically data-driven business model sets the Company apart from its peers in the watch industry. Online-driven data collection enables in-depth market research, high-frequency data tracking, and internationally integrated transaction data. The data-driven inventory management system predicts, tracks, and informs CHRONEXT's sourcing and sale of luxury watches and optimises the Company's logistics processes, while CHRONEXT's proprietary pricing engine, which is based on a database of over 200,000 historic transactions, determines the prices of the watches it sources and sells based on prevailing market trends. The platform allows for smart decision-making thanks to a well-integrated omnichannel technology stack, a highly scalable, progressive shopping platform and a secure transaction environment.
CHRONEXT benefits from trusted relationships with customers and suppliers
CHRONEXT's rigorous 17-step authentication and quality assurance processes, carried out by an in-house team of certified watch experts, and its 24-month CHRONEXT guarantee for all new and pre-owned watches have resulted in trusted relationships with its customers, evidenced by CHRONEXT's repeat purchase rate of about 30% within 36 months and a current Trustpilot trust score of 4,8/5 and Trusted Shops trust score of 4,9/5. The access CHRONEXT offers to a global customer base, combined with the unique data touchpoints as well as the convenient and simple selling process it offers, make CHRONEXT the trusted partner also to brands and retailers.
CHRONEXT has an attractive and sustainable financial profile and a promising outlook
CHRONEXT's financial profile is characterised by a track record of sustained growth with attractive unit economics to drive future profitability. In 2020, CHRONEXT generated €101.29m in revenue. This represents a Compound Annual Growth Rate (CAGR) of about 104% since CHRONEXT's first full year of operation in 2014, and a CAGR of 47% since 2018. By shifting to the sale of higher value luxury watches in 2020, CHRONEXT was able to increase the average order value (AOV) from €4,604 in 2019 to €7,111 in 2020, driving profitable unit economics with a 11.2% gross profit margin and resulting in an 17.7% increase in revenue year-on-year. The Company's growth significantly exceeded that of the European luxury market, which grew at a CAGR of 2% in 2019, and decreased by 36% in 2020.
CHRONEXT is headed by an experienced, founder-led management team and complemented by a highly experienced Board of Directors
CHRONEXT's success is driven by a diverse and committed team of watch enthusiasts and led by passionate and ambitious founders and a highly experienced Board. CHRONEXT is led by founders Philipp Man (CEO) and Ludwig Wurlitzer (CPO), whose passion for watches has attracted more than 120 employees, including watchmakers who examine, authenticate, and polish the timepieces, and a highly experienced team of Board members, among whom Jacob Fonnesbech Aqraou, Gary Briggs, Daniella Vitale, Hamdi Chatti and Kristiina Leppänen as well as Norbert Platt as advisor to the Company. Together, the team has embarked on a journey, driven by a shared vision for making the world of luxury watches safer and more convenient as well as providing an exceptional customer experience.
CHRONEXT is well positioned thanks to key advantages over competitors
For now, the luxury watch market is mostly offline and driven by the sale of new watches sold through brick-and-mortar stores (POS). While the majority of pre-purchase research today is already online, the actual transaction still takes place in-store. Currently, customers are confronted with waitlists, limited offline selection and little to no high-quality pre-owned choice in the market.
CHRONEXT believes that the market of tomorrow, however, will be defined by online and the rise of certified pre-owned (CPO). Online will be the key channel with a strong click & collect proposition and with significantly fewer POS globally. CHRONEXT expects that almost every single luxury watch purchase process will begin with an online search and be ultimately converted or initiated via e-commerce.
CHRONEXT's three pillars to drive future growth
CHRONEXT plans to drive future growth by drawing on three major pillars.
First, a key element of its strategy is to broaden its customer base. The online sale of premium and luxury watches is expected to significantly increase in the coming years, driven by the digitally native Generation Y and Generation Z who are expected to contribute approximately 180% of the total luxury market growth between 2019 and 2025. By 2025, luxury spending by these demographics is expected to contribute up to 68% of the global luxury market. As a technologically advanced, next-generation luxury watch platform, CHRONEXT is ideally positioned to capture the growth in online luxury watch sales. CHRONEXT's efficient and effective marketing activities are aimed at helping to continue to win new customers within these cohorts and drive loyalty among existing customers.
Second, CHRONEXT intends to continue its international expansion into new geographies. Supported by its scalable technology platform, the Company aims to pursue a structured market entry and expansion strategy to develop a presence across the world. Initially, the focus will be on consolidating CHRONEXT's position within Europe. Having recently entered the French, Italian and Dutch markets, CHRONEXT plans to strengthen its position by establishing pick-up lounges and further developing its brand presence. Thereafter, the aim is to expand into Spain, Belgium, and certain Nordic countries, followed by the UAE and Australia.
Third, CHRONEXT intends to continue to grow its profit margins by expanding existing business areas and offerings, in particular sales of pre-owned watches, which command a higher gross margin than the sale of new watches: in 2020, pre-owned watches (approximately 24% of revenue) resulted in a gross margin of 17%. The Company expects the share of pre-owned watches to grow significantly in the coming years. Added to this, new value-added services and offerings are planned to further drive margin expansion and accelerate convergence to profitability. It is also planned to further drive sales of watches sourced from brands directly to further boost profit margins.
CHRONEXT AG (www.chronext.com) was founded in 2013 by Philipp Man and Ludwig Wurlitzer. The platform for luxury watches employs over 120 people and offers around 7,000 models for sale. With headquarters in Zug (Switzerland) and a further 9 locations in Europe and one in Hong Kong as well as a watch workshop for quality and authenticity testing, the company is internationally positioned and guarantees a fast, convenient, and secure service. CHRONEXT simplifies the complex structures of the watch market and enables a unique buying experience. For more information, please visit: www.chronext.com
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The UK Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Offer. Furthermore, it is noted that, notwithstanding the UK Target Market Assessment, the underwriters established in the UK will only procure investors who meet the criteria of professional clients and eligible counterparties. For the avoidance of doubt, the UK Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of Chapter 9A or 10A respectively of the FCA Handbook Conduct of Business Sourcebook; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the Shares.
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 McKinsey - The State of Fashion, June 2021
 According to company estimates, based on a proprietary model calculating, inter alia, watch exports figures.
 McKinsey - The State of Fashion, June 2021
 Bain & Company Altagamma
 Based on company data collected since 2017
 Bain & Company Altagamma
 Bain & Company Altagamma
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