Shares of the German meal kit company Hello cool rose on Tuesday after the company reported better-than-expected second-quarter profit and said its prepared meals segment saw rapid growth.

HelloFresh shares rose as much as 20% in morning trading but pared gains to rise 10% to 5.95 euros ($6.52) as of 9:30 a.m. ET.

HelloFresh reported adjusted earnings before interest, tax, depreciation and amortisation of €146.4 million in the quarter ended June 30, it said in its earnings report on Tuesday. That was down 23.7% from the same period a year earlier but was above the €123 million forecast by analysts polled by LSEG.

The company’s revenue rose 1.7% in the quarter to 1.95 billion euros, HelloFresh said.

The company said its results received a boost from the strong performance of its prepared meal delivery business, which experienced year-on-year growth of 50.2% in the first half of 2024.

HelloFresh made a more aggressive expansion into the prepared meals category a key priority as demand for its meal kits, which encourage people to cook with ingredients provided through a weekly subscription plan, declined following the easing of Covid-19 lockdowns in 2021.

HelloFresh acquired Factor, a company that prepares prepared meals for delivery, for up to $277 million in 2020 in a bid to expand in the category.

The firm said Tuesday that expansion of its prepared meals category, along with growth in its average order value in North America and international markets, “more than offset a decline in order volumes in the meal kit product category” in the first half of 2024.

However, HelloFresh also said that this increase in ready-meal production was cutting into overall sales costs. Its group contribution margin fell to 24.3% in the second quarter of 2024, down from 28.4% in the same period last year.

HelloFresh shares have suffered a sharp decline over the past year amid higher interest rates and questions about whether the company’s business model can match the strong growth rates achieved in the days of the pandemic. Over the past 12 months, HelloFresh’s share price has fallen 75%.

In March, HelloFresh shares fell 42%, suffering their worst session to date after the company disappointed investors with its annual earnings outlook for 2024.

UBS analysts said at the time that despite the risks already highlighted around HelloFresh’s outlook, the company’s outlook was “significantly worse” than previously expected.