Half Year 2021 Just Eat Takeaway.com NV Earnings Call
<unk> Investor Conference call to discuss the second quarter 2021 trading update of adjusted takeaway Dot com.
All of our corporate website, you can download of our press release and the slides for this penalty as an Investor Conference call.
In this brief presentation I will take you through our order growth for the second quarter end of first half year of 2021, which is ahead of targets. Despite the impact of COVID-19, Lockdown relaxation number for our main markets.
Our continued strong performance is underpinned by our efforts in the historically under invested legacy just eat markets, which are clearly paying off for instance, in the UK and Australia.
We will briefly discuss our observations and high level strategy for the United States and we will also provide guidance on order growth gross transaction value and adjusted EBITDA margin as a percentage of the GDP for the full year of 2021.
I will end the presentation with some concluding remarks.
After which we will open up the call for your questions. My Fellow board members of <unk> <unk> and Matt Maloney are also here to answer your questions.
The combination of just the takeaway dotcom and Grubhub is 1 of the largest food delivery companies on this planet.
Total orders for the first half of the year amounted to 547 million, implying a run rate of well over 1 billion of orders for the for years.
Of your orders have increased by 51% year on year of 61%, excluding grubhub despite tough comps.
Our total delivery orders more than doubled to $235 million compared to the first 6 months of 2020, driven by numerous restaurant additions and our price leadership strategy.
The company has aligned its API definitions with industry practice, which is led to replacing gross merchandise value <unk> with gross transaction value of <unk> in the financial information presented.
<unk> represents of total value of orders based on our platform, including taxes tips and any applicable consumer fees similar to the definition of most of our competitors.
CTV amounted to $14.1 billion euro in the first half of 2021 up 50% of constant currency basis compared to the same period of 2020.
Given the success of our investments.
<unk> program expectations for 2021 have improved and therefore, we upgrade our previous guidance of more than 42% order growth of adjusted takeaway Dot com, excluding grubhub to now more than 45% order growth for the full year.
Lastly management believes adjusted EBITDA losses have peaked in the first of all.
And that there are various catalysts for the company to turn trends back to profitability going forward, while retaining significant growth during the second half of the year.
I will explain this in more detail later in this presentation.
As mentioned the growth of transaction was successfully completed in June.
The combined business is 1 of the largest online food delivery marketplace globally active in 24 countries.
It holds the number 1 positions in several of the largest profit pools of the world and many of our local businesses today are already highly profitable.
We are partnering with over 580000 restaurants globally, and serving nearly 100 million active consumers as per the end of June the.
Of the penetration upside office very significant growth opportunities.
On slide for you find the split of our orders of <unk> for each of our segments.
For the growth for the combined business was 51% for the first half of the year.
Adjusted takeaway dotcom, excluding Grubhub grew orders by 61%, while Grubhub accounted for 27% of order growth in the first half of the year compared with the same period last year.
GDP for the combined business grew more or less in line with of orders, 50% on a constant currency basis totaling 40 of $1 billion Euro the first months of 2021.
Moving on to slide 5.
As the pandemic Unfortunately still ongoing our efforts in new historically Underinvested legacy just keep markets have continued to drive growth.
And allowed us to win online share.
The UK continues to be the fastest growing segment and our main driver of growth.
In the first half of 2021, we processed 135 million orders in the UK up 76% compared to the same period last year.
Delivery order growth in the U K was 733% in the first half of 2021 compared to the same period in 2020 make.
Making us the fastest growing delivery business in the country.
In London, we observe a significant inflection with triple digit order growth in the first half of 2021 compared with the first 6 months of 2020.
Where our online share was estimated at around 20% of year ago in London again today. It is estimated at 30% and growing fast.
It is important to understand that we are just getting started in London, and we can still make quite some improvements to the business.
Clearly our investment program in the legacy just need markets is paying off.
Now please follow me to slide 6.
As you know we will hold an investor day in October when we intend to share more details around the strategy for the combined group.
Nevertheless, I would like to use a few minutes today to update you on what we have seen in the past year, and where our strategic focus will be.
Grubhub has 1 of the largest space in the U S. Although it does not hold of number 1 position in each and every region.
We strongly believe that the U S cannot be seen as 1 market like for instance, the UK or Germany, but that each metropolitan area has its own characteristics. We will therefore, a refocus of strategic efforts to grubhub strongholds, whereby the focus will be to expand from that stronger base rather than target the whole country.
In the second half of 2021, we further expect to catalyst of Pos.
Of this the impacts profitability.
Firstly, the removal of a significant fee caps and voluntary partner support that we have put in place during the pandemic and secondly, the reopening of offices, which is traditionally a strong hold for this grubhub business.
In the second half of the year.
We will further focus on the transition of the seamless of brands to Grubhub in line with the single brand strategy that we have successfully rolled out throughout Europe, which for example contributed to our growth in Germany.
This will allow us to optimize our marketing spend and benefit from the network effects of around 1 single brands Inc.
We are very excited about the positioning and possibilities of Grubhub and we will share more details with you in of itself.
On slide 7.
We like to guidance you in terms of order growth GTD and adjusted EBITDA as a percentage of GDP for 2021.
Previously we had guided 2021 order growth, excluding grubhub will be higher than the 42% we reported last year.
We are pleased to upgrade this guidance to order growth for the full year of 2021 to at least 45% again, excluding grubhub.
For the full year of 2021 <unk> for the combination is expected to be in the range of 28 to 30 billion euros, which clearly established us as 1 of the largest food companies in the world.
2021 is an investment year.
To restore and expands our market leadership in particular in the legacy adjusted markets.
However, we believe that adjusted EBITDA losses peaked in the first half of 2021, and we therefore expect our adjusted EBITDA margin to improve going forward driven by a few factors.
Firstly, the removal of significant fee caps.
And voluntary partner support spoke of in the U S and Canada.
Secondly by improved unit economics.
Economics in our delivery network and thirdly, increasing benefits from the investment program and the legacy adjusted markets.
As a result for the full year 2021, we expect adjusted takeaway com, including Grubhub to generate an adjusted EBITDA margin in a range of -1% to -1% of 5% of GDP.
As stated previously we will continue to invest in growth and prioritize market share of our adjusted EBITDA.
I will continue with the conclusion of this presentation on slide 8.
We are excited to have combined with grubhub to create 1 of the largest food delivery marketplace growth.
As communicated before we intend to provide further strategic updates for the combined business during our Investor day in October.
The strong results of the first of all have improved and our expectations for the full year hence.
Hence we upgrade our previous guidance to order growth of more than 45% for the full year excluding grubhub.
For the same period GTT for the combined group is expected to be between 28, and 30 billion euros on a pro forma basis.
Our efforts in new historically under invested legacy adjusted markets continued to drive growth specifically, we see continued online share gains in the U K pathway for significant inflection in London, where we have gains of around 10 percentage points of share in less than a year.
As these observations strengthened our belief in our strategy, we will continue to invest heavily in our business to drive further growth and market share gains.
However, we believe EBITDA losses have peaked in the first half of this year as we see multiple catalysts for improved profitability.
Hence we expected.
We expect adjusted EBITDA for the full year to be in the range of -1 to -1% to 5% of GCB, which includes the significant impact of fee caps in the U S and Canada.
In short of the combination of justice to takeaway of calm and Grubhub is in excellent shape. The first half of 2021 has delivered excellent growth and I am convinced that we will continue that trajectory.
With that operator, I would like to open the call.
Thank you Sir.
Ladies and gentlemen, we're starting the question and answer session. Now if you have a question or remark. Please press star 1 now and your telephone.
<unk> for your question Mark Matt.
Remind everyone to limit yourself to take questions will provide you with any questions afterwards, new compressed al 1 of them should we joined the queue.
The star 1 for your questions or remarks.
Matt.
Our first question is for Mr market.
<unk> of Jpmorgan go ahead, Sir your line is open.
Hi, everyone.
Marcus.
Questions.
The first 1 is obviously on your comments that EBITDA.
Net loss of peak.
Could you elaborate a little bit more you obviously highlighted the fee.
Obviously, an improving unit economics, but the third pillar of kind of like Tech investments marketing investments is that also something.
We should think conceptually going down.
And then the unit economics seem.
It seems like improve a lot because it looks like obviously your orders are still strong and the delivery operations.
So if you could help us understand kind of like.
The unit economics in your delivery business, helping also on the EBITDA side picks to take and marketing investments I'll take your question makes sense.
The second question is on the marketplace business.
Can you of what's very strong in Q1.
Maybe you can comment a bit more attuned to the slide 5.
Latest developments and just marketplace all of that would be helpful. Thank you.
Thanks for the question So Mark let me, let me start with your second question around around marketplace.
I think it is important to understand that the comparable marketplace is difficult in Q2 because of what happened last year with the pandemic.
Obviously, there was quite some quite some growth there because also of most of the delivery restaurants closed down a day.
The shutdown, so therefore actually it's quite difficult to do.
To grow market base compared to last year, we do assume it's going to be different in Q3. So I think I hope the publisher question around marketplace growth.
Also if you look at.
Take for example, the U K for ins all of the Mcdonald's stores were closed also for delivery.
So that means that you can see that also in the marketplace are sort of.
And the market share of development of last year, you will be able to see actually that the market share of our logistical competitors collapsed in these months. So I think that's important to point out in relationship with the marketplace growth of loss share as opposed to the issue.
And then your first question around around EBITDA, we have full 2 previously that Q1 was trading in line with Q4.
What happened after Q1 is that there were significant fee caps in Canada that we honestly did not expect because they are quite late in the pandemic, but but still day they were introduced.
Of course.
We will also hoping that the pandemic will subside by the first of April that was in our calculation. So actually most of our investments with targeting.
The first of April as a date to reduce the investments and actually of course of the pandemic is still ongoing. So we kept the investment program going but that of course also resulted in larger growth than anticipated intensity upgrade India.
And the guidance for the year for the orders.
Sure.
Also in that quarter of course.
Is euro 2020. So that's also an increase of course in the in the cost for the for the for the first half year.
Now if you look at the second second half year. So of couple of things I'll give you. The example for.
For our expansion of schools and London scuba as a labor model as you know as opposed to 2 the other logistical network we have in the U K.
Very challenging to have 2 logistical networks in 1 city.
Because you are curious cannot cross over certain areas you would have people for instance zone, 1 and 2 that can only work in zone, 1 and 2 because.
When you have the specific labor model, but we would not have that outside of the area.
We will see that we will have the labor model in the whole city of London.
Actually I mean, everything within the range growth.
Towards the end of the year and therefore, we will have quite some efficiency gains in London, which is of course, the lion's share of our efforts.
Okay. So we have a couple of benefits there you'll see us increase some of the delivery fees that are now extremely low.
We are sometimes 5 pounds below our competitors. There is a lot of room for us to increase of the delivery fees, you will see us do that a little bit.
In the next in the next half year, and there will be significant fee cap reductions we already have a couple of dates for the U S. So we kind of already know when the fee caps are going to fall away in.
And the second in the second half so it's actually not so difficult for us to improve the EBITDA.
And the remainder of the year.
Okay perfect. Thanks for since I have for you could you maybe elaborate a bit more on marketplace in Q3.
And your comments on comps in Q2, it looks like at least from what we're seeing.
2 as of January do you might might be.
We open again and Cousy QC proof.
For sorry, QC Q4.
Do you think of that this is more of a relative to delivery of.
The marketplace is improving.
Should we really think about it if you can just elaborate a bit more why you think mix 2 columns Q.
Q3 should be better for marketplace.
Yes, just because if you compare us with so sort of dosing for let's say you have you have.
M <unk>.
30% of logistical orders in 1 year, but all of the logistical restaurants closed down.
Then obviously all of the orders go to marketplace restaurants, so a lot of the growth actually that we saw for instance in April last year is caused by that so actually our growth last year was very high and therefore, the comp with last year for marketplace, specifically is difficult net will.
<unk> be the case of course in the first quarter because.
You remember last year actually.
When it was unclear how long the Lockdown would law would lost a lot of take he was ours chose to just close.
And that gross for dining, but theyre also closed for delivery.
And that of course, you know after a couple of everybody realize we were going to be in the situation for a lot longer and the rest of it was reopened but only for delivery and therefore actually in Q3, you don't you no longer have that tough comp for marketplace.
Yes.
And I guess then Matt.
David we all remember that pace, but it also shows the relationship between delivery and marketplace.
Dave when if 1 of stronger at the other 1 south of US it seems for whereas the <unk> seems to be that this is kind of like growing nicely next to each other I understand the effects in Q2, but do you think.
This kind of like independence of marketplace.
Independent from delivery still holds all of us in the second quarter, because I guess the concern is that.
Delivery orders over time might might cannibalize some marketplace. That's basically the relationship I want to find out.
2 things I need to say about about this I'm, sorry, sorry about that.
Donnelley.
No. So first of all of the first first of all you can also.
Ill turn it around if all of the marketplace restaurants would close naturally all the orders would be the delivery restaurants. So.
Other normal situation, obviously that you do so much of your offering because of for pandemic hopefully it's other non almost situation for humanity that happens too often so that's that.
Rotter unnatural thing to happen to us.
2.2 to 2 of our business.
And on top of it we are assuming also for delivery orders to generate profit we're not we're not going to run this at a loss for eternity in the UK.
A lot of our efforts are around taking market share, which is happening very significantly. The alignment of example of this data, but it happens in the all of the UK, we're taking market share for my competitors and we're doing this with a lot of aggressiveness and that includes having much lower delivery fees than than our competitors.
Our competitors all of those making I think it's important.
<unk>.
And they all of us, making even with delivery fees that are now for 5 pounds higher than our delivery for you. So theres a lot of room for us to improve whether that's the efficiency of the delivery now for a quarter delivery fees in the U K.
So I think both both.
Basically the assumption that there is a kind of loose on the market is not right. We are growing marketplace for significantly. It is just that last year the delivery network.
<unk> almost empty because of the civitas actually were forced to close down and if you wouldn't see cannibalization you wouldn't see the reorder rate increasing by of as much as we SBC in the market and I would like to actually increasing the choice by adding either of the of the 2 marketplace or delivery restaurants and that clearly.
It has an impact in increasing order frequency and if your if your point was right on cannibalization you wouldn't see such an increase of frequency over time and.
So thats actually country for what we see no no perfect. Thanks, Thanks, both of you.
Okay.
Our next question is from Mr. Andrew Gwynn, Exane BNP Patti backbone.
Go ahead Sir.
Yes, good morning, all free quick questions Mccann. So firstly could you just give us a lot of David of the first half losses.
Just so we can kind of better understanding of the sequential change.
Second 1 market conditions, maybe just on the key markets. The UK, Germany, and then also of the U S.
And then the third 1 would be I guess, the implication of this shrinking to greatness in the U S. Since we could well see a drop in G television in the market.
Maybe not let's see.
Okay.
Is that something we should have been on line. Thank you very much.
Thank you I'll take your last question for.
First question would go to.
And the second question I guess 2 to Europe, and then maybe Matt can comment on the.
On the U S.
First you should not see our efforts in the U S. As I think you mentioned shrinking to greatness.
We will continue the efforts of the Gulf.
Currently making in the U S bundle apps and efforts in the areas in which we are really slow.
And Thats very similar to our strategy in Europe, because as you would understand most of our investments in Europe go through the U K, that's hardly it's hardly an area in which we of week of a very strong in the U K.
I also sometimes make the comparison of our UK business will be in the U S. It would be far bigger than anything thats in the U S and I think it's important for especially American investors to understand how big the businesses.
So the investments there actually are to improve the businesses that we have and we will do the same thing in the U S. There's a lot of growth of available around cities like New York, and Chicago et cetera, and it's of course much easier to grow out of strength.
We have been.
As you know I started I started this business in Holland.
And we know very well that if you didn't cross over into Germany with.
A lower marketing budget.
If no brand awareness.
And in a much bigger country youre not going to get anywhere and so it's very important to understand that already quite early on it was quite clear to us where we needed to invest and how we would create let's say that moat what it for.
Sometimes also of a call it its much easier to work for them very strong positions and then created but it doesn't mean, we're not going to be in.
Ohio, or Arizona has adjusted our focus will not be that will be elsewhere.
So for the first question Brent if you could if you could answer that.
Yes, I know.
Although this trading updates provide you insight.
R R.
We're doing right now and certainly because to give you some guidance for the full year will be as we said.
We believe that we are.
Sure.
Most of it will be 1 to 1.
Hi.
True.
T V.
Losses.
A big.
Improve.
We will.
The improved results.
First of all of us.
Certainly impacted by that.
Right of fee caps in the voluntary released that we provided for the restaurant.
But in a month, we will provide you with all of the financial details for each segment and then we will.
Full disclosure of the reserve.
Yes.
Thanks, Brett with regard to market conditions.
In the UK and Germany, So U.
U K as you know it used to be more or less of a drag on the just eat.
All of that work.
We started our investment program after the merger investing into network effect basically sales.
Doubling the sales force in the UK are more than doubling by now all of the sales force in the U K M.
Arthur with a specific focus on chain acquisitions marketing logistics price leadership, and we saw very very much great results.
Most recently also significant market share gains so as mentioned lumber for example were up.
More of that 10% market share gain with triple digit growth rate in the level of an area.
<unk> in the U K overall is up on a year over year by more than 700%.
And.
That's actually more by far more in light of a times faster than the pure logistics player.
In the U K our restaurant offering has also significantly expanded obviously, you've known about Mcdonald's and Greg Macdonald now reported across 1000 sites in the UK and Ireland, we've actually.
Out of 2 room, our Starbucks and Jen with now of 455.
<unk> cross the coffee.
<unk> started the rollout of already over 500 sites live and most recently, we also like Trialing.
For example of it is also very strong in London and was a former exclusive to 1 of our competitors. So we think very good progress on that and so overall very very strong science and to my initial comment that it used to be more or less of a drag on the overall growth rate of legacy just it's actually the growth driver now if you look at our sector.
<unk> U K orders in the second quarter grew fastest of all of the segments, 61%. So it actually.
Not only absolutely speaking breakeven relatively speaking the fastest growing segment. We have so that comes despite opening of the market for you.
As you know United Kingdom have already opened up the restaurants and will open up even more of it but we're still seeing very strong trading and are very very happy with the results of our investment.
Program in the UK.
With regards to Germany Likewise.
For the second quarter growth was 50% being.
Being very strong trading in the German market and just as a reminder, I mean.
We are heavily investing in the German market.
Results for this strong growth rate and we're actually driving the market actually in terms of relative order growth even faster than the market was developing when there were still multiple players in the market, but we seem to do a very good job of this because were actually able to grow the market faster than when we had.
The method of competition in a couple of years ago, and even pre COVID-19 that was already the case.
I hope all of <unk> spending.
<unk> as mentioned by the end of the year will be 80 cities in Germany.
And doing.
Doing very well also on the logistics front of fulfillment times, improving efficiency growing very well. So overall, we're very happy in these 2 key market.
And with that I would love to hand over to Matt to give you some insight on the U S.
Yes, Thanks, David.
Thanks, Eric.
Absolutely would not expect a drop in GTA V over time in the U S and in fact I would expect further growth in market share gains I think just to comment on.
Q1 versus Q2 numbers, which you can see from <unk>.
Previously disclosed.
As a separate company from grabbing now obviously combined.
The second quarter is much more difficult in terms of Covid comps many of the U S metropolitan areas, specifically in New York City, where we're a strong market leader still coming back online.
We are in the U S investing significantly in growth.
Focusing on our market leadership positions I guess it was outlining this has worked really well.
Jesse take away U K markets.
We're prepared to invest more behind that strength, we think theres a lot of room to grow both in terms of new diners and in terms of higher frequency. If you look at.
The diners in more mature markets across the world there.
Generally ordering much more often than you were seeing in most of the U S markets.
The way we look at the World is in terms of supply.
Service and consumer pricing.
We're still matching supply and some of the metros, but obviously, we've exceeded supply and the other ones are leaders for leading.
In terms of service and logistics, where as good or better than competition in terms of pricing, whereas good or better of the competition in fact recently rolling out of guarantee.
That low kind of that low price guarantee.
So.
We're already investing significantly and with the fee caps that were outlined in this information rolling off this year.
We're looking to increase that spending and in fact of fee capture disproportionately impacting our business because of the most aggressive for capturing some of our leadership market. So I think we have a lot more room to invest and we're confident that our strategy will increase our leadership in.
In these markets, where we have historically led.
We've been executing in 2021 that nearly breakeven.
While posting market share gains according to multiple third party data sources I would say that different from the UK case, we do not believe that continued market share gains will require material investments from the European profit pools. So while we're still 1 month and we're working hard to align our global strategies.
And learn the best practices that have been put in place in some of these are legacy Jesse markets and there will definitely be more on our U S strategy.
October thank.
Thank you.
Thank you for that.
Very much appreciate it just on the competitive backdrop.
Sort of really the crux of the question is there a significant change out of that Uber eats for getting more aggressive or no real change, perhaps just a very quick answer I apologize for taking for some time.
Is that of referring to specific Margaret just through all markets.
Oh market is really just a very big rate to comment.
So I mean in the U K, we currently.
Don't necessarily see.
The increase in grasp of aggressiveness from competitors I mean, you have to have to see that.
Yeah.
When we show of some sort of data.
Already there was quite some vouchering going on at levels of 30% 40%.
It's very much hard to increase that further from the pricing side. We also don't see any increased competitiveness on the country actually we see competitors, increasing pricing and also with the comments around.
Trying to get less loss, making with competitors, we cant foresee that this is changing so overall.
We feel very confident I mean, we have a super strong position in the U K, especially non.
Targeting that effort for the U K and we.
Actually generating quite some some profit.
Yes.
In certain areas of that business, which we are deploying right now, but we're actually able to target that.
And actually.
Reduce or increase that investment SBC unnecessary.
We will do anything to keep all of our market positioning of our leading market position of our even expanded and for.
For competitors. This is actually a quite a difficult situation to react if youre not market leader you obviously have way less.
<unk> to deploy if you have any at all and with our price leadership weekend with all of that maintained net price leadership strategy as long as we want.
So it's very tough for competitors to extra react and that holds true for most of our market because as you know 90% of our more than 90% of our of GMB comes from leadership positions, where we do have a hybrid model with quite some underlying profit to deploy and therefore.
We are actually the ones, who can dictate the aggressiveness in the market and who can react if the competitors become more aggressive but currently we don't see that.
I think what's also important to note here is that in in the data that we are providing to you a win for our competitors down there are the significant vouchers, which we don't believe our actual orders, but they are generated orders because youre handing out free food.
There are white label orders, a white label orders have no network effects. It doesn't really contribute to your network because nobody seizure of network of people people. What do we have different website of a restaurant rather than with your own marketplace and you know this is Don.
It's about network effects.
And of course it includes grocery.
We've already said that we are preparing launch of grocery across our businesses.
And that will make it even more difficult for them for the competition and don't forget that this is also.
So almost a perfect storm because now the vouchering applies to grocery shopping so all of a sudden people use of vouchers not per se on food delivery. So it's not competing with us it's competing with grocery shopping which is essentially free grocery and wouldn't like free groceries.
Himself.
That's all included in the end of figure still we're gaining market share I think it's important on the standard also indeed in the underlying businesses of our competitors there is an issue.
And therefore, we are very confident that's you know we will continue to gain share in most of our markets.
And.
Yes.
I think for US Indeed also as Europe. As you said, we can keep this up for a very long time and this is also of course, if you look at our success in Germany.
It took us a long time to gain market leadership in Germany book, when we took it it also became extremely profitable.
And in the U K, we don't even have that issue we are comfortable market leaders.
Yeah.
Alright. Thank you very much. Thank you for the comprehensive answer thanks.
Our next question is from Mr Sweetheart.
I'm Kelly from <unk> go ahead, Sir your line is open.
Hi, good morning, everybody. Thanks for taking my questions actually if I could just follow up on Andrew's question Matt.
Matt. Please I'll have another go and see if I can get.
I think you talked about EBITDA trending back to profitability going forward.
I just wonder if that means you'll be approaching breakeven in the second half for actually you're thinking it could be of profitable second half.
That'd be helpful.
And secondly, then is it fair to assume the large part of this sort of 200 million euros, you've talked about.
Impact from fee caps and such.
Is that largely in the first of all perhaps spilling over kind of a month into the second half.
Clarify that that'd be great.
And again still sticking with the guidance.
Does the guidance include any investments into growth.
Perhaps beyond these take rate comps I guess.
Those 3 please thank you.
Okay. Thanks, So to your last question, yes. They do include the investments in growth.
So are there for the total of total company regarding profitability, we have set of losses have peaked.
Can't comment on that further obviously, we have our results for the half year for financial results.
A couple of weeks, so you will be able to get that data and we as you know because of those.
Segment sales will be able to see where we make most of the of.
The.
Investments.
Regarding your fee cap question and the voluntary supports yes, most of that is H 1.
Okay.
Yeah.
Our next question is from Mr. Jos for line of Jefferies. Go ahead, Sir your line is open.
Thank you alright. Thank you my first question.
It's a very high level question Adam.
Some of these events yesterday.
Delivery hero, Germany.
And for Japan.
Several of them.
And thankfully for my reading tear up a lot of these.
Rulebooks around how you're allocating capital in the sector and how you compete.
And in time trigger a change in strategy.
Just a different perspective on how you execute.
I am pretty sure yet for what Youre going to say in response, but it would be interesting to hear your take on why.
Whether the landscape has changed.
Or not.
The second piece.
Grocery.
The comment you made a moment ago, maybe Matt.
This concludes competitive growth rate would be interesting to know just a bit more color on exactly what you plan to do this year.
And.
Any color on investments that you'll make into technology product sales.
I would also be useful.
And then finally, a question for Matt on the U S.
Pretty close question.
We've seen the first permanent fee come through in San Francisco and I. Appreciate it's a continent country with with many flavors and kind of the politics of along the spectrum, but it would be interesting to know this is a lead indicator for what can happen in other cities or is it just.
For the San Francisco.
Thank you.
Thank you. So obviously last question for Matt.
First question around weather.
I think I think of as summarized it correctly, whether the rules of engagement or the or the way that.
You know the.
For us in the sector works has changed.
And.
The answer is actually no.
Network effects of our network effects and the only reason that you would.
Lose customers or lose orders, if you do not have certain supply.
So.
Within food delivery, it's probably better than not sort of Mcdonald's probably better than not to have salad bars.
Et cetera, but as long as you provide that.
Your customers are not going to go anywhere and I think.
People Miss.
Is that there are no examples of non.
2 for your in force that would ever make any money in any market right and it doesn't matter what is market base or delivery people think there'll be make a distinction between the 2 day, that's not accurate we run the largest food delivery company in Canada. It is fully logistics and it is highly profitable.
Why is a highly profitable well because we are the number 1 actually new business model in the U S and kind of that works pretty well.
Of the delivery.
Business model.
No.
If you look at.
People trying to do adjacent stuff.
We're monitoring of course, what are these guys in Berlin are actually I am currently in Berlin.
What is our competitors are trying to do but it's essentially if you. If you if you simplify it issue as you understand we have been in competition in Germany.
For I think.
We started in 2007, so let's say, let's say for 14 years.
Take.
And we were at some point in competition with 3 brands of delivery hero, namely picture of the E.
Leave for health and food or food.
<unk> was the logistics and also by the way that was deliberate also again logistics now at the peak of their investments and we're talking crazy amounts of money.
Diesel of companies, whether it's delivery of food or they were losing about 7 years and order and they had June.
I don't think new delivery, we've got that with 200000 orders monkey give or take.
We have $15 million right I mean, I just wanted to put it in perspective.
And we also run our logistical network, that's about 10% of the $50 million. So also if you look at logistics is a very lots of logistical business that there'll be other money.
Even our analyzed the competition they are very much focused on logistics and they are providing a logistical service that is inferior to our logistical business.
Of less restaurants efficiency has lowered the delivery piece of Ohio, and the coverage of course is not the whole country to coverage is Berlin and maybe a couple of couple of cities.
In some cases.
The addition of grocery to it and especially the flash grocery yeah. I mean, there are now involved in I think 6 or 7 companies that are well invested in the flash grocery delivery space.
Well good luck competing for those guys. If you want to compete with that.
Best case scenario, maybe you win.
<unk>.
But yeah, it's not it's not very much related also to what we would like to do in grocery, namely offer of just regular grocery change it's a different different channel.
So no I don't believe that the rules of engagement change I think it's still the same.
And yet about network effects and protecting protecting your business and we are always protected our business and then specifically not everybody on the line anyhow regarding.
Delivery in Germany. It is a low percentage because there are no there are not too many Jewish us of any strength.
Normally we do not constrain the delivery network. It is the same open network do you have in the U K. It's the same open network, having kind of that we don't force people to use marketplace. We don't force people to use deliveries for the same thing.
A natural artifact of that of the of.
The German market.
Then regarding your grocery question I already alluded to it.
We are working on collaborating with supermarket change and we're going to be an open network. If a supermarket chain. Once you use our vos logistical network across our global businesses. They can.
We will do that.
More of that gross profit neutral and it will just be an add on to our logistical network. It's important that we are large so if we add a lot of grocery chain in the market, we're going to add millions of orders.
Youre going to be overly excited because you're going to see further growth as a result of.
All of that what we should it it is an easy add on for us because we have lots of logistical net forex in each of our country.
Country, and we are available in all of the large cities in our giant network right. So it's it's something that's not so complicated.
The investments for <unk>.
Sales of usually ramp up our sales force so.
You can especially sheet of enrollment loosening up tremendous amount of restaurants in London in the UK.
In Australia, but also in Germany also in and in Holland, We have very large sales force, we have very high marketing budgets, our marketing budget in Germany alone is about 100 million euros on an annual basis that is far more than the investments or new competitors are making into Germany. So just to put everything in perspective.
If I can.
And we have a very large tech with department of sometimes see people talk about of Tech Department. They don't realize we have about 2000 people and tech.
So we have a lot of people focus on Inc.
Moving on.
I'll take platforms now of course after after a merger you need to need to work on aligning systems that is a lot of effort that has a lot of work, but don't forget that we did a lot of these things.
In Germany, you will remember that the 3 platforms of delivery hero for integrated in 1 month.
So we have a lot of experience in each day.
<unk>.
Still.
Lots of businesses require.
Prudent approach to for integration.
Maybe Matt if you could comment on the U S for you yes.
Sure.
To reiterate I think theres a lot of.
Yeah.
New competitors are looking to expand their batteries and talk about how there they are tearing up the rule books.
Everyone needs to change I think that's all.
Bogus.
I think what we said earlier was or what I said was its about supply.
Restaurant supply delivery service and consumer price and that's all of that's about that's the only thing.
To everything else of smoke and mirrors.
I had a great great answer for that and in the U S is absolutely San Francisco being San Francisco.
So if you follow the history of San Francisco.
Recognize there on the.
The fringe of aggressive new rulemaking, and which is generally.
Litigated back.
So I think that.
Our business like get to just said, we don't force anyone to use delivery.
Fundamentally of marketplace business, where.
Are we charged for advertising for.
San Francisco, where the.
Limit the T O.
Commissions able to be charged by Facebook or by Google on on any business advertising it would be an egregious overstep up there.
Authority I think youre seeing a very similar situation play out in food delivery right now.
Most of our restaurants in San Francisco and deliver for themselves. They are simply paying us regeneration fees to get new customers.
So I think you will see of response by the industry, there's a lot of conversations.
We have made no commitments to participate but there was a lot of activity.
Sponsorship of recent.
Our recent Permian.
But youre not going to see.
I would predict you did not see another permanent take out being voted on until.
The San Francisco situation gets resolved in court.
Understood. Thank you very much.
Okay.
Our next question is moving.
I'll be south market for Barnwell Tallahassee.
I'm wondering if a lot of thanks for taking my questions. Just firstly just to follow up on grocery could you. Just confirm then that you are planning to roll that out in your other markets by the end of the year and perhaps if you could give any color on what youre expecting in terms of instead of the contribution to orders or G. T V from grocery and then secondly, just on the U S business, Matt if you could give us some.
Kind of on the performance in New York relative to other markets and we'll say the beat for the business is that starting to recover and then third day. If you could just give a bit of color on the rest of world performance, specifically, Australia and I'll take you could talk a bit about the the trials of scuba that happening there as well. Thank you.
Thank you I will.
For a question 1 of the 2 jurgen and of course of U S. Krishna.
Sure.
Grocery side, the timing is obviously very much related to whether we sign up.
Some of those big partners.
Is it worth mentioning our strategy is to go with large retail partners and yes, I cannot really comment on the timing of this but.
That obviously also has an influence on the contribution of that service to.
Our overall business, but if you look at the coverage of some of these potential retail partners you are looking at hundreds of stores or even in some cases.
More than 1000 in.
2000 stores in a certain country. So contribution could be sizable if you compare that to currently for example of Mcdonald's Mcdonald's.
Mcdonald's has quite some orders for thought but if you compare that to thousands of stores of Mcdonald's in the UK you can already.
That's the contribution can be sizable and some of our competitors have already more than 10% of contribution from growth rate. So I get that some of some sort of of benchmark you can look at it in terms of other.
But like I said, it's very much dependent on the timing of some of your contract.
We kind of give you an exact timing of that rollout of that for.
Rest of World performance.
Overall, we are also happy with that performance top line is doing very well.
But there was also quite strong comps and some of these markets.
So so that also impacted that.
Rest of World, obviously quite a quite a mixed bag.
Sort of jurisdictions in there.
Overall, we see M S.
Especially in Australia continued market share gains.
From data, we see from some of our Rep, and Google trends, where half of basically regain number 1 position.
We're very happy with the continuous market share gain in a particular market because of a specific you are asking for Australia.
Okay.
I can speak to New York.
The city itself is coming back.
But it's kind of like slower than other major metropolitan areas in the U S.
You have to remember that New York city of of Metro areas.
22 million people roughly you know GDP size of Canada.
In Brazil, it's a very large market.
What work ends up looking like in New York City is yet to be seen and say that the beat of B business is recovering slower than our consumer business for sure. There are many offices that are just not sort of the.
What we think of as the seamless.
M D to B product is just not.
Coming back yet and that's it.
Very highly profitable.
Very strong product.
Youre also seeing in the consumer space, there are significant employment of issues for restaurants across the country, but especially in Manhattan and with the majority of our restaurants are being self deliberate and theyre, having a hard time I'm not.
Not only getting customers to come up so true.
To actually be operable.
So I'd say in general New York's come.
Coming back, but definitely slower than others.
It would impact all competitors, but us.
So because we have such a strong leadership.
In New York City, but we are feeling extremely confident in our ability to expand our leadership in New York not only in Manhattan, but all of the boroughs and of surrounding areas because of that.
Take significant focus as we reiterated all of multiple times on this call.
Yes.
Great. Thank you.
Okay.
Our next question is for Mr. Marc Hesselink of I N. G. Go ahead. Please sir.
Yes. Thank you.
First question I would like to understand a bit better the moving parts on the on the EBITDA.
So earlier, excluding grip you have $60 million EBITDA for the year for.
For the full year.
And then hopefully we now have the fee caps.
And we are going to have the extra investments.
<unk>.
In the group business.
Can you explain the moving parts of it.
Underlying 60 million ex weekend of X script still the same.
And then the rest of the fee caps and the extra investments comes on top of Arista.
Other parts moving in there.
Yeah, Let me, let me try to walk you through food.
So Q1 was in line with Q4.
Then Q2, we saw significant Canadian fee caps in the legacy business of tens of millions of very significant.
We wish both what we.
We assumed that the pandemic would end at the first of all for April. So we have all of our investment program basically basically declining after the first of April because of that of.
The so called end of the pandemic of course Hasnt happened yet so we decided to continue the investment our investment program.
And then of course at the end of Q2, there was zero of 2020 of which of course also has been very cost you've got of a successful for our business in terms of exposure in brand awareness and all of that sort of expect for quite some benefits from that sponsorship.
But that's so that's the difference.
Q1, and on top of it. If you can also look at the Grubhub business. The lion's share of the fee caps in the U S is an H 1.
Because we also know of ADC. That's in most of the cities. We have an end date for the for the for the fee caps.
If you look at H 2.
Of that end dates.
Leave of an NDA for the Canadian Ctf's, yet, but we do have it for most of the of the of U S business, but they will we all see of course that things are getting.
Relatively back to back to normal end of fee caps are mostly connected through states of emergency or a restaurant of occupancy being over 100% that sort of.
From a from a local government he gives up a big impact, but also our investment program has a big impact and to remind you what the investment program actually is it is.
Scaling up sales.
It is reducing delivery fee to some.
And in some cases for 5 pounds difference in delivery fee between us and of competitors and.
And of course of competitors are loss, making so.
Unit deliveries are going to go up so there's quite some of some room for us to increase those delivery fees.
In many of the of the legacy adjusted to just ease of countries and.
And also those networks of sometimes not efficient right. So.
If we introduce a labor model and issuance of market. It is going to replace a model that was already there and if you don't do based on a whole city of ones. Then you have inefficiency. So we see quite some efficiencies coming in and don't forget that the 7% of growth in the U K Inc.
It's very difficult to keep out you know we have to hire quite some of them some people to to.
To facilitate the growth so obviously that can be.
Far more efficient if if if.
You are bigger but.
Yeah, Evan go down sense for ramp up of 7.1% you have to have for quite some of that throughout this too.
To.
Deal with that so it is not so complicated for us to improve the EBITDA.
So in a nutshell.
Where we're going and of course again in August for all supply you with more details around the EBITDA for the first of all of them.
Okay.
Just to be 100% chance of the $60 million.
A bit higher but that's also reflected in the higher growth for the non credit business.
60 are you referring to.
Yes, you always have this lack of $60 million loss for the full year excluding grip.
Yes, so mark I think.
At the time, we said that we are based on the question of what do you think of them as an annual run rate for 2021, we said take the queue for a run rate, which was something like 2000.25 million a negative EBITDA. So I think you are multiplying 15 instead.
There is a big big.
Difference of already.
M and then I.
I think the answer remains similar on the AR on the additional information that we will disclose during the half year results in a couple of weeks. Unfortunately.
Okay. Okay.
The second question is on the U S M D delivery proportion.
It was actually quite a lot higher than than I have to ask them to sort of the business I was actually expect of more would be marketplace is that.
Temporary is that because of Covid that you now have more of delivery because of those businesses, where we're holding of better and eventually the majority of your business will be will be marketplace again.
And also take into account.
If you push the extra investment in the other marks just need your extra investments whereby expanding the delivery option, but this is already quite a high number so.
How do you think about that.
Well first of all of our focus is not necessarily an expanding the.
The delivery option of our focus is on improving the launch markets of Grubhub.
And it can be in logistics, but don't forget that of course in the U S. D unit economics for logistics are much better than of Europe ticket.
Ticket sizes are higher labor costs of lower willingness to pay is it's much much more there.
Logistics or marketplace in the U S doesn't make too much of a difference.
What modality.
You you choose there.
If you look at.
Specifically.
Growth Grub has been disadvantaged independently because of the launch business in both in cities like like like New York, where you know a lot of people left the city businesses closed of course of all of the business is.
<unk> business.
In New York as well so in that sense, David disadvantage compared to our 2 other players and the growth also for growth was also in the logistical network outside of those of those cities. So yes, you will see more mark spacing go back as things normalize in the U S as well.
Yes.
That 2 thirds being.
Being true.
That's no that's not the historic Matt.
Hey, Mark price.
That was probably a lot higher rate.
Yes, it was sort of a hybrid but don't forget that grubhub gains quite some size of independencia make right. I mean, it's still grew quite significantly in a lot of that growth was actually logistics.
Okay.
Thank you.
Our next question is Thomas of Andrew Porteous HSBC go ahead Scott.
Yes, Hi, Tim I guess, the first 1 for for my perspective was more on the UK business I mean, it's clear from the charts that you've shown in the presentation that your market share gain it seems to be coming at the expense of the that's doing great.
Just sort of wondering where we are on some of the overall proposition in the U K and and you know how we get to those next next market share gains you know where are we on ret.
Strong choice customer experience sort of of the overall overall op, Inc. Perhaps give us some color on why we all of them, perhaps what your ambitions are all there in the future.
And then secondly, really just trying to get.
How you how you're sort of thinking about the guidance and perhaps of the link between GCB of any EBITDA margin guidance.
If you if you get tools of the upper end of your you'll GCB target. So that's sort of of 30 billion level should we be thinking you maybe get towards the lower end of of the EBITDA margins are you the -1% rather than the 1.5 or is that link not that I'm, just trying to sort of conceptually understand how youre thinking about it.
Deadly Inc is not necessarily there [laughter].
It depends a little bit on what the.
Same thing of it with what we said about the first of April right Theres, a big difference with academic Ensign for as of April 1st of all of Us.
That of course.
If you have an investment program or number within that that makes a big difference, but they've not necessarily related. So that's the answer to your first question I will give you a little bit of an answer for the first as well.
Then maybe Eric wants to say something about that as well actually of growth in the U K is at the expense of.
New customers so people that have not ever placed an order, but also at the expense of both the competitors and again you need to take into.
Consideration.
Makeup of the orders of our competitiveness.
A lot of Vouchering.
White label orders and there are grocery orders in there.
Yeah, I don't care, what exactly the percentage of that is.
But if you compare the websites of our competitiveness or the absence of our competitors with our apps you need to if you want to make any signs of comparison really take that into consideration because that means actually yes. You can you know at let's say.
20% of your business and it's going to be groceries, but that means you did not add.
Food delivery and it might even mean that you've lost orders.
And this is why actually we do believe that adding grocery is going to also again make a significant growth impact.
In the U K, because it's not going to be at the expense of of our food delivery network. Obviously so.
It actually comes to the extent of both the competitors now.
Now it is clearer towards the number 2 in India and the U K.
But again you are looking at 1 of the percent of the business of.
That competitor and it includes more things than just food delivery of more things than just actual orders.
And then with regards to even some more color into the U K, we continued to sign all of them.
Restaurants, and in Q2, more specifically with regard to the supply and in London.
We are now at more than 13000 restaurants in the London area.
There is still a gap of about.
6000, restaurants, but if you annualize it.
These restaurants.
GAAP actually a lot of it can be explained by our.
Grocery convenience and actually even more so by my math of a kitchen. So you have some instances, even where we actually list of restaurant 1 breath of.
Competitor with actually up to 23 entries for 1 of the restaurants. So like if you consider that of that GAAP, 40% actually is covered by those 2 categories sort of like the GAAP actually has become very small. So we are continuing to close that gap and we feel very confident like originally indicated.
To close that gap within the 12 month timeframe, which we indicated previously and we are very well on track of off of that.
And as you see from the market share gains and in London plays out pretty well in terms of the overall consumer experience and especially of our logistics.
That is doing very well in terms of the customer proposition actually if you look at.
For doing the logistics power itself.
And the thing is we are doing actually of the logistics of ourselves and not through a third party provider and we're actually the fastest in terms of fulfillment of time.
That is better than the other.
We are monitoring that by if you do mystery shopping over quite a large sample on over.
Several of week.
Of performance.
We actually the day.
First of can kind of of procurement of time ex London now of London.
As of a bit of of special situations, because we are actually ramping up our logistics there significantly we all of changing the way how we operate and that obviously has a little bit of an impact, but we're not talking about lots of numbers here. So I like where we're very happy and satisfied about the development of <unk>.
Basically the choice, we are providing an efficient for our customers, but also the quality of all of the quality of our of delivering its really best in class in the U K.
Brilliant thanks, Doug well 1 other quick 1 if I may of it you can very quiet I food and some no mention of that in this segment can you give us a quick update there I assume you have not mentioned it is noteworthy of huge amounts of say, but it'd be interesting to know either way.
Now, it's still work for a lot of money and we would welcome any office for it.
Thanks.
This is our final question from Mr. William What's Bernstein go ahead Sir.
Hi, guys. Thank you very much for taking my questions..2 quick ones for me I'd, just like to know a little bit more about the how the demand has trended over the quarter, maybe month to month and particularly how much can we baked in for.
The 1 off of exception of its kind of the football impacting that and then the second question is around delivery in Germany, obviously, it's still a relatively small portion.
Over the next kind of couple of years do you see the need for further investment like we've seen in the U K to bring that delivery level up to.
The other kind of segments.
Let me take that last question of all of them for the first 1 to 2.
Yeah.
Regarding regarding the delivery percentage.
In Germany, it's very important to understand that.
We have signed up.
All of the restaurants, almost all of the restaurants.
That's great.
Call it 95% of for restaurants.
That are interesting to add to a logistical network that includes all of the civitas and it includes all of locally.
So they are simply no more restaurants that you can actually have I'm sure I'm missing some but it's.
That's what it is.
For now at I believe 50 cities in Germany, which we've done that.
That leads to dish share of logistics. This is not different to what we do in Holland is not different to what we do in the U K does even though a difference of what we do in Australia.
Kind of now.
In Australia, a very large proportion of our business is logistics.
In Canada, almost the entire businesses logistics, we are new.
Against logistics and we provide the option 2 of whichever restaurant wants to have it so that the whole idea that there are more restaurants, and net debt percentage should be higher well sorry, there is no equivalent for demand for rate in Germany.
Just.
Fact of life and if you ask us why isn't that demand that is very much connected to the size of the Q was Washington.
He was always in Germany are much weaker than for interest in the U K and shows for me much weaker than than in the U S and even a large chain as Mcdonald's gets far less orders on a personal basis than the UK Mcdonald's for or even you know of Dutch Mcdonald's for.
It is.
It is in that sense something that is naturally of this size don't forget also that's M.
Companies like food or all of which is essentially the same thing as food part of that.
And also deliver food.
At the peak of their investments before day left the country in the case of food or before it was sold to us.
They were tiny that we're doing 200000 boys on a monthly basis and a lot of that again vouchers ride of lot of that is not actual.
Actual order to give people free food.
And those companies were in multiple German cities.
And don't forget you know Berlin is a bit of of different animal than most of the volume in.
Germany in logistics is actually in bullet.
So it's just not a large segments in Germany and.
We don't we feel quite agnostic about it if it is larger it is larger if it is more of it this morning.
We don't particularly care.
And were there you've got sort of trading.
Very strong trading across the board.
There is obviously, a strong outcomes and the market opening up.
And a lot of countries of the Corona measures are.
Seizing so that obviously has an impact but we continue to see.
Strong trading despite these strong comps of from from last year and.
Lot of this is also caused by our continued investment program I mean again, if you look at the UK growth rate.
Even if that wasn't helped by the pandemic.
As of today, even something which goes beyond the pale.
Pedro with regards from the pandemic, it's really caused by M. Also the investment program and we see that also in <unk>.
Some other markets, especially legacy Inc.
Markets, which would get to.
He has been underinvested in the past, where we actually invest quite a lot of money.
But we also for you the results of these investments that they are now growing stronger and.
That proof of our strategy right and therefore, we are continuing to do that but overall, we continue to see strong trading.
Great. Thank you.
We have no further questions Sir please continue.
Hey, Thanks, everybody for attending this other school and we hope to see you again with the half year results for the Investor Day in October.
Yeah.
Ladies and gentlemen, this concludes the just the take rate Dot com.
Tightening up guidance. Thank you for you Eric I'll take you may now disconnect your line.
[music].