Full Year 2021 Just Eat Takeaway.com NV Earnings Call
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Good morning, ladies and gentlemen, thank you for holding and welcome to the just eat takeaway dot com core year 2021 results okay.
At this moment all participants are in listen only mode and after the presentation, there will be an opportunity to ask questions now.
Now I would like to hand over the conference to Mr. Coote. Please go ahead Sir.
Thank you operator and good.
Morning, everybody and welcome to this analyst and Investor Conference call to discuss the full year 2021 results with just eat takeaway com.
While our corporate website, you can download our press release and the slides for this analyst and Investor Conference call.
I will start off today's presentation by taking you through the highlights of 2021 and I will share some additional background on the results of our investments in sustainable growth during the pandemic and how this has benefited our business.
Transitioning our CFO will then talk you through the financial details of the results at group level and for each of our operating segments individually.
I will end the presentation with some concluding remarks, after which we will open the call up for your questions and my Fellow Board member <unk> is also here to answer your questions on specific topics.
Regarding the question and answer session.
I have a housekeeping announcements to make as already shared with the analysts we have amended the process for our Q&A session to make sure that everyone gets the opportunity to ask her or his question and to avoid marathon sessions.
Therefore, we will allow one question from each of the analysts.
Afterwards, the analyst will be moved to the end of the queue and if we have a sufficient time youll get the opportunity to ask a second question once everybody has offset tough questions.
We do hope that this will improve the quality of our Q&A session and that this provides an equal and fair opportunity to each of the analysts.
Please follow me to slide four.
We certainly have the 100 million active consumers by the end of December .
An increase of 9% year on year.
Our percentage of returning active consumers increased further to 67% while the number of orders per active consumer grew to $2 nine times per month.
Mainly driven by our announced restaurant offering and investments in growth.
This resulted in one of the 1 billion orders, representing a <unk> of more than 28 billion Euro and two continents with you.
We generated revenue of $5 3 billion Euro.
Which is up 33% compared with 2020.
Adjusted EBITDA on a combined basis with just eat takeaway to come was minus $350 million Euro in 2021, representing an adjusted EBITDA margin of minus 1% to 2% of GCB, reflecting our significant investment methods vendor.
<unk> will further elaborate on the financials and the financial section of this presentation.
I am now on slide five.
2021 was a year of strong growth driven by our investments during the pandemic.
Our business has accelerated with growth drivers above pre pandemic levels as Vince will explain in detail, we issued to convertible bonds and secured bank loans in 2021 totaling $1 4 billion Euro.
This has resulted in a strong cash balance of $1 3 billion at year end 2021 to finance, our operational cash flows and business plan.
With regards to portfolio management, we intend to discontinue our operations in Norway in Portugal to concentrate in leadership positions and profit pools effective as of the first of April of this year.
I would like to take this opportunity to severely thank our talented and dedicated Norwegian in Portuguese teams, who have worked tirelessly to build up our business in these countries.
Then finally to reduce complexity and costs, we confirm that the last trading day of our American depositary shares on NASDAQ is expected to be the 11th of March.
With trading on the OTC markets via a sponsored level one program expected to begin on 14th of March 2022.
On slide six we provide our orders with a split for each of our segments, both excluding and including Grubhub.
As you know, we only completed the Robert concession in June last year, and as a consequence of that the majority of our investments were focused on the legacy just E businesses.
Our investments resulted in an order growth of approximately 100% during the pandemic 2020.
Now if you follow me to the next slide please on the left side you see our reported adjusted EBITDA for the combined businesses.
We have peak losses in 2021, mainly driven by our investments in the historically underinvested legacy just fee businesses to reposition the business for online share gains.
We've added the bar to show our January 2022 annualized run rate with a minus $240 million Euro and already within our 2022 guidance of an adjusted EBITDA margin of <unk> of minus zero to up 6% to minus <unk>, 8%.
We are working hard to generate further profitability improvements throughout 2022 and beyond.
To show the strong underlying profitability of the combined businesses. We also provide the adjusted EBITDA, excluding the mandatory fee caps in the United States and Canada.
At the end of 2021, many of these fee caps have expired, but they remain in place in major U S cities, such as New York City and San Francisco.
As communicated previously we felt lawsuits against these cities last year and believe that permanent fee caps R&D Eagle.
In Canada currently British Columbia is the only remaining province of size within fee cap still in place.
Excluding mandatory E <unk>, our adjusted EBITDA for 2021 would have amounted to minus $158 million Euro and generate 2022 annualized run rate would have been minus 69 million euros.
Now moving to slide eight.
Profitability is in our DNA and this is unique in our industry.
In North America and shared in the previous slides, our strong underlying profitability was impacted by government imposed fee caps.
Northern Europe was the most profitable segments in the industry with an adjusted EBITDA between 56 million Euro in 2021.
In the UK and Ireland, we doubled orders in the past two years and we are now on a clear path to profitability.
And in Europe , and Australia, and New Zealand's high investments in leading positions also double the segment in terms of orders during the pandemic with profitability improving going forward.
On slide nine we focus on the growth drivers that have improved above pre pandemic levels.
From the left upper corner clock wise, you will see that our new consumer additions peaked during the pandemic and are now back at pre pandemic levels.
The order frequency of our active consumer base is much higher than before the pandemic and consumers also come back more often than before the start of the pandemic.
And then lastly, we have risk amount that the consumer spend on our platform for order is increasing driven by a number of factors and I would like to emphasize that inflation is generally a positive development for our company as it is a driver for average order value, which of course is the basis of both the marketplace and the delivery commissions.
Turning to slide 10.
We have already made great progress towards a profitable delivery business and we have further levers to enhance this the main levers are revenue improvements in delivery costs and overheads and the opex.
Revenue is driven by increasing average transaction values optimizing consumer fees and driving new revenue streams improvements in delivery are mainly driven by scale and density as well as tech innovation.
Markets, we typically have the leading market position, which brings consumer density. This is important to increase the number of drops are curious can make per hour and reduce cost per drop.
Continue with enhancements in technology are critical in our industry.
Implementing enhanced demand management further optimized order pooling and efforts to reduce waiting times.
Rats, and Opex will be improved by automation and economies of scale there.
His considerable operating leverage as you continue to increase volumes and revenues.
Now on slide 11, we repeat our portfolio management approach, which aimed at focusing capital and management attention towards our highest potential markets for generating scale leadership positions and profit pools as our industry rationalize.
As a result, we feel obliged to discontinue operations in Norway in political as of the first of April .
This would remove approximately $10 million of adjusted EBITDA losses on an annual basis going forward with an immaterial impact on orders and revenue.
With that I hand over to Brent for the CFO .
Thank you my first slide.
With our combined like for like bigger.
Conspiracy. The majority of this presentation will show figures on a combined basis, which includes just eat takeaway on grubhub and pool for all periods shown.
21, <unk> results vary from our combined bigger as our breast only includes the results of wrap up.
The 15th of June 2021, which was the date of the acquisition of.
Please see the notes in the press release for the exact explanation.
Please move to the next slide where we highlight the development of drivers behind the growth of orders and revenue as.
As indicated before but we continue to improve our key consumer metrics driven by our target investment.
Ended 21 with an active consumer base of 99 million people, which is an increase of 8 million consumers compared to the prior year.
<unk> 99 million active consumers to third quarter more than once.
Proportion than 2020.
Finally, the average orders per consumers increased to nearly three times a month. We are very pleased with these figures as they show a continued increase of our customer engagement. Despite.
At winds from the lifting of gold with restrictive towards the end of 2021.
As a result of decent API improvements you can see our strong growth order on the following slide we added $270 million incremental orders in 2021 delivery orders grew by almost 70% driven by investments in restaurant supply expansion and successful partnerships with global <unk> as well as.
The price leadership strategy implemented across many just deep legacy markets and the <unk>.
First off in 2021.
I would like to stress that our highly profitable marketplace business continues to grow showing new competitive advantage at our hybrid model brings most of our orders are still marketplace orders, which provides us with a stable source of capital to reinvest into growth.
Please move to the next slide where we show the positive impact of the improved growth drivers when GDP revenue, we published our full year GDP.
$28 2 billion euros in our January Q4 trading update.
You can see that our revenue group.
Slightly foster despite the significant impact of government in both fee caps.
On the next slide you can see the trajectory of both our revenue and adjusted EBITDA revenue as a percentage of GDP increase in age to 2021 would be further optimized pricing in the adjusted EBITDA you can see that 'twenty 2021 wasn't investments here the key.
Drivers will be explained further per segment.
Primarily related to expanding our delivery operations are excellent network and investing in our brand.
In 2022, we expect expected adjusted EBITDA to improve in both absolute terms as well as a percentage of GDP.
Moving to the next slide we bridge between the adjusted EBITDA and the loss for the period. Please note that it is in our rescue with Grubhub included from the date of the acquisition as feasible a large part of the bridge is due to noncash items, such as amortization of intangibles and share based payments.
Sure.
Turning to the next slide where we explain our cash flow throughout 2021.
As mentioned by <unk>, we secured a $300 million bilateral term loan in December last year. This was offered at attractive terms and provide some additional headroom in our cash position.
A majority of our operating net cash outflow is directly linked to our operational cost debt interest and capital expenditure churches that internal tech development and offices.
Following our convertible and debt raises this year, we are well funded for the future.
Turning to the next slide we have summarized the maturity profile of our debt and convertible instruments. This slide shows two things.
We have nearly two years before the maturity of our term loan and FERC convertible.
The majority of our remaining debt and convertible is quite equally spread over the next six years second the larger months are maturing later, which aligns with our expected progress towards targeted adjusted EBITDA margin of 5% of GDP.
Considering these two factors we are very comfortable with our current capital structure, which provides sufficient flexibility to reduce or refinance our debt through either operating cash flow generation or unlocking value in our balance sheet.
Now I will review each segment in more detail move.
Moving to our largest segment North America, you can see we grow by.
19%, despite the headwind of reopening of hospitality in the second half of 2021 when offices are back to full capacity, we will get a further bump in orders due to the fact that a large portion of grubhub orders or business to business orders.
Goldman in both fee cap has an impact of nearly 200 million euros materially impacting the profitability of this segment.
We are continuing to challenge the legality of the restrictions from private enterprises to re prices.
Results of these factors segment adjusted EBITDA was minus 29 million euros in 2021.
Now turning to the Northern Europe section as we mentioned as mentioned by its it is the most profitable food delivery segment in the world generating $256 million.
And adjusted EBITDA in 2021.
Segment, <unk> had significant skill and continues to grow quickly.
Despite the headwinds from the hospitality sector reopening orders.
Grew by 35%.
And with increasing basket sizes. This translated into a GDP growth of 42% and a revenue growth of 43%.
Moving to the UK, and Ireland, which with our classic fastest growing segment.
With material investment investments driving 52% order growth to almost $290 million of orders in 2021 investments were focused on product leadership, expanding the restaurant network as well as the successful ownership of Euro 2020.
GDP grew by 42% on a constant currency basis, which is lower than the order growth due to a lower year over year basket size.
Due to the increased mix of orders from Q was art and the effect of easing go with virus restrictions seeing <unk> begin to trend closer to refocus averages.
Revenue grew by 57.
Percent, reaching over $1 2 billion euros. After this period of significant investments and restarting growth in the U K, we will now focus our attention on joining our skill and to stay more profitability.
Now on to our southern Europe , and E&S segment again order growth was strong with nearly 40% led by an exceptional growth in Australia, where our delivery orders more than doubled.
Revenue growth outpaced GDP growth by 10 percentage points, we invested heavily in this underpenetrated in these underpenetrated countries, many of which were historically underfunded, primarily by delivery expansion sales and marketing as well.
Focus on profitability improvement, we will continue to carefully assess the tradeoff between divestments and long term value in these markets.
Next we see the financial result of iPhone, which are shown on 100% at constant currency base basis.
Sure.
Also covered earlier <unk> is one of the strongest business in this sector, having a clear leadership position in Brazil, which is a large and attractive market for food delivery.
<unk> had another strong year in 2021, achieving 55% GDP growth on top of their stellar 2022, 2020, adjusted EBITDA losses reflect the increased investment in grocery and feedback for <unk> has an opportunity to lead the large Brazilian market in the sector.
We recently participated in iPhone latest funding round to maintain our current shareholder holding but we remain open to disposing of our stake should we receive an offer which reflects the value of this asset.
With this I include my section and hand over to Gibson.
Thank you Brent.
Moving to the next slide of this presentation on slide 28.
Our strategy is and has always been to prioritize long term growth over short term profits.
1021 was an investment year to restore and expand our leadership positions in particular in the legacy <unk> markets.
Our adjusted EBITDA losses peaked in the first half of 2021 and markedly improved throughout the second half of 2020.
This year, we will start to see tangible benefits of these investments with adjusted EBITDA improving to a range of minus zero to up six to minus <unk>, 8% of GDP.
Delivering GDP growth in the mid teens.
Reiterate the long term goals of the group.
Firstly, we expect to grow our annual <unk> in five years by 30 billion year round, which is effectively more than doubling our current GTP.
Lee we will achieve an adjusted EBITDA in excess of 5% of GDP in the long term we.
We are confident that we will reach this objective by executing our strategy as outlined at the capital markets day focus on growing sustainable profit pools.
One of the very few online food delivery companies already achieving this in some of our markets and have a clear plan on how to get there for the company as a whole.
On the next slide we would like to draw your attention to the seasonality analysis for our GDP growth rates, which are subject to tough comps and are expected to increase in the second half of 2020 to do two atypical seasonality in 2021 because of the pandemic.
Like you probably recall.
Order growth in the second half of 2021 fell short of expectations exactly because of the lack of the usual seasonality in food delivery businesses, where we see the fourth quarter is typically the growth season, driven by shorter days and colder weather.
However, the first two quarters of 2021 were much stronger than we usually see.
This results in challenging year on year comps in the first and second quarter of 2022, and we therefore anticipate a relative growth rates to pick up in the second half of the year.
I will continue with the conclusion of this presentation on slide 30.
2021 was an investment year resulted in strong growth in the reinforcement of network effects repeat losses in the first half of the last year and we will increasingly focus on profitability going forward.
Our business has accelerated with the growth drivers are above pre pandemic levels and we reiterate our 2022 and long term guidance, we have a very strong cash base to finance, our business plan and our maturity profile of our debt aligns with our expected profitability improvements and we'll continue to be open to sell our stake in <unk> and we remain in discussion with several potential.
Strategic partners to strengthen the U S position.
And with that operator, I would like to open the call for questions.
Thank you, ladies and gentlemen, we will start the question and answer session. Now if you ask a question or remark. Please press star one on your telephone as a reminder, please limit your questions to one.
The first question is from Mr. Andrew Ross Barclays. Your line is open. Please go ahead Sir.
Hey, good morning, all.
My question is just around the U S and the cycle of strategic partnerships. We are exploring I'm. Just wondering if you can give us a bit more color.
The types of people, we're talking to and what kind of types of partnerships. We're talking about is it just strategic financial as well and then any kind of timeline on that right now. Thank you.
Andrew Thanks for the question.
Can't disclose too much obviously, we all understand that we are talking to both strategics and private equity.
It's difficult to scale of course to give you a horizon on that because it depends on what people are offering.
But would you be willing to look at by Fay.
JV or selling a stake or something like that as well as purely a strategic benefit.
Chip.
We are looking at all options.
Most important requirement is to strengthen wrap up as a business.
Thank you.
The next question is from Mr. Joseph Barnett <unk> credit.
Credit Suisse. Your line is open. Please go ahead Sir.
Excellent. Thank you.
Run rate adjusted EBITDA in January is currently on track for your guidance does that imply that given improvements in scale through the year, you wouldn't be able to hit guidance and invest more than you're currently.
Could you just talk a little bit about your priorities and that trajectory. Thank you.
Thanks.
That is essentially what we've always done obviously, we have a very profitable core of marketplace orders and we are increasing the efficiency of our delivery network as well.
So this is how we've always grown historically.
Now people have referred to that I was using the Dutch profits in Germany, and the German profits elsewhere et cetera, but it's also important that for instance in the U K, we have a very profitable underlying marketplace business that we invest in the UK itself. So.
So yes, we can do both but it's not that's not different to how we've done businesses business in the past now obviously during a pandemic. We made use of the pandemic to grow faster and essentially just be we became larger and of course, our kpis in Alberta.
So we invested more than then.
I think what we would have been able to do without a pandemic.
But this is this the way we've always grown.
Thank you. Thank you.
The next question is from Mr. Zhao Stuart Jeffries. Your line is open. Please go ahead Sir.
Thank you I wanted to revisit the topic of subscriptions for anyone watching you for capital markets day. There are obviously very big on cross selling and then using Uber one too.
To find that kind of behavior into something that's sustainable.
And I'm guessing judging by headlines today about pushing it through another 80 cities in Germany, and the push into Egypt.
Pretty confident it will be effective.
You've been very clear before you didn't think it was.
Kimberly good idea for Europe .
Has anything changed.
No it's not that I haven't said it is not particularly a good idea for Europe .
If you look at our <unk>.
Active user base, you've seen that that is increasing quite significantly it has increased quite a lot during the pandemic.
That's not for most of the business using subscription, but our customers are very loyal and they become more loyal during the pandemic. We also have loyalty programs, but then up subscriptions at most in most countries.
Regarding the entry off of other players in markets in which you have a very large market leader, we've always said that that is nonsensical.
Of course, all the things that work for us in a country like Germany have not worked for us in smaller countries like like.
Like Norway in Portugal.
And I think this is important right. We are a huge European delivery leader, but we have brands that struggled to become the market leader in smaller countries in Europe .
And so that also shows you that super complicated to get something like that done even if you have all the capital in the world to try to to achieve that.
Now regarding subscriptions, we haven't done the investigation I'm not I'm, not saying that we will not launch it.
You should also not think about us not having it because we do have it in certain places and in some places we call. It the loyalty program, but it is very similar to a subscription program.
And maybe to add to that.
Yes, we have a certain program.
Around 3 million subscribers.
In auto and quite a lot by now are making quite a bit higher amount of the ultrashape I know <unk> was alluding to we have slightly programs in almost all our markets.
Yes.
<unk>.
Which consists mainly of collecting points and then redeeming these points.
And then the midterm, we're trying to align these programs to come up with one drilling program across the board to make it more aligned and that could include both sides of the things loyalty.
Loyalty points plus subscription.
Understood that's great. Thank you.
Yes.
And our next question is from Mr. Andrew <unk>.
Your line is open.
Yes, Hi, Tim.
Okay.
Yes.
If you did see sort of how you're progressing in most parts of your business towards that sort of breakeven level or in house profits I guess, one of the big areas, where you guys. Good luck.
Australia, New Zealand market could you give us some color about the progress there what youre investing in it and give us some confidence about improving trajectory that.
I think the question is fair obviously.
We are in pretty good shape in countries like Germany, UK, Holland et cetera, et cetera. If you look at that segment, though it's a bit of a mixed bag, we have a very sizable and pretty fast growing Israeli segment still growing quite fast actually.
That's Poland in that that's also a great business.
How important is in the other segment now.
If you look at Italy, and Spain, those businesses are excellent.
The only difference with a country like Holland and Germany is that the penetration is lower so that means that we are making quite some upfront investments to get to the same situation as we are in Germany and Holland.
And this is again very similar to what we've seen in the past in countries like Germany, because you will remember that between 2016 and 2019, we actually got quite some criticism on the investments in Germany, because we were using the Dutch profits as I just add.
It's also to invest in them.
In Germany, so actually that sort of investments.
Profile is not something that is out of the ordinary in getting to such positions.
I think it's important to understand that not every country and not.
Every competitive surrounding allows you to get into that sort of position. So you really need to look at very carefully.
How the countries are doing by themselves.
Now, obviously, we have announced leaving Norway in Portugal, as a consequence of us looking very carefully at all.
Are we going to get the required.
The result out of our investments it was very clear that we were not getting those.
Norway and.
In Portugal.
It is for it is very clear to us that we will get those results in Spain and in Italy.
That doesn't mean that those companies are not.
<unk> is making now it does mean that that loss, making but the trajectory to profit is very clear to us and again very similar to what we've seen in the other markets in which we are making price performance.
Does that answer your question.
Yes. Thank you.
The next question is from MS. Miyamoto Shah Morgan Stanley Your line is open.
Great. Thanks for taking my question just one on the fee caps. If you could just give us a bit of an update on where you are today with the legal proceedings and then also could you share the revenue impact from fee caps in states, where the capital has already been released just to get a better sense since the impact on that from that this year.
Yes.
Thank you.
I think the way we're going about this fee caps of course without the.
The court cases, we are also talking to.
All of politicians, whether thats city level or state level to try to resolve it in another way then.
Through the course of <unk>.
Our preference very difficult to give you a timeline. It is very unfortunate we would have loved to have been a 200 million more profitable them yet.
Today, obviously.
But it is it is what it is.
It depends very.
Every where you are in the world or in the U S and Canada.
To answer your second the second question.
Our Canadian business for instance, normalized is actually very profitable.
The fee caps in Canada, we're very closely tied to the state of emergency so thats a bit different from the situation in the in the U S and therefore that in a way apart from.
British Columbia.
And I think Nova Scotia, but I think Nova Scotia is very relevant for us, but those two provinces.
The impact of that is pretty significant because actually you see the profitability go up quite rapidly.
They fall away and Thats of course, because your costs are at the bottom.
The bottom half.
Of your of your profile and the benefits of course are with scale.
Incremental orders should turn into profit.
So that's a question that's difficult it depends on the market, but obviously it is very good if those if those vehicles globally.
Okay. Thanks.
And our next question is from Mr. Andrew <unk> your.
Your line is open. Please go ahead.
Hey, good morning.
There's some suggestion I think coming into Q1, we're seeing some very very soft trading maybe even negative and a couple of markets. So within the guidance, which is the priority.
Sorry, mid teens growth for us at EBITDA guidance. Thank you very much.
Good question that both priorities.
I think what's important to understand is that we have very good control over over.
EBITDA, because we choose to invest for instance in the UK.
Actually quite significant amounts of money to improve our position.
Over there.
<unk> global for Us.
Is it related to the comps and the comps the comps, but still it's very important to US also to hit the <unk> targets.
And I think it's pretty early on in the year to make any sort of claim of where it's going to end up with but we have good visibility and again the.
Inflation actually works in our favor.
Okay.
Okay. Okay. Thank you.
The next question is from Mr. Rob Joyce Goldman Sachs. Your line is open.
Alright, thanks very much for taking the question. So I appreciate your comments that you've got very good visibility on the trajectory of profitability across your businesses. When you look beyond 'twenty. Two does this mean you can see yourselves being positive EBITDA in 2023 at a group level and if not then one thank you very much.
Sure.
Yeah very good question Rob.
Not Luke.
Again, we fully control.
Our profitability profile.
And we can't really estimate.
Whether our competitors are going to be more rational than let's say in the past couple of years, we would hope so, but we cant count.
And.
And therefore, we're going to be quite prudent if we need to invest a lot of money in the U K, we will do so if our competitors are going to be more rational then.
We become more profitable.
So I don't want to take take.
Take.
Equal that in advance.
On the future I think the most important thing for you guys to understand is that you.
We have quite some buttons and levers that allow us to change the profitability profile of the business.
Okay is there any sign of competitors, becoming more rational.
Well, we have delivered relief, Spain that was rational.
To be quite Frank I don't see a lot of those those movements. We do know of course that it's much more difficult to raise capital now than what it was in the past.
Last couple of years. So it has to happen for the sector I think that's pretty clear to at least to us.
But again, we're not counting on as we have full flexibility in terms of the <unk>.
Investments that we need to make in.
Most important countries.
And we'll have to see whether they're going to they're going to be more rational, but I think there is a question for other people not for us.
Thank you.
The next question is from MS. Paula Citi. Your line is open.
Hi, good morning, all and.
I just had a follow up question on the fee cap.
On that slide where you show your run rate of EBITDA losses in Q4, I understand the different including and excluding the fee cap. The January run rate for the fee caps is still at $181 million that is the 119 in 'twenty 'twenty. One I'm just trying to understand that in the context as you said the Macy's U S ones haven't come.
Off the top from New York and San Francisco.
Nadine one being off a pop from British Columbia.
Yes, it can be very precise actually.
Of course, New York is a huge chunk of the fee cap.
In the U S for us.
To get a couple of other cities.
The Canadian fee cap ex was in place until January for most of the provinces because of course of the renewed.
Let's call it just <unk>.
It's called <unk>.
Yes.
And have fallen off so actually that was the case in January and February does fee caps were gone for most of the country.
Okay. Thank you.
The next question is from Mr. Ashwin.
Kelly UBS. Your line is open. Please go ahead Sir.
Yes, hi, good morning, maybe.
Maybe just on the U K can you give us.
Some insight into your plans with respect to the three logistics networks.
And how you should migrating them to walk to the timelines.
What might be the impact on delivery cost per order, how should we think of metrics you could tell us there that would be super helpful. Thank you.
Yes, I can take that so currently as you rightfully said, we have three <unk>.
Three different models scripting flawed model.
What we call telco internally and we have third party provider mainly Europe .
So that's the ongoing contracts with.
With two outs, which were mainly using in the larger cities.
But also here, we aim to get some efficiency gains.
And that one and obviously there is a perspective too.
Only run our systems at some point in time.
And we are aiming for that one.
Also on our network at such and such.
<unk> has alluded to earlier a lot of.
Operational gains we can make in the future for example by increasing share of.
Of pooling or sagging off orders for example.
Which in the past might have been also challenging with some restaurant partners, but we're also working on that one, but we're actually able to tool to be allowed to do pooling with with all of our restaurant partners. So that we.
We will increase the efficiency of the network quite a bit.
And also scale, obviously contributes a lot to it.
So once we are increasing the scale predominantly in necessarily like lung for example, the network where get way more efficient than we've proven that in the past as well with the rollout of major chains and huge growth, we have actually been able to decrease the cost of our logistics network.
On the telco side by more than 10% over the last let's call. It 18 months.
So there is an effort.
The third party provider is still ongoing contracts, which we have to honor and after that we will focus on our own systems, mainly with <unk>.
<unk> gross on deep type model in the large cities also have branding on the street.
But there will be a mix of our internal.
Models.
So just a quick follow up in terms of ability to pool. What has changed is that with the largest sort of restaurant partners Macdonalds etcetera.
Is that much smaller.
Partners, who are loving it.
As couple of developments there.
Pool since.
Basically 2016, but we've been quite restrictive on it because of course could catch call.
But if you're a network increased intensity you can do more pooling you just have more movements in the same direction and yes, we are working with partners such as Mcdonald's, making pulling possible in the Mcdonald's network.
Thank you.
The next question is from Mr. Marc Hesselink LNG your line is open.
Yes. Thank you.
Can you talk about your directional trend of gross margins.
Given the end of it maybe the positive of increasing delivery fees, but on the.
Negative stimulus of the mix of more delivery orders, what do you expect there.
Yes.
If you look at.
Let's say for example.
Like Germany, and the Netherlands.
We are usually able to even though we were increasing the share of delivery to actually increase and I'm not talking about EBITDA.
Absolute EBITDA now and.
In the past now.
There is obviously an continuously increased share of logistics, which were also foreseeing going forward because most of the restaurants, which are adding to the platform.
Will it be logistical restaurants.
As compared to the current share of restaurants on the platform and also you have the convenience pit, which would also mainly be on the logistical side. So there will be continuous pressure from that one but we're also like we said earlier, we will also achieve efficiency gains so from the likes of pooling optimization of the.
Network and the algorithm.
No.
We believe that.
In most countries.
We would be able to actually increase.
The margin on that end.
Because also if you look at where that was in the past a huge deterioration. It was mainly driven by fast roll out of larger chains and buying.
By now we actually do have most of the large chains all of the large chains and in most of our countries. So you wouldn't expect another let's say huge rollout like we had in the past and backup alluded to in an hour.
More mature countries like Netherlands, and Germany, we were able to continue to improve the business also on a profitability basis.
Okay. So the year over year improvement in the margin and ASP EBITDA as a percent of GDP is not necessarily only.
Improvement in gross margin is just one of the components.
One of the components because.
It's for sure that what you've seen in the millennium vessel logistics when we've we've done that now quite heavily since the last three years that has put some pressure on the gross margin with what you see today is that.
We also we got it.
Benefit from.
There have been a more dense network economies of scale that we also see in <unk>.
The logistical network. So both logistical gross margin per order is is increasing at the same time and thats.
We also pointed to that is the fact that we also have a significant share of orders actually the majority is.
As Mark place orders, which.
As shortly bringing a very healthy gross margin.
On top of it so on a blended rate.
We see significant improvement and of course it so the EBITDA improvement that you are referring to.
Will come through both gross margin improvement as well as.
The quantity of skill with respect to fixed costs, because our fixed cost.
For example, marketing already reached sort of a sealy, which is not going to expect to do.
Increased significantly but.
So from that angle come from both both sides.
Okay. Thank you.
The next question is from Silvia Cuneo Deutsche Bank. Your line is open.
Thank you and good morning, everyone. Thank you can you talk about this development and Youre exactly right.
We've seen many pieces of news.
Got it.
Thank you Ron Paul for the question Brian .
In terms of automobile company.
Thank you.
We designed.
Thank you.
So Sylvia.
I think and I hope that's clear from the announcements.
We make that Youll see that were still building up the inventory you should expect more announcements regarding grocery and convenience.
I think the.
The thing that we're trying to accomplish is that we run it.
At the profit and it might not be a profit now for instance, if the whole logistical network in the country is still loss, making but it's for us not.
There is no difference between a grocery convenience order.
And a food delivery order, if we deliver it from a <unk>.
Supermarkets.
Obviously, there's a difference if we built our own hubs such as we'll be doing in Canada, and we are taking a measured approach to it.
On a per country basis.
I think in places, where we can't get to a grocery partnership it's more likely for you to see us build hubs.
Doing that also will cost probably supermarkets tend to also work with us on the on those hubs, but we're doing quite quite some things there in terms of the exercise is still to make a profit on it just like we want to make a profit on older delivery orders is.
As well you shouldn't you shouldn't think of this as something else then the expansion of our logistical network.
And to give some more color to it.
Yes, you might have seen that for example in the U S. We launched a national partnership with 711, which are branded as Grubhub closed stores.
And basically delivering from over 3000 locations here.
We also have a subscription partnership which will launch with in store comps.
In the U S.
And then if you could talk about Canada.
Where we go very much into the <unk> area, but we also have partnerships. We have over 1700 convenience stores from partners live we launched basically.
Seven Express Lane story, so far.
With more than 30 by mid of the year and we are aiming to cover more than 70% of our active consumers with docs.
Dark stores, our own dock source and that goes very well and it's very well received in terms of orders per day per store.
It's above our expectations here so like.
Very good progress in North America in that segment and if you go to UK and Ireland.
We've closed partnerships.
<unk> been with us and tests for one stop and there.
There will be coming up more things on that and so on so very good progress in the UK and Ireland and also in Europe . We had several announcements most recently on on the partnership side as it was alluding to in Europe to focus more on partnership side, because we think with our assets that we have.
And the assets then that partners bring in we can actually scale up the business very fast because theres a lot of partnerships, we can deliver from very fast.
But our preferred model.
I also wanted to exclude that we are selectively going in with dark stores in Europe .
Thank you.
The next question is from Mr.
Your line is open.
Yes, very good morning.
In the press release, you mentioned that the team is working hard to make 2020 to a successful year for both the company as well as all stakeholders, including shareholders.
And obviously you are acutely aware that they are pretty United in the future not only improve profitability, but also accelerated core protection.
At this point in time, all your peers are under pressure severe pressure.
And you're basically on all the strategic pieces to make the puzzle that are for all players in the industry.
And that will basically allow you to do share buyback at very attractive levels et cetera et cetera. So the question is have your discussions with your counterparts.
On corporate action increased in recent months and at the right price are you now more willing to follow up on divestments to unlock some of the sum of the parts in your business.
Thanks.
Thank you let me give you a diplomatic answer.
We are of course aware of everything that you said and we are of course aware of the additional scrutiny on the.
On the sector.
The things that.
Are interesting to us of course.
It's all around.
We believe we're going to be the successful businesses.
And we've spoken about that those businesses that are very large as opposed to the size of the population in those businesses that have a good profitability profile.
We understand of course, all the concerns of the of the shareholders.
I think it's safe to say that we are taking those those things very seriously and we're looking at everything.
Sure.
Thank you.
The next question is from Mr. William.
Christine Your line is open.
Hi, just a quick question around your scenario advertising revenue it looks like it's tripled from 2010.
Q1, how much of that is driven by including Grubhub.
And what's your perspective on advertising going forward.
I will just say that it has a lot of attention on our side, we've had advertising for quite some time.
Big team on it, but I think youre, probably better place too.
Yes.
Having a lot of activities on that side I mean, it ranges from bidding.
Setting yourself up in the ranking which.
It's property automated with our partners.
Gift cards for example, but we also what we have as well as the <unk> program, which is a huge benefit for the consumers and Jeff to see that in most areas.
At least within.
European operations for example.
In a country like Germany more than 30% of our restaurant partners.
Allowing stent graft that basically means they are paying for a rebate to the consumer and it creates loyalty with them and thats something that our competitors don't have basically through that program you get 10% discount every time, you order with our restaurant network ex U S.
More than 20% of our restaurant partners are offering sort of Tampa, which is a huge competitive advantage with the other one third have so that commercial growth team is on the one hand generating additional revenue opportunities and on the other hand also trying to increase our frequency another area, which we are focused on.
With the partnerships on FMT.
The Jeep brand.
For example, we were most recently <unk>.
Advertising together with Magnum, which.
As.
Basically.
Cooperating with us on the branding side and also trying to annual guidance together to.
Actually I agree obviously, the revenues for that product, but together with us.
That's also an additional source of.
Quite some some income for US we also see huge potential going forward in that area and.
We also see X holding that business over the next couple of years.
Our that part of the business.
Thanks.
The next question is from Mr. Nigel John Pitzer Your line is open.
Thanks, Good morning.
Follow up on a couple of previous questions about the combination of <unk> kept in U S. On the one hand, and discussions youre, having with potential partners, including private equity about growth.
It seems to me that reaching a deal is not easy or even possible as long as the court has not provided clarity about the issue.
So does it make sense to assume that if you say all options are on the table youre talking more specifically about potential partnerships towards grocery delivery or is it for the company as a whole still and if so could you provide some color on the time lines et cetera.
Thanks, Yes, I don't want to elaborate too much on it but we are looking at everything that make that would make drop off a stronger business.
And this is quite a lot of U S. Players that can look through the fee caps because I think there is broad agreement that they are probably another needle.
But yeah of course, if they would fall away Tomorrow, then that would be.
Beneficial because it's just additional EBITDA.
Thanks.
The next question is from Mr. Skinner.
Carlos next your line is open.
Thanks, very much morning.
So you got last year in June $92 million run rate in January that <unk>.
Run rate in the second half was more like $1 $5 million I'm, just trying to get a sense for.
What's implied in your guidance for 2022.
The fee caps are fully observed in absorptions in our guidance.
So if they fall away it's additional EBITDA.
But can you give a sense on what that fee capital $100 million of fee caps that you're assuming within your guidance for that for us, it's only $60 million up $40 million drop through can you give us kind of a starting point.
We are assuming a continuation of the New York and San Francisco fee caps in the in the U S. Broadly I'm sure. There are some smaller ones, but they are not material and we are assuming in Canada only was at British.
Lambert to continue for some time.
And just to clarify is that more consistent with the second half fee cap run rate is more like $140 million.
I think that's broadly right yes.
Great. Thank you very much.
The next question is from Mr. Bryan Garnier Your line is open.
Hey, good morning, Amdocs tolls.
Regarding the possibility of a winning.
And also in Europe .
Do you think.
Would it be higher than glad Judy opening them on your own or with <unk>.
Being a small player.
We've already established this operation.
Some das totals.
Sean.
Okay.
I think it's unlikely that we would acquire any players.
I think the level of.
Losses that most of these players incur are just unpalatable for us obviously the benefit of us delivering.
Grocery slash convenience is that we already have a very sizable.
Delivery network, basically everywhere, where we operate.
And therefore, a lot of the.
Costs involved in the process.
When you have to absorb.
In our company so it would not be smart for us to to buy players even of course I mean, we've seen a couple of these things happen.
In the last half year, even if it's a fire sale of those assets I think that the.
Cost level is just too high for us to entertain.
Thanks.
During the time I would like to get to work to Mr.
Okay.
Alright, thanks, everybody would like to round off this analyst and Investor call by thanking you again for participating and your questions should you have any additional questions or remarks, please reach out to our investor relations team. Thank you.
Yes.
Ladies and gentlemen. This concludes the event call you may now disconnect. Your lines. Thank you for joining and have a very nice day.
The conference is no longer being recorded.
Okay.
[music].
Okay.
Yeah.