Q3 2022 Just Eat Takeaway.com NV Trading Statement Call
Okay.
Okay.
Okay.
Hum.
Okay.
Okay.
Okay.
Yes.
Okay.
Sure.
[music].
Okay.
Great.
Hum.
Okay.
<unk>.
Okay.
Okay.
Yes.
Okay.
Okay.
[music].
Okay.
Okay.
Hello, and welcome to the just eat takeaway Dotcom Q3, 2022 trading update.
Please note this call is being recorded and so the duration of the call your lines will be on listen only.
You will have the opportunity to ask questions at the end of the cold. This can be done by pressing star one on your telephone keypad.
If you require any assistance at any point. Please press star zero and you will be connected to an operator.
I'll now hand, you over to your host eat the rone to begin today's conference. Please go ahead.
Thank you operator.
Morning, everybody and welcome to this analyst and Investor Conference call to discuss the first quarter.
2022 trading update adjusted takeaway to come.
On our corporate website, you can download the press release and the slides for this analyst and Investor Conference call.
Given that we published a trading update only today's presentation regarding the first quarter trading update will be kept brief.
Afterwards, we will open the call for your questions.
Thank you Gavin and then who carry are also here to answer your questions regarding to a Q&A session. As a reminder, we will allow one question at a time from each of the analysts.
Please follow me to slide two.
Just a takeaway to come after two years of significant investments following the merger and the pandemic. So both positive gross transaction value growth as well as positive adjusted EBITDA in the first quarter of 2022.
Jesse takeaway, though comp process to a 35 million orders in the first quarter of 2022, representing an 11% decrease compared with the first quarter of 2021 predominantly caused by challenging year over year comparisons. Following the end of COVID-19 restrictions and to a lesser extent.
By reducing the number of low contribution orders.
We have been lower in Europe , Germany remains the most important growth driver with year to date positive order growth.
While the market backdrop in the UK was less favorable against a strong comparator period, the UK and Ireland segment achieved material improvement in profitability.
In North America, Grubhub partnership with Amazon showed encouraging early results and then finally order growth into Southern Europe and agency segment was adversely impacted by market contraction in Australia due to lapping a period with significant COVID-19 restrictions in 2021.
<unk> was up 2% in the first quarter of 2022.
Compared to the same periods in 2021, driven by a higher average transaction value and positive FX movements.
Following the merger of just eat and takeaway dot com and the pandemic, we made significant investments most obviously in the U K, but also in other countries in our portfolio.
Most of these investments were around partner supply and the rollout of our larger delivery network.
I am pleased that just eat takeaway com was adjusted EBITDA positive in the third quarter of 2022 materially ahead of prior guidance at the beginning of the year and in our half year results, we disclosed at Northern Europe remains highly profitable, while North America, and the UK and Ireland also released positive adjusted EBITDA in the second.
<unk> 2022.
Adjusted EBITDA improved in all segments in the first quarter of 2022, both year on year as well on a sequential basis.
Driven by a range of initiatives, we continue to improve our operational efficiency, while simultaneously enhancing the user experience and the consumer proposition.
Already made good progress to improve the profitability of our business and we have further levers to enhance this profitability as you will see on the next slide.
Now slide three.
You will remember that I presented this slide in previous earning presentations, we show the three pillars around which we will continue to improve our business.
Three main levers are one revenue per order to improvements in Korea cost per order and free overheads in Opex.
Revenue was driven by increasing emphasis extra values optimizing consumer fees and driving new revenue streams.
Improvements in delivery cost per order are mainly driven by scale and density as well as tech innovation.
In our markets, we typically have the leading market position, which brings consumer density.
This is important to increase the number of drops our careers can make per hour and to reduce cost per drop continue.
Continuous enhancements in technology are critical in our industry and we are implementing in Hollister Simonton instruments further optimized ordered pooling and efforts to reduce waiting times.
Now this is also downstream benefits for instance in the call Center.
In regard to compensation to consumers.
Over the Opex will be improved by automation and economies of scale.
Our focus on profitability delivered material improvements in revenue per order delivery cost per order and overheads in Opex and as a result, just eat takeaway that was already adjusted EBITDA positive in the first quarter of 2022.
Now given there is considerable operating leverage as we continue to increase volumes and revenues. We are on track towards our long term target margins.
On slide four.
I would like to spend some time on further improvements that we have made during the first quarter.
In addition to the already actions improvements, which we identified in our half year results presentation.
On the left side.
The adjusted EBITDA margin that we delivered in the first half of 2022 and that we will use as a starting point.
As a reminder.
EBITDA for the first half of this year was minus 134 million euro or minus zero at 9% as a percentage of GTT.
We've been pricing.
We have increased consumer fees throughout the first half of 2022 and three increased commission rates in Europe in the first week of July .
We have also realized efficiencies in marketing from July onwards, and in the U S. We realized efficiencies following the commercial agreements with Amazon.
I'd like to stress that these improvements will already action and we stated during our half year results webcast that this would bring us to the middle of our previously guided adjusted EBITDA range for the full year.
Now on top of this.
We delivered further improvements in reduction of delivery cost per order for instance by introducing pooling and other operational efficiencies in June we announced the hiring fees for the entire business and we have implemented several cost reduction initiatives.
As a result, adjusted takeaway to come was adjusted EBITDA positive in the first quarter of 2022 materially ahead of prior guidance at the beginning of the year and we expect to generate positive adjusted EBITDA in the second half of this year.
Turning to slide five.
As a result of the significant progress made during the first quarter.
Iterate as our updated guidance for the full year of <unk>.
<unk> to grow by low single digits year on year in 2020 to positive adjusted EBITDA in the second half of 2010.
92.
And for the avoidance of doubt we expect the company to maintain positive adjusted EBITDA in full year 2023.
And the long term objectives with just eat takeaway com remains unchanged.
In line with our strategy to improve profitability and to maintain a disciplined capital allocation policy, we announced the sale of our equity stake of approximately 33% in the <unk> joint venture to an affiliate of process in August .
The transaction consideration will comprise 1 billion euro and cash on closing and contingent consideration of up to $300 million Europe .
The transaction proceeds will be retained to strengthen the balance sheet and to serve as repayments of upcoming debt maturities.
Provided that the resolution has been adopted.
EDM on 18 November 2022 completion of the ICU transaction is anticipated to occur shortly thereafter.
I will continue with the wrap up of this brief presentation on slide seven.
After two years of significant investment the company has returned to profitability earlier than anticipated anchor.
Encouragingly all segments improved adjusted EBITDA in first quarter of 2022, both year on year and sequentially.
Driven by a wide range of initiatives, we continue to improve our operational efficiency, while simultaneously enhancing the user experience and the customer proposition.
As a result of the significant progress made during the first quarter of 2022 managements recently updated its guidance for the full year.
The sale of our <unk> stake in return for a cash consideration totaling up to 108 billion euro issuance that the business is well capitalized.
<unk> of the transaction is anticipated to occur shortly after the extraordinary general meeting on the <unk>.
18th of November 2022.
And in the U S. We together with our advisors continue to actively explore the partial or full sale grubhub to.
To conclude and just your takeaways from owns many leadership positions of significant scale is well capitalized through the sale of our <unk> stake and is therefore, well positioned to capture profitable future growth.
And with that operator, I would like to open the call for questions.
Thank you Sir as a reminder, ladies and gentlemen, if you would like to ask a question. Please press star one on your telephone keypad once again Thats star one for your question.
And our first question comes from Silvia Cuneo from Deutsche Bank. Please go ahead.
Good morning, everyone and thanks for taking my question.
On the per pound.
And going into next year.
You mentioned, the consumer backdrop will likely be.
Okay.
And then can you talk about.
Intermodal demand Seattle will frequently.
At this point Joe Mike.
While global market.
We can now take impact.
Maybe perhaps.
And you will recall.
Thanks.
Martha.
Thank you.
Yes. Thanks for the question I am going to try to give.
The most elaborate answer I can give you on that without predicting the future because I don't think we are in that debt.
Debt position.
I think what's important is that if you look at our cohorts that the.
APAC that we see on growth is predominantly caused by the COVID-19 cohorts and the large absolute amount of new customers that we added.
And therefore also you have a churn of those customers.
That is larger in absolute terms, but not in relative terms than what you would normally have so.
So thats the biggest impact that we see currently and that is actually causing.
Closing the order decline.
Now thats good because it means that we are left with very very good customers ordering very frequently it means that all the.
Cohorts.
Before COVID-19 are intact and it means that the.
Cohort.
Cohorts from the Covid pandemic are also largely impacted of course, because these were large numbers of people. We do have an impact, but I think for the business model.
Integrity of the business model is actually quite important.
And also if you look at things like order frequency was slightly below.
Where we were during the pandemic, but we are much above where we were when we entered the pandemic. So from that perspective, the business is incredibly healthy.
<unk> provides us with a good base for future growth.
Now.
Then we take another step back re grow because we try to penetrate.
The markets.
With high shares off of the population ordering with US now clear examples are Holland, where 40% four zero percent of the population of orders with us the UK. We're at about 35%, but also countries like Germany, where the penetration is about 20% of the of the adult population.
We try of course to increase the penetration in all our markets and.
And of course is to increase the penetration in markets in which you are large and already profitable you are just increasing the EBITDA.
Essentially what we tried to achieve in most of our.
Most of our businesses.
That also means that those businesses are relatively stable because you already have a lot of consumers online and you are loss are you able to capture new customers.
Quite quite easily.
In the past 22 years, we have not seen a material impact on our growth from any sort of prices, whether its the banking prices or something else as part of the business during the dot com.
<unk>, which was also probably not the best moment to start there.
We saw the business.
In hindsight, we never saw a material effect and why is that because it's a penetration game for us we've tried to get the penetration to go up and that drives the growth. So it's not normally dependence on other things than ethanol.
<unk> is a very strange event for a food delivery or for humanity UTC.
So it was slightly different but normally.
Penetration actually causes closest.
The growth.
So we are not currently expecting material impact on our business from a pandemic, but we also excluded so we want to be very careful with that I think what's important is that.
We have a very large marketplace business and our marketplace food is just must cheaper than delivery. So there is a possibility that people will shift from delivery to a marketplace restaurants.
Is that food is cheap I'm, not hoping delivery fees unfolding actually food prices and of course. This is a concern because food prices are going up so.
So we do expect a shift to more marketplace waters, but again, we can't predict the future. We don't know I can only tell you that we don't think that a material that we've seen a material impact.
Now.
But obviously that doesn't say something about.
Yes.
Ladies and gentlemen, thank you.
Okay.
Thank you. Our next question is from Jay This talk of Jefferies. Please go ahead.
Thank you.
Bearing in mind.
Comment you just made around <unk>.
Current churn from the Covid cohort.
And the fact that the <unk>.
Acquisition of those customers came during the period.
Large investment.
Allocation of growth capital followed by the business.
Is there anything that youre seeing that changes your views on the ACP strategy as we go into 'twenty 2023 and 2024.
I'm sorry, it's quite a broad question.
Any kind of that would be useful.
Yeah, Thanks, well if.
If you look at the Covid period.
I would say that our customer acquisition cost were actually quite low because we acquired a large number of customers and of course it happened in a very short period of time, that's why it was very expensive.
But I think in terms of customer acquisition.
We gained a tremendous amount of new customers in that period and of course, if you gain a lot of new customers. If you have lower and that's actually the case relative to and you still have an absolute that's quite quite high but that's a normal thing for food delivery business to <unk>.
So I think actually.
CPA.
Cost of acquiring these customers was actually much lower than outside of a pandemic.
Sure.
Does that then impact our strategy.
Well to a certain extent because obviously we are part of society. So.
Comps and we closed on a couple of businesses as you are probably aware of across our Norway, Portugal and Romania.
<unk>.
In a growth scenario.
You, just calculate where youre going to be let's say a year from now two years from now and that picture looks of course dramatically different. If you are not in a pandemic or because you don't have that growth.
So we're constantly looking at okay. What are these businesses going to do going forward and if the environment changes then of course also that outlook changes.
If you look at our strategy and the way we operate our business I would argue with you that the Mesa is the same since we started the business.
And that Hasnt changed dramatically, but the environment has changed and the environment has changed from being overly enthusiastic about both businesses to being very negative.
On the sort of businesses and probably the two of us in the mill.
Our strategy going forwards because actually we are we are more efficient than before the initially so that also means that while we are producing EBITDA. We can also invest a little bit in certain aspects of our business. The main investments that we're currently making is not only on efficiency. It's also on experience.
Quality of our service over just but foster now we handle customer queries Foster and of course, we can reduce the costs.
If you think what is important the other thing is as important to us as a food delivery business. So qualitatively I think were better business, we will become an even better business going forward and we will focus more on areas where for instance, we are a little bit weaker in the footprint that we have I think still the important thing to remember is.
If you just list all the profitable food delivery businesses on the planet.
Likely to own most of them.
So from that perspective, I think I think we're going in the right direction and we will.
I would call the things that we're doing now hygiene, so to make sure that that business look more like basically the Dutch business or the German business.
<unk> has always looked.
But going forward of course, we will do a little bit more delivery of non foods into more delivery of grocery I think actually we've been resistant to faces introducing flash grocery delivery in because we thought that that would be economically not sound, but we do believe that there is an opportunity in grocery delivery.
On our existing logistical network.
Because of that the logistical network is becoming more efficient and therefore, we can do more things. So we'll be we'll be venturing out to other adjacencies. So thats something that you will see in the next in the next year.
But other than that I think I think we're done.
Well on costs.
Jacob.
Thank you our next question.
<unk> of UBS. Please go ahead.
Hi, good morning.
One question then please.
You talked about the profitability measures you are putting in place clearly very confident on it.
Into 2023 full year EBITDA.
But perhaps can you talk through how we learned that 'twenty three with dog he's on.
Getting some growth back again in the business or GTD I think we're all expecting probably consensus was mid single digits.
TV growth.
Do you think even into next year, it will somehow be disconnected from growth and there is enough to sell pellets in the tank.
Regardless so.
Low single digit or mid single digit growth, we will get through to the right.
<unk> zero, a full year basis, while EBITDA. Thank you.
Well I'll cut that.
The question in half so.
At least runway and of course, when theyre going to give you the EBITDA for the second half but.
We were we lost <unk> 131 was 40.
44 million.
And EBITDA in the first half.
So that's.
That is 270 million euro run rates.
The first half and I'm not going to give you the second.
EBITDA, but obviously that's at least the swing factor of $270 million EBITDA.
So that means we're not dependent on growth, but not at the same time. It also just towards thoughts.
I think it was Sylvia.
That's we grow because of penetration.
Horse now.
The comparison is with a pandemic so it's hard.
At the same time, we know that we will grow.
And the benefits from the way we are now operating again.
Please bear in mind. This is not extraordinary for us because we've always operated like this and of course, if you've merged the businesses in the middle of <unk>.
Pandemic and you need to invest in the in those businesses and you want to expand those businesses youre going to increase the cost and therefore, you're temporarily not profitable, but we know how to be profitable we're back to profitability.
And growth therefore, we will be profitable it will not be loss, making and I think that's a big benefit from owning all these profitable positions because we can just now.
With the growth increase our EBITDA.
And that's the sort of thing.
We're looking at so no we're not dependent but we're also not going to be excited if we grow slowly we tried to grow fast.
Got it thank you.
Thanks.
Thank you we now move on to a question from Joe Barnet Lamb of Credit Suisse. Please go ahead.
Good morning team. Thanks for taking my question I was wondering can you talk about the degree to which your accelerated path to profitability also pulls forward free cash flow breakeven sort of how you see the timeline around this and I guess related to that when you get to free cash flow breakeven will you be more willing to address your capital structure. Thank you.
Thanks, Let me.
Possibly to Ben.
Let me tell you that.
<unk>.
Our next target obviously is to get to a neutral cash burn.
We're earlier at the.
Neutral EBITDA, there's a couple of things.
That will improve also below EBITDA a couple a couple of obvious things like like ICU.
But.
Just generally the way we think about it is that we should not be burning cash.
But I will hand over to you Bill.
Yes.
As you know adjusted EBITDA is a sort of a metric.
To measure to help of your operations at the same time, there is quite a lot below that.
<unk> point of view as well as cash flow.
Well on the P&L of course, you'll have two leases.
Which you need to.
You need your offices to range of operations.
Sure.
Yes detect shift interest.
And one offs that are always on our.
And our P&L, but at the same time, we also invested significantly capex.
Well as we also said last.
I think in the first half you've seen what we burnt.
Adjusted EBITDA I think it's fair to say that.
That will also come back in the second half of next year, we expect to lower our particular also our capex sure to lead a bit.
Well, we are certainly on the way too.
Ultimately become cash flow positive.
I think it starts with making money on the operations. So the EBITA adjusted.
Adjusted EBITDA trajectory is hosted in the right direction.
I'm not going to say that we will be EBITDA.
Cash flow neutral next year, but we certainly moving in that direction.
And we certainly will take into account. The fact that we continue to invest in growth.
But that will also have to turn into web into profit and cash.
But we own the right path and.
And just to add to it because I think <unk> mentioned it.
We don't have to invest in IP with any more if we don't own it.
Of course also to create the cash flow to the bottom $90 million.
Yes.
Tremendous thank you very much.
Thank you.
Thank you we now have Mac with Stephen of J P. M. Without next question. Please go ahead.
Hi, everyone.
If you could tell us maybe the latest trends in terms of quarter development.
The minus is Apple.
For the quarter, roughly where we expect.
<unk> October so far and then related to that.
If you could give a bit more color on the orders that you are losing I mean, given your comments on the call.
On the first question just to check it's fair to assume that the vast majority of.
Autos that you that you lost in the quarter coming from delivery, which I guess that drives the profitability, but if you can just give a little bit more color on what are the orders that are really.
Really down the quarter that would be very helpful. Thank you.
Yes.
One the trends, obviously cant give you the current trading but you will see that in absolute order terms it looks like we're stabilizing.
That doesn't say anything about the future, but you also know with our <unk> target for the year. So that should give you an indication of what Q4 should look like.
So I think thats good news, but it is also logical rise you can only level pandemic once.
Obviously no.
Pandemic left you don't have the same let's say.
Influence on your on your order numbers.
Then regarding the orders were losing I don't think thats to say delivery or.
Our marketplace buyers there.
So.
If you look at the reduction of the orders is mainly caused by dose cohort from the pandemic.
But at the same time plasticizers, what we were before the pandemic right. So I think I think this is this is a natural consequence of people people walking around cities, rather than being locked up into there.
<unk>.
So.
The right answer to your question is it is very much caused by these cohorts.
And there is not really a mix difference between the two it seems to be slightly favorable to marketplace, but.
I struggled to say that that's now going to be a trend.
Perfect that's clear thank you.
Okay.
Thank you we now move on to Rob Joyce Goldman Sachs. Please go ahead.
Alright, thanks, very much for taking the questions can I just do a quick clarification and then a question sorry, just on what Brent said earlier.
Are those numbers below free cash flow is that youre, saying thats around $350 million going forward I think if you sum those up.
I should clarify that and then the question is you mentioned cost of customer acquisition cost earlier.
The tracking above pandemic levels, but how are these tracking versus pre pandemic levels.
Are you seeing any any changes there in terms of the consumer customer acquisition costs. Thank you.
Let me take your question first before I hand off to best for your first question.
In terms of the.
Acquisition costs, they were lower because of the sheer number of new customers that we're getting and obviously.
Resisting cost is being calculated on the basis of the new customers that we add is not calculate or anything else. So obviously of your new customers go up by 50% in the period.
Even if you increase your marketing a bit.
As you increase your marketing by all of you will have a benefit on your customer acquisition cost. So generally during the pandemic. There was favorable I would say that what we're seeing now is that we see in some markets a lessening of competition and therefore, we see also some marketing efficiencies and we've talked about that also in our presentation.
A party like delivery, leading Spain, and Holland of course that helps us because there is less pressure on.
Our Google expenses for instance, so the types of some some money.
I Wouldnt say that thats per se related to the pandemic, it's more a consequence of the money, becoming more expensive and therefore it has been.
Is becoming.
Rapidly more difficult for competitors to funds very small operations in countries in which we are very large.
And so I'm just is the marketing cost per new customer required now tracking above or below 2019 levels.
Okay.
I think it's below.
See you.
Nabil.
It's probably a good sign.
Okay and on the free cash point thanks, Brent.
And the free cash flow.
Look what is clear that we.
The additional.
We made an additional investment in the second quarter.
<unk> was the commitment.
I think a lot of the things that we.
We're in the cash flow statement in the first I will come back.
So thats more of the guidance that I can give with respect to the cash flow and mix to at home.
Why would you think a more ongoing by customer.
Just so we think next year, we're thinking $3 50 that sits below EBITA ballpark.
Yeah.
I think the only thing that we can say about is that capex will be lower because we have some.
Lease hold improvements this year that we won't have next year and <unk> will not be there.
And a lot of money.
One offset to be wont happen and some of the things. We will of course return we will still keep our offices, we will staff.
Two.
I have to pay interest so a lot of things will certainly return next year.
Thanks very much.
Thank you we now move on to a question from Andrew Gwynn of BNP Paribas. Please go ahead.
Hi, Good morning, Yes, one thing to ask a question about what else fall apart.
Obviously, you've increased delivery fee to the consumer during this period.
When you ask me for a few months how much <unk> are you seeing do you think there's scope for further increased clinically. Thank thank you very much.
Thank you.
To be fair.
We did increase delivery fees, but we did it in a smart way.
Having started as a marketplace business in most countries. We did not have a lot of the mechanisms.
<unk> necessary to price for instance, based on distance or.
Time of day weather.
Amongst periods available and that sort of thing. So we are becoming much smarter in that respect. So we have more tools at our.
Sure.
Sure.
It is worthy.
Disposal.
More tools at our disposal to.
Two actually.
Price a bit smarter than what we did in the past so actually close by the restaurants, we are much cheaper usually than our competitors not always but usually and further away. We are more expensive now you can still order further away, but we do.
Like to limit those orders because they cost us more because it's further away.
We get calls or the service qualities et cetera, So tried to sculpt the delivery fees a bit better. So it's not to say that we increase the delivery fees necessarily for you as a consumer.
Is there space to increase I would say so at the same time, we are usually the affordable options and we think it has a benefit in this environment.
And it's especially a benefit because we do believe that.
Depending on the country some of our competitors need to race is delivery is quite a bit to just stay alive steady stay in the game of essentially so yes, we can raise them further but we also think that we have a relative play.
In.
In.
In being the affordable option.
And then there's also of course, if you look at the.
The comparison with previous periods, we remove the orders that have a lower contribution to our profits and these are sometimes very basket orders or orders that.
Sure.
We're adding to the order growth, but not per se to the province.
Yes.
Okay, great. Thank you very much.
Thank you.
Now move to you can call it <unk> of Kepler Jeffrey Please go ahead.
Yes. Thank you very much on good morning to everyone on Amazon.
On page for you.
<unk> indicated that you've realized obviously efficiencies.
Due to this commercial agreement with Amazon very good.
I was wondering if when do you expect us to see or you have to see.
A meaningful growth in the customers and the <unk>.
Orders in Q3, obviously for obvious reasons, we haven't seen yet an impact really on the artist growth.
You've talked very optimistically about this corporation. So I was wondering if you could give us maybe a little bit more insight as to what's happening there and when we will actually see some kind of an impact here. Thank you.
Thanks, well.
The reason that you don't see anything in Q3 is that we started this corporation at the end of July exactly so thats one aspect aspects. There also and I've said it before it's not a silver bullet it wont dramatically change grubhub overnight, but it is supporting that business.
Actually the trajectory of the business now comes more in line with the rest of our business. So I think that's a good sign.
Need to work on further co.
Cooperating with Amazon with which we have good contacts.
<unk> has had a very.
Hi management level also and both companies. So I think I think that's great. We are very enthusiastic about it but we do have more work to do in the United States without them with just the Amazon transaction.
Right. Thank you.
Thank you and we now come to Sarah Simon of Baird. Please go ahead.
Yes morning.
Have a question also on the U S, which was can you give us an update on the situation with the New York fee caps. Please.
I feel very good about them.
Do you think we should start putting this in for 2023.
Now you need to be very conservative.
Okay.
Okay. Thanks.
But I guess as an additional data point you also saw that San Francisco basically itself.
The fee cap situation.
Rich.
Also our goods.
That data point.
I think that's a good point, south San Francisco, but also British Columbia.
Which is actually one of our that contributed <unk> <unk> in Canada. There was also some solution proposed.
For legislation in Canada.
This is one of the remaining fee caps, we have outstanding there and.
That will also give some more flexibility.
With regard to pricing.
So you see basically all over North America. There is dilution is being followed together with.
Yes, the government.
So these situations.
That makes up a very constant for US New York integration.
Okay. Thanks.
Thank you.
We now move on to our next question, which is from Klim Journal of Brian Gagnon and co. Please go ahead.
Hi, good morning, just.
Just to come back on <unk>.
Can you elaborate on the <unk>.
Partnership I mean is it caused you to lower the catkin marketing costs or is it some.
Client <unk> as many customers as possible to really lever.
Trends of LNG, you guys, because if I'm right is running in.
September trend.
Yes.
<unk> is not so visible.
<unk>.
Yeah.
Well.
Pending on what source you look at there is there is a.
You can actually detect something.
Obviously.
While we try to do is reduce the cost of acquisition.
We have quite a large marketing budgets for instance in the United States actually if we can reduce that cost that will be great because that will make that business more profitable and of course, we're not it's not the same market share. We're looking at we're looking at the growth of that business right. So we try we try to return that business to grow.
We look at the vessels.
Of the businesses, but also I think this is quite important.
Going forward, yes, food delivery businesses need to be profitable.
And therefore, the only way forward is to be profitable and to grow at the same time. So that has our focus and thats something else than just to grow at all cost.
Well it definitely is right that obviously the deal has more of an impact on new customer acquisition.
Basically it's something we got on a frequency of existing customers and that.
That will be more visible over the course of.
Basically coming quarters, because now acquiring these customers and then down over the coming quarters.
Okay. Thanks.
Yes.
Thank you.
And we now move to Christopher <unk> of HSBC. Please go ahead.
Thanks, everyone for taking my questions also coming back to the U S and.
Is there any more color you can give some sort of early indications as to where you stand, let's say with respect to things like cannibalization of the existing customer base. If there is any anything that surprised you in sort of the early looks at that.
An experienced that you've had.
Extend that question to ask about the Gulf of partnership.
Your thoughts maybe beyond what is in the.
Press release on that thanks.
Thank you Andrew can you take the.
First question, Yes, sure I mean, I think on the cannibalization point.
We obviously.
This partnership model assumptions on what we expected the cannibalization to be and I think we've been positively surprised so far so that's been encouraging.
An encouraging start we're really not seeing any material laterals kind of mandate kicked off.
Very recently, but.
Trajectory seems positive and I think we'll see that.
I know theres similar partnerships expand as we kind of March at a faster clip into.
Into grocery January I know there are adjacencies in the U S.
But it's super early days.
Got it thank you.
Thank you as a brief reminder, that is job one for your questions today.
Now come to William Boots of Bernstein. Please go ahead.
Hi, good morning.
The biggest drag on profitability at the moment.
In Europe , and Australia region. When you think about those new leaves a delivery and operational efficiencies how much of that is coming from that region.
We expect.
Southern Europe , and Australia, it's a breakeven in FY 'twenty.
Yes, thanks for the question so.
If you look at that segment, obviously, Australia is a large component of it and we are seeing benefits in Australia also from the work done on the logistical network because I'm not sure whether that's clear to everybody, but we have two global network. We have network fulfill ounces in network for employees the network for free.
<unk> is actually much larger than the network for employees.
And the work that we do on the <unk> network has beneficial effects.
In the UK.
Canada, Ireland, and Australia, and New Zealand.
And obviously the largest share of your logistics.
The more benefits you got to get out of that but these are global solutions also the benefits are.
Globally to look further at that segment.
<unk> seen market contraction in Australia, because you will probably remember that.
That the Lockdowns in Australia lawsuit longer than for instance, in Europe or the United States.
Look at the comparison just look at the news articles of last year, you'll see that that was actually still going on.
In Q3 last year.
Sure.
That also means of course that southern Europe is trading pretty much in line with the rest of Europe . So thats I think so.
Good to see.
The investments that we're making in for instance, a country like Italy are good investments because Italy, but also Spain look very very similar.
Germany, or Holland, but they are not to scale, yet because obviously.
We have more orders in whole loans than we have in Italy. So you can imagine that in the logic country, you have to spend more money on marketing and that sort of thing or sales.
So it takes longer for those businesses to become to become profitable.
I understand where the question comes from but I also believe that.
By the end of this.
<unk> year.
You will be less concerned about it also because the impact on the rest of the business will be far less and I don't believe it's per se an issue to invest in a market even if.
The.
The global market environment becomes more difficult to two.
Be able to keep up these investments some of these investments actually ebay.
They are they are good investments to make even in a more difficult market environment.
Because with the same arguments you could have closed down Germany between.
Yes, 2012 in the year 2019.
In Germany of course is not the most profitable food delivery business on the planet.
South somehow you need to have some patients auto market. We don't believe that we will get the uncertainty do something about it.
Excellent. Thank you.
Thanks.
Thank you there are no further questions in the queue I would like to hand, the call back over to your host for today for any.
Our closing remarks.
Thank you very much I would like to round off this analyst and investor call by thanking you for participating and your questions.
If you have any additional questions or remarks, please reach out to our Investor relations team. Thank you.
Thank you. This concludes today's call you may now disconnect.