Just Eat Takeaway.com N.V.

Hello and welcome to the JerseyTakeAway.com Q3 2023 Trading Update call. My name is Laura and I will be your coordinator for today's event. Please note this call is being recorded and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star 1 on your telephone keypad to register your question. If you require assistance at any point, Please press star zero and you will be connected to an operator. I will now hand you over to your host, Yitzhak Hun, the CEO, to begin today's conference. Thank you.

Thank you, operator. Very good morning and welcome to this Analyst and Investor Conference call to discuss the third quarter 2023 trading update for JusteatTakeaway.com. On our corporate website, you can download our press release and the slides for this Analyst and Investor Conference call. And given we published the trading update only, today's presentation will be kept brief, after which we will open the call for your questions. Brad Vissink, Georg Gerbig, and Andrew Kenney are also here to provide answers. Regarding the question and answer session, as a reminder, we will allow only one question from each of the analysts. On the following slides, I will provide more details, but the key messages for today's update are, Company excluding North America returned to GTV growth in the third quarter of 2023. GTV growth in Northern Europe and the UK and Ireland increased to plus 6% and plus 4% respectively. We upgraded our adjusted EBITDA guidance to approximately 310 million Euro in 2023. We revised GTV guidance to constant currency growth of approximately minus 4% in 2023. We upgrade our free cash flow guidance to approximately break even in the second half of 2023 and positive thereafter. And we are launching a new share buyback program of up to 150 million euro. Please follow me to slide three, where you can see that the Northern Europe segment representing 30% of group orders delivered a further step up in year on year GTV growth with growth increasing to plus 6% in the first quarter of 2023 compared to 4% in the second quarter. This growth is highly profitable, given we already have industry-leading margins in this segment, with significant potential for further improvement. We continue to invest in expanding our delivery network across Northern Europe, enabling us to serve more consumers with a wider choice of partners, including a wide variety of supermarkets, cosmetics from Lush, and electronics from MediaMarkt, to just name a few. This investment strengthens our mode and platform for future years. And as a result, our overall competitive position within the segment has continued to strengthen. Turning to slide four, showing the continued improvement of GTV growth and profitability in our UK and Ireland segments representing 28% of group orders. The year-on-year GTV growth improved to plus 4% or 5% in constant currency in the first quarter of 2023 compared with plus 1% in the second quarter. Encouragingly, both absolute orders and GTV grew sequentially for the second quarter in a row. As described in detail during our half-year results presentation, we have continued confidence around our margin improvement in the UK and Ireland, driven by further progress on the reduction of delivery costs per order. The UK and Ireland will be a key contributor to adjusted EBITDA growth in the second half of this year. And on the commercial side, we further expanded our market-leading restaurant and grocery offering with the total number of partners now above 85,000, representing a 16% year-on-year increase in net additions. Moving to the North America slide on slide five. As mentioned previously, in parallel to actively exploring a partial or full-sale crop-up, we have made several organizational and operational improvements to the company. Therefore, we remain confident about our progress towards a return to top-line growth and cash flow breakeven. For the avoidance of doubt, this includes any positive impact of a potential fee cap amendment in New York City. While North America will be a key contributor to adjusted EBITDA growth in the second half, in the third quarter of 2023, the segment faced a stronger currency headwind in reported GTV growth in the third quarter of 2023, as you can clearly see in the growing difference between reported and constant currency numbers. At the same time, North America had a tough comparison base versus the third quarter of 2022, given the Amazon partnership launch in July of last year. The stronger FX headwind combined with a tough year-on-year comparison led to a slower recovery in North America, representing 31% of group orders. And to conclude this slide, we are pleased with September's federal court ruling, which has increased our confidence that this long-standing New York City COVID-era fee cap will be resolved. On slide six, we conclude the segment section with Southern Europe and Australia and New Zealand, a smaller segment with only 10% of group orders. While sequentially there was significant progress in constant currency GTV growth in Southern Europe and ANC, currency headwinds have continued to impact reported GTV growth, and we expect further improvement in the segment's adjusted EBITDA margin in the second half of 2023. versus the first half of the year, driven by improved unit economics. On the left side of the page, on slide seven, you can see that JustEatTakeaway.com's GTV amounted to 6.5 billion Euro in the first quarter of 2023, down 7% compared to the same period in 2022, or down 3% in constant currency. PropUp represents the majority of the North America segment, and is for sale as you know. When we exclude the North America segment from the group's results, it becomes clear that 69% of our group orders are back to GTV growth. In hindsight, we should have provided our GTV guidance for 2023 in constant currency instead of reported figures. The volatility of the currency movements, in particular in 2022, significantly impacts the year-on-year comparisons. And to avoid further speculation on currency movements for the fourth quarter of this year, we have revised our top-line guidance to a number in constant currency. Driven by a slower top-line recovery in North America, we refined our guidance to constant currency GTV growth to be approximately minus 4% year-on-year in 2023, from previous guidance reported GTV growth to be in the range of minus 4% to plus 2% year-on-year in 2023. On slide eight now. We continue to make good progress on operational improvements, primarily stemming from progress in the UK and Ireland and the North American sectors, and we are ahead of plan on profitability. Therefore, we now expect to generate positive adjusted EBITDA of approximately €310 million in 2023, compared with previous guidance of approximately €275 million, and our original guidance of approximately €225 million at the beginning of this year. Driven primarily by the improvement in profitability, free cash flow before changes in working capital is now expected to be approximately break-even in the second half of 2023 and positive thereafter. On the next slide, we summarize the results from the share buyback program that was initiated at the publication of the first quarter trading upgrade in April. The program was completed on 20 September and we repurchased approximately 10.8 million shares at an average price of 13 euro and 91 cents, representing 4.9% of the issued shares. All repurchased shares are currently still being held in treasury and none of them were needed to compensate for the share-based comp thus far. Turning to slide 10. In the graph, we visualize the milestone of free cash flow to be approximately break-even in the second half of this year and to be positive thereafter. which is a significant acceleration from previous guidance to turn free cash flow positive in mid-2024. This progress in free cash flow generation, combined with a strong balance sheet, allows us to launch a new share buyback program of up to €150 million to improve future earnings per share. And the program commences today. On slide 11, we summarize our updated outlook. We expect constant currency GTV growth to be approximately minus 4% year-on-year in 2023 from previously reported GTV growth to be in a range of minus 4% to plus 2% year-on-year in 2023. We remain focused on profitability and now expect to deliver a positive adjusted EBITDA of approximately €310 million in 2023, which is an upgrade from approximately €275 million previously. We also expect to reach the milestone of free cash flow to be approximately break-even in the second half of this year and to be positive thereafter, which is a significant acceleration from previous guidance to turn free cash flow positive by mid-2024. I will continue with the wrap-up of this brief presentation on slide 12. The company excluded North America, returned to GTV growth in the third quarter of 2023, GDP growth in Northern Europe and UK and Ireland increased to plus 6% and plus 4% respectively. We upgrade our adjusted EBITDA guidance to approximately €310 million in 2023. We revise GDP guidance to constant currency growth of approximately minus 4% year-on-year in 2023. We upgrade our free cash flow guidance to approximately break-even in the second half of 2023 and positive thereafter. To conclude, Driven by the improved cash flow generation combined with our strong balance sheet, we are launching a new share buyback program of up to €150 million to improve future earnings per share. And with that operator, I would like to open the call for questions.

Thank you. Ladies and gentlemen, as a reminder, if you would like to ask a question, please press dial 1 on your telephone keypad. Thank you. We'll now take our first question from Silvia Cuneo at Deutsche Bank. Your line is open. Please go ahead.