Just Eat Takeaway.com N.V.

hello and welcome to just a takeaway.com full year results 2023 my name is alicia and i will be your coordinator for today's event please note this goal 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 keyboard 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 Yitzhak Cohen to begin today's conference. Thank you.

Yitzhak Cohen Thank you, operator. Good morning, everybody, and welcome to this analyst and investor conference call to discuss the full year 2020 free results for Just Eat Takeaway.com. On my corporate website, you can download the press release and the slides for this analyst and investor conference call. First, I would like to take a step back to share our vision and our strategic pillars. In the slides following that, I will take you through the highlights of our performance in 2023 and present a new guidance for 2024. Georg Gavik, our COO and Andrew Kennedy, our Chief Commercial Officer, have prepared a couple of slides regarding the significant progress we have made across our strategic pillars including our efforts to further enhance our consumer proposition by investing in non-food adjacencies and the operational improvements in efficiency within our global delivery operations. Then visiting our CFO will then provide the financial results at the group level and share further details regarding our cash position and free cash flow generation. I will end the presentation with some concluding remarks, after which we will open the call for your questions. Regarding the question and answer session, as a reminder, we will allow one question from each of the analysts. On slide four, before we dive into the details, I would like to set the tone for today's presentation. Our key messages are that the group excluding North America returned to GDP growth in 2023, that our full year adjusted EBITDA in 2023 was ahead of guidance at €324 million, and it's growing quickly. that we have strong momentum in the UK and Ireland, with the adjusted EBITDA margin rapidly approaching a similarly high level as North and Europe, that we reached a significant milestone of positive free cash flow in the second half of 2023, that to date we have repurchased 7.3% of our issued shares, and lastly, that we issue new guidance for 2024. Please follow me to slide six. Before we look at our performance in 2023, I'd like to take a step back and remind you of our business profile, which has transformed significantly in the past couple of years, in part driven by organic growth fueled by our investments and through M&A as well. A northern Europe and UK and Ireland segments, representing more than 60% of total orders, returned to GTV growth in 2023 and are highly profitable. In these segments, we have strong positions of scale with further upside from both higher frequency and increased penetration. A southern Europe and ANZ segment is relatively small, representing 10% of orders, where we make targeted investments in several relatively early-stage markets to increase penetration and reach the scale that is required to offset the fixed costs of our business. These segments account for 70% of our orders. North America represents the remaining 30% of orders, and in this segment, we saw our top-line performance stabilizing in 2023, but not returning to GDP growth yet. Our key focus for this segment was and remains to be to improve the cash flow generation. And as we will show in the next slides as well, DropHub continues to make strong progress to watch free cash flow break even. Now I'm walking to the next slide. Our company has evolved significantly over the past 25 years as we have grown from a small online marketplace in the Netherlands to a global leader in on-demand delivery. At our heart though, our core mission has remained persistent we make our customers' lives easier. We provide a much more convenient way of getting what they need. We have, however, only started to scratch the surface of the potential opportunity in our market. We started out as a food delivery platform, making it easier to get your weekly Friday night takeaway. We have already, of course, moved well beyond that, serving more and more occasions throughout the day. and weak, and there is a huge potential from new categories beyond food to deliver an even better experience and more convenience to our customers. Our vision, therefore, is to empower everyday convenience. That means we empower customers to get what they need when they want it, deliver it straight through their door at the tap of a button. And in doing so, we also empower our partners to grow their business with new consumers and new channels, and we empower our couriers to build their careers in a safe, flexible, and inclusive environment. What all this means for the customer is that we will be able to fill a lot more cases. A midweek lunch at the office to a Saturday night family takeaway, their weekly grocery delivery to last minute flowers for Mother's Day, a bottle of wine on a Friday, and of course the aspirin on a Saturday. We are excited by the scale of the opportunity that lies ahead of us. In terms, on slide eight, of how we deliver on that vision, there are three core pillars to our strategy. Jörg and Andrew will share more detailed information on the progress that we have made across our key strategic pillars in 2023. But to summarize, the first pillar is providing the best choice and value. We've added many partners, including in grocery, and invested both in brand and value, and Andrew will talk about that later. Second is providing a great experience whilst enhancing efficiency. We are, of course, a merged business and still have many synergies as a result of that of all those mergers and we have made and continue to make progress in reducing our cpo both in delivery and elsewhere in the company and you're talking about the data as well the third pillar is around acting responsibly for our people and the planet flipping to slide nine as already explained in our fourth quarter trading update while the year-on-year comparison continues to be impacted we are excited that in fact the fourth quarter was the best corner of the year for gt both in absolute as well as in relative terms. This strength is also presented in the graph on the right-hand side of the page. When we exclude the North America segment from the group's results, it becomes clear that 70% of our group orders are back to GTV growth from the third quarter onwards. Please follow me to slide 10, where you can see that the year-on-year GTV trajectory improved throughout 2023. In fact, The Northern Europe and UK and Ireland segments, representing more than 60% of group orders, exited 2023 at the highest ever quarterly GTV level, even including the pandemic period. This all-time high GTV emphasizes the strength of our European businesses. While the year-on-year growth in North America and Southern Europe and ANZ continue to be negative for both segments, we do see stabilizing GTV for each of the two reporting segments when looking at the quarter-by-quarter developments in 2018. Moving to slide 11. On the left-hand side, you can see that the adjusted EBITDA for the group was €324 million in 2023, which is a €305 million improvement compared to 2022. On the right-hand side, the adjusted EBITDA per segment is provided, which clearly indicates that all segments materially contributed to our adjusted EBITDA improvements. A couple of things I would like to highlight are that Northern Europe continues to demonstrate strong profit generation with an adjusted EBITDA of €366 million in 2023. The adjusted EBITDA margin in Northern Europe remains one of the industry's strongest and further improved to 4.8% of GTV in 2023, up from 4.2% in 2022. And in fact, we believe it can increase further over the next couple of years. In the UK and Ireland, adjusted EBITDA improved significantly to €135 million in 2023 from €23 million in 2022, mainly due to enhanced delivery efficiency and simplification of our delivery operation. Joep will talk about how we did this later, and he will also share how we will improve the UK CPL further. With the adjusted EBITDA margin increasing to 2% of GTV in 2023, up from 0.4% of GTV in 2022, UK and Ireland are rapidly approaching a similarly high adjusted EBITDA margin as Northern Europe. In the Southern Europe and ANC segment, operational improvements in logistics and more efficient customer services resulted in an improvement of adjusted EBITDA of minus €97 million in 2023 from minus €161 million in 2022. North America significantly increased its adjusted EBITDA to €126 million in 2023 from €65 million in 2022. And to round off this slide, we were adjusted EBITDA positive in three out of the four operating segments in 2023, representing 90% of our group orders. And if you now follow me to the next slide, Brent will provide more details on free cash flow generation in his section, but given the importance of this milestone, I want to quickly run you through the significant progress that we have made in our free cash flow generation. As a result of this increased adjusted EBITDA, the group reached the significant milestone of being free cash flow positive in the second half of 2023, generating €4 million of positive free cash flow. Now on slide 13. Grubhub, with a free cash flow of minus 20 million euro, continues to make strong progress towards free cash flow break-even. Under new management, and in parallel to actively exploring a partial or full set of Grubhub, we are improving Grubhub's cost base and competitiveness. We have realized $30 million plus run-rate savings from 2024 onwards through restructuring, and we have extended our Amazon Prime partnership and improved Grubhub Plus, making it more competitive, And lastly, we see good momentum in new verticals with a strong pipeline of new partners in addition to some recently announced partnerships. Moving to slide 14, where we show that we have met or exceeded our guidance for 2023. Our constant currency TTV growth was in line with our guidance for approximately minus 4% year-on-year in 2023. We remain focused on profitability and our adjusted EBITDA was ahead of guidance at €324 million in 2023. and we have passed a significant milestone of positive free cash flow in the second half of 2023. This was, of course, ahead of plan. Moving to the next slide, where we summarize our new guidance for 2024. We expect constant currency GDP growth excluding North America to be in the range of 2% to 6% year-on-year. We remain focused on profitability and expect to deliver an adjusted EBITDA of approximately 450 million euro We expect free cash flow before changes in working capital to continue to be possible in 2024 and thereafter. And we reconfirm our long-term target of growth, just to keep the down margin in excess of 5% of GDP. And with that, I hand over to Jörg. Andrew. Andrew, sorry.

Thank you. And good morning, everyone. Over the next few slides, I will talk you through the strong progress we've made in our choice and value strategic pillars. This pillar is all about our relentless focus as a business on ensuring we are offering our customers the widest range of choice on our platform, which of course means strengthening our core restaurant proposition, but now more and more through scaling into grocery and other new retail verticals. We are also working hard at leveraging our brand and technology to enhance our loyalty and value features to our customers. And I will finish by touching briefly on our advertising business as well as the investment in our brand. Firstly, on slide 17, it's worth emphasizing the increasing number and range of partners on our platform. We are firm in our mission to offer consumers unrivaled choice and value, and that's reflected in the progress here. Across our overall ex-North American business, we've increased the number of online partners by 6% year over year. This has been despite a more challenging economic backdrop for restaurants as input costs around food, utilities, and staffing escalate. all of which force considerable numbers of restaurant operators across markets to close their business. Our progress on offer expansion has been seen across national chains, some of which previously had long-term exclusivities in place, but also critically local heroes, small chains, and independents that are recognizable to and loved by customers in their neighborhoods. In our business, getting the selection right must always be assessed with a hyper-local lens. Moving to convenience grocery, this vertical is clearly our most immediate and significant opportunity outside of core restaurants. And our progress, albeit from a low base, continues to accelerate, showing very strong signs of growth, particularly in segments such as the UK and Ireland, which I'll come on to shortly, but also in North America. Overall, we more than doubled the number of grocery and retail partners on our platform last year and scaled up more teams and expertise focused in this area. Large-scale adoption by major grocers of instant delivery remains more nascent in some of the core European markets. However, there have been some notable breakthroughs, in particular with our ongoing expansion with major players such as BN Spain and Carrefour across some of our European markets. And we expect other countries to follow this year. Beyond our commercial progress, we've also made strong advances in product and technology that is powering a much-improved customer interface, search, and navigation tooling. Equally, our partner-facing tech has also progressed, and we have a lot of resource dedicated to numerous innovations in grocery and retail to continue to enhance the experience through 2024. Finally, to touch briefly on our retail offering, this area is in its very early days with various tests and rollouts happening across markets. We're excited that consumers in various markets can now use our platform to shop for products such as flowers, electronics, and pharmaceutical goods. Fulfilling these everyday needs will help us unlock new ordering occasions, driving frequency from existing customers, but also reaching new ones. And you will hear us talk more about this over the coming quarters. Moving to slide 18. As Yves alluded to, we are particularly pleased about the strong financial and commercial progress delivered in our UK and Irish business in 2023, as well as the momentum we feel we have in this segment. We have a very large leading position in what is currently the largest food delivery market in Europe. And strategically, we have been very clear and deliberate about what we needed to do in 2023. GTV growth accelerated in each quarter from Q2 last year, and orders also grew in absolute terms sequentially every quarter of the year. Profitability step changed last year with adjusted EBITDA six times higher versus 2022, driven by significant improvements in our logistic capabilities and the simplification of our model, which Jorg will talk more about shortly. Importantly, this improvement in margin came alongside us continuing to invest in both marketing and price at significant levels, and we are confident that this dynamic will continue. Most importantly, the consumer proposition continues to get meaningfully stronger with 17% more choice on our platform year over year and the total number of partners now up above 85,000. The team have also executed extremely well in accelerating our growth proposition with now over 8,000 partners up from 5K at the halfway point last year. The priority, as you remember, over the past 12 to 18 months was really to get a scaled offering, and this comprehensive national offer allows us to advertise and push the vertical more aggressively to our millions of customers throughout the UK. And as you can see in the chart on the right-hand side, this is translating now into category adoption, with grocery now representing mid-single-digit percentage of GTV in the UK and continuing to build, working with the majority of major grocers. Importantly, grocery inconvenience not only presents a substantial opportunity for future order growth, but there are clear signs that this vertical is highly complementary to our core offering and enhances the ecosystem overall. So overall, the journey continues at full speed through 2024, but we're certainly pleased with the progress made both in the UK and across this category. Moving to slide 19. I talked a little bit at H1 last year around the growth in our high-margin advertising platform, and I'm pleased that the momentum continued through the year. 2023 revenue was over 200 million, an increase of 28% over the previous year, and now represents just over 1% of GTV. And these numbers actually exclude Grubhub, whose pricing model is different but still generates substantial ad revenue. The increases seen were primarily driven by higher penetration of our ad products with our partners across both our long-tail independent restaurant base as well as our key strategic partners. The primary revenue source here is products that give greater visibility to our restaurant, grocery, and retail partners to enhance their visibility on our platform. This, of course, generates incremental sales for partners with a proven high return on their spend. We also made progress in 2023 towards beginning to diversify and develop new ad products, as well as expanding the expertise that sits within our business in this area. These products, examples that you can see on the right-hand side of the slide, are in early stage of either testing or development in different markets, but at the beginnings of being able to capitalize on our app real estate to work with a variety of partners and advertisers, showcasing their products at the right moment to the right consumers. Overall, the foundations laid in 2023 will allow us to further accelerate our advertising advances over the next few years and capture some of the significant growth potential that we see in this space. Finally, in this section, as you would expect, we continue to place considerable emphasis on investing in driving brand awareness. This is fundamental to the long-term success of our business. Top of mind, brand awareness is a metric we track closely across all our markets. And it's typically a good proxy for the long-term brand preference and commercial health in a market. As you can see from the chart in many of our core European markets, like the UK, Germany, and the Netherlands, our top-of-mind brand awareness far outpaces our nearest competitor. This is driven by our continued investment in high-quality creative production outputs, which hopefully you've seen, and smart media buys, which allowed our brand to drive organic reach as well as paid media investment. Our UEFA partnership is a key mechanism to drive brand awareness. As you may have seen, we recently announced that we will continue to sponsor the UEFA Champions League, Europa League, and Europa Conference League, as well as various other UEFA competitions for the next three years. The partnership continues to be one of the most comprehensive in UEFA's history. Recognizing that football and food are a very natural fit, we've been very pleased with the impact the sponsorship has made with significant media value generated, including over 2 billion impressions across digital platforms. Now, I will now hand over to Jörg, who will talk us through the experience and efficiency pillar.