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.

Jörg Jörgenen Thanks, Andrew. I'll now spend some time walking through key developments in our experience and efficiency strategic pillar, including important progress for our logistics model and concluding with customer services. Operational efficiencies were the biggest contributor to the improvement in EBITDA in 2023. Please follow me to slide 21. To begin, I will give a brief overview of our logistics models, how we operate these across our markets, and what influences our strategy here. We operate two delivery models across our markets, independent contractors and our employed model. As you can see on the map, we operate with independent contractors in our English-speaking markets and with the employed model in the majority of markets in continental Europe. Our choice of delivery model is dependent on the legislative landscape. And hence, we remain committed to our employed model in most of our continental European markets. We are committed to upholding the legislative requirements in each of our markets, but seek to operate profitably on a level playing field with our competitors. For example, in the UK, we've started transitioning to a single model in 2023, and by the end of 2024, we will have moved away from all third-party engagements. We have made significant progress in improving our unit economics globally. On slide 22, I will spend some time illustrating how the changes have enabled us to make significant strides in the unit economics of our largest market in the UK. As you can see on the left-hand side, our delivery cost per order in the UK has decreased by 12% year over year, representing significant savings on aggregate and contributing to the market's profitability trajectory. Pooling and model simplifications are the key drivers of this unit economics improvement. As we move into 2024, we are looking forward to further improvements in these areas that will help us continue to drive down our cost per order We're working at pace to fully roll out our in-house independent contractor model across the UK in 2024. This will unlock efficiencies and benefits of network density. We are yet to see the full impact of many of our initiatives, but are also planning to deploy various new initiatives, such as improving courier performance through order flow and algorithm enhancements, which gives us comfort that our delivery unit economics can be further optimized this year and beyond. Turning now to logistics expansion on page 23. We see this as another critical opportunity to grow and improve our business. Just to set the scene, in most of our markets, we cover more than 95% of the population with our marketplace restaurants, the restaurants that deliver themselves. In independent contractor markets like the UK, we are already offering a large population coverage with our logistics offering in addition to the marketplace offering, and therefore increasing the choice for our consumers. In Northern Europe, where we operate our employment model, there's still ample room to grow our logistics population coverage. In 2023, we added approximately 40% to our logistics coverage in Northern Europe alone. by expanding within existing cities and into new ones. Across the year, order volume from new areas drove material incremental order volume. We expect that number to substantially increase this year. We've also looked to maximize the choice and return on our existing coverage by extending opening hours in many cities. Both our breakfast and late hour offerings have been well received in many of our tier one cities. Take Munich, for example. We have more than tripled the share of order volume that our extended breakfast offering contributes throughout 2023. We see this volume as incremental to our lunch and dinner returns, highlighting how powerful these flywheel effects can be. Looking ahead to 2024, we plan to continue to capitalize on this opportunity for expansion, driving future partner growth and, in turn, new customer growth and reorder rates. I'll finish off this section by talking about customer services on slide 24. Improved processes and automation on this front have led to reduced customer service FTE and lower staff costs and OPEX per order. On the right, you can see the savings we made in these costs since the beginning of 2022. A 36% reduction, which continued progress each half year. Meanwhile, our customer service FTE per million orders has decreased by 38% since the beginning of 2022. This is a result of increased automation, streamlining processes, but also much more efficient setup of our customer service agents around the world. These savings and efficiency improvements do not only benefit our profitability, but also improve customer and restaurant experience. We are committed to delivering an absolutely seamless and instant experience to our stakeholders and anticipate further improvements in this area, both from a cost and experience perspective in 2024 and beyond. The exciting thing here is that there is so much more potential for us to improve our service experience even more, while further bringing down our cost base. The deployment of artificial intelligence, for example, will further drive incremental efficiencies in 2024 and beyond. And with that, I'll now hand over to Brent for the CFO section.

Thank you, Jörg, and good morning, everyone. In my last annual earnings poll CFO, I'm pleased to report that we have made substantial improvements across our business. With improved technology, operations, discipline, execution, and cost management, we could deliver a year-on-year increase in adjusted EBITDA of more than €300 million, as well as becoming free cash or positive in the second half of 2023. Although Group GTP was down 4% year-on-year at constant currency, we returned to 3% GTP growth at constant currency for both nor in Europe and UK and Ireland segments in 23. Please move to the next slide. Revenue-less fulfillment cost is a key metric for our business. By continuing to improve our unit economics, we can ensure we remain a cash-generating business in the coming years. Our ongoing focus on both revenue and cost levers meant we are able to improve unit economics in both delivery and marketplace models. The improved unit economics offset lower volume meaning revenue less fulfillment costs increased compared to last year while processing less orders. The biggest driver for the improvement was the increased performance of our delivery operations, with the most notable gain achieved in the UK as a result of the simplification of the delivery model. On the next slide, we see the contribution of each segment to the adjusted EBITDA. We are very pleased that each segment, as well as the head office, demonstrated a step of profitability, leading to a significant improvement in group-adjusted EBITDA. As a result, group-adjusted EBITDA as a percentage of GDP has also increased by 1.1 percentage points compared to last year and reached 1.2% of GDP. North America almost doubled its adjusted EBITDA compared to 2023, €226 million, reaching a 1.3% margin. This was driven by restructuring, which reduced overhead spend, and being able to leverage our strong acquisition pipeline from Gruppa Plus Partnership to reduce partnership spend and marketing spend. In 2023, the Northern Europe segment reached 3% GDP growth compared with the last year, and adjusted EBITDA came out at €366 million, which was a 70% increase compared to the year before. The adjusted EBITDA margin in 2023 further improved by 0.6% points to 4.8% compared with last year and remains one of the highest marks in the industry. The profitability improvement was mainly driven by optimized partner pricing, increased advertising revenue, and targeted cost reduction programs. The UK and Ireland segments had a very strong year, with GDP returning to growth and adjusted EBITDA increased significantly from €23 million in 1922 to €135 million in 1923, with the adjusted EBITDA margin reaching 2% of GDP This was primarily driven by an end delivery efficiency and simplification of our delivery operation. The adjusted EBITDA margin in the UK and Ireland is rapidly approaching a similar high level as in Northern Europe. Southern Europe and ANZ reduced its losses further from minus 160 million euros in 22 to minus 97 million euros in 23. This improvement was mainly driven by actions taken to streamline operations and improvement in marketing efficiency. And lastly, we have a strong focus on cost control in our headquarters. This results in continuous optimization. However, this is partly offset by inflation-related adjustments. Moving to the next slide, where we bridge between adjusted EBITDA and net loss for the period on an IFRS basis. While loss for the period In 2022, it was €1.8 billion. It was fully caused by the impairments of historical equity-funded acquisitions and the amortization of acquired intangibles. Excluding these aforementioned impairments and amortization, profit for the period was €145 million in 2023, which is a significant improvement compared with the loss of €652 billion in 2022. On the next slide, we bridge adjusted EBITDA to free cash flow. in the first half and in the second half of 2023. As a result of the increased adjusted EBITDA, the group reached a significant milestone of being free cash flow positive in the second half of 2023. Reaching positive free cash flow is a key achievement. However, we will continue our path and expect to add more adjusted EBITDA and free cash flows in 2024. On the next slide, we bridge 2023 adjusted EBITDA to free cash flow for the full year. In 2023, we significantly improved our cash generation, mainly driven by our enhanced profitability. For the full year, free cash flow before change in working capital was minus 73 million euros. If we exclude exceptional items and working capital movements, which do not reflect underlying cash generation, our core activities delivered positive free cash flows. The non-recurring items of 80 million euros are related to the cash flows from settlement of a tax matter and other exceptional items, such as the restructuring rub-up and the simplification of our UK delivery operations. The tax settlement is worth 36 billion euros and relates to a tax dispute between the Danish and UK tax authorities, which goes back to 2012 and has now finally been resolved. We expect to increase positive free cash flows in 2024 and thereafter, which is further explained in the next slide. We remain disciplined in managing spend or maximizing income on items which sit below adjusted EBITDA. Given the fact that we expect our spend below adjusted EBITDA to remain more or less stable, we anticipate that the conversion of adjusted EBITDA to free cash flows will improve as we become more profitable. On the next slide, we bridge the 2032 cash balance to the first half cash balance and the end of the year. We see that in the second half of 2023, our positive free cash flows, positive working capital and M&A proceeds meant that we were able to broadly maintain our cash balance despite our share buyback programs of more than 120 million euros during that period. Please follow me to the next slide, where we show our liquidity and debt maturity profile. We have a strong liquidity position, and together with the free cash flows we will generate in the future, we have a very manageable debt maturity profile. These strengths allow us to make optimal long-term decisions, both operationally and with our capital structure. Such as the share buyback programs we have been operating since April last year. In terms of our capital structure, we continue to consider our capital allocation options, including share buybacks. We will take action to capture value should compelling opportunity arise after considering all factors. Relevant factors include the return on our current cash holdings versus the very low coupon of the shortest dated bonds, and managing the maturity profile to retain strong liquidity. This is also considered against the strong return we expect from buying back shares at current prices. My last slide covers the details on the ongoing share buyback programs. As announced in October 23, we initiated the second share buyback program of €150 million. The repurchased shares will be used to cover the company's obligations and the share-based compensation arrangements, or will be canceled to reduce issue share capital to improve future earnings per share. We were able to take this action as a result of our strong balance sheet and the increased visibility on free cash flow generation. Until today, we have deployed approximately 220 million euros to buy back 7.3% of issued shares. Finally, this is the last time I present the annual results to you. Joining Takeaway in 2011, it has been a privilege to witness the company transforming from a small company into one of the world's leading online food delivery marketplaces. I'm proud of our journey and grateful for the opportunity to contribute to the CHEF success. I'm confident this company will continue to thrive with the proposed new member of the Managing Board CFO, Maite Oosterveld. And with this, I am back to Jitsche for the conclusion of this presentation.

Thank you, Berend, and that's a good endorsement of Maite, I would say. I will continue with the wrap-up of this presentation on slide 37. The group excluding North America returned to GDP growth in 2023. Our full year adjusted EBITDA in 2023 was ahead of guidance at €324 million and growing quickly. We have strong momentum in the UK and Ireland with the adjusted EBITDA margin rapidly approaching a similarly high level as North and Europe. We've reached a significant milestone of positive free cash flow in the second half of 2023. To date, we have repurchased 7.3% of our issued shares. And lastly, we issued new guidance for 2024. So to conclude, the business is in a strong position to capture further improvement to our top-line performance and just EBITDA and free cash flow in 2024. And with that, operator, I would like to open the floor for questions.

Thank you. As a final reminder, if you would like to ask a question or make a contribution on today's call, please press R1 on your telephone keypad. To withdraw your questions, please press R2. We'll take now the first question from Sylvia Cuneo from Deutsche Bank. Your line is open now.

Thanks. Good morning, everyone. I ask my question about the guidance. Can you please discuss the building blocks of your GTV guidance for 2024 through the low to high end of the range? In particular, what do you expect in terms of ordering trends? Maybe do you see demand returning and normalizing inflation on food prices? So yeah, any color you could say also by segment would be very helpful. Thank you.

Thanks, Sylvia. I think it's safe to say that we have pretty good visibility on the behavior of our strongest segments, of course, the UK and Northern Europe. The cohorts are very strong. Order frequency is very strong. New user additions are strong. The active user base is strong. On top of it, we're investing a lot in these segments. We're expanding the delivery network. In places in which we are very strong, we have usually... 99% national coverage. In, for instance, continental Europe, we might not have delivery coverage everywhere, but we do know that we have flourishing businesses in these smaller towns. So adding a delivery network is very predictable for us. It will take a bit of time before people start ordering with these new restaurants that become available, because clearly a restaurant would have a user base on their network. But we know what will happen as a result of those investments. And similarly, for instance, in the UK, our grocery offering is growing very rapidly, so we can extrapolate what that growth will do. Now, obviously, this is still a small segment of our orders in the UK. It will become a larger segment, and therefore, it will start to contribute to the growth of the business as well. So in these segments... You know, the way our business grows is very similar to the way the business grew before the pandemic. So, you know, it's basically you're adjusting user base and your order frequency going up, and it is adding new users. So this is what gives us confidence on the TTP growth number for these segments. It's not in particular any building blocks. It's just color behavior.

Okay, thank you. We'll check the next question from . Your line is open now.

excellent hi team thanks for taking my question um it's just another one on the gmv guidance for fy24 um you've obviously excluded north america but left sands in there can you help us understand how you're thinking about sands growth into 2024 is it fair to assume it'll remain in negative territory and i guess related um how are you viewing the sands division within the portfolio at present thank you thank you good good questions around around as well we don't obviously guide for uh for segments

What we can say about the other segments, so outside of that 60% of our business that is highly profitable and growing, what we can say about it is that we do anticipate these segments, including North America, to improve. At the same time, and especially around North America, our focus is around cash flow generation, so not around GDP, so that's not included in the GDP target. We do believe that given a large chunk of SEANCE is actually in Europe, that it makes sense to guide including SEANCE. I think that is just a better way to guide. If you look at how we feel about these businesses, now these businesses are less mature than, for instance, Northern Europe or the UK and Ireland. So, you know, we're open to talk about consolidation of these businesses. At the same time, these are strong businesses. They're just not as mature as the Northern European segments. And, you know, I can go into detail about any of these countries, but there's quite a lot of divergence between these countries and the local situation. But we're quite confident that we can improve these businesses as well.

Excellent. Thank you, Yitzhak. Thank you.

Yitzhak, now our next question from Miriam Josia from Morgan Stanley. Your line is open now. Hi, medium, can you hear us? We will take then the next question from from BMP Paribas. Your line is open now.

Yeah, hopefully I'm muted in my case. Just on North America, obviously, again, excluded from guidance, but included within the EBITDA guidance. So I suppose you don't understand that. But more generally, I suppose it's thinking about a plan C. So would plan C be more about radically downsizing the North American business to focus on profitable markets? Or is that still not part of the thinking? Thank you very much.

You know, I have me second guessing what plan A and plan B are in your mind. Let me elaborate. For us, it's important not to burn any cash. That business is improving, so that is good news. But we really don't want to burn any cash down. We have a commitment that we bring the cash burn to zero as soon as we can. It doesn't mean that the business won't improve. It just is not the focus of our business, so it would be weird for us to guide on GTV and then miss the cash flow target. That's not going to happen, so this is why we don't include it. In terms of Plan C, look, I mean, if there were no restrictions in this world, we would probably invest a lot more in North America, but we need to be realistic. You know, we can't in this situation, and, you know, we are where we are. I wouldn't call that Plan C.

Okay, well, plan A was sort of integration, plan B sales. Yep, very clear. Thank you very much.

I think there's another way around, okay, yeah.

We'll take our next question from Monique Perard from Citi. Your line is open now.

Hi, morning, everyone. My question was just on the Northern European profitability. So the second half of the year, the Northern European profitability EBITDA margin came down to 4.5%, 3.5% in the first half. I'm imagining a lot of that is to do with what Jorg was talking about in terms of expanding the delivery coverage. But just wanting to understand if that's correct, if that's the reason why the margin has come down there, and how we should expect the margin to progress into 2024, given there's going to be further expansion of the own delivery network.

That's not entirely correct. It's a good question. First, let me take a step back. Our GDP margin between 22% and 23% improved from 42% to 48%. I believe that's the highest margin on the planet in our sector, so I think we should not pretend it's not going well. It's actually going quite well over there. That segment still lost 2% of orders compared to 22. It's, of course, a profitable business, so if you lose 2% of orders, you are going to lose some profit as a result of that. On top of it, indeed, we made tremendous investment in our logistics network. That is not the same as expanding, for instance, in the UK, because obviously, given the regulation in Europe, we need to build hubs, we need to put e-bikes in place, and we start with zero orders. So it takes a bit of time for us to make sure that the CPO in those places goes to an acceptable level. These are investments that we believe are sensible. We're the only ones in most of these countries with such an extensive network. Don't forget that. We are the only way in many cities to order with a delivery restaurant. Therefore, we think that we need to make those investments. And we've done so in the past as well. I know you're focusing on this, but we've also said that we believe that 5% is not the end station of Northern Europe. We believe that that margin will go up.

Understood. Thank you.

Thank you.

We'll take now the next question from Chris. I'm from HSBC. Your line is open now.

Good morning, all. Thanks for taking the questions. On M&A, putting aside Grubhub, how likely is it that Jet will participate in M&A this year? And then a small housekeeping question, what would head office costs look like excluding Grubhub? Any sort of color you can give on that?

Thanks. Head office costs, Massifo is saying the same.

Yes, more or less the same. We've always kept Grubhub as a separate subsidiary of our company, so most of the headquarter costs that we report are only applicable for everything excluding Grubhub. some of the goals which you may see coming back next year, but so far it was quite a standalone subsidiary.

And regarding your first question, of course, hard for us to predict. You know, there's ongoing conversations around GrowUp, but there have been ongoing conversations for quite some time. We have different partners as well. Sometimes they take a long time. Sometimes partners come back. So it's very hard for us to predict. If we could predict that sort of thing, then, of course, you know, we would be more vocal about it. But I don't want to promise something that in the end is not going to happen.

His question is outside of global.

I think it was.

Yeah, outside would be, I mean, I understand you're still in talks on graph of that. Aside from that, I mean, is there any appetite to do something? I mean, yeah.

Okay, that's a good question. So if you look at our business, obviously we are tremendously powerful in most European countries. It would not be logical for us to be selling any assets in Europe. That's not the most logical thing. Obviously, we have businesses that are not as profitable as Holland or Switzerland or Germany or one of these assets. So yeah, we're always open for discussion around that also because of course the investment horizon has changed quite drastically in the last one half years as well for our business, but for businesses worldwide. So we're always open to any discussion there. Understood, thank you.

Thanks.

We'll take now our next question from Melissa Young from GS. Your line is open now.

Good morning. A final question on the outcome for 2024. Just wondering, I think orders were still down a little bit in Northern Europe and the UK. And given, I think, the visibility that you have on cohort behavior, when do you think sort of order could turn positive there? And how do you see basically the development of order growth versus AOV growth, especially in the UK and Northern Europe? Obviously, AOV growth has been a single driver of the GDP growth in recent years. So any call would be helpful. Thank you.

You want to take it, Jo?

No, I think, I mean, we guided on GTV and that's the predominant guidance we have. Obviously, you have some inflation or you had some inflation in the last year, but that's coming down. Obviously, you see across the market inflation coming down. So the discrepancy between order growth and GTV growth is getting smaller and that's most likely to continue also throughout this year.

Okay, thank you. We'll take now our next question from Jill Storm from Jefferies. Your line is open now.

Thank you. I just wanted to come back to slide eight and get a sense of where a subscription program fits within your later thinking on brand loyalty and value proposition. On the previous slide, you're talking of two to three orders per week as, I guess, a long-term target for frequency. I mean, there's a lot of voices in the industry that say only a subscription program could get you there in any type of reasonable timeline. You've been against the idea previously, so just an update on your latest thinking. Thanks.

No, we were never against the subscription. We have subscription, of course, in the U.S. We have a subscription program in Canada. We're a couple of months away, Giles.

Brilliant. Okay, I wasn't expecting you to say that. Thank you very much. And I should have said, you've been against the subscription program in Europe. I see the other ones elsewhere. And, look, since you're – go ahead.

Not even against that in Europe, but obviously in many places we don't have delivery fees. So, yeah, you would be giving something away that we already give to our customers because there is no delivery fee, so. that the value of that, you know, the subscription program is zero, right? How much are you going to charge for something that people get for free already? But continue.

Okay, thank you.

We'll take now the next question from Marcus Diaville from JP. Your line is open now.

Hi, everyone. Maybe a question for Jörg. It's also on the guidance. But on the EBITDA guidance, I mean, we talked in the past several times about your improvements at the gross margin. We talked about pooling. How can we think specifically on marketing? Not only because we have obviously these major events, as you highlighted this year, but also in terms of competition. I mean, what is your view, particularly in Germany? Is it the same old or do you step up your marketing line? That would be quite interesting to understand. Thank you.

I mean, generally speaking, we usually differentiate between brand marketing and performance marketing. And on the brand marketing side, we usually are at quite high levels. I mean, you saw the top of mind brand awareness across the different countries. And in most of our, especially European markets, we are the best known brand and the brand with the highest preference. And so we continue to invest at similar levels on the brand marketing side. We've just prolonged, obviously, the UEFA contract, which is another testimony of continuing to spend quite some money on the brand marketing side. And likewise, on the performance marketing side, we're usually going quite aggressive there. You have a direct impact on orders, and we have a preference to be on top of Google AdWords, for example, that's driving these sort of orders. So we feel quite comfortable with the level of brand marketing spend we currently have, and we'll continue to invest heavily on these across the markets. You've seen us, for example, investing a lot of money in the UK and even stepping up because we can actually make use of the savings we get, for example, from the operations in the UK and reinvest that into the market to drive growth further. So selectively in certain markets like the UK, we'll even consider going more aggressive. But overall, in most markets, we already have a very decent amount of spending.

Okay, so basically it will be the same absolute amounts that you think will be sufficient. There's no basic development in Germany in terms of walls and competition, and we talked about it in the past, the triggers for you to spend more at this time.

Yeah, I mean, it will be similar amounts. I mean, I can never exclude, because obviously we'll have some technical flexibility throughout the year, but broadly speaking, I think it will be at similar levels.

I think also, I mean... look, competition in most of our countries in Europe, you could drive a whole series of bus stations through the gap. So, you know, in the UK, there's still, we're also quite a lot larger than the other players. But, I mean, that's not even comparable to most of the European markets in which we're much and much bigger. So this is also a bit, you know, if you look at, for instance, adoption and brand awareness. If you look at all these figures, we're light years ahead, not a little bit. And the reason that we sponsor things like the Champions League is because we want to be more than, you know, a portal because we're essentially a portal just like other food delivery businesses are portals. So brand preference is incredibly important to us. And we've invested heavily in that. You see that in the UK because you live there, but, you know, we do, We do the same thing in Germany and other places, just with the gap between us and the competition is so much larger outside of the UK.

Okay. Yeah, good. That's clear. Thank you.

We'll take now the next question from Miriam Josia from Morgan Stanley. Your line is open now.

Hi, great. Thanks for taking my question. Just one on the employment model in Europe. I guess in France, you're now switching to contractors. And just wondering, given the delay to the European-wide legislation, do you have any plans to change the model in any other markets? I think previously you'd said that Italy would have been a market that would have benefited a lot from regulation. So is that one that you could be considering?

Thanks. Well, unfortunately, a little bit more complicated than that. So First off, you know, we deal with national laws and not with European laws, certainly not with European laws that don't exist. If there were to be something introduced from the European side, it would make the national law stricter in some countries. It doesn't have any presence, you know, any platform work directive would have no effect in Germany because the laws already are strict. A platform work directive would have no effect in Spain because the laws already are strict. So the most prominent effect of a platform work directive in Europe would have been in countries such as Italy, in which it's not legal to operate in the way that competitors are operating. But it is hard for the government to do something about it, because you need to go through seven years of courts. And therefore, the platform work directive would have helped in those places. It does not mean, unfortunately for us, that we can start breaking the law ourselves, because it's still breaking the law, and the law will catch up with you at some point. We can pretend that it's fine not paying taxes or Social Security for many years, but in the end, you will have to pay them. And that's great if you're the only ones left in the country. If you're not the only ones left in the country, it's sort of a problem. And, you know, we're getting to that situation in a couple of countries now. Our assessment is that the situation in Europe, we have it on slide, which slide was this? 21. We don't think that this situation will change anytime soon across the globe. So we don't think that the UK will move to employ it. We don't think that Germany will move to free loans or that Italy or Spain will move to free loans. We think actually this situation will continue. What you see happening, of course, is different from what is legally permissible. You see the courts catching up with all the court cases. And that's what you see in the media and, you know, in the noise around it. But legislation-wise, this is just how it is, you know, and we're not going to break any law. So even if other people do something that's illegal, we're not going to do it.

Thank you.

We'll take now our next question from William Woods from Bernstein. Your line is open now.

Hi, thanks for taking the question. I just wanted to touch on take rates, particularly in the UK, Southern Europe, and North America. We've seen some compression half on half and a bit year on year. Some of that in North America is probably driven by Grubhub subscriptions, but advertising is obviously going up. What's the main driver between the take rate compression, do you think?

Some places, I would say mixed effect. In other places, I would say delivery versus marketplace. Venomous price. and dynamic pricing. So I know that sounds a bit vague, but that's what you see in that moment.

And so what's the mix effect, and why does delivery make the take rate go down?

Delivery makes the take rate go down because you are very dependent on chains. Okay. Perfect. Thanks. And this is mostly North America, too.

We'll take now our next question from Mark Hasling from ING. Your line is open now.

Yes, thank you. In the step-up in profitability for 24 to reach your 450 million EBITDA, can you maybe talk about the building blocks? So you have the further increased efficiency in your delivery model, you have the operational leverage on your growth in your core business, and you have the cost cutting predominantly in the U.S. Can you maybe rank that or talk about which is going to be the most important ones and also the level of certainty on those levels?

Yeah, that's a good question. Well, overall, we try to continuously improve our business and our operations, so that's certainly an important driver. The UK will be an important driver of profitability this year. And in the US, cost-cutting sounds a bit, you know, we try to improve the business while reducing the cost. I think that's the better description of what we try to do. Now, there's also a couple of places where we do believe that we still need to do some some reorganizing, but that's not, you know, that's not on the larger business because, you know, we've made a couple of adjustments right after the pandemic because, you know, in some places our company was smaller or the growth wasn't there. So we've made those adjustments. But you'll see more, you know, improvements of CPO. There's going to be some artificial intelligence helping our customer service, for instance, that should help our CPO drop as well. So it's a couple of these things. Um, coming. And of course, you know, we, we are used to being a growth business. So obviously, uh, we just discussed, uh, for instance, that if you have less orders in the profitable market that you have less, uh, profits, well, it's also the other way around. If you have more orders in the profitable market, you're going to create more profits. So actually this is why it's so important that our usually profitable markets are growing because you know, that's profitable growth and it will contribute quite a lot to, uh, to our success.

Okay, thank you.

Thank you.

We'll take now the next question from William Gill from ABN AMRO. Your line is open now.

Yes, good morning. Apologies for circling back to North America. You already asked quite or answered quite a few questions on that. But overall, if I look at the business, you keep losing customers. Even in the first quarter, based on second measure data, you shredded another 20% of your customer base. So as you cannot shrink into greatness, I'm a little bit struggling to see the strategy here. So if you reach that cash flow break-even situation, what are you going to do? Are you just going to milk this asset or are you going to invest again in this asset to basically make it a more attractive target again? And also in the discussions that you have with various parties, as the discussions are ongoing for two years now, How did, let's say, these discussions change over the last couple of quarters as the business is basically shrinking? Does it become even more difficult to sell the asset? And what is plan B if you fail to sell the asset? Thank you.

Thank you. There's loads of questions. So first, our target now is to get drop-up to not burn cash. That's our predominant target in the business. And don't forget, drop-up is severely handicapped because of the fee caps, right? There's a 100 million difference in profitability. So we would actually be generating 100 million U.S. dollars if the fee caps would not be there. There's still quite a good possibility that the fee caps go. Regarding the discussions, how did they change? Well, they went from being live to them not being there when the financial situation changed. to now we're getting more interest again. And this is, of course, due to the discrepancy. It's hard to imagine from Europe, given where all the European e-commerce businesses are trading. But actually, the market in the US is more favorable now. So we're getting more incoming requests for drop-offs. So I would say it's picking up again, actually, now. I don't want to talk about plan C. Look, we're good operators. This business will remain to be a good business, at least from a scale perspective, but also from a profitability perspective. We know what to do to generate profits in food delivery. That's pretty obvious in our business, I hope. So we can always run it like that, but that's not our preference. We like to run very profitable growing assets. You know, and I'm actually glad that, you know, most of the business is that again, but that's not the case here yet.

Thank you.

We'll take the next question from Michael Roig from Digital of Petercom. Your line is open now.

Yes, good morning. Now that your adjusted net profit is positive and you expect to make further progress in profitability in 2024, will you be considering a dividend payment over 2024 to be paid out in 2025?

Look, I'm not a big fan of dividend. I'm a big fan of buying back shares. But I don't want to – it all depends on where you are with your cash flow generation – Let's say after the current buyback, because we're still buying back shares, right? After the current buyback round is done. So ask me again when that happens.

Okay. Well, both measures are, of course, to remunerate shareholders, but the benefit of a dividend is that it can open up new shareholders that currently are restricted because you don't pay dividends. So just a suggestion. Thank you.

I understand that. Thank you.

We'll take now the next question from Bradley Hooks from Shore Capital. Your line is open now.

Good morning, all. Thanks for taking my question. Just hanging on to what you said earlier about being comfortable deploying additional marketing in the U.K. this year, could you sort of perhaps give us some color on how order growth in this segment is looking here today and sort of mindful of some competitors' steps up?

price investment in q4 last year so any color on that would be great thanks yeah i mean um i think you know we obviously get questions on the understandably on on the sort of competitive dynamics in the uk every single quarter uh for a very long time um it is a competitive geography. And from time to time, the promotional intensity increases. But fundamentally, we have a very large business in a very large market. And we have been able to reinvest some of the savings that we've been making, the significant savings, across 2023. I think that's played out well in terms of our market position overall. And so we will also continue to invest in pricing. The pricing gets more intelligent and more targeted. So our ability to generate higher returns from that pricing investment have also improved. But we certainly intend to spend at an elevated level like we did in 2023 and in 2024 again.

Great. Thank you very much.

We'll take now the next question from Zin Kili from Banmur Gordon. Your line is open now.

Perfect. Morning, everybody. I'd like to ask about the advertising proposition in particular. How can we expect margin growth to evolve in that looking forward? And is there any clarity you can give us on the geographic distribution of the revenues at the moment?

Yeah, look, I mean, we're obviously pleased with the progress that we've made in this area. You know, it's worth saying that it's been a significant part of our business for many years. It gets talked about, obviously, a lot now as new opportunities are emerging. It's an area that we've invested both in terms of the sort of commercial and technical expertise that fits within the business, as I mentioned a bit earlier. The extension outside of our advertising products, our current advertising products, is also dependent on the acceleration that we're making into you vertical. So the more grocery that you have on the platform, the more opportunities that you also have obviously to work with FMCGs and third party advertisers as well. So we're setting up that area quite nicely as it grows alongside the new verticals. But there's a chronology to how this gets set up, and obviously you need that base of penetration in the vertical. So we're at 1.1% of GTV now. I think we would describe it as an A scenario of the business, and we expect that number to grow over the coming years, but it's not per se a number that we're guiding on.

Thank you. And if it's so closely related to grocery, I see you've got grocery in the UK to mid-single digits now. How should we think about the year-on-year growth rate in that going forward?

Yeah, look, I mean, it's come... far quite quickly and we're very pleased with the progress that we've made. We've 8,000 partners on the platform in the UK. As I mentioned on the call, it's so important that we had a diverse and large offering that we could really take through the line and through our marketing channels to really push. The absolute penetration at a customer level remains pretty low and that's the opportunity in the UK and in other markets going forward now. Of course, it's helpful from a new customer perspective. you know, penetrating our very, very large existing base of UK customers is really the opportunity. So it's difficult to say exactly what level it will get to and what timeframe, but we expect it to continue to grow at a steady clip.

Thank you, Ted. Thanks very much, Rob.

We'll take now the last question from Angie Rose from Barclays. Your line is open now.

Hi, guys. Thanks for squeezing in. Mine's on Canada. It's interesting that you've excluded kind of all of North America from the GTV guidance, which makes sense on the U.S., given there's a process running for it and focusing on cash. But can you just update us as to why you've excluded Canada and then give us a sense in terms of what's happening in Canada in terms of growth, market share, profitability, and how we should think about that as a part of the portfolio over time, where you need to get to an answer on the U.S. Thank you.

Yeah, I understand the question, but it's part of the same segment, so we don't really have a choice in terms of guidance, because otherwise we would have to split everything out. Canada is a profitable business. It's a competitive market, but it's a large position in Canada. We're generally quite satisfied about that business. But yeah, we can't make that split because otherwise we would confuse everybody with a split North American number. And I think we should keep our communication as crisp as we possibly can.

We currently have no further questions, so I will hand you back to Gypsy to conclude today's conference. Thank you.

I would like to thank everybody for attending this call, and should you have any additional questions, you can contact Investor Relations, and I would like to see everybody next time. We'll see you next week in the U.S.

Thank you for joining today's call. You may now disconnect.