Just Eat Takeaway.com N.V.

Good day and welcome to today's JustEatTakeaway.com H1 2024 Results Conference call. Throughout today's recorded presentation, all participants will be in a listen-only mode. Later, we will conduct a question and answer session. If you wish to register for questions, you may press star 1 on your telephone keypad. And now, I'd like to hand the call over to Yezi Hu. Please go ahead.

Thank you, Operator. Good morning, everybody, and welcome to this Analyst and Investor Conference call to discuss the half-year 2024 results for Just Eat Takeaway.com. On our corporate website, you can download the press release and the slides for this Analyst and Investor Conference call. Before we go into the details of this presentation, I'm very pleased to say that we are joined here today by our new CFO, Maite Oosterveld. She joined our company in early June, and I'm sure that I also speak on behalf of Juergen Andrew, when I say that we are very excited to work with her. So welcome, Maite. In the following slides, I will provide more color on the progress we've made on our strategic pillars and take you through the highlights of our performance for the group, as well as for each of the operating segments in the first month of 2024. Maite will then present the financial results for the company and share further information 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. Joer Gabik, our COO, and Andrew Kenny, our CCO, are also here to provide answers. Regarding the question and answer session, as a reminder, we would request that each analyst ask one question only. On slide three, I would like to set a tone for today's presentation. Our key messages are, That the constant currency GDP growth for the group excluding North America was 3% in the first half of 2010-24. That our half-year adjusted EBITDA was €203 million, representing an increase of more than 40%. That we generated a free cash flow of €38 million in the first half of the year, an increase of €116 million versus the first six months of 2023. That our positive free cash flow, combined with a strong balance sheet, allows for a launch of a new share buyback program of up to €150 million. And lastly, that we reiterate our guidance for 2024. Please follow me to slide five. A GTV grew 3% year-on-year in constituency for the group excluding North America, in line with the 2024 guided range. GDP for the total company amounted to €13.2 billion in the first half of 2024, down 2% compared to the same period last year, or minus 1% reported. Turning to slide six. On the left-hand side, you can see that the adjusted EBITDA for the group was €203 million in the first six months of 2024, which is a €60 million improvement compared with the first half of 2023. The adjusted EBITDA margin as percentage of GTV for the group further improved to 1.5%. On the right-hand side, our free cash flow before changes in working capital is provided. And Maite will provide more details in her section of the presentation. But I would like to point out that driven by the increased adjusted EBITDA, we significantly improved free cash flow and generated 38 million in the first six months of 2024. which is 160 million euro higher compared to the same period last year. I'm pleased to say that our profitability improvement and free cash flow generation are well on track. Moving to the next slide. Our company has evolved a huge amount over the past 25 years as we have grown from a small online marketplace in the Netherlands to a global leader in online delivery. At our heart, though, our core mission has remained consistent. We are here to make our customers' lives easier. We have only started to spread the service 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've already moved well beyond that, serving more and more occasions across the day and the week, and there is huge potential in 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 want, when they want it, delivered straight to their door in a matter of minutes. And in doing so, we also empower our partners to grow their businesses with new consumers and new channels, and we empower our couriers to build their careers in a safe, flexible, and inclusive environment. We are excited by the scale of the opportunity ahead of us. Now on the next slide, In terms of how we deliver on that vision, there are three core pillars to our strategy. The first pillar is providing the best choice and value. We have, of course, started decades ago by mainly offering pizza and kebab. We later added all types of cuisines, which is still an ongoing process. By expanding our logistical footprint, we are now able to not only offer every single restaurant, but also adjacencies ranging from convenience and grocery stores to pet food and iPhone cable. As the number and quality of partners drives order frequency and return rate, this is of the utmost importance to us. We also invest heavily in marketing and sponsoring to make sure that we are the consumer's preferred brand in most of the marketing in which we are active. Our second strategic pillar is providing great experience while enhancing efficiency. We are working hard to consolidate our tech platforms. As you may know, one of the disadvantages of mergers and acquisitions is that the result is that there is more than one platform in the business. I am glad that we are now moving towards having only one app in Europe, and we expect that more than 90% of European app orders will be placed through our new app by the end of this year. This platform consolidation will provide and improve user experience, accelerate innovation, and significantly improve speed to market of new product features. Ultimately, it will reduce costs, by operating a reduced number of tech platforms. We also made significant tech investments to transform our logistics to having best-in-class experience and efficiency, and we have made several improvements to provide seamless and efficient customer care. While we have improved a lot of our internal processes, many of the changes now and in the future will be AI-driven. The first strategic pillar is around acting responsibly towards our people and the planet, which is, for instance, reflected in our attitude towards delivery couriers and legislation, for example. In the second slide, I will share more detailed information on the progress that we have made across our strategic pillars as well. Moving to Northern Europe on slide nine. In Northern Europe, the GTV increased by 5% year-on-year in constant currency to €4 billion in the first half of 2024. Adjusted EBITDA decreased slightly to €186 million in the first six months of 2010-24, from €191 million in August 2020-23, reflecting significant investment in expanding delivery coverage. The adjusted EBITDA margin in Northern Europe at 4.6% of GDP remained one of the industry's strongest. On the back of these investments, Northern Europe against order growth in the second quarter of 2024. On the next slide, we provide more color on the progress of our strategic pillars in Northern Europe. With our marketplace offering, we already have nationwide coverage in most of the European countries, reaching 95 plus percent of the population. But as mentioned on the previous slide, we have invested significantly in expanding our delivery coverage by entering new cities, expanding existing delivery zones, and widening opening The bar chart shows that we have increased population coverage of our logistics services by approximately 1.5 times over the past 18 months. This logistics investment is important as it strengthens our mode and platform for future years. In June, we launched our new customer loyalty program, JetPlus, to Amazon Prime customers in Germany and Austria. We believe this partnership is a fantastic opportunity to further grow our customer base. And while our online share in countries like Germany and Austria is already high, This partnership should drive an uplift in order frequency and population penetration. We plan to launch a paid version of JetPlus in the second half of this year. Furthermore, as I already said when I was going through our strategy, we are rolling out our new app across Europe and have launched in Austria and Germany in the second quarter. This new app will improve user experience, accelerate innovation, and significantly improve speed to market of new product features in the whole of Europe. Moving to the UK and Ireland, where we have continued strong momentum while rapidly improving profitability margins through delivery efficiency gains. DTV increased by 6% year-on-year in constant currency, or up 9% on reported basis, reaching 3.4 billion euro in the first half of 2024. In April, the UK business faced a difficult consumer backdrop due to the end of cost of living support payments in Q2 of 2023. Adjusted EBITDA, increased by 36 million compared with the first half of 2023, amounting to 92 million euro for the first half of this year, mainly due to enhanced delivery efficiency following simplification of our delivery operation. With the adjusted EBITDA margin increasing further to 2.7% of GDP in H1 2024, the UK and Ireland segment is moving in the same direction as Northern Europe. Flipping to slide 12. The transition of all UK delivery orders to our own platform was completed in July. This simplification marks a milestone for the company and has significantly improved costs per order, which improvement we expect to continue in H2. At the same time, we delivered continued strong growth in supply and choice, adding 11% more partners compared with a year ago. We continue to scale our grocery business as well, and as a result, we doubled the grocery share of GTV in the last 12 months. Part of the benefit from ongoing improvement in our delivery business were reinvested in marketing and promotional spend, while at the same time we were able to significantly improve profitability, proving the ability to grow both top and bottom lines simultaneously. On slide 13, we show Southern Europe and ANC, our smaller segment representing just 7% of group GTV. While GTV has been stabilizing, our key focus here is on reducing losses. We improved adjusted EBITDA in absolute terms by 6 million through lower order fulfillment costs and general cost control. We also launched DebtPlus to Amazon Prime customers in Spain in June. And in April, we discontinued operations in New Zealand. Recently, we announced our intention to cease operations in France, reflecting our commitment to drive efficiencies and focus on building strong and sustainably profitable positions. While New Zealand has been excluded from these figures, France is still included. To conclude this section of this presentation, we move to North America. As I mentioned at the Q1 update, this segment now includes the mobile orders and GDP of RAPAP's large campus ordering offering that is available at more than 300 colleges and universities across the U.S., reaching 4 million students. In North America, adjusted EBITDA increased significantly to 80 million euro in H1 2024, up 29 million euro compared with H1 2023, despite the ongoing headwind to segment profitability from fee caps, as well as the introduction of minimum wages in New York City. In May, GroupUp announced an expansion of its partnership with Amazon Prime, whereby consumers who are Amazon Prime members can enjoy free ongoing GroupUp Plus membership in the U.S. This builds on the previous partnership announced in July 2022. Two, by allowing Amazon consumers to order wrap-up directly from Amazon.com and from within the Amazon Shopping app. In addition to our partnership with Amazon, we have also entered into partnerships with leading brands, including Starbucks, Albertsons, and Rexall, which accelerated our grocery and retail partner supply in both the U.S. and Canada. The drop-up continues to make strong progress towards cash flow breakeven, with a free cash flow before changing working capital of minus 4 million in the first half of 2024. And with that, I hand it over to Maite for the financial results.

Thank you, Yitze, and good morning, everyone. Before we get into financial performance, let me start by saying how delighted I was to join jussietakeaway.com at the beginning of June. about two months ago, and that I'm very much looking forward to talking and meeting with you all over the coming period. Let me take you to slide 16, where we show the development of orders and GTV in the first half of the year. On the left-hand side, you see that on a group level, we processed 446 million orders in the first six months of 2024, down from 469 million in the first half of 2023. which was driven by stable order levels in both Northern Europe and UK and Ireland, which represent 57% of total group orders, and declines in CNs and North America. Now, on the right-hand side, you see that Group GTV was down 2% year-on-year at constant currency and totaled €13.2 billion in the first half of the year. As Yitze mentioned before, the GTV for Group excluding North America grew by 3% at constant currency. driven by the continued good momentum in Northern Europe and UK and Ireland. Moving to slide 17. Total revenue declined by 1%, slightly above GTV growth. But more importantly, we made further improvements in revenue less order fulfillment cost per order, which increased by 7% in H1 2024 compared with the same period last year, mainly driven by delivery model simplification. Revenue-less order fulfillment cost is a key metric for our business and therefore remains the core focus point. By continuing to improve our unit economics, we can ensure that we remain a cash-generating business in the years to come. The improvements in fulfillment cost per order in combination with lower central costs resulted in a group adjusted EBITDA of €203 million. As a percentage of GTV, group adjusted EBITDA increased by more than 40 basis points compared with last year, reaching 1.5%. On the next slide, we see the contribution of each segment to the improvements in adjusted EBITDA. And as Jitsa already explained, the UK and Ireland and North America segments demonstrated a significant step up in profitability, leading to the improvement in group adjusted EBITDA of €60 million. Head office expenses were €106 million in H1 2024, compared with €100 million in H1 2023, which was mainly due to the cost inflation impacts. As you can imagine, optimization of overhead costs and further cost control measures will be an important focus area for me going forward. On the next slide, we bridge adjusted EBITDA to free cash flow for the first half of 2024. We significantly improved our cash generation, mainly driven by our enhanced profitability In the first six months, free cash flow before changes in working capital was €38 million versus minus €78 million in the same period last year. Our capital expenditures amounted to €81 million in the first six months of the year. CapEx mostly consists of our tech development costs reflecting our ongoing investments in enhancing product experience and innovation. As communicated at our full year 2023 results, We expect capex for the full year to be slightly higher than in 2023, leaving a little under €100 million of capex for the second half of the year. The weighting towards H2 is in part due to timing of product development, as well as the refurbishment of our office in Enschede, which will take place in the second half. Non-recurring items were €11 million in the first half of 2024, which was significantly lower than the €62 million in H1 2023, and as you may recall, last year included a €36 million one-off tax settlement. As a reminder, given the nature of our working capital cycle, where we receive the GTV ahead of paying our partners, working capital cash flows are positive over time, but are subject to volatility based on cut-off dates. This is a technical movement based on which day of the week the period ends. We therefore consider free cash flows before changes in working capital, to give a better view of underlying performance and cash flow. To conclude this slide, we remain disciplined on items which hit below adjusted EBITDA in the P&L. Given the fact that we expect that our expenditure below adjusted EBITDA will remain more or less stable, we anticipate that the conversion of adjusted EBITDA to free cash flow will improve as we become more profitable and generate more cash. On slide 20, we bridge the cash balance from year-end 2023 to the end of H1 2024. Cash and cash equivalents amounted to 1.4 billion at 30 June 2024 in comparison to 1.7 billion at year end 2023. As you can see, our positive free cash flow and the working capital movement roughly offset each other. The reduction in our cash balance in H1 was therefore fully due to the repayments of convertible bonds of 250 million euro in cash upon majority in January and cash outflows in relation to the share buyback program, which in H1 were 108 million euro. Moving to slide 21. Here we summarize the combined results of the two share buyback programs that have been completed to date. The first program was initiated in April 2023 and completed in September of that year, and the second program launched in October last year and completed in May of this year. Under these two programs combined, we repurchased approximately 21.7 million shares at an average share price of 13 euros and 81 cents, representing 9.9% of issued shares. Turning to slide 22, where we see our strong liquidity position and debt maturity profile. We remain well financed, and this strength allows us to make balanced investments into the business as well as decisions on our capital structure. Our positive free cash flow combined with our strong balance sheets and taking into account the future debt and bonds maturities allows us to launch a new share buyback program of up to €150 million. The program commences as of today and is expected to complete no later than March next year. In addition, we decided to cancel 5% of issued shares currently held in Treasury to reduce the number of issued shares. The cancellation is expected to be executed in October following the completion of a legally mandated objection period of two months. And then moving to the next slide, where we reiterate our 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. In line with the top-line growth trajectory and normal seasonality of our business, we expect adjusted EBITDA generation to be back and loaded towards the second half of the year. We expect free cash flow before changes in working capital to continue to be positive in 2024 and thereafter. And to conclude this slide, we reconfirm our long-term target of group adjusted EBITDA margin in excess of 5% of GTV. And with that, I hand it back to Yitze for the conclusion of this presentation.

Thank you, Maite. I will continue with the wrap-up of this presentation on slide 25. To summarize, GDP growth for the group, excluding North America, was 3% in the first half of 2024. A half-year adjusted EBITDA increased by more than 40% to €203 million. We generated a free cash flow of €38 million. We launched a new share buyback program of up to €150 million. And we are well on track to achieve our guidance for the full year. And with that, operator, I would like to open the call for questions.

Thank you, sir. Ladies and gentlemen, as a reminder, to ask a question, please signal by pressing star 1. If you find that your question has already been answered, you may remove yourself from the queue by pressing star 2. And please make sure the mute function on your phone is switched off to allow your signal to reach your equipment. Again, it is star 1 to ask a question. Now, the first question comes from Luke Holbrook from Morgan Stanley. Please go ahead.

Yeah, good morning, everyone. My question is just on the possibility of further market exits. We've obviously now seen you exit France and New Zealand. Just want to hear the possibility of another market exit by year end. And can I just clarify, under the new share buyback programme, will the shares be cancelled or will they be held in Treasury for the time being? Thank you.

Ladies and gentlemen, please stand by as we're experiencing momentary technical issues. Please stand by.

I think people could not hear us. I hope you can hear us now.

Yes, we can indeed, sir. Please proceed.

The miracle of phone lines in 2024. I will refer the buyback question to Maite later on. Regarding portfolio... We are constantly evaluating our portfolio. I think if you compare the situation, for instance, in France and New Zealand to other places in France and New Zealand, we were not market leaders, not by a long stretch. And we also had small operations. Now, our other operations that, you know, the countries in which we're currently are active are large positions. There might not always be market leadership positions, but they are large, and usually they are quite well-known brands in those markets as well. It doesn't mean that we are satisfied with the performance of all these markets, so we keep on constantly evaluating whether we dispose of markets, whether that's selling or anything else, or whether we entertain merger discussions for these markets.

On the share buyback question, we currently have approximately 15 million shares in Treasury. And as I said, we intend to cancel about 5%, which is between 11 or 12 million shares of that if we get in about two months' time after the mandatory waiting period. And then the remainder will be used and held for our future share-based comp. Obviously, we will review that over time, whether all of those will be needed. But for now, we're canceling the 5% and doing the next share buyback program.

Okay, thank you. And the next share buyback program will be held in Treasury for the time being?

For the time being, yes.

Thank you. Thank you. We will now take our next question from Marcus Diebel from JPM. Please go ahead.

Yeah, hi, everyone. My question is on the UK. I don't know, Andrew, if you want to talk about it. I mean, clearly a major improvement in profitability. It's one of the key drivers, as you highlighted, for the increased group profitability. How shall we think about this going forward? I mean, clearly it's coming from, obviously, you moving to your own delivery. You made this point. these effects will will still go into h2 i suppose or where do we have this kind of like year-on-year effect ending yeah i'm just trying to understand how much of this kind of like effect of own fleet delivery and the corresponding margin improvement how long will that last on a year-on-year base and when do we kind of like run into normal margin development and then the question is what is the improvement from from there that would be my question hope it makes sense

Yeah, it does, and I think just stepping back on the UK more generally, we're very pleased with progress overall. As you mentioned, we've been able to significantly step up profitability while simultaneously investing more in the customer proposition, in marketing, in promotion. I think for those that have been following the story for a while will have seen that sort of steady improvement over time in the proposition. Our choice and supply has really step changed. The grocery momentum that I think we talked about considerably at the full year numbers has continued and we're continuing to roll out more and more brands there. Top of mind awareness is good, is very, very strong and industry leading. And yes, we are now 100% on our own logistics platform. So the benefits of all the investments and all the energy that is going into improving the DELCO, what we call the independent contractor delivery platform, now scale out on 100% of the UK volume. So the second half will see the full benefit of that, of course, which we didn't see in the first half. It's been steadily eroding over time, that partnership exit. But that is only one part of it. The story over the last 12 or 18 months has been a combination of step changes in the technology, so introducing more sophisticated pooling and higher rates of pooling and other delivery efficiencies, as well as this partnership exit, the third party exit in the UK. Now, the second part goes away, but the first part continues. And we still believe that we have significant yards to go in driving increased efficiencies in all of our delivery markets. But obviously, you'll see that notably play out in the UK. Now, that won't be a you know, that won't come in a single go. You'll see the steady improvements play out over time there. But, you know, we worked with Stuart for a long time in the UK. The unwind of that relationship was never going to be straightforward, but I think the team's executed it extremely well and we're now able to capture those significant savings.

Yeah. And since I have you related to this kind of like competitive environment, How do you see this developing in, like, say, tier two, tier three, tier four cities in the UK?

I mean, the UK is always competitive. I don't think I'd articulate any major change in those cities, either tier one or tier three, four, five. So, you know, I think it's not straightforward to do that. You know, I think there is... undoubtedly some kind of a consumer headwind that I think still exists in the UK. We've managed to put up some good momentum on the GTV line, but orders are flat for the half. So we're obviously very focused on changing that dynamic around. But we're very fortunate that we're in a position where we are continuing to invest more money in the market while being able to lift margins. And that dynamic is not always straightforward.

I think also just to add to this, the way you grow a food delivery business, you basically need to grow three numbers. You need to grow your customer base, which actually I'm not going to give you that number for the UK, but in most European markets, it's actually a growing number. You need to grow your order frequency. You grow your order frequency, obviously, by adding supplies or adding grocery, adding adjacencies, but also adding more restaurants. And one important thing for us is the increase of the return rate. Now, the increase of the return rate is more complicated because that's very closely related to the economy and how the economy is doing. Because obviously prices went up and not to say our prices, but food prices. And therefore the return rates, I think in the UK, given where the economy is at, basically not growing. that's still something that's out of our control. These two other things we can actually influence. So if you see our business grow, it will be because of those two things that we have under our control.

Yeah. Okay. Perfect. No, thank you.

Thank you. We will now move to our next question from Joseph McNamara from city. Please go ahead.

Hi, thank you very much for taking my question. It's, I guess somewhat related to Marcus's question, I guess you saw strong gross profit margin expansion in the half, 30 basis points as a percentage of GDP year over year. How much of that could be attributed to the kind of process simplification you flagged? And is that in the UK and I? And I guess related to that, again, how should we think about the gross profit margin expansion potential in the second half? given, and going forward, given, I guess, the UK and I process simplification kind of rolls off at some point. Thank you.

Yeah, let me take part of that question and then hand over to Jörg, because we're working a lot on things such as cost control, but also simplification of our processes and automation of our processes, because Andrew already spoke about the replacement of multiple models, and we had three in the UK. We were down to two, and then we were down basically to one and a half, and now we're to one, but we also have a lot of work still to do in improving basically our global delivery platforms, and that's a very rewarding process because we just save a lot of costs, and we also mostly make our delivery faster as a result of that, so I think that's part of it. but also maybe you can say a couple of things about it. When you are a business that also does a lot of delivery logistics orders, it is us being responsible for the delivery of the goods. So that also means that we're going to get a lot of complaints if things go wrong. We're going to get a lot of frauds because of basically the growing amount of logistics orders that we provide. And we can also improve our business to make sure that we get better at fraud detection or automatic replies, for instance, in the call center. So maybe you can talk a bit about what we've been doing.

Yeah, sure. I mean, on logistics, obviously logistics is one of the biggest cost buckets we have in the UK, for example. And any saving we do there has a significant impact on on gross profit, but also on the profitability. And as we reflect from H1 2023 to H1 2024, we've reduced the cost per order, per delivery order, by 12%. So you can imagine that is actually a huge impact. And that's partly driven by the simplification of the model, like it was alluded to earlier, but it's also driven by technology advances. The simplification of the delivery model has been completed in the UK in July 2024. So the full impact is fully unfolding in the second half of the year. But the technology advances are continuing to go a head further. I mean, in the past, we've spoken a lot about the pooling, for example, when we introduced pooling, which is a feature which we unlocked. And that will develop further because we're still about to roll out multi-partner pooling in some of our regions. So we haven't rolled out multi-partner pooling in all of our regions yet. So that will further be extremely effective in reducing our cost per order. And then further on efficiencies, we're also improving courier performance through order flows and algorithm optimizations. And meanwhile, our investments in improved courier waiting times will also deliver a more seamless experience for all of our stakeholders. So there's quite some more to come, and it's an ongoing process. Like I said, some of it has been coming through basically in the last 12 to 24 months, but there's quite some more to come. And given the size of that logistics cost piece, any percentage improvement in efficiency has a huge impact on the P&L and will allow us to invest further into growth in the business.

Excellent, thank you. We will now move to our next question for Joe Barnplant from UBS. Please go ahead.

Excellent, it's Joe from UBS and thanks for taking my question. Firstly, congrats on a strong print and welcome to MITEI. Whilst I have many questions, I'll use my one on buybacks. With free cash regeneration higher than ever before, balance sheet strong and the share price where it is, why not do a larger buyback? And assuming that it's sort of general conservatism, As free cash flow ramps, do you see other uses of incremental cash flow? Or is it fair to assume at the current time that buybacks should ramp also as free cash flow generation ramps? Not looking for sort of specific guidance, but interested in the principles as you see them now. Thank you.

Thanks, Joe. And thanks for your welcome in that question. I think you point, I'm happy to have inherited a strong balance sheet in combination with improving and positive free cash flows. And in terms of deciding of the current size and potential future sizes of a share buyback program, I think it is around striking the right balance between funding opportunities for growth, maintaining that strong balance sheet, including taking into account future debt maturities, but also returning cash to shareholders. And I think that sort of striking that balance is how we got to the $150 million. And I think to point out the obvious, This is our third program of $150 million in a row, and you can see that over that period of time, the amount of cash returned to shareholders was a lot higher than the free cash flow generated. So I think at this point in time, I've been in the jobs for two months. I feel very comfortable with this decision, and I think we need to see how things progress to make the next decisions.

Thanks, Maite. Just as a follow-up though, as you view it at the moment, are there other sources of free cash flow that you could see directing the cash flow towards or nothing more as you see at the moment?

No, I think we're directing the cash flow to our plans and that is that balance between investing in our business but also the future debt maturities and then what we see as access to to sort of make sure that we have a comfortable balance sheet is what we will return to shareholders.

Wonderful. Very clear. Thank you.

We will now take our next question from Andrew Ross from Barclays. Please go ahead.

Great. Good morning, everyone. I wanted to ask about the US and what you've learned since the integration between Grubhub and Amazon. got deeper at the end of May. Can you give us a sense in terms of what was happening with all the trends in the U.S. in April, May, how that's changed into June and July? Has it made any difference? What have you learned? Thanks.

Yeah, we're obviously bound to be a bit secretive about this deal. But generally, I think I probably speak from two sides of this partnership. This has been very helpful to us. As you know, with the fee caps still in place in New York, we lack the firepower to invest properly in marketing in the U.S. And this is just a fantastic tailwind for us. And to be quite frank, we're actually... quite excited about the implementation in the Amazon product because it does provide us with a far easier way to activate these customers because you can imagine that if you compare the two programs, if you have one program which is basically sending out a link to a customer that the customer then has to actually sign up to something. It's actually a bit of a complicated process compared to just being able to order just like these customers also use Amazon to order whatever they order on Amazon. It's just far easier and you remove the hurdles. And I think from people that are not in e-commerce, the only thing that you try to do in e-commerce is to not have any hurdles for your customers. So to take away anything that could tempt your customers to not order. that's basically the task of running a good, you know, e-commerce marketplace.

To be clear, you are saying there has been a kind of noticeable uplift in orders since the change was made?

I think otherwise we probably would not have done it.

Okay, cool. That's helpful. Can I just follow up, boss, on the topic of government in the US, because I'm sure it will get asked, but any idea around timing of the, the vote around the fee cap amendment, and if the answer is no, then it's a quick question.

I've learned over the years to be very patient with U.S. political processes.

Cool. Thank you. Thank you. We will now move to our next question from Christopher Jochman from Equity Analyst. Please go ahead.

Good morning. Thanks for taking my question. I'll follow up on Andrew's question with the U.S. business, if I may. First, I'm curious if there is anything new, any more color you can say about the sales process. I think a couple of quarters ago, you hinted towards things being a little bit more or a little less dynamic given the ongoing VCAP situation. Maybe there is an update on that. And then coming back to the VCAP, somewhat related, I know timetables or timelines on these kind of things are very difficult, but I assume that the settlement talks on this are still ongoing. Is there any sort of timeframe you can give on that? Thank you.

Well, the last question is essentially the same question as the previous question, so I don't think we can look at it. quite close to the VCAPs rolling off last year, but it did not happen. So again, we need to unfortunately be patient on this one. Clearly, the court case is progressing, so that should provide some additional pressure to resolve this in the U.S. Regarding the sales process, we talked to plenty of parties that the issue obviously is is, for instance, the huge swing factor of these fee caps. So it's not straightforward to get to a solution there, but the sales process is ongoing.

But on the court case, there is no date or anything that we should be aware of that you can share?

Oh, there's plenty of dates. There's also plenty of dates in the political process, but again, it's moving in the right direction, but it's very hard to give you a date.

Understood. Thank you very much. We will now move to our next question from Jas Thorne from Jefferies. Please go ahead.

Thank you. I was looking for a bit more color, please, on what's behind the change of leadership at Nicaranda and what you'll be looking for from the new GM that perhaps Katharina didn't bring to the role. Thanks.

Thank you. not much behind it quite a frank uh katharina was in a role for i believe eight eight years um so it's a normal situation that people sometimes want to look for for other opportunities in terms of what we have put in place is a very strong commercial executor if you if you look very carefully at what sort of persons we try to put in country leadership. Those are usually very commercial people, because as we said before, especially these markets in which you're established and very large, it's all about commercial supply of partners and partnerships. So that's the most important thing you look for in a country director. whether these people are capable of pushing this business forward by adding exciting partnerships. And for instance, we are making very, very good progress with supply, basically partner supply in Germany. So we're very happy with the ease of that change.

So no radical shift in strategy in Germany?

No, look, we are, you know, if you compare, for instance, opposition in Germany to even the strongest player in the U.S., we are far stronger in Germany than that strongest player is in the U.S. So our position in Germany is very strong and we can only make it stronger by, you know, for instance, getting more markets online.

And, Giles, as you saw, I mean, in the slides that you went through, you know, we've obviously launched a partnership with Amazon in Germany. You know, we've launched a new app this quarter in Germany, which is very exciting. We're investing more in the key cities. The number of partners, the platform in Germany has increased significantly over the last 12 months. We're finding significant in our logistics capabilities, both in terms of coverage, our cooperation, longer delivery ranges. I would say there's an intensity to what we're doing right now in Germany. That's great, Conor. Thanks, guys.

Thank you. We will now move to our next question from Roman Richet from Goldman Sachs. Please go ahead.

Hi, thanks for the call. Just to follow up on the UK and Ireland, as the constant currency growth in second quarter there would imply a deceleration to 5% from 7% last quarter. I appreciate this could be driven by the seasonality of cost of living support payments in previous quarters, so just wondering if you could share any estimate on second quarter underlying growth adjusted for this impact, and do you expect any customer support payments during the year?

Ah, well, the support payments were fortunately by the government, because otherwise it would be a very high check for us. Those were government support payments to the UK population that supported some, you know, it's interesting what people do with the money. Apparently they order a lot with us if they get a check, which is good, I think. But that was last year, so that made for a difficult April comp. Generally, we have these three things that we need to change in the UK to get more growth out of it. We've increased our marketing budgets, for instance, so we are attracting as a result, or we should at least get more new customers in so that our user base grows. You will see more grocery chains being added to Just Eat in the coming months as well. So you'll see us grow our grocery business. You'll see us grow The partners, which we have done tremendously, of course, in the last year, also in the UK. And because of the savings we're going to get from our logistical network, we'll be able to invest more money in the UK. So, you know, we'll do whatever we can to make sure that all the parameters that we can influence. And again, we can't influence the economy. Unfortunately, that will be great. We can't. So, but the things that we can influence, we'll invest very heavily in. And don't forget, obviously, we're by far the largest player in the UK. Just Eat UK is still by far the largest for delivery business in the whole of Europe.

Okay, thank you.

Thank you. We will now take our next question from William Woods from Bernstein. Please go ahead.

Hi, good morning. I just wanted to ask about the rollout of the Amazon partnerships into Europe as well. Obviously, when you look at the metrics on active customers, returning active customer rates and frequency, they're still going down or flat. What are you seeing in the countries where you roll out the Amazon partnership? And are you seeing those metrics go upwards? And is it sticky? Thanks.

Yeah, I think that's giving Amazon a bit too much credit in those markets. Look, we are... Probably, and I don't know any of the figures of other players, but we're probably the largest e-commerce business in Germany. Our position in Germany, for instance, is very strong. In most of the European countries, we are probably the largest e-commerce business in terms of transactions. In some of these markets, Amazon is also large, but in all of these markets, we are actually a lot larger than Amazon in terms of transactions. So it depends a bit on which market you are. The situation is obviously different with the U.S., where drop-off is far smaller than Amazon. So I think while Amazon partnerships for us are always helpful, it depends a bit on the position in the country, whether you will be able to notice in our overall figures what the support is from Amazon partnerships. We wouldn't do them if they would not be supportive, but at the same time, when it when it rains for a week, that probably has a bigger impact than the new spot.

Understood. Thank you very much.

We will now move to our next question from Mark Hessling from ING. Please go ahead.

Yeah, thank you. A little bit coming back to some of the answers you already gave, but it's more fundamentally on the growth potential in Northern Europe and UK. I mean, you're doing quite a lot of investments on the supply side. You're saying that you're getting a bit of a pushback effect from the economy. but more structural given the demographics, giving the increasing water frequency in the higher supply, what kind of growth should, should you be in this business? If you would have a normal economy, I can understand you cannot really point to a number, but if it's like structurally, how do you think about the growth potential of these, these businesses longer term?

Yeah, that's, that's, that's almost a philosophical question. Look, I mean, we, we know for instance that the restaurant sector is in some of these countries shrinking, right? I mean, um, We've seen some figures in Germany, for instance, of this sector shrinking instead of growing. As we said, we can't control the German economy, but most European economies are growing at 0%. That doesn't supply any tailwind. It probably also doesn't put up a headwind for us because we'll just do what we were doing. We'll add more customers and we'll try to increase the order frequency. Now, if the economy is going to grow in these markets, great, but I don't think we're very dependent on it long term. Obviously, in getting out of the pandemic, our user base shrank, so that's different now. It no longer does that, so that's great news for us. The order frequency did not move tremendously between the pandemic and now, so that stayed roughly stable. Look, the growth in Europe is entirely on us and on our ability to execute our strategy. And conceptually, we believe that we should serve 80% of the population in Europe. We only serve 35% of the UK, for instance, and we want 80% of the UK population to order with us. And we would prefer if they would more often than today. So that's basically... In a nutshell, how we think about where we should be as a business, now how long it's going to take, that's a wholly different question. But that's the goal for this business, to serve the entire population, or almost the entire population, with multiple occasions per week instead of a couple of orders per month.

Okay, thanks. And then the growth that you saw in the first half of the year, was that a bit like you expected it to be, or...?

I think if you can see that we are within the guided range, yeah, I think that's safe to say.

Okay, thanks.

Thank you. We will now move to our next question from Sylvia Cuneo from Deutsche Bank. Please go ahead.

Thanks. Good morning, everyone. Just following up to the topic you were just discussing in terms of the frequency, I wanted to ask about your vision on convenience, if you could talk a little bit more about to what extent that is already contributing toward the frequency. Since I see the average monthly order frequency was unchanged year on year, just trying to understand when, in your view, demand will follow the additional supply that you have introduced?

Well, I think the clearest example is the UK. We've spoken about this being roughly 5% of ITTV already. And that came from zero. So you can understand that it's quite supportive in in increasing, first of all, your order frequency, but also in increasing potentially your user base, because you might not want to order food, but if you then want to order grocery, you can, or if you want to order something else, you can. The biggest opportunity clearly currently is in grocery delivery. We see that everywhere in all the countries in which we're active, and these other agencies such as pet food, et cetera, they're further away. Um, but that's also quite logical because people don't, I mean, people come to us to order food, right? So, you know, groceries are close enough to that. They don't typically come to us to order pet food. And therefore that requires some education from, from our side. But the UK is the clearest example of our progress there. We also see that in Europe. So in a lot of European countries, we've added quite some grocery chains already, but it is something that is still quite, quite nascent in most markets.

Thank you.

Thank you. We will now take our next question from Sean Kelly from Panmure Liberum. Please go ahead.

Good morning, everybody. If I could ask very quickly on the margin in Northern Europe, I particularly want to dig a little bit deeper on the profitability of the logistics operation there. Is it fair to suggest that you've got a slightly negative gross margin on the delivery operation there? And so if so, how should we expect that to evolve as you continue to expand coverage of the logistics across Northern Europe?

Yeah, I think you need to take into consideration that running a logistical network in most of the EU countries is just very expensive compared to, for instance, running it in the UK. There's very few markets in which we believe that running a freelance model is permissible. We've seen a couple of examples of competitors getting into trouble because of this. Now, it is a frustrating, slow car accident happening for competitors in most of our countries, but it still doesn't warrant us to do things that we think are in conflict with the law. So that means that you have a very long runway in getting your investments back. So if you are going to start providing logistics in a 50,000 people town in Germany with low volume because it's a smaller town. It takes a long time to make that investment back. We think that's an investment we're willing to make. And we think it's a wise investment for us to make. But as with everything in food delivery, it's about scale. Now, we already have the scale in Germany, of course, so that is helpful. But yeah, it is... very expensive to run a food delivery network because in most countries it's employees, it is hubs, in Germany it gets worse because you get worse councils, unions, bike masters, you can look it up what it is. So it is a very long return of money investment. So you'll see also if you look at our margin, it went down a bit because we've opened these smaller towns and extended ranges and more difficult times of the day, et cetera. And it will take some time to make that money back. Now we've made most of the investments we wanted to make most of the upfront investments. So for feasibility profitability, that's, that's good news, but still, it will take some time for us to get the amount of orders that we have projected for these smaller towns. Uh, you know, you don't, if you, if you open in a 50,000 people, um, German town, don't think of this as a UK town. there will be only one chain, maybe two, that you can put on there to get some traffic and all the rest are local heroes. So it's very different and it's an investment that will take some time.

Thank you. So that makes a lot of sense. So it's right to think that most of the upfront investment in expanding the logistics network in Germany in particular is already done and we shouldn't expect much of that to be coming through in the P&L on ongoing basis.

A couple of points on that. First of all, it's not only in Germany. Obviously, we have 95% population coverage of Northern Europe. I'm sitting next to a German and he sometimes talks about Germany as if it were Germany. It's not. It's a rather big area. We're making these investments across Northern Europe. I don't think we're ever ready and done. You might say that we take a bit of a leap in the future. Those are maybe towns that we would have started next year instead of this year. So we've taken this investment a bit closer to us to grow a bit faster because we don't like the fact that our growth is low in Northern Europe. We want it to be higher. So this is why we're making these investments earlier. But I think this is the way to think about it. And you should not expect us to stop. So we will be in towns of 20,000, 25,000 people at some point, just not now.

Thank you very much, Lisa. Thank you. That's all questions we have for today, sir.

I'd like to round off this analyst and investor call by thanking you for participating and for your questions. And if you have any additional questions or remarks, please reach out to our investor relations team. Thank you and goodbye.

Thank you. This concludes today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.