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.