Delivery Hero Se Unsp/Adr

Welcome to the Delivery Hero Q4 2025 Trading Update. Today's presentation will be followed by a Q&A session. For those of you who have joined the Zoom webinar, you can use the raise hand function at the bottom of your Zoom screen at any time to join the queue to ask a question, and you will be called upon during the Q&A session. If you have dialed in, please press star 9 to enter the queue. If you want to withdraw your question, please lower your hand using the raise hand function in the Zoom app or via telephone press star 9. I will now hand over to Christoph Bast to begin the presentation.

Hello and welcome everyone. Thank you very much for joining our Q4 2025 earnings call. Joining me on this call are Niklas Westberg, CEO and Marianne Popp, CFO at Delivery Hero. Together they will present the key highlights of our Q4 2025 results. Following their presentation, we'll be delighted to address any questions you might have. And now over to you, Niklas.

Thank you Christoph and welcome everyone and thank you for listening in. So 2025 was a challenging year with tough competition, FX had wind and regulatory uncertainties. Therefore, I'm very happy to share that we returned to growth in Korea as promised. We completed the rider model change in Spain and Italy. We accelerated growth in Saudi Arabia at the end of the year, which was even beyond our highest expectations. I'm also very happy to have turned the integrated vertical segment profitable while growing very fast. Staying on the topic of integrated verticals and QuickCommerce in general, let's move to the next slide. So what you can see here is our QuickCommerce business, which represents the next frontier of our platform's evolution. We have moved beyond traditional food delivery to become an indispensable everyday app, leveraging a hybrid model of food delivery, owned DMARTs and local retail partnerships. The primary strategic advantage is the deep structural stickiness it creates within our user base. We aren't just a service, we are a daily habit. We capture diverse shopping occasions across the entire consumer journey, starting from your essential grocery shopping over pet food, electronics, to health and beauty products and so on. The results speak for themselves. QuickCommerce is currently outpacing food delivery with GMV growth of over 30%. In addition to continuous strong growth in groceries, we are seeing significant momentum across non-grocery verticals. Within this, health and beauty stands out, contributing over 50% year-on-year growth, while non-grocery as a whole already accounts for 20% of our quick commerce volume. With 2025 GMV surpassing 7.5 billion euro, we are scaling rapidly to meet our 2026 GMV target of around 10 billion euros, solidifying our position as the leader in instant grocery and retail delivery. Now moving to ad tech. Some time ago, we gave the ambitious long-term target for our ad tech business to reach more than 1.5 billion euro revenues in the full year of 2025. As you can see, we came very close to this target despite a slower rollout of our ad tech products in South Korea. Although the share of ad tech revenues in Korea constantly increased in the last two years, it is still behind the group average. leaving plenty of upside. On group level, ad tech revenues grew to 3.0% of GMV in 2025, and in Q4 2025, the share reached already 3.2%, with very attractive adjusted EBITDA margins. Our continuous improvements to the performance of the ad products contribute strongly to this growth, To name some key developments, our personalized ad ranking system leverages neural networks to improve the relevance of ads and the efficiency of our user targeting. this combined with our machine learning based automated ad bidding and pacing enables return on ad spending to improve from 3.9 times to 6 times between 2022 and 2025 and this unlocking significant additional investments from vendors in simple words we offer better and more relevant ads with greater returns to our vendors Throughout the years, we have stretched and strengthened our ad product portfolio from launching display ads in 2025, our CPC rollout in VUVA in 2022, to keywords revamp and video ads launched in 2025. These products support restaurants and vendors to increase visibility and conversion rates. Going forward, the main growth drivers for our ad tech business will be Vova, Glovo and PDGa, which are all below group average right now, but growing strongly. Our long-term ambition remains to achieve ad tech revenues of above 4% of GMV. And ad tech is just one area where we are seeing huge improvements from AI. As we navigate the broader AI transformation, we view our complex physical operations as profound structural modes. AI agents help us predict demand or recommend great restaurants to customers, but they cannot move physical goods, manage millions of real-time merchant integrations, or run hyper-local logistics, D-marts, and kitchens. Because our business is fundamentally anchored in hard, real-world execution, we're highly insulated from purely digital disruption. Ultimately, we see ourselves as massive beneficiaries of this revolution, leveraging AI to drive huge upside across consumer experience, merchant success, and bottom-line efficiencies. So with that, let me now hand over to Marianne, who will guide us through the financial highlights.

Thank you, Nicholas, and a warm welcome from my side as well. We finished the year 2025 strong, with Q4 showing further improvements in our three main focus areas, pro-plan growth, profitability, and cash generation. GMV in Q4 increased by 8% year-over-year on a like-for-like basis and excluding hyperinflation and FX effects, accelerating from 7% year-over-year in Q3 driven by significantly improved momentum in Asia. Revenue grew by 21% year-over-year on a like-for-like basis, growing again markedly faster than GMV. Profitability also improved, with gross profit margin expanding to a new all-time high of 8.3% in Q4. It does that EBITDA grew to more than €900 million in 2025, despite elevated gross investments in MENA and Asia, as well as particularly strong FX headwinds from the US dollar and Korean Won. One thing I'm particularly pleased about is that our free cash flow came in at more than €200 million. If we go to the next page, orders on group level grew by 9% on a like-for-like basis in Q4, accelerating from 8% in the previous quarter as the Asia segment has returned to growth, while all other segments continue to grow strongly. As mentioned, GMV growth for Q4 reached 8% on a like-for-like basis in constant currency and excluding hyperinflation accounting, improving from 7% in Q3. Revenue increased by 21% and has remained above the 20% mark at the group level for several consecutive quarters. This robust growth continues to be fueled by the ongoing expansion of our own delivery logistics, particularly in South Korea and Turkey, as well as a shift to the new rider model in Spain. In addition, the sustained strong performance of AppTech Business and the continued appeal of our subscription programs have further supported this momentum. Let us take a closer look at the preliminary results for the full year 2025. The guidance for GMV was increased to the upper end of 8% to 10% year-over-year growth during our H1 trading update. Our slightly increased growth in Q4 was not able to fully compensate for a slightly weaker than expected Q3 growth rate, and we arrived at a 9% year-over-year growth. Total segment revenues rose by 23.1%, coming in at the midpoint of our 22% to 24% year-over-year guidance on a like-for-like basis. Adjusted EBITDA reached above €900 million, compared to our guidance of €900 to €940 million, and free cash flow exceeded our guidance of more than €120 million and came in at over €200 million, due to improved working capital efficiency and lower tax payments. Hence, we are pleased with our preliminary results for the full year 2025 and will now dive deeper into the Q4 performance on a segment level. In Europe, GMV growth was temporarily softer in the second half of 2025 since we were still optimizing the operational efficiency following the successful transition of our rider fleet to an employment-based model in Spain. This will still have some effects on the top line in H1 before growth is set to re-accelerate again in the second half of 2026. Performance in markets outside of Spain stayed robust, supported by healthy increases in orders and DMV in the majority of countries. Revenue growth in Europe was again driven by the year-over-year expansion of our own delivery logistics, which reached 82% in Q4 2025. The implementation of the new rider model in Spain and its associated change in revenue recognition as well as strong ad-tech revenues and increasing basket sizes resulted in a particularly strong growth of 34% in segment revenues. After business review of our operations in Finland, we concluded that reaching a category leadership position would require prolonged and disproportionate investment relative to the long-term returns. That's why we exited the market as of mid-February and will focus our energy on countries where we are ready, number one, or strong, number two, and where we can generate the highest long-term returns. Adjusted EBITDA in Europe came in close to the break-even point in Q4 2025. Through further efficiency improvements, we expect to be around adjusted EBITDA break-even for the full year 2026. Let's move on to MENA. We have again delivered robust GMV growth despite challenging prior year comparables as Q4-24 was exceptionally strong due to concentrated growth initiatives. Throughout the region, spare competition regulations are being rolled out across Saudi Arabia, the UAE, Kuwait and Qatar, creating a more balanced environment that benefits the entire MENA ecosystem. It puts a halt to predatory pricing mechanisms that distort competition, disrupt smaller innovators, and add a significant cost burden on local restaurants. Order growth in Saudi Arabia picked up again in December, with momentum even accelerating through January and early February. This performance was driven by an enhanced subscription offering, with half of Saudi's GMV already coming from subscribers. Further investments are targeted incentives for high-value customers and the expansion of the multi-vertical proposition. Palabat once again delivered strong operational results, achieving 20% year-on-year GMV growth in Q4 2025, despite exceptionally high comparables from the prior year, with growth of 33% year-over-year in Q4 2024. Growth was supported by the continued expansion of quick commerce and subscription offerings, improved partner-funded savings, and an ever-growing selection. In Turkey, profitability improved substantially, resulting in positive adjusted EBITDA in the second half of 2025. Now on to the Asia segment. GMB returned to growth on a like-for-like basis in Q4-25 across the entire Asia segment, supported by category share gains since May and an increase in orders in South Korea, both driven by ongoing improvements in customer experience, which, among other things, has resulted in an outstanding year-on-year growth of 31% in the quick commerce business. The rest of Asia continue to strengthen, delivering DMV growth of 11% in Q4 2025, supported by an improved restaurant selection, more attractive vendor-funded deals, subscription rollout, and a leading quick commerce proposition. We expect this positive momentum to accelerate further throughout full year 2026. Our operations in Hong Kong can look back on a particularly strong year in 2025, with accelerating growth throughout the year in both orders as well as GMV. Building on the momentum, the region, and in particular Korea, has had a strong start to Q1 2026 with further acceleration in top-line growth. Revenue growth remains robust, underpinned by the continued rollout of own delivery operations as its main driver, with the OD share for the segment increasing to 76%. Profitability was reduced by investments in product and customer experience to further strengthen our long-term business. Now continuing with the America segment. We accelerated order growth by 224% in Q4, reaching the milestone of 1 million average daily orders. GMV grew 17% year-on-year, slightly below order growth, even though basket sizes increased across most countries. This reflects the impact of reporting Argentina and Euro, even within our constant currency framework, since Argentina qualifies as a hyperinflation country. QuickCommerce and our subscription offering continue to be key growth drivers, strengthening our value proposition across the Americas. Revenue growth was further supported by the strong performance of AdTech, which outpaced the overall top line and still offers significant upside potential going forward. Adjusted EBITDA also improved materially in 2025, demonstrating the resilience of our business despite ongoing macro headwinds. Now on to integrated verticals. Our integrated verticals business continued to deliver outstanding momentum, achieving 25% GMV growth year on year. This performance was especially strong in the MENA region, where demand is exceptionally high. Adjusted EBITDA improved marketly and reached breakeven for the full year 2025. This progress reflects our ongoing efforts to enhance the customer value proposition through broadening and strengthening the assortments to be more relevant, as well as effective pricing strategies across our store portfolio. For the full year 2026, we expect a small positive adjusted EBITDA despite investments in our DMATs expansion. Besides the pure DMARTs business, also our local shop offering, which is actually included in the regional segments, continues to perform exceptionally well, supported by the onboarding of key partners like Jumbo in Argentina, Carrefour in Qatar, or Kiko Milano in UAE. Our combined DMARTs and local shop business, collectively known as QuickCommerce, has now surpassed €7.5 billion in GMV, And we're on track to approach 10 billion euro in full year 2026, underscoring the strength of the business model. Let's now have a closer look at the gross profit margin. At the group level, our gross profit margin continued its upward trajectory, increasing by 10 basis points year on year to reach 8.3% of DMV, which is a new record high. Both MENA and Americas are already operating at strong and attractive GP margin levels. These regions are using their solid profitability as leverage to scale rapidly in the quick commerce space. In Asia, gross profit margins also showed steady improvement, expanding sequentially by another 20 basis points in the fourth quarter of 2025, largely driven by stronger profitability in South Korea. Europe is gradually recovering from the temporary impact of the transition to the new rider model in Spain. With that adjustment now largely behind us, we anticipate further margin expansion as we move through fiscal year 2026. Just as a reminder, as part of our continued efforts to streamline financial disclosures starting in 2026, we will report gross profit only in accordance with IFRS and on a semi-annual basis. Up until the release of full year 2025 numbers, we have had two structurally different P&Ls for management reporting purposes and for IFRS reporting purposes. These differences draw significant manual reconciliation, limiting speed and transparency, while increasing risk across many levels. Hence, we harmonize the two P&Ls, and from 2026 onwards, we'll disclose slightly amended but fully aligned KPIs. This will accelerate our internal reporting cycles and provide greater transparency and comfortability of our profitability drivers for the financial community. Let's now have a look at the affected KPIs. We're basically talking about two shifts. First, we will reflect revenue reductions like vouchers or refunds as a direct deduction from revenue instead of marketing expenses, thereby having the total segment revenues fully aligned with the IFRS revenue as published in our half-year and annual reports. Secondly, we will have certain cost-free classifications within the P&L to ensure both reporting structures are fully synchronized. While this results in higher cost of sales and a lower reported gross profit, it reduces our other operating expenses, meaning this does not have any impact on adjusted EBITDA and free cash flow. Also, GMV and group revenues will remain unaffected by these changes. Let's have a look at the upcoming dates. On 26th of March, we will publish our annual report 2025 and the full year 2025 earnings release and also organize another analyst call. We will also give formal guidance for the full year 2026 that date. Until then, we would like to refer back to what we already stated in the Q3 trading update, namely that we expect moderate adjusted EBITDA growth for 2026 as we increase our investments in Talabad, Korea, and integrated verticals. Without providing a specific outlook at this stage, we would characterize this as an adjusted EBITDA increase of up to a mid-single-digit percentage. From a cash flow perspective, we anticipate that the business performance will continue to improve the underlying cash conversion. At the same time, we will see higher investments in our DMODs business as previously communicated. Taking these opposing effects together, a free cash flow slightly above €200 million appears to be a reasonable expectation for 2026. Regarding the strategic review, we're carefully evaluating all relevant strategic options together with our advisors to unlock shareholder value. Given the nature and scope of the strategic options being evaluated, it is not in the best interest of the company and shareholders to give any interim details of discussions while they're underway. We will provide updates as soon as we're in a position to share details. Some options available to us may progress quickly, while others naturally require more time. Let me assure you that the organization is fully focused and working diligently across all work streams to assess every avenue to drive value for our shareholders. One more heads up we would like to give to today's audience. We're thrilled to announce that Andrea Ferraz will take on the newly created role of VP of Investor Relations and Corporate Communications. Andrea joins us from Klarna in March and you will get to know her over the coming weeks. That's it from my side. Thank you for listening, and we're now looking forward to taking your questions.

Christoph? Thank you very much, Marianne. Before we enter the Q&A, I would kindly ask you to limit your questions to one panelist, because this way we can ensure that every analyst has the opportunity to ask a question. And with this operator, please go ahead.

Ladies and gentlemen, we will now begin our Q&A session. For those of you who have joined the Zoom webinar, if you have a question, we ask that you please use the raise hand function at the bottom of your Zoom screen. Once called upon, please unmute your audio and ask your question. If you have dialed in, please press star 9 to enter the queue and star 6 to unmute once called upon. Our first question comes from Andrew Ross with Barclays. Please unmute your line and ask your question.

Great. Good afternoon, everyone. Thanks for those comments on the outlook for 26 in the strategic review. Given that, I'm going to ask on Saudi and ask if you can give a bit more color as to the changes that you've seen since the new regulation came into place at the end of last year. So could you be more specific about where Hunger Station's market share is today versus where it was pre-Ketar launching in 2017? and how much you've been able to regain since those changes came into place. I guess the follow-up to that is how you're thinking about regulation coming in through the rest of the GCC region in this year. Thank you.

Very interesting. Hey, Andrew. So we don't really look at category share the way maybe you do. We rather focus on how we are growing. If someone gives out on a $600 million in vouchers, of course, we get a lot of orders. The question is, what is the kind of long-term sustainable order level. So what is the true category share that such a player has versus what is the temporary order growth that someone would generate. Therefore, we don't really pay too much attention to that. We don't think it is that relevant. We try to look at underlying fundamental category share gains and losses. And the best way to do that is look at our own business and see how that is evolving and are we losing any of our customers. We believe that the customers that we have, which we have gained over multiple number of years through aggressively pushing our service, whatever customer we didn't gain during that time period is probably not a very good customer. But, of course, if someone offers $100 to order from and so on, you have a lot of riders and cleaning people and so on also ordering because it is simply free money to gain. So coming back to that, like how does our business look and evolve? Well, first of all, we grew prior to Kita entering, we grew at 15%. We obviously pushed a lot in Q4 that year when they launched and we actually accelerated our growth 10 to 15%, I think 15% in Q4 2024. So that's why we have a pretty tough comp as we entered Q4. Despite that, we managed to grow faster than 15% at the end of the year. So let's say December here. So faster than 15% in December, and this trend continued into 2026. So that means we are growing faster now than we did before ETA entered the market in Saudi. And we have done that without any material downgrade to profitability. Our expectation is that we're going to grow in Saudi this year in terms of profitability. So overall, I think it's incredibly strong signals that we have there. And we have achieved this not by doing massive discounts and vouchers and ending the price war. And it's very easy to... to kind of get dragged into that that's not what we have done but we have actually rather focused on our best customer and continuously working on the service and the product offering that we give to them And that's why we see that we haven't lost any of our good customers. The only customers that we have lost have been very low-quality, voucher-driven customers. And therefore, we are incredibly excited about Saudi, and we see a very good development for us. Impact from regulatory, yeah, of course, if someone has to start making economics because you cannot do predatory pricing anymore. So, therefore, you would see an impact if someone starts adding... different fees they have to start charging restaurants they have to um start charging consumers and so on so of course it becomes a little bit more level playing field and of course some of those let's call it um fake customers or or empty orders those will disappear from from from Those are the platforms, which means that technically speaking, yes, we would have gained share, but again, we don't consider it share gain when someone lost an order or a customer that wasn't really a true customer. So from that point on, we focus rather on our growth. And outside of Saudi, I think the other markets have learned from the negative experience that Saudi had to go through, that is hurting the restaurant ecosystem and Many of the technology disruptors got disrupted. So I think the rest of the Middle East learned from that experience and were much faster in applying and adopting predatory pricing practices. And that's what we also see then in the most of the markets that operate. So the majority of the markets in GCC have applied that. Yeah, I think overall we view it pretty positively for the industry and the restaurants and the full ecosystem.

Cool. Thanks, Mites.

Thanks, Samuel. Our next question comes from Marcus Dable with JP Morgan. Please unmute your line and ask your question.

Yeah, hi everyone. I guess I have a CFO question. Clearly the free cash flow, more than 200 million is a strong message. My question is how should we think about 2026 in terms of the cash flow? I think previously you commented that Cash conversion should be better in 26 than 25. If I just say, okay, the sort of like mid-fingered digit percentage growth in EBITDA gets us to roughly 945. Would you say we still have a sort of like, yeah, 600, 700 million gap between EBITDA and cash flow? Or do we sort of like factor at least a meaningful improvement also in there? I appreciate it's not guidance time. But any sort of like conceptual help would be quite useful, I guess.

Sure. I think, you know, I gave a bit of, you know, self-guidance already around that, right? And, you know, overall, I think we think a level above, you know, 200 is also what we would see for the current year. And, again, we can go into a bit more detail in about a month's time, right? But I think the way to think about it or the factors that would be driving it, you know, will continue to be different. Some of what we've seen this year, right, which is to continue to actually work on, in particular, working capital improvements. I think, you know, we've done a lot already. We have improved tremendously in 2025, you know, inventory management, in particular, cash conversion cycles in the DMARTs. We've been able to negotiate improved payment terms with payment service providers. We're monitoring payment cycles much more closely. So, again, a lot of improvement has materialized already, but I think there's still more to do. So I think there's still some of that also happening or continuing to happen in 2026. obviously, you know, any kind of overall improvement in the business world will also translate into free cash flow. And I think then, you know, on the counter side, we obviously then also have investments that we've talked about in particular in the quick commerce segment. And that would then, you know, have obviously repercussions on the CapEx and the lease picture in particular, right? So I think you've got these two movements kind of Maybe not fully offsetting each other, but I think leading to dynamic where you're probably looking at the numbers we so far gave for 2025 as well as 2026.

Yeah, okay. So basically if we say 945 EBITDA, so the sort of like incremental EBITDA should come through a better cash conversion than 25, or even better, let's call it like this.

Yes, but again, I mentioned other effects as well, right? You know, the investments, I think you have to factor in. So, again, you have a number of moving pieces here. Some of them will increase your cash flow. Others will, you know, slightly decrease it as you invest more. So, I think there's a number of checks and balances here.

Okay. Thank you.

Our next question comes from Joe Barnett Lamb with UBS. Please unmute your line and ask your question.

Excellent. Thank you. Thank you very much for taking my question. So you've spoken about the broadening out of your service and movement to being the everyday app. You also specifically state your desire to raise QuickCommerce GMV to 10 billion and to invest in IV. Can you give a little bit more colour on IV? Can we expect it to remain breakeven with you investing incremental adjusted EBITDA into it, or is it likely to get dragged down? back to negative adjusted EBITDA. And sorry to push a little bit further on the cash conversion question, but it's sort of partly where Marcus was going, I think. Are you going to expand your store footprint, and what's that going to mean for CapEx? A little bit of colour around that would be helpful as well. Thank you.

Maybe I started to take them. Yes. So the plan is to be taking it to profitable and we will maintain it there. But the growth that we're having is, of course, adding a lot of positive profit contribution and that portion, the incremental profit contribution that has been generated. will go back to expand and grow but yes we will keep it still around or slightly above EBITDA for for 2026 and then maybe you want to ask the cash flow conversion Marianne

yeah sure so yes i think the the short answer is yes there is obviously plans to further invest in the business in particular in the middle east and then that means you know d mites um additional ones or um looking at expanding d mites that are in locations that are working very well um so you will see um additional investments. And what that means for CapEx is you probably have a bit more of that. We also had some one-off effects in CapEx in 25, which you'll see a bit less of. We talked about Korea finishing some real estate projects there, right? Again, I think overall you will probably see CapEx going up a bit. And then I think the lease picture is obviously also important, right, as we expand the footprint of the DMART. So I think you should probably look at both of those increasing a bit.

Okay, thank you very much.

Our next question comes from Luke Holbrook at Morgan Stanley. Please unmute your line and ask your question.

Good afternoon, everyone. Thanks for taking my question. I'm going to be the person that asks on your strategic review, just to try and get a little bit of sense here. Is everything on the table, small, medium, larger size geographies? And when you say the timeline for some of these discussions might be shorter, some others longer, you know, is those longer discussions still within the realms of 2026? I'm just trying to get more of a framing around how we think about that.

Yes, very hard for us to comment much around here. As we said in our strategic review announcement, we are looking at a wide range of options. We basically looked at everything from the ground up, putting it this way. uh to review what could be shareholder friendly based on that we have also come to to some assessment where we think there is value to be be generated to shareholders and we are working very hard and diligently through those potential options Some of them will be fast to execute and not dependent on others. Others will take longer and or dependent on others. So therefore it's hard to give a specific timeline. on any announcement that will come there. But, yeah, we are taking a very deep look, and we are looking at a wide range of potential options. And, yeah, that's what I can say.

All right.

Thank you very much. Thanks. Our next question comes from Giles Thorne with Jefferies. Please unmute your line and ask your question. Giles, please unmute your line and ask your question.

Right, finally found the unmute button. My track record continues to be terrible at that. Thank you, Nicholas. A question on your definition of the everyday app. Does it continue to exclude any services around mobility, or is that something that you could see yourself leaning in harder on? Thank you.

Thanks, Charles. So it does not include it as for us building it, but we are, as you know, partnering in some locations and regions with existing ride-hailing companies to see how it can benefit our customers to have that as part of our subscription program and also have it integrated into our app. to cross-sell and leverage both our user base as well as improving the stickiness of our users. We are still at the somewhat early stage there to see how much we're expanding on this partnership, to what extent, how much it adds value to our users and to us. But we have no plans to expand with our own business at the time.

Thank you. And just by way of follow up, the Bolt partnership in the GCC in the UAE, how's that going? Is there any kind of colour that you can share? I appreciate it's still pretty early doors, but any colour on how that's going would be useful.

Yeah, I think we do see we like the partnership. I think there is an argument for extending it or deepening some of these partnerships. I would still say it's It could be value accretive, but it's not a game changer. As I've maintained before, there is a clear value in having restrictions to what your brand stands for. Our brand stands for being the best delivery company. And, of course, the more you expand into other areas, the more you dilute your message. I want people to think about how do I get something delivered to me and not anything else. And I think that is also the benefit that we have had in many markets and against many players, that we are that focused and that we are balanced. Also, dedicating all our tech resources and so on to building that. And there is a lot that needs to be built and improved still. So, therefore, we also like to be focused when it comes to our resources on what we're building and what we stand for. But, yeah, I think there are also some encouraging signs. We see some value, but it's not a game changer yet. Very good. Thank you.

Our next question comes from Annick Maas. Please unmute your line by pressing star six and ask your question. Please unmute your line by pressing star six and ask your question. Thank you.

Hi there. My question is on the ad tech business. Can you just explain us again how much of the ad tech business is today contributing to profits and With that, you are today already at 3% of GMV. You're now saying 4% of GMV is the long-term target. Why is that not higher? I think at some point in your history, you had a bit more ambitious targets here. Can you just explain us what is driving this? Thank you.

Yeah, so most of the... revenue that we generate that goes to the bottom line and increasingly so. So, of course, in the beginning when we sold ad products, we had to use sales team members. That is gradually being moved over to automated biddings and self-service and AI-generated sales agents to support and reduce. So we see that the margin on that revenue is increasing over time and will continue to increase. In terms of our ambition, I think our ambition was 3% to 5% for a long time. Now we're saying above 4%. I think for the non-food side, so if you look at groceries and in particular if you look at our own D-marts, we think that level will be higher. So that's maybe what you're referring to. There we see that we can improve. It goes substantially above 5%. We are still very early in that phase because we have been prioritizing more on the restaurant side, given that it was a larger part of our business. But during 1.05 and even more so in 26, we are pushing the NMR revenue stream further. So to our CPG companies and so on. And we think there is a lot of value and money that can be generated and improved there. But we are still very early in that stage. But yes, here we have bigger ambitions than that. Of course, you can look at things that, okay, if you make that margin, then a big part of your profit is coming from there. And you see it as two businesses. But of course, it's not two businesses. If we would have less ad revenue, we would have to make more money in something else. Then maybe we would have increasing our delivery fee or our commission or something else. Because in the end, we have a target on gross profit that we want to deliver. And, of course, the more we can deliver through ad tech, the less we have to generate through other parts of the business. So we can charge less to users and so on. So you can't see the two different businesses and that one is breaking even and one is making money because we calibrate those together to make sure that we hit our target margins and target profitability. And you can't do one without the other either. I hope that does it.

Thank you. Our next question comes from Silvia Caneo with Deutsche Bank. Please unmute your line and ask your question.

Thanks. Good afternoon, everyone. My question is on the guidance and the effects. Thanks for the call on the outlook for 2026 on the adjusted EBITDA growth front. I just wanted to check because in the previous commentary around the Q3 stage, You referred to local currencies levels of growth in your message. So I wanted to check if what you commented about today, the up to mid single digit percentage growth in adjusted EBITDA is in reported terms for 2026 or is it not? And related to that, if you could comment about the FX headwind that you currently foresee based on exchange rates at the moment. Thank you.

Sure.

Yeah, I will. So, yeah, so the kind of soft guidance or indication we have today assumes the visibility we currently have on FX. And yes, that basically is what we see at the moment. I think overall, what we've obviously seen in 2025 is that FX had a very strong impact on our financials. And we talked about that a few times in previous trading updates, right? especially after March 2025. And I think if I look at the overall impact on EBITDA that FX had at the end, over the course of all of 2025, it's probably around 100 million. maybe a little less, about 90 million on free cash flow. So there was a very, very strong impact, which was obviously very hard to foresee. I think where we stand right now in 2026, it's very hard to have a crystal ball. I think we don't see right now the same massive impact, but probably there will be some effect and some slight headwind. So in terms of, you know, the outlook we're giving, it is currently based on current assumptions, right? And I think as we speak again in March, we would, you know, kind of further confirm that.

Thank you.

Our final question comes from Bharath Nagaraj from Cantor Fitzgerald. Please unmute your line and ask your question.

Thank you. How should we think about the timing lag between the higher investment that you're making and the EBITDA inflection? Basically, does 2026 represent like a tough year for profitability? Thank you.

Yes, so... There are different types of investments. You could make investments that would give an instant kind of almost return. For example, if you give a voucher, then very quickly you make back that money on that order, that voucher, but there is no long-term positive effect. If you buy a customer, it costs a lot more, and it can take a month, a year to get that return back. But of course, it is still a very good return from an IRR perspective, even if it takes a multi-year. Same if you invest in technology, it will take time until you deliver that return. Or if you build a DMART more, until you have building the volume and so on, it will be a longer payback period. I think the investments that we have structurally done or want to do this year, in particular when we speak about DMART and Middle East, is to strengthen in our service and operations product offering, and in particular with the DMART and integrated verticals and multiverticals. Some of those have a very long payback period. But they are nevertheless incredibly strong payback periods. So when we push multi-vertical, we will keep investing. Also next year, we will invest in expanding and improving our multi-vertical offering. Long term, we will have built a business that is worth tens of billions, probably in that space. But there will be also a number of years where we keep investing in order to get that. So even if the payback here this is good and and it it's still some of these investments will be multi-year investment the same with demarking it took us We invested for three, four something years. Now we have an incredibly strong business, but it was still an investment over a number of years until we start seeing a profit from that. So it's a little bit hard to give you now an exact number. There will be returns of it already next year, but there will also be investments happening next year. So that's why it will still be hard to look. like to like what were the actual returns from the investment this year as they may continue.

Understood. That's really helpful, Kalle. Thank you. Thanks a lot.

This concludes the Q&A session. I will now hand back to Niklas Osberg for closing remarks.

Many thanks, everyone, for listening in. And thanks to all heroes for your hard work. We are, as I've said, leaning in during 2026, and it will be an exceptional, important year to deliver. So many thanks in advance for an even harder work during 2026. Thank you, everyone.

This concludes today's call. Thank you, everyone, for joining. You may now disconnect.