Inpost Sa

Good morning, my name is Gabriela Burdach and I am Investor Relations Director at InPost. Welcome to our Q1 2023 results call. A quick disclaimer, today's call includes forward-looking statements that are subject to risks and it is possible that actual results may differ materially. This call is being recorded and will be available on our website soon after the call. Today's presenters are Rafał Brzoska, our CEO, Michael Rouse, CEO International, and Adam Aleksandrowicz, CFO. We will have a Q&A session after the presentation. Rafał, over to you.

Thank you, Gabi, and thank you all for joining us this morning. It's been another exciting quarter of our Outperformance for Impulse, which I look forward to taking you through. But before we dive into details, let's remind ourselves of what makes us stand out. Our mission is to revolutionize last-mile e-commerce deliveries, but also returns across Europe, boosting convenience, economic efficiencies, and, of course, sustainability. With Parcel Lockers as our key enabler, we offer structural advantages to both merchants and consumers. That's why we are consistently gaining market share in all our key geographies. And it's time for a game-changing e-commerce experience. And we are leading the way. So let's jump into the next page. For those who have been following us for a while, you already know about our so-called flywheel concept, the business strategy that creates a self-reinforcing cycle of growth. And it's been from the beginning the key to our continued success and, of course, also driving force behind our international expansion. It all begins with bringing ourselves closer to consumers, offering next-day delivery and reducing the friction of online orders. This boosts convenience for consumers and, of course, encourages them naturally to choose our lockers as their preferred delivery method. While no logistics company has a kind of monopoly on people's front doors, the lockers of over 17 million strong Polish consumers base visits are actually our own. As our user base and their intensity of usage grows, we become increasingly relevant to merchants, further entrenching our competitive differentiation. Underpinning the flywheel are our investments in data and technology, and also recently into artificial intelligence. and our focus on sustainability, which is so inherent in our APM delivery model. On the next page, you can see three clear indications of why lockers are simply the most consumer centric, but also sustainable mass market solution for last mile delivery. You may recognize this page from our annual results call. Lockers are a more convenient solution for customers as they appreciate the ability to control their own collection times rather than being at the mercy of a traditional courier delivery. And this is something that old fashioned to door delivery companies cannot match. This is confirmed not only by our consistent ability to grow volumes ahead of the market, but also by third-party market research showing that our APMs record net promoter score of 81, a much higher level than any outdoor competitors. Happy customers are also a big win for merchants, as demonstrated by our merchant NPS, which is also significantly outperforming the rest of the market. Merchants trust us as a reliable partner, and it's a fundamental to our success. Lockers when correctly utilized, are a significantly better solution than traditional to-door delivery from also a sustainability perspective. In Poland, every merchant order that is delivered via one of our lockers can save up to 97% of the carbon footprint versus to-door last mile. And as merchants are increasingly focused on their suppliers' emissions, here, our differentiation versus PS will only increase. Next page, please. We are operating in nine European countries currently, with significant exposure to the larger British and French markets, which are the, by the way, number one and number three e-commerce markets in Europe. In France and the Benelux countries, we operate under Mondial Relay brand due to the existing customer base and excellent brand recognition. Everywhere else, we are expanding under the Infos branch. With almost 30,000 automated parcel machines across our entire network, we are the largest automated out-of-home network in Europe. And we are the market leader in Poland by a significant margin and enjoy, of course, market leading agnostic APM status in France and the UK. We also decided to continue a capital life expansion of traditional PUDO points. In some markets, it's very important to grow our client base for future automation, but also that allows us to address the enormous demand which we may simply address. On the next page, I'm super, super thrilled to share with you some of our impressive Q1 2023 highlights. Despite macro challenges, we achieved outstanding volume growth of more than 20% year on year and revenue of almost 2 billion Polish zloty, which is almost 30% increase from Q1 2022. Growing volume, operating leverage, continuous improvement in our logistics, as well as our ability to adjust prices helped us achieve an outstanding 36% growth in adjusted BDA. And it's all despite challenging cost environment due to rising inflation and fuel prices. On a group level, we generated positive free cash flow, which was driven by a very high free cash flow generation conversion in Poland at more than 56%. And the positive free cash flow led to a decrease in net leverage ratio to 3.0 times compared to 3.2 times at the end of last quarter. But Adam will provide you further details on this. In Poland, revenues increased by 29% year-on-year and volumes by 18%, resulting in a higher BDA margin of 45%. In international markets, volumes increased as well pretty nicely by 28% year-on-year and revenues by 30% year-on-year. We continue to expand our international network, increasing the number of out-of-home points by almost 40% in comparison to the last year. The international APM network increased by 19%, while PUDO points by 24%. And in the UK, we hit a major milestone by reaching 5,000 parcel lockers, and in France, 3,000 APMs. Next page, please. We have made a decision to no longer disclose market volume growth and declines. There are many different sources that show values in each of our key geographies. And no matter which source you are looking at, you can clearly see that our strong double digit volume growth consistently and massively surpasses market data in all of our key geographies as demonstrated by these various sources our q1 2023 revenue growth was driven primarily by volume and also by the finalization of the repricing process The strength of the repricing was different by market, of course, but you can clearly see continuation of the positive trend from Q4 2022. After having looked at our group as a whole, we are now going into more detail for each of the geographies that we cover. So let's jump in to Poland. Our consumer-centric strategy in our home market is focused on delivering a dense but also a convenient locker network to our customers. We strive to improve our network each year and take pride in being the clear market leader in automated out-of-home delivery in Poland. With over 60% of the Polish population already living within a seven-minute walk of four lockers and moreover 85% in urban areas, we ensure that our customers can easily access our services when and where they need them. And this is critical. Our mobile app with over 10 million users has a remarkable five-star rating on the App Store, the highest in our industry. We have a growing and devoted user base with almost 2 million more APM users in Poland than last year, totaling over 17 million of them. 44% of the Polish population already uses our lockers with nearly 3.4 million so-called super heavy users accounting for about 64% of our total volume. And these royal customers drive impulse growth and massively contribute to the outperformance of the Polish e-commerce market compared to most of Europe. On the other hand, also our merchant partnerships are crucial for our growth as we provide them with a sustainable and very cost effective solution that enhances the delivery and returns experience for their customers. In the last quarter alone, we launched label-less deliveries for Vinted. We initiated APM and fast returns deliveries through Zalando launch. And also we expanded our partnership with Amazon on fast returns. It's really exciting to see our merchant base grow by over 2,000 in the last quarter only, and now totaling over 50,000 merchants. On the next page, you may see in Q1 2023 that we delivered more than 130 million passes, which is, again, 18% more year on year. What's even more impressive is that our APM volumes grew even faster than the number of lockers, 18% versus 17%, which shows how we improve the efficiency of utilization as well. And our APMs are a cornerstone of our success. You may see that clearly on the third chart on the slide, illustrates how our APM utilization rates have steadily climbed post-installation and remain high. This is a very strong indication that our continuous efforts to improve the convenience have resulted in growing adoption and utilization. This is the merit of our end consumer centricity. This also proves that our APM network in Poland can still expand an attractive utilization and return on the investment. And now let's jump into the last page in my section. So it's all about the customers. They are fiercely loyal to InPost. As demonstrated on this chart, competing machines installed nearby or even on the same real estate have had little to, I would say even no impact on our machine performance, which is confirming that our customers, they really do trust in our brand. This confirms that in the absence of a significant difference in price or quality, simply our customers remain loyal to our services, given our much larger footprint and access to all major merchants in the country. Let me now hand over to Michael for the international part. Thank you very much.

Thanks, Rafa. Good morning, everybody. So let's go through our international business update, turning to page 15. The Mondial Relay out-of-home network has expanded to over 23,200 points, a 25% year-over-year increase, including 3,300 APMs, almost five times more versus Q1 last year. Over half of our APMs are deployed with national landlord partners like Lidl and Carrefour as we continue to target high footfall and high visible locations. We're expanding our coverage and density with 32% of the French population now living within a seven minute walk of an APM or a PUDO. So as we continue to invest in our market coverage, we observe more engagement from customers and merchants alike. Recently, we've actually been ranked third by Havas Media Group on the list of most meaningful B2B brands in France, behind such notable companies such as Microsoft and Google. Clearly, our investment in the market offering is still quite early, but that is quite an achievement, such early in this journey. And our mobile app downloads reached over 400,000 high ratings on both the App Store and Google Play. But our app journey is still early. Our merchant base also continues to grow with over 46,000 partners and almost 3,000 new ones added just in the last quarter alone. We're signing new contracts and extending cooperation with existing merchants to provide them the best possible experience. And the most recent example with the launch of the pilot of Mondial Relay Express, our D plus one offering to the first B2C customers, we're happy to report that our customer promise rate is over 95% since the launch of this program and client feedback has been super positive. So we will continue to invest and continue to optimize in the Mondial Relay Express product and its efficiency, looking to expand adoption with other merchants throughout the balance of the year. So what are the positive results of our actions in France? Q1 witnessed a robust growth across all Mondial markets, with volumes rising to 17% year over year, and our French volumes rising to 43.8 million, up by an impressive 11%. We continue in Q1 to capture market share gains and capitalise on growing demand. And to meet this accelerated demand, we've continued to invest to capture the market share against elevated labour costs driven by minimum wage increases and some marginal cost impact due to national strikes. Adam will further comment later in the financial sections on these. Our locker expansion strategy has been instrumental in driving volume growth. In Q1, APMs represented an impressive 10% of total parcel volumes in France, a significant increase from the 7% in Q4 22 and 1% in Q1 22. So volume growth in Q1 was led for the first time by B2C volumes, which grew by 15% as we see the early positive indicators of our increasing B2C focus with players like Sheen and Amazon. Our B2C services increased within our mix of merchant partners, but we've been more moderate with price increases As we go in exchange for volume, market share and ultimately adoption of lockers at checkout as we start the turning of the French flywheel. The chart on the right hand side of the slide shows the number of parcels per APM covered per month post installation. Encouragingly, we're thrilled to see the continuous adoption of lockers in France. What's even more encouraging is that the adoption rate of the 23 cord is keeping up with previous year, demonstrating the sustained traction of our lockers. So now let's move to the UK market, where we continue to see an immense growth potential. In Q1, we surpassed a staggering 5,000 APMs, a 53% increase year on year, making us the leading agnostic APM provider in the UK. Our focus on deploying larger machines with more lockers has improved our career economics. Additionally, we've begun to add poodle points in dense urban locations that have high footfall, but are not suitable for APMs to complement the network. We're pleased to say that in 12 of the UK major cities, 42% of residents are now within a seven-minute walk of an in-post APM. When deploying new APMs, we work together with major chains like we do across all markets and key landlords. And in the UK, 80% of our APMs have been installed at landlord and supermarket partners like Tesco, Sainsbury's, Morrison's and Lidl, to name a few. Again, key high footfall and visible locations. The chart in the center of the slide shows our growing UK consumer base. In Q1, over 1.3 million unique customers used our services, with almost 800,000 using instant returns and almost 600,000 using locker-to-locker, even though that product has been on a capped service since launch. Both the number of returns per customer as well as the number of locker to locker parcels bought per customer increased customer usage and retention every quarter, which is really encouraging signs now as we start to unlock the network. As for merchants, we partner with over 200 brands, including the UK's top retailers at the end of Q123. The number of sellers was 50% higher than Q122. And we note that this concerns only returns in locker to locker, while our B2C service in the UK is still not live, as we await the higher logistic capacity and coverage. On the next slide, in the UK, we continue to see tremendous growth with volumes reaching 7 million parcels and 95% increase year over year. This was largely driven by the successful launch of the locker-to-locker service we've ended, leading to a surge in C2X volumes. Returns have also continued to increase in line with our growing client base and higher input share check as we see the heavy repeat customer usage. Our total volumes in Q1 23 even exceeded peak season from the previous year. And as you can see in the middle chart, Consumer adoption of our APMs is on the rise, and our focus on deploying APMs in high-quality locations continues to pay off. We're making strides in profitability as we leverage the logistic capacity and see high repeat usage of the product services, resulting in improved adjusted EBITDA per parcel economics. The adjusted EBITDA per parcel reached minus 3.3 Polish Sloty in Q1, a significant improvement compared to Q4, and a significant improvement even further from Q1 2022. The high demand for our services in the UK is a clear indication of the increasing appetite amongst UK consumers for high-quality, automated, out-of-home delivery services. With a tremendous opportunity in the UK, we are focused on resolving the capacity bottlenecks that have hindered us up until this point and to fully maximise the potential of them all. market the good news is the transition is now completed in q2 and with the volume ramp up already commenced in may we're well on the way to to really attacking the market our plan for 23 is to continue expanding our network of apms and poodles to better serve our growing customer base and to capture the enormous opportunity the uk market represents i'll now hand over to adam to discuss the financials