Inpost Sa

Good morning. My name is Gabriela Burdach and I'm the investor relations director at InPost. Welcome to InPost Q4 and full year 2023 earnings call. This call is being recorded and it will be available later on our IR website. Today's presenters are Rafał Brzoska, InPost CEO, Michael Rouse, CEO International, and Adam Aleksandrowicz, CFO. After the slides, we will have a Q&A session. A quick disclaimer, today's call includes forward-looking statements that are subject to risks, and it is possible that the actual results may differ materially. I am now pleased to hand over to our CEO, Rafał, over to you.

Thank you, Gabi, and thank you all for joining us today. What an incredible year 2023 turned out to be. We achieved new records in volume, financial results, and most importantly, we delivered on our key strategic priorities. Let me then start with the broader perspective. We are operating in nine countries and have exposure on the largest e-commerce markets in Europe. With over 66,000 points, we are the leading out-of-home and number one APM network in Europe. As of the end of last year, 61% of our out-of-home points and 38% of our APMs were located outside of Poland. Moving on to the next page, I'm pleased to share with you some of our full year highlights. At the group level, Impulse delivered almost 900 million passes last year, 20% more than in the previous year, with revenue growing even faster by 25% year-on-year, hitting almost 9 billion Polish zloty. Our adjusted BDA for 2023 was almost 40% higher than last year, coupled with a robust positive free cash flow at the group level and further reduction in our net leverage ratio. In Poland, our volume once again outperformed, massively outperformed the e-commerce market, which I will talk about in a second. Revenue generated in Poland grew by an impressive 27% and our adjusted EBITDA margin reached 46%. This great performance not only demonstrated our financial strength, but also resulted in the generation of substantial free cash flow with an impressive cash conversion of 49%. That's money we can invest, of course, in our international expansion. As for the international markets, we have some good news to share as well. Our volume increased by 28% compared to last year, and our adjusted EBITDA grew by 82%. the culmination of our strategic efforts was particularly evident in the last quarter of 2023, where we not only achieved a sustainable level of profitability in the UK, but also reached a BDDA break-even in Italy, and that's the news of the day here. It means Q4 2023 was the first quarter when all our markets were profitable at the adjusted BDA level. We remained the past the local leader in Poland. Last year, we claimed the top position in the UK, and just recently, this quarter, we secured the number one position APM Network in France, reaching 5,000 machines in that market. Moving on to the next page, last year, we shared with you some priorities for 2023, and we delivered on our key promises. In Poland, we solidified our leadership position by achieving volume growth that surpassed the market. The robust generation of free cash flow was strategically invested in international markets. The improvement in the BDA resulted in a lower net leverage ratio, which was another priority for the group in 2023. In a challenging environment, Mondial Rila demonstrated the resilience of its business model, generating volumes well above the e-commerce market and with a very decent margin. Thanks to our focus on the quality of service and wider merchant adoption, we saw remarkable growth in the B2C segment. We invested in logistics, opened new hubs and depots, and we continue to work on improving our quality and delivery time. The year 2023 marked a significant breakthrough for Inpost in the UK. We finally have more control over logistics. We have unlocked volume growth and have become a BDA profitable. Now it is time to accelerate the network expansion by focusing on our strengths and what we do best, customer experience and quality. On the next slide, here I would like to highlight that Q4 was another quarter of Enpost outperforming the market in all key geographies. In Poland, throughout 2023, our volumes grew by 16%, while the e-commerce market only grew by 11%. Despite being the market leader in Poland, we continue to gain market share. This is the effect of our long-term investments into logistics, commitment to quality, and relentless pursuit of excellence in our user experience. We also successfully gained market share in Mondial Relay geographies. Mondial Relay volume increased by 13% and in the strategically important B2C sector even more, by 23%. All this while total e-commerce market volumes grew only 2% year-on-year. In the UK, InPost is in a growth mode. Last year, our volume grew by over two times. We are expanding our network, increasing volumes, disrupting the market and gaining market share. And the market potential in the UK is massive. On the next page, let's look at some ESG metrics. Delivery to impulse APM, we know, is the most environmentally friendly solution. What we see based on our calculations is that delivery to APM emits up to 98% less CO2 than traditional door-to-door service. And this concerns only transportation, but even taking into account branches, sorting, and customer pick-up, APMs are much more eco-friendly than two-door. These calculations concern in post-APMs with our density of the network and of course the efficiency of our current operations. As you can see on the chart, 2023 was another year of declining CO2 emissions per parcel in scope one, two, but also in the third one in our company. All this is getting noticed. We have just recently received higher ESG ratings And we were also included by Euronext in the ESG index, which recognizes the top 25 companies with the best ESG practices among blue chips listed on Euronext Amsterdam. Let's move on to the business update from Poland. In Poland, we have the largest, most dense, and most convenient APM network for our customers. That's a fact. In cities, 87% of the population lives within a 7-minute walking distance to an impulse APM. And nationally, this ratio is already over 60%. Last year, we added over 2,500 new APMs in our domestic market. Each year, we add new APMs to our network because we see that the demand of our services remains at an outstanding level. And we know that our new machines will maintain a high utilization rate. We don't see the ceiling yet. we see that new machines adopt at a comparable level versus previous cohorts, and we will deploy new APMs as long as we see it really makes sense. Turning to the next page, In the last quarter alone, our volume grew by 17% year-on-year, underscoring our continued market share gains. What you can also see here is that our volume growth continues to outpace the capacity of our local network. The chart on the right shows inputs high levels of utilization across our entire network. What I'd like to highlight here is that during the recent peak season, our utilization rate was even higher than last year, increased by an impressive 9 percentage points, and we still successfully managed last year's peak. We believe InPost was the only company in the market that delivered before Christmas without any problems. And this shifted a lot of volume towards inputs in December, more than we expected, and we still delivered with superb quality. On the next page, we have more details about our growth drivers in Poland. We have a growing and loyal customer base of over 18 million APM users, representing more than half of country's population and more than a number of households. We also have more than 11 million users of our top-rated mobile app. Frankly, now it's hitting almost 12 million. Our user base is very loyal. 20% of our APM users are super heavy users, the most loyal group. They are responsible already for over 60% of our total volume. And what's more important, all the time, these users increase frequency of orders. All customers are extremely important to us, which is why we are striving to enhance their user experience even further, for example, by adding new services. In Q1 2024, we proudly launched Impulse Pay, following successful beta tests in 2023. It is more than just a payment service. Impulse Pay represents a revolution in convenience and efficiency, providing one-click payment and easy delivery. We are early in the journey, but we already see a very positive impact in terms of conversion at checkout and much higher rate of completed baskets. Next page, please. Now I would like to share with you the recent studies that only confirm what we already see internally, that we are a beloved consumer brand. As you can see in the chart, customers in Poland favor parcel lockers over other delivery methods and they have a clear preference for impulse brands versus other providers. When shopping online, 93% of customers that use parcel locker delivery choose InPost APM. We significantly stand out compared to our competitors. We always emphasize our outstanding NPS score. This is not just a number. Behind that result is our superior quality. We have the most dense and the most convenient locker network in Poland. 22,000 APMs. And these are not just lockers. Behind them, we have the whole logistics backbone at the operational level that allows us to deliver more than 97% of parcels the next day, even during peak times. Our high focus on user experience throughout the entire parcel journey only boosts the consumer satisfaction. And our competitors are far from that. And we constantly work on getting better. I will now hand over to Michael for a short update on our international business. Thank you very much.

Thanks, Rafael. Good morning, everyone. 2023 has been a strong year for the international business and all the markets that operate within it. We have continued to take market share from legacy incumbent players We've been attracting and building new users to APMs in all markets, and we've established InPost and Mondial Relay as the leading locker solution in the UK and France. We're still early in this journey in all markets, but we're now break-even in all the international segments, and we will continue to double down on our strategy on replicating the flywheel and building the leading consumer-centric e-commerce delivery option for our consumers, merchants, and landlords alike. At a snapshot, 60% of the group's total out-of-home delivery points are now located outside of Poland, and this percentage will only continue to grow. In terms of volumes, one-third of the total group is now generated by our international markets, and in 2023 these grew by 28%, faster than Polish volumes, and we expect this to be the case going forward. In 23, we increased our international APN network by almost 5,000 locations, or 56% year over year. The number of lockers increased even faster, by 76% year over year, as we deployed larger machines and also expanded the APMs already deployed. We're still adding PUDO points in order to increase the density of our network, but not at the same pace. I want to emphasize that our APMs have significantly increased utilization rates in France and the UK last year, However, there is still potential for further improvement, particularly when compared to Poland as a benchmark. So let's move on to Mondial Relay. Our key priorities here remain the same. One, expand our APM network. Two, growing the customer and merchant adoption. And three, investing in improving end-to-end operational quality. We've made significant progress last year against these priorities. And last week, we made a significant announcement with over 5,000 lockers in France. And earlier this quarter, we reached the number one spot in terms of APM networks in this country. In Mondale relay markets, now over a third of the population live within a seven-minute walk from an impulse location as we continue to build density and coverage. A big pillar of our transformation is ensuring the logistics backbone can service all of France with quality, as well as support the increasing cross-border growth. We continue to invest in this area, and at the end of the year, we already had 41 depots and six hubs in France, and more in total across Mondial. This larger logistics backbone, which is nearly double now from when we acquired the business, will and is definitely having an impact on our operational quality, which will continue to impact positively on volumes, revenue, and results in the long term. Just to give you a small flavor of this, our B2C volume, which we've been super focused on growing, more than 60% of that now is being delivered D plus one. Moving on to the next page. One thing I want you to take away from this slide, and Rafael has mentioned that already, Mondial Relay is operating in a very difficult environment. declining e-commerce market volumes, strong and good quality competition. However, despite those market challenges, we have delivered double-digit volume growth last year, proving that our efforts and our business model are successful and our offer is attractive for both consumers and merchants. Mondial Relay volumes grew by 13% last year, significantly surpassing the e-commerce market. This growth is driven by the B2C segment that increased year over year by 23% in the whole year, and by 31% in Q423, and now accounts for over 40% of the total Mondial Relay volumes. In total, our merchant count grew nearly over 50,000, up 16% year over year, providing a strong portfolio to farm in the near to medium term. Moreover, all of our new volume is an APM volume. In Q423, almost 20% of Mondial Relay's volume in France was delivered via lockers, a significantly from 7% in Q422. You can also see it on the chart in the middle. Our new cohort follows the adoption rate of the previous ones, confirming the recognition of our expanding locker network. The whole network utilization is growing, and you could see that on previous pages, and we still see space for further improvement. Finally, Now I'd like to touch on the progress of the Mondial Relay brand and increasing customer satisfaction. Delighting our customers and improving on this on a continuous basis is critical for our sustainable success. In terms of brand awareness and reliability, Mondial Relay stands tall with 35% top-of-mind brand awareness now securing the top position amongst our competitors. These are lower levels compared to Poland, but still these are top levels in the French market versus peers. And according to the recent external research, 91% of respondents affirm that Mondial Relay fulfills the delivery promise. And 83% of the Mondial Relay users express that our service is their preferred choice for deliveries, reflecting the trust and the loyalty we are building. The total number of APM users has tripled in the past year with over 3 million active users now in France. And our mobile app albeit still early in that journey, launched at the end of last year, was downloaded over 1 million times now, and has strong store readings. And our MPS is at 22, and the distance versus the closest competitor is increasing. Our building blocks and our investments are now translating into meaningful customer centricity across the Mondial Relay portfolio. Now let's turn our attention to the UK. In the UK, we're on a path to create a fully integrated model. Last year was a breakthrough year for InPost in the UK. We started 23 knowing that our offer fits the market perfectly. Proof of concept was there. The demand was there, yet we could not grab the demand fully. In 23, we concentrated on resolving the bottlenecks. We finally have more control of our logistics process. We've unlocked the volume growth. We've started to speed up the network expansion because we see more demand for our services. We've engaged a new active, frequent locker consumer and user. And we've become EBITDA profitable thanks to higher volume, better logistics and economies of scale. And we expect that the last quarter profitability level is sustainable in the short term. This year, we have ambitious plans to deploy more APMs to meet the growing demand we're seeing, targeting in excess of 3,000 locations in the UK, taking the network over 10,000 in total. We want to continue to improve operations in conjunction with Menzies, and we're now piloting a B2C offer and plan to launch B2C on a larger scale towards the end of 2024. InPost has firmly secured its position as the number one APM network in the UK, significantly surpassing the nearest competitor. Our growth trajectory continues with a significant 62% year-over-year increase in the out-of-home points, totaling 7,800 at the end of the year. This expansion solidifies the coverage of our network, and we continue to expand now beyond the core three cities as we offer national seven-day-a-week coverage. Specifically on the three core cities that we've been core concentrating on, over 60% of the population now live within a seven-minute walk from our locations. Compare that to over a year ago, which was at 40%. We've made significant strides and improvement in covering cities that account for 70% of the UK e-commerce market. We continue to work closely with UK landlords and big chains, targeting high footfall traffic locations such as supermarkets and petrol forecourts, with recent partnership announcements of Lidl, BP and Shell being new additions to the footprint. Our growth is also coming from existing landlord development, with over 60% of APMs strategically deployed through partnerships with existing landlords such as WH Smith, Lidl and Tesco in the past year. On the right-hand chart, you can see the utilization of our lockers across the years. It's grew dynamically year by year, but as you saw on slide 15, there is still room for growth, especially as our offer in the UK doesn't cover BDC, which is the largest part of the market, yet we have to address. Closing the UK section, I'm happy to highlight the significant progress we've achieved in expanding our volume and customer base. Our mobile app, launched in Q3 23, is rapidly gaining popularity with over 300,000 downloads already. Our application significantly enhances the consumer experience, providing features such as capacity tracker, and we've already received positive customer feedback on the early development of our app. As illustrated on the column charts, our quarterly volume experience consistent growth through 23, ultimately doubling for the entire year, resulting in the successful delivery of almost 47 million parcels. Equally remarkable is the substantial increase in our customer base, boasting 2.7 million users, more than double the number from the previous year. These achievements underscore our commitment to excellence and continuous improvement and innovation in meeting the evolving needs of our customers in this dynamic UK market as we established out of home as a disruptor to the established to door market. I'll now hand over to Adam to talk about the financials in more detail, and thank you.