Prosus Nv Sp/Adr

Good day, ladies and gentlemen, and welcome to the Nice Passion Process Interim Results Call. All participants are currently in listen-only mode, and there will be an opportunity to ask questions later during the conference. If you should need assistance during the call, please signal an operator by pressing star and then zero. Please also note that this call is being recorded. I would now like to turn the conference over to the Group Investor Relations Officer, Owen Ryan. Please go ahead, sir.

Thanks, Chris, and everyone for joining the call today. On the call with me is our CEO, Bob Van Dyke, and our CFO, Basil Skordos. We'll walk you through an update on the group as well as the financials for the past six months. Then we'll open the call for questions. Before I hand over, a quick reminder and a few housekeeping items. As you know, Process is a subsidiary of NASPERS, and its financial results almost completely account for NASPERS results. To ensure that shareholders of Process and NASPERS are provided with the information simultaneously, we're having one call. Focusing on processes results, but where necessary, will highlight the impact on NASPERS. We report revenue and trading profit on an economic interest basis, meaning they include our proportionate share of the results of our associates and our joint ventures. The results of our associates, Tencent, Mailbrew, and Delivery Hero, and others are reported on a three-month lag. Importantly, free cash flow is a consolidated number as associates and JVs are fully funded via M&A. And finally, growth is in local currency, excluding the impact of M&A. We distributed our earnings materials through our investor relations site this morning, and you can also find the replay there. And with that, I will hand the call over to Bob.

Thanks, Owen, and thanks, everybody, for joining the call today. It's been a busy period for the group, and it's been a time when a lot was accomplished. So the operating environment remains turbulent, but consumers continue to shift more and more of their daily activities online. And we see that as really having a positive effect on our operations and investments. And it's really in periods like this that the best opportunities come out, and they present themselves to those with patience, with capital, and with conviction. And that's what we do here at Prozis. And that's why we invested in Tencent 20 years ago, and this is why over the past eight years, we've built a portfolio of the fastest-growing assets in classifieds, payments, food delivery, and asset globally. Our e-commerce portfolio will be worth roughly $54 billion after approval of the BillDesk transaction. And our core segments are operating at scale, and they're still growing rapidly. significantly in value, and we really have momentum that will propel future growth and value creation. So today I will walk you through the drives of current and future growth, as well as the investments that we're making to fund that growth. And after that, we'll open the lines and take all your questions. So let's start on slide five that shows our strategy, which is aimed to build businesses with sustainable growth potential, and we do this by identifying great products that are managed by excellent teams in high-growth markets that are addressing key societal or consumer needs, and we do that by building online platforms. And operating at this intersection has driven tremendous value creation for the group over the last few years. And if you look at slide six, you can see the pace at which this value has been created, and importantly, the impact that scale is having on value creation. So in the first half of the year, our e-commerce portfolio grew revenues 53% year on year organically. And this has driven substantial value appreciation. So excluding Tencent, we're currently generating a 22% IRR on the $22 billion we have invested over the last decade. And actually, if you look at the IRRs of our most recent investments, primarily in food and edtech, they are considerably higher than the 22%. So at the current course and speed, our non-Tencent e-commerce portfolio is on track to exceed 100 billion in the next few years and can meaningfully expand beyond that after. So I'm confident that investing across our portfolio will create strong returns for shareholders. And today, if you own shares of NASPERS and Prozos, you own, as you can see on slide seven, a really fast-growing, unique portfolio of unique consumer Internet companies. And most of these are not yet accessible to public market investors. And after the approval of Buildesk, three out of our four segments are worth more than $10 billion and are growing strongly. And our fourth, which is AdTech, has a clear path to the same. So if I take a step back, that makes each of our segments bigger than 90% of all publicly listed internet companies. And I am committed to ensure that this value is realized over time. So that's really how we think about things from a top-down perspective. And now let's turn to slide eight and get to the key highlights of what's really been a very strong six months. So first, as I mentioned, e-commerce revenue growth accelerated to 53% year on year. And we've known grown more than 100% over the last two years. And our operations and investments are scaling and are growing significantly in value. Second, this growth is underpinned by ongoing expansion of our businesses' ecosystems. And as an example, there's auto transactions and classifieds, and there's convenience of food delivery, which will extend that growth of these segments well into the future. Third, we've also invested in new and exciting assets and made more than 40 investments during the period. So Buildesk and Stack Overflow are just two of them, and these investments will position the group well for continued growth. Fourth, we funded our investments with ongoing improvements in profitability at our core operations, which is a very important point. That has also enabled us to efficiently access the debt capital markets through the issuance of $4 billion worth of bonds at very attractive rates. Finally, we're making massive progress in our sustainability efforts at the group, and I look forward to speaking about that more shortly. Let's dig a little deeper in each of our operating segments. I'll start with classifieds on slide nine. After a pretty turbulent 2021, OLX rebounded very strongly with more than 200% growth at OLX autos and 48% growth in core classifieds. So the growth in core classifieds was driven to a good extent by outstanding performance from Avido in Russia, which generated 67% revenue growth at higher operating margins. So in Brazil, Group Azap is now fully integrated in the business. And this has strengthened our property vertical and it's contributed to OLX Brazil's 40% organic revenue growth. On the left-hand side of the slide, you can see how OLX's growth compares to the peer group. We're very pleased to see that our performance is well ahead of the industry average. And we see significant further opportunity to build out a full-service auto transaction business through OLX Autos. And while it's still somewhat early, you can see from the right-hand side of the slide that we really are making good progress. We're growing the business quickly, and we just surpassed $1 billion in total car transactions. And we are, in terms of numbers of cars sold, actually comparing already quite well to some of the public companies that are operating in the same space. And all of these companies have very significant valuations. Then let's move to food delivery, and you'll see there we're following a similar path to classified. So we are delivering strong growth of a scaled core, but at the same time, we are extending the business through adjacent product offerings. And I think slide 10 illustrates that well. So during the period, orders grew 70% year on year. Besides a major step up in scale achieved last year, We've increased our investments in things like grocery and convenience to capture the broader delivery opportunity beyond food. And iFood continues to go from strength to strength with consistently strong growth, as you can see on the left-hand side of slide 10. So over the last year, iFood added more than 60,000 new restaurants onto its platform. That's another 20%. up from last year, and that was already on top of a very, very strong growth path in restaurant adding. So that growth was made possible by iFood developing its own delivery business from basically nothing in 2018 to 36% of orders today. And that's exceptional given that the marketplace business, which is sort of the non-owned delivery, is also growing strongly. And iFood's first-party business is now actually bigger than all of its other competitors in the markets combined. And that's actually a great example of our metric-based investing. And this is the same approach we're now taking in building out the additional offerings in convenience and grocery. So it's still early days there, but as you can see from the right-hand side of the slide, the signs are very positive. And the revenues from adjacencies in iFood is growing threefold in a very short period of time. And for me, it's a demonstration that the opportunity in this space has expanded significantly. And you're seeing an increased investment in iFood, Swiggy, and Delivery Hero, and that is a reflection of that conviction in increased opportunity. So if I can move on to pay you on slide 11. And again, here you see the same theme of strong growth at the core while we are investing to expand the opportunity set from here. So in the period, the core PSP business grew an impressive 48% year on year, with growth actually coming from all markets, and it's benefiting from increased e-commerce transaction activity everywhere in the world. So when the BuildNAS transaction is approved, PayU will move sort of from the middle of the pack in large payments providers to be a top 10 global payment provider, and the combined TPV of the business will be well over $100 billion. And it will process more than 4 billion transactions annually and will have more than 300 million transacting customers. And that actually includes the vast majority of customers that are trading and transacting online in India today. And with that level of scale, the combination will create a platform with a broad product offering and also significant potential for growth in digital banking. On a separate note, there's been another important valuation story in Bayou, and that was the IPO of Remitly that happened in September. We invested about $200 million in Remitly some four years ago, and based on its market cap at the end of September, our stake is worth $1.7 billion, and that applies to 7x return so far, and it's a great business that we're excited to be in. So let's now turn to our newest segment, which is EdTech, on slide 12. So far, we've deployed $3.5 billion in nine exceptional businesses that all have high potential, and we see them scaling rapidly both in usage but also in value. And when we think about the space, we tend to think about it in two main verticals. On one side, there's the enterprise or vocational space, and on the other side, there's K through 12 space. You see that on the left-hand side of the slide, and we are investing in both. So in enterprise and vocational, we know that employers today need to provide continuous education opportunities for their employees in order for these companies to remain competitive. And at the same time, employees need the ability to constantly upscale while they're on the job to remain relevant. So we're investing in the platforms and products that address those needs, and we are building enterprise solutions on a global scale. It's been a busy six months in that tech. Skillsoft went public and actually reported a strong first set of results as a public company that we're very proud of. And in June, we closed the acquisition of Stack Overflow, which is a phenomenal platform that's growing very quickly. As you probably know, Stack is a core resource for most software engineers around the world, and it serves more than 100 million users. developers and technologists every single month, and it's one of the 50 most used websites in the world. So if you step back from it, our portfolio now reaches 90% of the Fortune 100 across our corporate learning companies, and that includes Skillsoft, Udemy, and CodeCademy, and there is significant opportunity to drive future growth through these relationships that we have. And actually, we have a similarly exciting presence in K-12 through Byjuice and BrainMe, And there we're really investing in the mechanization of the classroom. So we're enabling students to gain access to alternative forms of learning that augment the core curriculum. And as a group, you should expect us to look for additional opportunities in the tech space. So While we're scaling e-commerce rapidly, and I hope what I just told you underlines that, I also want to underline the group's continued commitment to our long-standing investment, which is Tencent. Tencent is a phenomenal business, and it's also an investment with tremendous upside potential, and slide 13 shows this. And here's why. So first, China will become the world's largest economy, and a growth that's underpinned by a population of 750 middle- and upper-income customers. And over the next decade, close to a billion people will be living in cities and they'll be using smart technologies in every aspect of their daily lives. Second, I believe China is the world's most attractive internet market with over a billion mobile internet users. And actually the level of engagement of those users is well ahead of those in the West. Simply put, if you want to be a large consumer internet investor at a global scale, you have to be deeply invested in China And against this very supportive backdrop, I am convinced that Tencent is best positioned to take advantage of all of this. And there are four key drivers which underpin our conviction in Tencent. So first, Tencent is led by a world-class leadership team, and it has a proven track record of operating through all types of environments to the benefit of all stakeholders. Second, Tencent continuously evolves and it innovates its ecosystems in a profound way. Third, Tencent is the market leader in its core segments, and it is investing and innovating to keep those positions. And finally, Tencent is also one of the most active and successful investors globally. They have 1,400 investee companies invested close to $100 billion in deployed capital. And we don't believe that those assets are appropriately valued by the market, and therefore it represents a significant upside to our investment case. So now I've told you a few things about a strategy and about value creation. I hope you're excited about that too. Now on slide 14, I would like to spend a moment on our approach to capital allocation, which over the years has remained focused, has been disciplined, and has been balanced. So in the center of the slide, you can see that as a group, we've generated and raised approximately $44 billion over the last six years, and that's been to a combination of asset disposals, and capital raises in the debt market. And we have deployed 60% of these funds into extending our core four segments. And these all have tremendous potential. And as you've seen in the past few slides, they've grown tremendously over time. We achieved an impressive 22% IRR on doing this, and that excludes Tencent. And as I mentioned earlier, actually our return has accelerated of late driven by food and asset investments. And finally, and importantly, while we have deployed roughly two-thirds of our capital to investing for future growth, we have returned roughly one-third of that $44 billion to our shareholders over this period as well. And finally, when we turn to slide 15, I would like to emphasize the progress we've made in our sustainability efforts across the group. And I would also like to say a few words on how we apply our influence across the group to controlled and non-controlled businesses when it comes to ESG. So at a group level, what we do is we set the standards and the principles, which we then actively cascade across our majority controlled businesses, and we work closely with them to focus on areas specific to their business model. With our minority businesses, We share our principles and we demonstrate best practice, and we amplify that through our board seats and through our operational engagement. Now, we recently joined the UN Global Compact, and we're really pleased that our efforts are being recognized externally, with PROS achieving an inaugural score of 73 out of 100 on the Dutch Transparency Benchmark. And that actually puts us already in the top 40 of the benchmark. In the meantime, Stainalytics also acknowledged their efforts with an improved 2021 low-risk ESG rating, which, again, is a great confirmation of our progress. Finally, just a week ago, we received the process and the NASPR scores on the annual S&P assessment, and we are happy to see a 69% jump in the process score and a 52% increase in the NASPR score. And importantly, this improvement actually qualifies process to be included in the Dow Jones Sustainability Europe Index, which we're very proud about. So I think we should be excited about this progress. There is, however, a lot more that's planned here. And our priorities for the coming month include setting emission reduction targets and also articulating in full our responsible investment thesis, which we are looking forward to sharing with all of you. So with that, I would like to turn the call over to Basil. Basil, can you take us from here?